S-4/A

As filed with the Securities and Exchange Commission on June 25, 2004

Registration No. 333-115862

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Portola Packaging, Inc.*

(Exact Name of Registrant as Specified in its Charter)

Delaware	3089	94-1582719
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

898A Faulstich Court

San Jose, California 95112

(408) 453-8840

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

James A. Taylor

President and Chief Operating Officer

Portola Packaging, Inc.

898A Faulstich Court

San Jose, California 95112

(408) 453-8840

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copy to:

David K. Michaels, Esq.

Scott J. Leichtner, Esq.

Melissa C. Trousdale, Esq.

Fenwick & West LLP

Silicon Valley Center

801 California Street

Mountain View, California 94041

(650) 988-8500

*The Co-Registrants listed on Schedule A hereto are also included in this Form S-4 Registration Statement as additional Registrants.

        Approximate date of commencement of proposed sale of the securities to the public: as soon as practicable after the effective date of this Registration Statement.

        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.    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                         

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                         

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Each Class of	Amount to be	Offering Price Per	Aggregate Offering	Amount of
Securities to be Registered	Registered (1)	Unit(1)	Price(1)	Registration Fee
8 1/4% Senior Notes due 2012	$180,000,000	100%	$180,000,000	$22,806(4)
Guarantees of 8 1/4% Senior Notes due 2012(2)	$180,000,000	(3)	(3)	(3)

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act.
(2)	The 8 1/4% Senior Notes due 2012 were issued by Portola Packaging, Inc. and have been guaranteed by the subsidiaries of Portola Packaging listed on Schedule A hereto. No separate consideration has been or will be received for the issuance of these guarantees.
(3)	No separate filing fee is required pursuant to Rule 457(n) under the Securities Act.
(4)	Previously paid.

        The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

SCHEDULE A

GUARANTORS:

Exact Name of Additional Registrants	State or Other Jurisdiction of	I.R.S. Employer
as Specified in Their Charters	Incorporation or Organization	Identification Number
Portola Allied Tool, Inc.	Delaware		38-3461811
Portola Limited	England and Wales		98-0403791
Portola Packaging, Inc. Mexico, S.A. de C.V.	Mexico		PPI971111D9A
Portola Packaging Canada Ltd.	Yukon Territory, Canada		897554465RC0002
Portola Packaging Limited	England and Wales		2607146
Tech Industries, Inc.	Rhode Island		05-0301487

      The address for each of the Additional Registrants is:

c/o Portola Packaging, Inc.
898A Faulstich Court
San Jose, California 95112
Telephone (408) 453-8840.

      The (i) primary standard industrial classification code number and (ii) name, address and telephone number of the agent for service for each of the Additional Registrants is the same as that for Portola Packaging.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 25, 2004

PROSPECTUS

Portola Packaging, Inc.

Exchange Offer For

$180,000,000 8 1/4% Senior Notes Due 2012

        We are offering to exchange 8 1/4% Senior Notes due 2012 for our currently outstanding 8 1/4% Senior Notes due 2012. The exchange notes have substantially identical terms of those of the outstanding notes, except that the exchange notes will have been registered under the federal securities laws and will not bear any legend restricting their transfer. The exchange notes will represent the same debt as the outstanding notes, and we will issue the exchange notes under the same indenture.

      The exchange notes will be unsecured and rank equally with all of our existing and future senior unsecured debt and rank senior to all our future subordinated debt. The notes will be effectively subordinated to all our existing and future secured debt to the extent of the value of the assets securing such debt. The notes will be guaranteed on a senior unsecured basis by our existing and future subsidiaries that guarantee other indebtedness of Portola Packaging, Inc., including our amended and restated senior secured credit facility with General Electric Capital Corporation, until such guarantees of other indebtedness are released. The notes will be structurally subordinated to all existing and future liabilities (including trade payables) of our subsidiaries that have not issued guarantees of the notes.

      The principal features of the exchange offer are as follows:

•  Expires 5:00 p.m., New York City time, on                     , 2004, unless extended.

•  We will exchange all outstanding notes that are validly tendered and not properly withdrawn prior to the expiration date of the exchange offer.

•  You may withdraw tendered outstanding notes at any time prior to the expiration of the exchange offer.

•  The exchange of outstanding notes for exchange notes pursuant to the exchange offer will not be a taxable event for United States federal income tax purposes.

•  There is no existing public market for the outstanding notes or the exchange notes. We do not intend to apply for listing of the exchange notes on any securities exchange or automated quotation system.

•  We will not receive any proceeds from the exchange offer.

      Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account through market-making or other trading activities must deliver a prospectus in any resale of the exchange notes.

      Investing in the exchange notes involves risks that are described in the “Risk Factors” section beginning on page 16 of this prospectus.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is                     , 2004

TABLE OF CONTENTS

	Page
Prospectus summary		1
Risk factors		16
Use of proceeds		26
Unaudited pro forma consolidated financial information		27
Selected consolidated financial data		33
Management’s discussions and analysis of financial condition and results of operations		38
Business		53
Management		63
Principal stockholders		69
Related party transactions		71
Description of other indebtedness		73
The exchange offer		76
Description of exchange notes		83
Certain U.S. federal income tax considerations		116
Certain ERISA considerations		121
Plan of distribution		122
Legal matters		123
Experts		123
Where you can find more information		123
Index to financial statements		F-1
EXHIBIT 4.01
EXHIBIT 23.02
EXHIBIT 23.03

      Portola Packaging, Inc. is a Delaware corporation. Our principal executive offices are located at 898A Faulstich Court, San Jose, California 95112, and our telephone number at that address is (408) 453-8840. Our website is located at www.portpack.com. The information on our website is not part of this prospectus.

      In this prospectus, “we,” “us,” “our,” “the Company” and “Portola” refer to Portola Packaging, Inc. and its subsidiaries, unless the context otherwise requires. However, when we refer to “we,” “us,” “our,” “the Company” and “Portola” in historical financial data, we are referring to Portola Packaging, Inc. and its subsidiaries, excluding Tech Industries, Inc.

      “Outstanding notes” refers to the 8 1/4% Senior Notes due 2012 that were issued in a private placement transaction on January 23, 2004 and “exchange notes” refers to the 8 1/4% Senior Notes due 2012 offered pursuant to this prospectus. We sometimes refer to the outstanding notes and the exchange notes collectively as the “notes.”

      Cap Snap®, Snap Cap®, Portola Packaging®, Nepco®, Tech Industries, Inc.® and the Portola logo are our registered trademarks used in this prospectus.

      NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER TO SELL OR SOLICITATION WOULD BE UNLAWFUL. 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 TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

CAUTIONARY STATEMENT REGARDING

FORWARD-LOOKING STATEMENTS

      This prospectus includes statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.

      By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

      The following listing represents some, but not necessarily all, of the factors that may cause actual results to differ from those anticipated or predicted:

•  our ability to complete the integration of Tech Industries (or to integrate any future acquisitions) into our company;

•  pricing pressures due to consolidation in our customers’ industries;

•  risks of competition in our existing and future markets;

•  increases in prices and availability of resin and our ability to pass on increases in resin prices to our customers;

•  risks associated with new business development;

•  risks related to conducting business internationally and international expansion; and

•  the other risks described under the heading “Risk factors” beginning on page 16.

      You should also read carefully the factors described in the “Risk factors” section of this prospectus to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements.

      Any forward-looking statements, which we make in this prospectus, speak only as of the date of such statement, and we undertake no obligation to update such statements. Comparisons of results for current and

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any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

INDUSTRY AND MARKET DATA

      This prospectus includes market share and industry data and forecasts that we obtained from industry publications and internal company surveys. There can be no assurance as to the accuracy or completeness of information included in industry publications. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk factors” in this prospectus.

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PROSPECTUS SUMMARY

      This summary highlights material information about our business, the exchange offer and the exchange notes. This summary of material information contained elsewhere in this prospectus is not complete and does not contain all of the information that may be important to you. For a more complete understanding of our business, the exchange offer and the exchange, you should read this entire prospectus, including the sections entitled “Risk factors,” “The exchange offer” and “Description of exchange notes” and our consolidated financial statements and the consolidated financial statements of Tech Industries, Inc. (“Tech Industries”) and related notes included elsewhere in this prospectus. All references to fiscal year in this prospectus refer to the fiscal year ended August 31 of each year (e.g., “fiscal 2003” is our fiscal year ended on August 31, 2003). Unless otherwise indicated, all references to our pro forma results for fiscal 2003 give pro forma effect to our acquisition of Tech Industries, the sale of the outstanding notes and the application of the net proceeds therefrom and the amendment and restatement of our senior secured credit facility, as if such transactions had occurred on September 1, 2002.

Portola Packaging, Inc.

      We are a leading designer, manufacturer and marketer of plastic closures, bottles and related equipment used in the non-carbonated beverage and institutional food markets. In September 2003 we entered the cosmetic, fragrance and toiletry (“CFT”) markets with the acquisition of Tech Industries, a leading provider of closures in these markets. For the twelve months ended February 29, 2004, we generated pro forma sales of $245.2 million and pro forma income from operations of $9.3 million.

      We believe that we are the sole or largest supplier to many of our customers of the products we supply. Our consistent product quality and customer service have allowed us to develop strong relationships with our customers, and we have supplied products to our top 25 customers for an average of 13 years. We sold over 12.6 billion closures (pro forma) in fiscal 2003 to over 1,000 customers under the names Snap Cap, Nepco, Portola, Tech Industries and other brand names. Closure sales represented a majority of our 2003 pro forma sales. We sell our products to such beverage, food and consumer product companies as Dean Foods, Dairyworld Foods, Dairy Crest, Arla Dairies, Kroger, Perrier Water/ Nestle, Estée Lauder, Avon and Coca-Cola. Our products provide our customers with a number of value-added benefits, such as the ability to increase the security and safety of their products by making them tamper evident and leak-resistant.

      Many features of our products have been developed through our extensive research and development efforts. For example, we developed the “tear strip” feature that has become a standard tamper evident mechanism for non-carbonated beverage and food products. In addition, we have developed technology and know-how that have enabled us to achieve manufacturing efficiencies that we believe provide us with a significant competitive advantage. We hold more than 125 domestic and foreign patents, with over 70 additional patent applications pending, on the design and manufacture of container closures and containers, as well as compatible neck finishes.

      We produce a wide range of closures to satisfy a great number of application and customer requirements, and these products represented approximately 75% of our sales in fiscal 2003. The following describes our principal plastic closure product lines:

      Closures for gallon and half-gallon plastic containers. We are a leading provider of 38 mm closures used primarily for gallon and half-gallon plastic containers for milk and fruit juices in the United States and similar plastic containers for milk in Mexico and the United Kingdom. These closures represented a majority of our total closure sales in fiscal 2003.

      Five-gallon closures. We are a leading provider of plastic closures for five-gallon returnable glass and plastic water cooler bottles in the United States, and we also sell these products in Canada, Mexico, Europe and Asia.

      Other food and beverage closures. We produce a variety of specialty closures for the beverage and food markets. These products include (i) wide mouth closures for plastic containers used in institutional food

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applications such as packaging for condiments, mayonnaise and salad dressing, (ii) re-closeable plastic dispensing fitments for gable-top paperboard cartons used for orange juice, lemonade, other juice, dairy and soy products and (iii) push-pull sport caps for bottled water, juices and sport drinks. We believe that we are a leader in many of these markets in the Unites States, the United Kingdom and Canada.

      Closures and jars for the cosmetics, fragrance and toiletry markets. With the acquisition of Tech Industries, we believe that we have become a leader in closures for the CFT markets, with particular strength in compression-molded closures used for high-end products. Tech Industries has had long-standing relationships, averaging over 25 years, with seven of the ten major global cosmetics companies, including Avon, Estée Lauder and L’Oreal.

      In addition, we are a leading provider in Canada of gallon and half-gallon blowmolded plastic containers, used primarily for milk, water and fruit juices, and we manufacture five-gallon plastic water bottles in Mexico and the United Kingdom. We also offer other complementary products and services such as neck finish molds that match our closures, blowmolding tooling and molds, capping and turnkey water filling equipment and an extensive range of decorating, finishing and assembly services.

      Our products are manufactured through technologically advanced, high-speed injection molding and blowmolding processes and compression molding processes at twelve manufacturing facilities, including five located in the United States, four located in Canada, and one located in each of the United Kingdom, Mexico and China. In addition, we have two facilities located in the United States that produce equipment for our customers’ bottle filling lines and tooling for blowmolding equipment. We are developing a new advanced manufacturing facility in the Czech Republic to produce closures and CFT products for European markets and intend to begin construction of this facility in fiscal 2005.

      Historically, growth in demand for our products has been driven by population growth, increasing concerns about the sanitation and safety of packaged food and beverage products and the continued shift from glass or metal to plastic containers throughout the packaged food and beverage industry. In addition, in many international markets demand for plastic containers is growing with increases in consumer disposable income. For the juice, dairy and bottled water markets, demand is also a function of climate and weather, with warmer temperatures tending to increase consumption. In the CFT markets, growth has been driven by trends such as the aging of the population, increasing demand by younger consumers and the development of new cosmetic and skin care products. As packaging has shifted from glass or metal to plastic containers, which largely rely on plastic closures, the use of plastic closures has grown at a faster rate than the overall closures market.

      We were founded in 1964 and were acquired from our founders in 1986 by a group led by Jack L. Watts, our current Chairman of the Board and Chief Executive Officer. We have grown from $31.4 million in sales and 2.4 billion in closure units sold in fiscal 1988 to $249.2 million in pro forma sales and over 12.6 billion closures (pro forma) and 235.0 million bottles sold in fiscal 2003. The members of Portola’s senior management have significant experience in the plastic packaging business and an average tenure of over six years.

Competitive Strengths

      Leading and defensible market shares. We believe that we are a leader in significant segments of the United States water, dairy, food service and CFT closure markets. In addition, we believe that we are a market share leader in the United Kingdom dairy closure market, the Canadian dairy bottle and closure markets, and certain Mexican water and dairy closure markets. We believe our market leadership positions are defensible due to our being a low-cost provider, commitment to research and development, long-standing customer relationships, excellent customer service and strong brand recognition.

      Broad product offering. We believe that our product offerings are among the most extensive in our industry. In addition to our broad array of closures, we offer a number of complementary products and services that enable our customers to improve the quality and safety of their products (see the discussion of “Product Integrity” below) and that provide incentives for them to purchase additional products from us. Depending on the market, these products and services include blowmolded plastic bottles, neck finish molds that match our

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closures, blowmolding tooling and molds, capping equipment, turnkey water filling equipment and the decorating, finishing and assembly of customers’ products. Our research and development activities, as well as our customer service functions, enable us to continue to improve these products and services in response to customer feedback.

      Manufacturing expertise. Our operations use advanced automated and proprietary manufacturing processes to provide high quality products at relatively low production costs. We have implemented a continuous improvement process, based on the Toyota production system, designed to further automate our production flow, enhance the capabilities and efficiency of our workforce and upgrade our molds, equipment and systems. From fiscal 1997 through fiscal 2003, we increased the productivity of our United States closure manufacturing employees by 25% (as measured in units per manufacturing employee). We recently began to apply our continuous improvement process to the operations of Tech Industries, and we believe that this can yield significant improvements in its operations over time.

      Product development capabilities. Our strong commitment to research and development has led to significant product innovations, such as the original snap cap design, the five-gallon closure, the “tear strip” feature and ongoing improvements to the snap-screw and screw-on screw-off caps. Our product development strengths enable us to address customer requirements for product integrity, providing a wide range of high quality products and services that enable customers to enhance the safety and security of their products and enhance their brand equity.

      Loyal customer base. Our consistent product quality and customer service have allowed us to develop strong relationships with our customers. In addition, the multinational scope of our operations, and our ability to produce products that meet our customers’ quality standards consistently across geographic markets is increasingly important to large global customers. Our relationships with our top 25 customers average 13 years in length.

Business strategy

      Our primary strategy is to increase cash flow by maintaining and extending our position as a leader in significant segments in the plastic closure and bottle markets, as well as the newly-entered CFT markets. The key elements of this strategy are as follows:

      Emphasizing research and development and product engineering. Packaging of beverages and food is rapidly changing in the marketplace as producers encounter increased competition and sophistication among their customers. The demands for new packaging solutions can only be met by using innovative design and manufacturing techniques and new materials. We are continuing our commitment to the research and development of new containers, closures and packaging systems and the manufacturing techniques to produce them. We have introduced three new products in fiscal 2004, consisting of two 38mm screw closures for the dairy, water and juice markets and a 110mm closure for the food industry.

      Emphasizing customer support and total product solutions. We build long-term relationships with customers and attract new customers by providing on-time delivery and technical service and support and by selling our products and services as “total product solutions.” We work closely with our customers to design closures and compatible container neck finishes and neck inserts that meet their specific needs, provide them with a wide range of stock and customizable products and support their needs for service and support. Many of our closure customers also use our custom capping equipment, which we believe improves their products and strengthens our relationships with them.

      Expanding sales in markets outside of the United States. We expect significant growth in markets outside of the United States for plastic closures and capping and filling equipment, as bottled water and other non-carbonated beverage producers in international markets adopt more advanced packaging materials and techniques. We are seeking to capitalize on these growth opportunities by entering into joint ventures with local bottle manufacturers, bottlers and distributors, by increasing exports and by establishing manufacturing and sales operations in local markets. We have commenced expansion in China and Mexico and are developing a greenfield manufacturing facility in the Czech Republic to serve European markets for closures

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and CFT products to serve their respective markets. We intend to begin construction of the latter facility in fiscal 2005.

      Product Integrity. Our goal is to promote our customers’ product safety and brand equity as contemplated by our Product Integrity strategy. Product Integrity encompasses the providing of safety and security products and services designed to protect the integrity of our customers’ manufacturing process and to protect our customers’ products as they move through the distribution chain. Accordingly, we design our products to assure customers that their products will be received by end-users as the manufacturer intended, with the taste, freshness, odor and effectiveness unimpaired. Other Product Integrity initiatives include the development of an anti-counterfeit system designed to be integrated into customer packaging lines. The system will be sold as a service that enables customers to identify and potentially eliminate counterfeit items from their distribution systems. The system is scalable, internet-based, and inexpensive to implement. The service may be sold independently of the closure used including to companies operating in adjacent markets such as pharma- and nutra-ceuticals, customers not otherwise purchasing our closures. We believe that our attention to the protection of our customers’ brands and products differentiates us from competitors.

      Pursuing strategic acquisitions. We intend to selectively pursue strategic acquisitions, focusing on markets with higher growth rates than those we currently serve and in which we can leverage our strengths in Product Integrity and manufacturing efficiencies. For example, in September 2003, we acquired Tech Industries to gain access to the CFT markets.

Acquisition of Tech Industries

      On September 19, 2003, we acquired all of the outstanding capital stock of Tech Industries for approximately $35.7 million in cash (excluding items classified as assumed liabilities and transaction costs). During the 52 weeks ended August 24, 2003, Tech Industries had sales of $33.9 million. Tech Industries provides us with a position in the CFT markets, where advanced design capabilities and specialized manufacturing processes are required and gross margins are typically higher than our historical markets. We funded the acquisition principally through borrowings under our senior secured credit facility.

Financing Transactions

      On January 16, 2004, we amended and restated our existing senior secured credit facility with General Electric Capital Corporation (“GECC”). The amended and restated senior secured credit facility provides a $50.0 million revolving credit facility (subject to maintaining a prescribed borrowing base), including a $5.0 million letter of credit subfacility. This credit facility is secured by substantially all of our U.S. assets and certain of our foreign assets and has a term of five years. In addition, we entered into a further amendment to this senior secured credit facility on May 21, 2004. For a more detailed description of the amended and restated senior secured credit facility, see “Description of other indebtedness.”

      On January 23, 2004, we completed the offering of $180,000,000 principal amount of our outstanding notes. We used approximately $114.7 million of the net proceeds of such offering to redeem all of our outstanding 10.75% senior notes due 2005 (the “Note Redemption”), approximately $36.7 million of the net proceeds to repay outstanding borrowings under our then existing senior secured credit facility, and approximately $12.1 million of the net proceeds to redeem our redeemable warrants (the “Warrant Redemption”). In addition, we intend to use approximately $7.9 million of the net proceeds to repurchase shares of our common stock by means of a tender offer (the “Repurchase”). On March 31, 2004, we announced that we extended the Repurchase to at least June 21, 2004, and on June 18, 2004, we announced that we had further extended the Repurchase to at least August 23, 2004. We have the right to further amend the terms of the Repurchase.

      The issuance of the outstanding notes and the application of the net proceeds therefrom to effect the Note Redemption and the Warrant Redemption, to repay outstanding borrowings and to effect the Repurchase, as well as our entering into our amended and restated senior secured credit facility are collectively referred to in this prospectus as the “Financing Transactions.”

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Recent Financial Results

      On June 21, 2004, we announced our financial results for our third fiscal quarter ended May 31, 2004. We reported sales of $62.3 million compared to $53.7 million for the same quarter of the prior year. For the first nine months of fiscal 2004, sales were $176.3 million compared to $156.8 million for the first nine months of fiscal 2003. We had operating income of $0.3 million for the third quarter of fiscal 2004, compared to operating income of $3.8 million for the third quarter of fiscal 2003. For the first nine months of fiscal 2004, we had an operating loss of $2.2 million compared to operating income of $6.4 million for the first nine months of fiscal 2003. We reported a net loss of $4.4 million for the third quarter of fiscal 2004 compared to a net loss of $28,000 for the same period of fiscal 2003, and a net loss of $16.2 million for the first nine months of fiscal 2004 compared to a net loss of $2.4 million for the same period in fiscal 2003. Gross profit decreased $0.3 million to $11.6 million for the third quarter of fiscal 2004 compared to $11.9 million for the third quarter of fiscal 2003. Gross profit decreased $2.8 million to $30.2 million for the first nine months of fiscal 2004 compared to $33.0 million for the first nine months of fiscal 2003.

The Exchange Offer

      On January 23, 2004, we completed the offering of $180,000,000 aggregate principal amount of 8 1/4% Senior Notes due 2012 in a transaction exempt from registration under the Securities Act of 1933.

      In connection with this offering, we entered into a registration rights agreement with the initial purchasers of the outstanding notes, in which we agreed to commence this exchange offer. Accordingly, you may exchange your outstanding notes for exchange notes that have substantially the same terms. You should read the discussion under the headings “The exchange offer” and “Description of exchange notes” for further information regarding the exchange notes to be issued in the exchange offer.

Securities Offered	Up to $180,000,000 aggregate principal amount of 8 1/4% Senior Notes due 2012, registered under the Securities Act. The terms of the exchange notes offered in the exchange offer are substantially identical to those of the outstanding notes, except that the transfer restrictions, registration rights and penalty interest provisions relating to the outstanding notes do not apply to the exchange notes.
The Exchange Offer	We are offering exchange notes in exchange for a like principal amount of our outstanding notes. We are offering these exchange notes to satisfy our obligations under a registration rights agreement that we entered into with the initial purchasers of the outstanding notes. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your outstanding notes.
Expiration Date	The exchange offer will expire at 5:00 p.m., New York City time, on                     , 2004, unless we extend it.
Procedures for Tendering Outstanding Notes	If you wish to tender your notes for exchange in this exchange offer, you must transmit to the exchange agent on or before the expiration date either:
	• an original or a facsimile of a properly completed and duly executed copy of the letter of transmittal, which accompanies this prospectus, together with your outstanding notes and any

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	other documentation required by the letter of transmittal, at the address provided on the cover page of the letter of transmittal; or
	• If the notes you own are held of record by The Depository Trust Company, or “DTC,” in book-entry form and you are making delivery by book-entry transfer, a computer-generated message transmitted by means of the Automated Tender Offer Program System of DTC, or “ATOP,” in which you acknowledge and agree to be bound by the terms of this prospectus and the letter of transmittal and which, when received by the exchange agent, forms a part of a confirmation of book-entry transfer. As part of the book-entry transfer, DTC will facilitate the exchange of your notes and update your account to reflect the issuance of the exchange notes to you. ATOP allows you to electronically transmit your acceptance of the exchange offer to DTC instead of physically completing and delivering a letter of transmittal to the notes exchange agent.
	In addition, you must deliver to the exchange agent on or before the expiration date:
	• a timely confirmation of book-entry transfer of your outstanding notes into the account of the notes exchange agent at DTC if you are effecting delivery of book-entry transfer, or
	• if necessary, the documents required for compliance with the guaranteed delivery procedures.
Special Procedures for Beneficial Owners	If you are the beneficial owner of book-entry interests and your name does not appear on a security position listing of DTC as the holder of the book-entry interests or if you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender the book-entry interest or outstanding notes in the exchange offer, you should contact the person in whose name your book-entry interests or outstanding notes are registered promptly and instruct that person to tender on your behalf.
Withdrawal	You may withdraw any outstanding notes that you tender for exchange at any time prior to the expiration date of this exchange offer. See “The exchange offer — Terms of the exchange offer” for a more complete description of the tender and withdrawal period.
Acceptance of outstanding notes	If you fulfill all conditions required for proper acceptance of outstanding notes, we will accept any and all outstanding notes that you validly tender in the exchange offer and do not properly withdraw on or before 5:00 p.m., New York City time, on the expiration date.
Conditions to the Exchange Offer	The exchange offer is not subject to any condition other than that the exchange offer not violate any applicable law or applicable interpretation of the staff of the SEC.
Certain Material U.S. Federal Tax Considerations	Your exchange of outstanding notes for exchange notes to be issued in the exchange offer will not result in any gain or loss to you

6

	for United States federal income tax purposes. See “Certain U.S. federal income tax considerations” for a summary of material United States federal income tax consequences associated with the exchange of outstanding notes for the exchange notes and the ownership and disposition of those exchange notes.
Use of Proceeds	We will not receive any cash proceeds from the exchange offer. We will bear all expenses related to the exchange offer
Exchange Agent	U.S. Bank National Association
Consequences of Exchanging Your Outstanding Notes	Based on interpretations of the staff of the SEC, we believe that you may offer for resale, resell or otherwise transfer the exchange notes that we issue in the exchange offer without complying with the registration and prospectus delivery requirements of the Securities Act if:
	• you acquire the exchange notes issued in the exchange offer in the ordinary course of your business;
	• you are not participating, do not intend to participate, and have no arrangement or undertaking with anyone to participate, in the distribution of the exchange notes issued to you in the exchange offer; and
	• you are not our “affiliate,” as described in Rule 405 of the Securities Act.
	If any of these conditions are not satisfied and you transfer any exchange notes issued to you in the exchange offer without delivering a prospectus meeting the requirements for the Securities Act or without qualifying for an exemption from registration of your exchange notes, you may incur liability under the Securities Act. We will not be responsible for, or indemnify you against, any liability you incur.
	Any broker-dealer that acquires exchange notes in the exchange offer for its own account in exchange for outstanding notes that it acquired through market-making or other trading activities must acknowledge that it will deliver a prospectus when it resells or transfers any exchange notes issued in the exchange offer. See “Plan of distribution” for a description of the prospectus delivery obligations of broker-dealers in the exchange offer.

The Exchange Notes

      The following is a brief summary of the terms of the exchange notes. For a more complete description of the terms of the notes, see “Description of exchange notes” in this prospectus.

Issuer	Portola Packaging, Inc., a Delaware corporation.
Securities Offered	$180,000,000 in aggregate principal amount of 8 1/4% Senior Notes due 2012.
Maturity Date	February 1, 2012.
Interest Payment Dates	February 1 and August 1, commencing on August 1, 2004.

7

Interest Rate	8 1/4% per year (calculated using a 360-day year).
Optional Redemption	The exchange notes will be redeemable at our option, in whole or in part, at any time on or after February 1, 2007, at the redemption prices set forth in this prospectus, together with accrued and unpaid interest, if any, to the date of redemption. At any time prior to February 1, 2007, we may redeem up to 35% of the aggregate principal amount of the exchange notes with the proceeds of one or more equity offerings of our common stock at a redemption price of 108.25% of the principal amount of the notes, together with accrued and unpaid interest, if any, to the date of redemption.
Change of Control	If we experience a change of control, we may be required to offer to purchase the exchange notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any. We might not be able to pay you the required price of the exchange notes you present to us at the time of a change of control because our amended and restated senior secured credit facility or other indebtedness may prohibit payment or we might not have enough funds at that time.
Guarantees	The exchange notes will be guaranteed on a senior unsecured basis by all of our existing and future subsidiaries that guarantee other indebtedness of the Company, including our amended and restated senior secured credit facility with GECC, until such guarantees of other indebtedness are released. The guarantees will be unsecured senior indebtedness of our subsidiary guarantors and will have the same ranking with respect to indebtedness of our subsidiary guarantors as the exchange notes will have with respect to our indebtedness. For fiscal 2003, on a pro forma basis, our non-guarantor subsidiaries represented approximately 2.3% of our net sales, approximately 0.3% of our operating income, approximately 1.1% of our EBITDA and approximately (3.8%) of our cash flows from operating activities.
Ranking	The exchange notes will:
	• be our senior unsecured obligations;
	• rank equally in right of payment with all of our existing and future unsecured unsubordinated indebtedness;
	• be effectively junior to our existing and future secured debt, including debt under the amended and restated senior secured credit facility, to the extent of the value of the assets securing such debt;
	• be structurally subordinated to all of the existing and future liabilities (including trade payables) of each of our subsidiaries that do not guarantee the exchange notes; and
	• be senior in right of payment to any future senior subordinated or subordinated indebtedness.
Covenants	The indenture governing the outstanding notes will govern the exchange notes. The indenture contains covenants that impose significant restrictions on our business. The restrictions these covenants place on us and our restricted subsidiaries include

8

	limitations on our ability and the ability of our restricted subsidiaries to:
	• incur additional debt and guarantees;
	• pay dividends or distributions and repurchase our stock;
	• make other restricted payments, including without limitation, investments;
	• create liens;
	• enter into agreements that restrict dividends from subsidiaries;
	• sell or otherwise dispose of assets, including capital stock of subsidiaries;
	• enter into sale and leaseback transactions;
	• enter into transactions with our affiliates; and
	• enter into mergers, consolidations or sales of substantially all our assets.
	These covenants are subject to important exceptions and qualifications, which are described under “Description of exchange notes — Certain covenants.”
Mandatory offers to purchase	In connection with certain asset dispositions, we may be required to use the proceeds from those asset dispositions to:
	• repay secured debt, including borrowings under our amended and restated senior secured credit facility;
	• invest in assets related to our business; and/or
	• make an offer to purchase the exchange notes at 100% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase if such proceeds are not otherwise used within 360 days to repay senior secured indebtedness or to invest in assets related to our business.
Registration Rights; Additional Interest	In connection with the offering of the outstanding notes, we and our subsidiary guarantors entered into a registration rights agreement pursuant to which we are obligated to file with the SEC this registration statement with respect to the exchange offer. Alternatively, if the exchange offer is not available or cannot be completed or some holders are not able to participate in the exchange offer, we are required to file a shelf registration statement to cover resales of the notes under the Securities Act. If we do not comply with these obligations, we will be required to pay additional interest on the notes under specified circumstances.

      You should carefully consider all the information in this prospectus prior to participating in the exchange offer. In particular, we urge you to consider carefully the specific factors set forth under “Risk factors” beginning on page 16 of this prospectus.

9

SUMMARY FINANCIAL INFORMATION

      The following tables show summary historical and pro forma consolidated financial data of Portola. The historical data for each of the three years in the period ended August 31, 2003 are derived from our consolidated financial statements, which have been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, and appear elsewhere in this prospectus. The historical data for the six-month periods ended February 28, 2003 and February 29, 2004 are derived from our unaudited condensed consolidated financial statements that appear elsewhere in this prospectus and that, in the opinion of management, include all adjustments consisting only of normal recurring adjustments considered necessary for a fair presentation. Results for the six-month periods ended February 28, 2003 and February 29, 2004 are not necessarily indicative of results to be expected for the full year or any future period.

      The unaudited pro forma consolidated statements of operations data and other financial data for the fiscal year ended August 31, 2003, the six months ended February 28, 2003 and February 29, 2004 and the twelve months ended February 28, 2003 and February 29, 2004 give effect to the Financing Transactions and the acquisition of Tech Industries as if all these transactions occurred on September 1, 2002. The summary unaudited pro forma consolidated statement of operations data should not be considered indicative of the results that could have been achieved if the transactions described above had occurred on the specified dates. Also, the summary unaudited pro forma consolidated statements of operations data and other financial data do not purport to indicate financial condition or results of operations as of any future date or for any future period. The data presented below should be read in conjunction with “Selected consolidated financial data,” “Unaudited pro forma consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and the financial statements and related notes included elsewhere in this prospectus.

Summary Historical Financial Information

												Six Months Ended
			Year Ended August 31,									February
			2001			2002			2003			28, 2003			29, 2004
												(Unaudited)
			(Dollars in thousands)
Consolidated statements of operations data:
	Sales		$	219,418		$	210,757		$	215,315		$	103,062		$	114,047
	Cost of sales			169,544			157,133			166,689			81,846			95,415
	Gross profit			49,874			53,624			48,626			21,216			18,632
	Selling, general and administrative			28,774			30,844			29,307			15,156			15,664
	Research and development			3,096			3,069			4,729			2,415			2,926
	Amortization of intangibles(1)			4,176			1,551			903			432			622
	Impairment charge			—			—			207			—			—
	Restructuring costs(2)			1,939			—			405			405			1,866
		Income (loss) from operations		11,889			18,160			13,075			2,808			(2,446	)
	Interest income(3)			(75	)		(1,083	)		(120	)		(99	)		(81	)
	Interest expense			14,453			13,251			12,544			6,268			7,410
	Amortization of debt financing costs			718			756			777			373			1,560
	Minority interest expense(4)			278			113			73			38			27
	Equity (income) loss of unconsolidated affiliates, net(5)			37			(340	)		(415	)		(52	)		(6	)
	Loss (gain) on sale of property, plant and equipment(6)			(6,784	)		(20	)		30			29			5
	Income on dissolution of joint venture(7)			—			(475	)		—			—			—
	Income on recovery of investment(8)			—			(1,103	)		—			—			—

10

												Six Months Ended
			Year Ended August 31,									February
			2001			2002			2003			28, 2003			29, 2004
												(Unaudited)
			(Dollars in thousands)
	Loss on warrant redemption (including $1,639 loss on redemption paid to JPMorgan)(9)			—			—			—			—			1,867
	Foreign currency transaction (gain) loss			50			285			(348	)		252			(2,255	)
	Other expense (income), net			108			(39	)		194			(20	)		15
		Income (loss) before income taxes		3,104			6,815			340			(3,981	)		(10,988	)
		Income tax (benefit) expense		2,074			2,242			2,071			(1,573	)		742
		Net (loss) income	$	1,030		$	4,573		$	(1,731	)	$	(2,408	)	$	(11,730	)
Consolidated balance sheet data (at end of period):
	Working capital		$	18,665		$	18,147		$	10,449		$	15,931		$	33,269
	Total assets			149,635			136,589			132,773			132,555			186,544
	Total debt			131,872			120,552			116,933			119,041			191,309
	Redeemable warrants(9)			10,510			10,359			10,302			10,291			1,453
	Total shareholders’ equity (deficit)			(27,283	)		(24,913	)		(26,199	)		(27,065	)		(37,808	)
Cash flow data:
	Net cash provided by operating activities		$	15,020		$	24,405		$	14,291		$	6,420		$	254
	Net cash used in investing activities			(4,102	)		(11,041	)		(10,579	)		(4,726	)		(45,319	)
	Net cash (used in) provided by financing activities			(11,569	)		(12,135	)		(3,870	)		(1,599	)		55,278
Other data:
	Closure unit volume (in millions) (unaudited)			12,871			12,693			12,337			6,107			5,939
	Closure unit volume growth (unaudited)			7.8	%		(1.4	)%		(2.8	)%		(0.3	)%		(2.8	)%
	EBITDA(10)		$	40,223		$	40,112		$	31,627		$	11,404		$	6,806
	Depreciation and amortization			21,948			19,290			17,966			8,744			8,824
	Capital expenditures			14,088			10,488			11,081			4,999			8,121

See page 13 for notes to summary financial information.

11

Summary Unaudited Pro Forma Consolidated Financial Information

					Pro Forma
		Pro Forma			Six Months Ended
		Year Ended
		August 31,			February 28,			February 29,
		2003			2003			2004
		(Unaudited)
		(Dollars in thousands)
Sales		$	249,249		$	120,231		$	116,150
Cost of sales			193,368			95,503			97,020
	Gross profit		55,881			24,728			19,130
Selling, general and administrative			33,279			16,907			16,086
Research and development			4,896			2,582			2,926
Amortization of intangibles(1)			1,188			574			634
Impairment charge			207			—			—
Restructuring costs(2)			405			405			1,866
			39,975			20,468			21,512
	(Loss) income from operations		15,906			4,260			(2,382	)
Other (income) expense:
	Interest income(3)		(85	)		(17	)		35
	Interest expense		14,983			7,342			6,738
	Warrant interest income		—			(68	)		(57	)
	Amortization of debt financing costs		2,016			993			1,289
	Minority interest expense(4)		73			—			—
	Equity (income) loss of unconsolidated affiliates, net(5)		(415	)		—			(27	)
	Loss (gain) from sale of property, plant and equipment(6)		30			12			5
	Loss on warrant redemption (including $1,639 loss on redemption paid to JPMorgan)(9)		—			—			1,867
	Foreign currency transaction (gain) loss		(348	)		252			(2,255	)
	Other (income) expense, net		(32	)		(19	)		38
			16,222			8,495			7,633
	Loss before income taxes		(316	)		(4,235	)		(10,015	)
Income tax (benefit) expense			2,072			(1,573	)		742
Net loss		$	(2,388	)	$	(2,662	)	$	(10,757	)

See page 13 for notes to summary financial information.

12

Notes to Summary Financial Information

(1)

Includes amortization of patents and technology, licenses, tradename, covenants not-to-compete and customer relationships for all periods presented and also includes goodwill amortization for fiscal 2001. Effective September 1, 2001, we chose early adoption of the Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” for existing goodwill and other identifiable assets, which resulted in the discontinuance of goodwill amortization.

(2)

During the first six months of fiscal 2004, we incurred $1.9 million in restructuring charges primarily related to employee severance costs due to the closure of our manufacturing facilities in Sumter, South Carolina and Chino California and one of our two facilities in San Jose, California. The manufacturing facilities located in Chino, California and San Jose, California were relocated to a new facility located in Tolleson, Arizona, a suburb of Phoenix, during the second quarter of fiscal 2004. We have relocated the operations of our South Carolina facility primarily to our existing facility in Kingsport, Tennessee. In June 2003, we entered into a fifteen-year lease commencing December 1, 2003 for the Tolleson, Arizona facility. We have entered into a contract to sell the manufacturing building in San Jose, California, and we have sold the facility in Chino, California in April 2004. In addition to the restructuring charges discussed above, we have incurred approximately $1.1 million in relocation expenses during the first six months of fiscal 2004 related to the closing of the three plants in the first and second quarters of fiscal 2004, which is included in cost of sales in the statement of operations. As of February 29, 2004, approximately $0.7 million had been charged against the restructuring reserve for the employee severance costs. In addition, we expect to incur approximately $1.0 million in restructuring charges during the third quarter of fiscal 2004 primarily related to employee severance costs.

During the second quarter of fiscal 2003, we announced a restructuring plan to reduce our work force. During fiscal 2003, we incurred restructuring charges of $0.4 million for employee severance costs. The restructuring affected nine employees in general and administration, two employees in customer service, one employee in research and development and two employees in sales, totaling fourteen severed employees.

During the first quarter of fiscal 2001, we implemented a restructuring plan whereby our New Castle, Pennsylvania closure operation was relocated to Sumter, South Carolina and Kingsport, Tennessee, and the Cap Snap Equipment Manufacturing group was relocated from San Jose, California to New Castle, Pennsylvania. These relocations affected approximately 88 employees. We recorded restructuring charges during fiscal year 2001 totaling approximately $1.9 million, which consisted of approximately $0.9 million for employee severance costs and approximately $1.0 million for the non-cash write-down of certain assets.

(3)	Interest income includes income on the revaluation of the redeemable warrants and in fiscal 2002 interest income also included $0.8 million recognized on the recovery of an investment in Sand Hill Systems, Inc., an entity of which our chief executive officer, Jack L. Watts, was the chief executive officer through January 2000, and in which Mr. Watts and certain other officers held a financial interest. See Note 15 (Related party transactions) of the Notes to consolidated financial statements.
(4)	Represents minority interest expense for our consolidated subsidiaries that are not wholly-owned.
(5)	Represents equity (income) loss relating to our 50% interest in Capsnap Europe Packaging GmbH.
(6)	Loss (gain) on sale of property, plant and equipment includes a $6.8 million gain on the sale of real estate in San Jose, California in fiscal 2001.
(7)	Represents income relating to the forgiveness of debt in the dissolution of one of our joint ventures.
(8)	Represents income on recovery on our investment in Sand Hill Systems, Inc. as described in Note 15 of the Notes to consolidated financial statements.
(9)	We had two outstanding warrants, which were each redeemable at the option of the holder upon 60 days’ prior written notice to us. These warrants were redeemable through June 30, 2004 and June 30,

13

2008, respectively. The redemption price of the warrants was to be calculated based on the higher of the current market price per share of our common stock or an amount computed under formulas in the warrant agreements. Following the offering of $180.0 million of senior notes, on January 23, 2004, we offered to repurchase both of the warrants. During February 2004, one warrant holder agreed to our repurchase of a warrant convertible into 2,052,526 shares of our Class A common stock at a net purchase price of $5.19 1/3 per share. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of 60 2/3 cents for each share of Class A common stock. The aggregate warrant repurchase price was $10.7 million. We recognized a loss of $1.7 million on the transaction during the second quarter of 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to $5.80 per share as agreed with the warrant holder. During March 2004, the second warrant holder agreed to our repurchase of the warrant that was convertible into 440,215 shares of our Class A common stock at a net purchase price of $3.30 per share. This new price was based upon the same agreed current market price per share of common stock of $5.80, minus the warrant exercise price of $2.50 for each share of Class A common stock. The aggregate warrant repurchase price was $1.5 million and the funds were paid in May 2004. We recognized a loss of $0.2 million on the transaction during the second quarter of fiscal 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to the agreed-upon price of $5.80 per share. Prior to the redemption of the warrants, the carrying value of the warrants totaled $10.2 million, which represented the estimated fair value of the instruments as determined by our management using the Black-Scholes pricing model. In accordance with EITF Issue 00–19, the change in the fair market price of the warrants of zero and $(87,000) was recognized as interest (income) expense during the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $(57,000) and $(68,000) of interest (income) expense during the six-month periods ended February 29, 2004 and February 28, 2003, respectively.

(10)  EBITDA represents, for any relevant period, net income (loss) before interest expense, taxes, depreciation of property, plant and equipment, amortization of debt financing costs and amortization of intangibles. On a historical basis, for fiscal 2003 other items included $0.2 million of expenses associated with plant consolidation and relocation costs and for the six months ended February 29, 2004, other items included $0.1 million of plant consolidation costs and relocation expenses and $0.3 million of professional fees related to the Tech Industries acquisition. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other similarly titled measures of other companies. Set forth below is a reconciliation of our reported net income to EBITDA as disclosed.

14

											Six Months Ended
											February
		Year Ended August 31,
											28,			29,
		2001			2002			2003			2003			2004
		(Dollars in thousands)
Consolidated net (loss) income		$	1,030		$	4,573		$	(1,731	)	$	(2,408	)	$	(11,730	)
Add:
	Interest expense		14,453			13,251			12,544			6,268			7,410
	Taxes		2,074			2,242			2,071			(1,573	)		742
	Depreciation and amortization		21,948			19,290			17,966			8,744			8,824
	Amortization of debt financing costs		718			756			777			373			1,560
EBITDA(a)			40,223			40,112			31,627			11,404			6,806
Add (subtract):
	Cash received from unconsolidated affiliates		173			319			374			374			377
	Equity (income) loss on unconsolidated affiliates		37			(340	)		(415	)		(52	)		(6	)
	Loss (gain) on sale of property, plant and equipment		(6,784	)		(20	)		30			29			5
	Interest income		(75	)		(1,083	)		(120	)		(31	)		(24	)
	Impairment loss		—			—			207			—			—
	Income on dissolution of joint venture		—			(475	)		—			—			—
	Income on recovery of investment		—			(1,103	)		—			—			—
	Other items		—			—			176			—			395
	Change in operating assets and liabilities		(18,554	)		(13,005	)		(17,588	)		(5,304	)		(7,299	)
	Net cash provided by operating activities	$	15,020		$	24,405		$	14,291		$	6,420		$	254

					Pro Forma			Pro Forma			Pro Forma
		Pro Forma			Six Months			Six Months			12 Months
		Year Ended			Ended			Ended			Ended
		August 31,			February 28,			February 29,			February 29,
		2003			2003			2004			2004
		(Dollars in thousands)
Consolidated net (loss) income		$	(2,388	)	$	(2,662	)	$	(10,757	)	$	(10,483	)
Add:
	Interest expense		14,983			7,342			6,738			14,379
	Taxes		2,072			(1,573	)		742			4,387
	Depreciation and amortization		20,860			5,114			8,704			20,372
	Amortization of debt financing costs		2,016			993			1,289			2,312
EBITDA(a)		$	37,543		$	9,214		$	6,716		$	30,967

          (a) EBITDA for the twelve months ended February 29, 2004 includes a non-cash gain of $2.9 million on foreign exchange transactions, compared to a gain of $2.3 million for the six months ended February 29, 2004 and a loss of $0.3 million for the six months ended February 28, 2003.

15

RISK FACTORS

      You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus before participating in the exchange offer. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. For purposes of this “Risk Factors” section, the terms “we,” “us,” “our,” “the Company” and “Portola” refer to Portola Packaging, Inc. and its subsidiaries, unless the context signifies otherwise.

Risks Related to the Exchange Offer and the Notes

You may have difficulty selling the notes that you do not exchange.

      If you do not exchange your outstanding notes for the exchange notes offered in this exchange offer, you will continue to be subject to the restrictions on the transfer of your outstanding notes. Those transfer restrictions are described in the indenture and in the legend contained on the outstanding notes and arose because we originally issued the outstanding notes under exemptions from, and in transactions not subject to, the registration requirements of the Securities Act.

      In general, you may offer or sell your outstanding notes only if they are registered under the Securities Act and applicable state securities laws, or if they are offered and sold under an exemption from those requirements. We do not intend to register the outstanding notes under the Securities Act.

      If a large number of outstanding notes are exchanged for notes issued in the exchange offer, it may be more difficult for you to sell your unexchanged notes. In addition, if you do not exchange your outstanding notes in the exchange offer, you will no longer be entitled to have those notes registered under the Securities Act.

      See “The exchange offer — Consequences of failure to exchange outstanding notes” for a discussion of the possible consequences of failing to exchange your outstanding notes.

      Your outstanding notes will not be accepted for exchange if you fail to follow the exchange offer procedures and, as a result, your outstanding notes will continue to be subject to existing transfer restrictions and you may not be able to sell your outstanding notes.

      We will not accept your outstanding notes for exchange if you do not follow the exchange offer procedures. We will issue exchange notes as part of this exchange offer only after a timely receipt of your outstanding notes, a properly completed and duly executed letter of transmittal and all other required documents. If you want to tender your outstanding notes, please allow sufficient time to ensure timely delivery. If we do not receive your notes, letter of transmittal and other required documents by the expiration date of the exchange offer, we will not accept your notes for exchange. We are under no duty to give notification of defects or irregularities with respect to the tenders of outstanding notes for exchange. If there are defects or irregularities with respect to your tender of notes, we will not accept your notes for exchange. For more information, see “The exchange offer.”

Our level of indebtedness could, from time to time, limit cash flow available for our operations and could adversely affect our ability to service our debt or obtain additional financing.

      As of February 29, 2004, our total indebtedness was approximately $192.8 million. $180.0 million of this amount represented the principal amount of the notes, $11.1 million represented funds drawn down under our amended and restated senior secured credit facility, and $0.2 million was principally composed of capital leases. In addition, our total indebtedness included the redeemable warrants with a carrying value of $1.5 million that we have subsequently repurchased. Moreover, we have a total shareholders’ deficit of

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$37.8 million. Our level of indebtedness could from time to time restrict our operations and make it more difficult for us to fulfill our obligations under our senior notes. Among other things, our indebtedness may:

•  limit our ability to obtain additional financing for working capital, capital expenditures, strategic acquisitions and general corporate purposes;

•  require us to dedicate all or a substantial portion of our cash flow to service our debt, which will reduce funds available for other business purposes, such as capital expenditures or acquisitions;

•  limit our flexibility in planning for or reacting to changes in the markets in which we compete;

•  place us at a competitive disadvantage relative to our competitors with less indebtedness;

•  render us more vulnerable to general adverse economic and industry conditions; and

•  make it more difficult for us to satisfy our financial obligations, including those relating to the notes.

      Nonetheless, we and our subsidiaries may still be able to incur substantially more debt in the future. The terms of our amended and restated senior secured credit facility and the indenture governing the notes permit additional borrowings and such borrowings may be secured debt and effectively senior in right of payment to the notes and the related guarantees. Our incurrence of additional debt could further exacerbate the risks described in this prospectus. The subsidiaries that guarantee the notes are also guarantors under the amended and restated senior secured credit facility. See “Description of exchange notes” and “Description of other indebtedness.”

There is no public market for the notes, and we do not know if a market for the notes will ever develop or, if a market does develop, whether it will be sustained.

      The exchange notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market. Although the initial purchasers of the notes have informed us that they intend to make a market in the notes, they have no obligation to do so and may discontinue making a market at any time without notice. J.P. Morgan Securities Inc. is an affiliate of ours, and its ability to make a market in the notes following completion of the exchange offer will depend on our maintaining a current “market making” prospectus. Accordingly, we cannot assure you that a liquid market will develop for the notes, that you will be able to sell your notes at any particular time or that the prices that you receive when you sell the notes will be favorable.

      The liquidity of any market for the notes will depend on a number of factors, including:

•  the number of holders of notes;

•  our operating performance and financial condition;

•  our ability to complete the offer to exchange the outstanding notes for the exchange notes;

•  the market for similar securities;

•  the interest of securities dealers in making a market in the notes; and

•  prevailing interest rates.

      Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of these securities. We cannot assure you that the market for the notes will be free from similar disruptions. Any such disruptions could have an adverse effect on holders of the notes.

Our ability to service our debt and meet our cash requirements depends on many factors, some of which are beyond our control.

      Our ability to satisfy our obligations will depend on our future operating performance and financial results, which will be subject, in part, to factors beyond our control, such as interest rates and general

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economic, financial and business conditions. If we are unable to generate sufficient cash flow to service our debt, we may be required to:

•  refinance all or a portion of our debt, including the notes;

•  obtain additional financing;

•  sell certain of our assets or operations;

•  reduce or delay capital expenditures; or

•  revise or delay our strategic plans.

      If we are required and if we take any of these actions, it could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that we would be able to take any of these actions, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt instruments, including the indenture governing the notes, then in effect.

The covenants in our amended and restated senior secured credit facility and the indenture governing the notes impose restrictions that may from time to time limit our operating and financial flexibility.

      Our amended and restated senior secured credit facility and the indenture governing the notes contain a number of significant restrictions and covenants that limit our ability to:

•  incur liens and debt or provide guarantees in respect of obligations of any other person;

•  issue redeemable preferred stock and subsidiary preferred stock;

•  make redemptions and repurchases of capital stock;

•  make loans, investments and capital expenditures;

•  prepay, redeem or repurchase debt;

•  engage in mergers, consolidations and asset dispositions;

•  engage in sale/leaseback transactions and affiliate transactions;

•  change our business, amend certain debt and other material agreements, and issue and sell capital stock of subsidiaries; and

•  make distributions to shareholders.

      Adverse changes in our operating results or other adverse factors, including a significant increase in interest rates or in resin prices, a severe shortage of resin supply or a significant decrease in demand for our products, could result in our being unable to comply with the financial covenants in our amended and restated senior secured credit facility. If we violate these covenants and are unable to obtain waivers from our lenders, we would be in default under these agreements and our lenders could accelerate our obligations thereunder. If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. If our expectations of future operating results are not achieved, or our debt is in default for any reason, our business, financial condition and results of operations would be materially and adversely affected. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions. See “Description of exchange notes” and “Description of other indebtedness.”

The notes are effectively subordinate to all of our secured debt, and, if a default occurs, we may not have sufficient funds to fulfill our obligations under the notes.

      The notes are not secured by any of our assets. The indenture governing the notes permits us to incur certain secured indebtedness, including indebtedness under our amended and restated senior secured credit

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facility. If we become insolvent or are liquidated, or if payment under the credit facility or other secured indebtedness is accelerated, the lenders under the credit facility and the holders of any other secured indebtedness would be entitled to exercise the remedies available to them as secured creditors under applicable laws and pursuant to instruments governing such indebtedness. Accordingly, such secured indebtedness would have a prior claim on the collateral and would effectively be senior to the notes to the extent that the value of such collateral is sufficient to satisfy the indebtedness secured thereby. To the extent that the value of such collateral is not sufficient to satisfy the secured indebtedness, amounts remaining outstanding on such indebtedness would be entitled to share with holders of the notes and other claims on us with respect to any of our other assets. In either event, because the notes are not secured by any of our assets, it is possible that there will be insufficient assets remaining from which claims of the holders of the notes could be satisfied. In addition, the notes are our obligations and not of any of our subsidiaries, although the indenture requires that any of our restricted subsidiaries having assets with an aggregate fair market value in excess of $0.1 million execute a guarantee in respect of the notes. We cannot assure you that such guarantees, or any guarantee delivered by a restricted subsidiary formed in the future, would not be subject to avoidance by another creditor as a fraudulent transfer or for other reasons. Our unrestricted subsidiaries do not guarantee our obligations under the notes. Upon liquidation of any unrestricted subsidiary, such obligations would be effectively subordinated to claims of such subsidiary’s creditors upon its assets. It is likely that this will also be the case for other unrestricted subsidiaries that we may form in the future.

The notes are structurally subordinate to all indebtedness of our subsidiaries that are not guarantors of the notes.

      You will not have any claim as a creditor against our subsidiaries that are not guarantors of the notes. Indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will be effectively senior to your claims against those subsidiaries.

      For fiscal 2003, on a pro forma basis, our non-guarantor subsidiaries represented approximately 2.3% of our net sales, approximately 0.3% of our operating income, approximately 1.1% of our EBITDA, and approximately (3.8%) of our cash flows from operating activities. At February 29, 2004, our non-guarantor subsidiaries represented approximately 1.2% of our total assets and had approximately $1.0 million of outstanding total liabilities, including trade payables, but excluding intercompany obligations. In addition, the indenture governing the notes, subject to some limitations, permits these subsidiaries to incur additional indebtedness and does not contain any limitation on the amount of other liabilities, such as trade payables, that may be incurred by these subsidiaries.

We may incur additional indebtedness ranking equal to the notes.

      If we incur any additional indebtedness that ranks equally with the notes, including trade payables, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of us. This may have the effect of reducing the amount of proceeds paid to you.

We may be unable to purchase the notes upon a change of control as required under the Indenture.

      Upon a change of control, we would be required to offer to purchase all of the notes then outstanding for cash at 101% of the principal amount thereof plus accrued and unpaid interest. If a change of control were to occur, we cannot assure you that we would have sufficient funds to pay the repurchase price for all notes tendered by the holders thereof. In addition, a change of control would constitute a default under our senior secured credit facility and, since indebtedness under the credit facility effectively ranks senior in priority to indebtedness under the notes, we would be obligated to repay indebtedness under the credit facility in advance of indebtedness under our notes. Our repurchase of notes as a result of the occurrence of a change of control may be prohibited or limited by, or create an event of default under, the terms of other agreements relating to borrowings which we may enter into from time to time, including agreements relating to secured indebtedness. Failure by us to make or consummate a change of control offer would constitute an immediate event of default under the indenture governing the notes, thereby entitling the trustee or holders of at least 25% in principal

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amount of the then outstanding notes to declare all of the notes to be due and payable immediately; provided, however, that so long as any indebtedness permitted to be incurred pursuant to the senior secured credit facility is outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration of any such indebtedness under the credit facility or (ii) five business days after receipt by us of written notice of such acceleration. In the event all of the notes are declared due and payable, our ability to repay the notes would be subject to the limitations referred to above.

      The change of control provisions in the indenture may not protect you in the event we consummate a highly leveraged transaction, reorganization, restructuring, merger or other similar transaction, unless such transaction constitutes a change of control under the indenture. Such a transaction may not involve a change in voting power or beneficial ownership or, even if it does, may not involve a change in the magnitude required under the definition of change of control in the indenture to trigger our obligation to repurchase the notes. Except as described above, the indenture does not contain provisions that permit the holders of the notes to require us to repurchase or redeem the notes in an event of a takeover, recapitalization or similar transaction.

A subsidiary guarantee could be voided or subordinated because of federal bankruptcy law or comparable foreign and state law provisions.

      Our obligations under the notes are guaranteed by our existing and future subsidiaries that guarantee other indebtedness of Portola, including our amended and restated senior secured credit facility, until such guarantees of other indebtedness are released. Under the federal bankruptcy law and comparable provisions of foreign and state fraudulent transfer laws or laws that require reimbursement of a guarantor of amounts paid out under a guarantee, one or more of the subsidiary guarantees could be voided, or claims in respect of a subsidiary guarantee could be subordinated to all other debts of that guarantor if, among other things the guarantor, at the time it incurred the indebtedness evidenced by its guarantee received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee and

•  was insolvent or rendered insolvent by reason of such incurrence; or

•  was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

•  intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

      In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor or to a fund for the benefit of the creditors of the guarantor.

      The measure of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

•  the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;

•  the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

•  it could not pay its debts as they become due.

      We cannot be sure as to the standards that a court would use to determine whether or not the guarantors were solvent at the relevant time, or, regardless of the standard that the court uses, that the issuance of the guarantee of the notes would not be voided or the guarantee of the notes would not be subordinated to that guarantor’s other debt.

      If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for our benefit, and only indirectly for the benefit of the guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration.

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      A court could thus void the obligations under the guarantee or subordinate the guarantee to the applicable guarantor’s other debt or take other action detrimental to holders of the notes.

Risks Related to our Business

The integration of Portola and Tech Industries may not be successful and may adversely affect our results of operations.

      We could have difficulty completing the integration of Tech Industries’ operations into our own and could incur unanticipated disruption and expenses related to that integration. The continuing integration of Tech Industries will require a substantial amount of our management’s time to the detriment of their other duties. Our management is not experienced in the sales and marketing of CFT closures, and we depend on the sales and marketing capabilities of Tech Industries’ management. Although most of Tech Industries’ management are continuing in their current functions, we cannot assure you that they will continue to do so in the future.

      The integration of Portola and Tech Industries may take longer and be more disruptive to our business than anticipated. Integration may also result in unanticipated expenses, which could adversely affect our results of operations. We may not succeed in implementing new manufacturing processes at Tech Industries’ facilities at the rate anticipated, and as a result, we may not realize the expected operating efficiencies, growth opportunities and other benefits of the transaction or may realize them later than planned. Problems that may arise in connection with the integration of Tech Industries’ operations with our operations may have a material adverse impact on our business and results of operations.

      Tech Industries was a family-owned enterprise prior to its acquisition by us. We have not fully completed the process of integrating Tech Industries’ accounting records and systems into our own information and reporting systems. This process is time-consuming and has resulted in adjustments to Tech Industries’ historical financial statements. We filed a form 8-K/ A with the SEC on February 9, 2004 amending historical financial statements of Tech Industries to adjust the amount of revenue and cost of sales previously reported on a Form 8-K/A filed with the SEC on December 4, 2003.

We may be subject to pricing pressures and credit risks due to consolidation in our customers’ industries, and we do not have long-term contracts with most of our customers.

      The dairy, water and juice industries, which constitute our largest customer base from a revenue perspective, have experienced consolidations through mergers and acquisitions in recent years and this trend may continue. As a result, we could experience increased customer concentration, and our results of operations would be increasingly sensitive to changes in the business of customers that represent an increasingly large portion of our sales, or any deterioration of their financial condition. During fiscal 2003 and the six months ended February 29, 2004, our top ten customers accounted for approximately 35% and 36% of our sales, respectively. Consolidation has resulted in pricing pressures, as larger customers often have been able to make greater pricing and other demands over us. Consolidations in the dairy and water industries had a negative impact on our gross margins during fiscal 2003 and in fiscal 2004.

      In addition, one of our major accounts consists of the Canadian and U.S. subsidiaries of the large Italian dairy company, Parmalat, representing approximately $4.3 million in sales for fiscal 2003. The United States subsidiary of Parmalat declared Chapter 11 bankruptcy during 2004. We are monitoring the situation carefully and have instituted strict credit controls to manage our exposure in Canada. See “Management’s discussion and analysis of financial condition and results of operations — Results of operations.”

      We do not have firm long-term contracts covering a majority of our sales. Although customers that are not under firm contracts provide indications of their product needs and purchases on a periodic basis, they generally purchase our products on an order-by-order basis, and the relationship, as well as particular orders, can be terminated at any time. The loss of or significant decrease in business or a change in the procurement practices of any of our major customers may produce pricing pressures that could have a material adverse effect on our business, results of operations and financial condition.

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We are subject to strong competition in our markets.

      We face direct competition in each of our product lines from a number of companies, many of which have financial and other resources that are substantially greater than ours. We can expect to meet significant competition from existing competitors with entrenched positions, and new competitors with respect to our existing product lines as well as with respect to new products we might introduce. We have experienced a negative impact due to competitor pricing, and this impact has accelerated during the past and current fiscal years. Further, numerous well-capitalized competitors might expand their product offerings, either through internal product development or acquisitions of our direct competitors. Such competitors could introduce products or establish prices for their products in a manner that could adversely affect our ability to compete. Additionally, from time to time, we also face direct competition from bottling companies, carton manufacturers and other food and beverage providers that elect to produce their own closures rather than purchase them from outside sources.

We are subject to risks caused by changes in prices and supply of resin.

      Our products are molded from various plastic materials, primarily low density polyethylene (“LDPE”) resin. LDPE resin, which is a broadly traded commodity, accounts for a significant portion of our cost of sales for closures. Plastic resins, including LDPE, are subject to substantial price fluctuations resulting from shortages in supply or changes in the prices of natural gas, crude oil and other petrochemical products from which resins are produced, as well as other factors. Instability in the world markets for petroleum and natural gas could materially adversely affect the price and timely availability of raw materials. We have contracts with our three principal resin suppliers that provide for the adjustment of prices payable by us depending on periodic increases or decreases in published indices of national resin bulk pricing. Accordingly, the price effects of resin on us lag the market. In the past, in the event of a significant increase in resin prices, we have not always been able to pass such increases on to customers promptly, in whole or in part, and we cannot assure you that we will be able to do so in every or most cases in the future. Such inability to pass on such increases, or delays in passing them on, have had and would have a material adverse effect on our sales and margins on a current or delayed basis. Most of our sales are either made to customers on a purchase order basis, which provide us with no assurance that we can pass on price increases to these customers, or pursuant to contracts which generally allow only quarterly price adjustments, which could delay our ability to pass on price increases to these customers, if at all. Moreover, even if the full amount of such price increases were to be passed on to customers, the increases would have the effect of reducing our gross margins. On the other hand, if resin prices decrease, customers typically would expect rapid pass-through of the decrease, and we cannot assure you that we would be able to maintain our gross margins. Changes in resin prices had a negative impact on our business during fiscal 2004 and 2003.

      We may not be able to arrange for sources of resin from our regular vendors, or alternative sources, in the event of an industry-wide general shortage of resins used by us, or a shortage or discontinuation of certain types of grades of resin purchased from one or more of our suppliers.

The integration of future acquisitions may result in substantial costs, delays and other problems.

      We may not be able to successfully integrate future acquisitions, if any, without substantial costs, delays or other problems. Future acquisitions would require us to expend substantial managerial, operating, financial and other resources to integrate any new businesses. The costs of such integrations could have a material adverse effect on our operating results and financial condition. Such costs would likely include non-recurring acquisition costs, investment banking fees, recognition of transaction-related obligations, plant closings and similar costs and various other acquisition-related costs. In addition, each transaction inherently carries an unavoidable level of risk regarding the actual condition of the acquired business, regardless of the investigation we may conduct beforehand. Until we assume operating control of such businesses, we may not be able to

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ascertain the actual value or understand the potential liabilities of the acquired entities. If and when we acquire a business, we would likely be subject to risks including:

•  the possibility that it would be difficult to integrate the operations into our existing operations;

•  the possibility that we had acquired substantial undisclosed liabilities;

•  the risks of entering markets, producing products or offering services for which we had no prior experience;

•  the potential loss of customers of the acquired business; and

•  the possibility we might be unable to recruit managers with the necessary skills to supplement or replace the incumbent management of the acquired business.

      We may not be successful in overcoming these risks.

We depend on new business development, international expansion and acquisitions.

      We believe that growth has slowed in the domestic markets for our traditional beverage products and that, in order to increase our sales, we must continue to develop new products in the markets we currently serve and new products in different markets, to make acquisitions and to expand in our international markets. Developing new products, expanding into new markets and identifying and completing acquisitions will require a substantial investment and involve additional risks. We cannot assure you that our efforts to achieve such development and expansion or to identify and complete potential acquisitions will be successful. Expansion poses risks and potential adverse effects on our operating results, such as the diversion of management’s attention, the loss of key personnel and the risks of unanticipated problems and liabilities. We may be unsuccessful in making acquisitions because of competition for acquisition candidates, which could result in fewer opportunities and higher acquisition prices, and because in many instances candidates may have difficulty in continuing to operate in the U.S. Moreover, as described above, our debt instruments impose significant restrictions under certain circumstances on our ability to make investments in or acquire other companies.

Difficulties presented by non-U.S. economic, political, legal, accounting and business factors could negatively affect our interests and business efforts.

      Approximately 43% of our sales for fiscal 2003 were derived from shipments to destinations outside of the United States or from our operations outside the United States. We intend to expand such exports and our international operations and customer base. Increasingly, we are determining that most new and some existing manufacturing operations must be conducted outside the U.S. Our sales outside of the United States generally involve longer payment cycles from customers than our United States sales. Our operations outside the United States require us to comply with the legal requirements of foreign jurisdictions and expose us to the political consequences of operating in foreign jurisdictions. Our operations outside the United States are also subject to the following potential risks:

•  difficulty in managing and operating such operations because of distance, and, in some cases, language and cultural differences;

•  fluctuations in the value of the U.S. dollar that could increase or decrease the effective price of our products sold in U.S. dollars and might have a material adverse effect on sales or costs, require us to raise or lower our prices or affect our reported sales or margins in respect of sales conducted in foreign currencies;

•  difficulty entering new international markets due to greater regulatory barriers than those of the United States and differing political systems;

•  increased costs due to domestic and foreign customs and tariffs, adverse tax legislation, imposition or increases of withholding and other taxes on remittances and other payments by subsidiaries;

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•  credit risk or financial condition of local customers and distributors;

•  potential difficulties in staffing and labor disputes;

•  risk of nationalization of private enterprises;

•  government embargoes or foreign trade restrictions such as anti-dumping duties;

•  increased costs of transportation or shipping;

•  ability to obtain supplies from foreign vendors and ship products internationally during times of crisis or otherwise;

•  difficulties in protecting intellectual property;

•  increased worldwide hostilities;

•  potential imposition of restrictions on investments; and

•  local political, economic and social conditions such as hyper-inflationary conditions and political instability.

      As we continue to expand our international operations, these and other risks might increase. As we enter new geographic markets, we may encounter competition from the primary participants in those markets that may have significantly greater market knowledge and that may have substantially greater resources than we do. In addition, we conduct some of our international operations through joint venture arrangements in which our operational and financial control of the business are limited.

Adverse weather conditions could adversely impact our financial results.

      Weather conditions around the world can have a significant impact on our sales. Unusually cool temperatures during a hot weather season in one or more of our markets have and could again adversely affect sales of our products in those markets.

We are subject to risks that our intellectual property may not be adequately protected, and we may be adversely affected by the intellectual property rights of others.

      We rely on a combination of patents and trademarks, licensing agreements and unpatented proprietary know-how and trade secrets to establish and protect our intellectual property rights. We enter into confidentiality agreements with customers, vendors, employees, consultants and potential acquisition candidates as necessary to protect our know-how, trade secrets and other proprietary information. However, these measures and our patents and trademarks may not afford complete protection of our intellectual property, and it is possible that third parties may copy or otherwise obtain and use our proprietary information and technology without authorization or otherwise infringe on our intellectual property rights. We cannot assure you that our competitors will not independently develop equivalent or superior know-how, trade secrets or production methods.

      We are involved in litigation from time to time in the course of our business to protect and enforce our intellectual property rights, and third parties from time to time initiate litigation against us asserting that our business infringes or violates their intellectual property rights. We cannot assure you that our intellectual property rights have the value that we believe them to have or that our products will not be found to infringe upon the intellectual property rights of others. Further, we cannot assure you that we will prevail in any such litigation, or that the results or costs of any such litigation will not have a material adverse effect on our business. Any litigation concerning intellectual property could be protracted and costly and is inherently unpredictable and could have a material adverse effect on our business and results of operations regardless of its outcome.

      We are currently a defendant in a suit filed by Blackhawk Molding Co., Inc. on August 28, 2003 in the U.S. District Court for the Northern District of Illinois, Eastern Division. Blackhawk Molding alleges that a “single-stick” label attached to our five-gallon caps infringes a patent held by it. We have answered the

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complaint denying all allegations and asserting that the Blackhawk patent is invalid and that we have not infringed Blackhawk Molding’s patents. Discovery is in an early stage. The Court held a hearing on claim construction at the end of May 2004, but has not rendered a decision. While we believe that we have substantial defenses in this matter, the ultimate outcome of any litigation is uncertain, and an unfavorable result could result in our sustaining material damages.

      A number of our patents relating to one of our closure product lines have expired in recent years. We believe that such expirations have, to varying effect, adversely affected our margins, as competitors who have become free to imitate our designs have begun to compete aggressively against us in the pricing of certain products. These adverse effects will only be partially ameliorated to the extent that we continue to obtain new patents.

      The laws of certain countries in which our products or technology are or may be licensed may not protect our intellectual property rights to the same extent as the laws of the United States. The protection offered by the patent laws of foreign countries may be less protective than the United States patent laws.

Defects in our products could result in litigation and harm our reputation. Many of our products are used to cap beverage and food products.

      From time to time in the past, we and other producers of similar products have received complaints from customers and end consumers claiming that such products might cause or almost caused injury to the end consumer. In some instances, such claims have alleged defects in manufacture or faulty design of our closures. In the event an end consumer suffers a harmful accident, we could incur substantial costs in responding to complaints or litigation. Further, if any of our products were found to be defective, we could incur damages and significant costs in correcting any defects, lose sales and suffer damage to our reputation.

Our customers’ products could be contaminated through tampering, which could harm our reputation and business.

      Terrorist activities or vandalism could result in contamination or adulteration of our customers’ products, as our products are tamper resistant but not tamper proof. We cannot assure you that a disgruntled employee or third party could not introduce an infectious substance into packages of our finished products, either at our manufacturing plants or during shipment of our products. Were our products or our customers’ products to be tampered with in a manner not readily capable of detection, we could experience a material adverse effect to our reputation, business, operations and financial condition.

Changes to government regulations affecting our products could harm our business.

      Our products are subject to governmental regulation, including regulation by the Federal Food and Drug Administration and other agencies in the United States and elsewhere. A change in government regulation could adversely affect our business. We cannot assure you that federal, state or foreign authorities will not issue regulations in the future that could materially increase our costs of manufacturing certain of our products. Our failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures as well as to potential criminal sanctions, which could have a material adverse effect on us.

Our business may be adversely affected by compliance obligations or liabilities under environmental, health and safety laws and regulations.

      We are subject to federal, state, local and foreign environmental and health and safety laws and regulations that could result in liability, affect ongoing operations and increase capital costs and operating expenses in order to maintain compliance with such requirements. Some of these laws and regulations provide for strict and joint and several liability regarding contaminated sites. Such sites may include properties currently or formerly owned or operated by us and properties to which we disposed of, or arranged to dispose of, wastes or hazardous substances. Based on the information presently known to us, we do not expect environmental costs or contingencies to have a material adverse effect on us. We may, however, be affected by

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hazards or other conditions presently unknown to us. In addition, we may become subject to new requirements pursuant to evolving environmental, and health and safety, laws and regulations. Accordingly, we cannot assure you that we will not incur material environmental costs or liabilities in the future.

We depend upon key personnel.

      We believe that our future success depends upon the knowledge, ability and experience of our personnel. The loss of key personnel responsible for managing Portola or for advancing our product development could adversely affect our business and financial condition.

We are controlled by Jack L. Watts, the Chairman of our Board of Directors and Chief Executive Officer, and JPMorgan Partners 23A, an affiliate of J.P. Morgan Securities Inc. Their interests as equity holders may conflict with your interests as a creditor.

      Jack L. Watts (the Chairman of our Board of Directors and our Chief Executive Officer) and JPMorgan Partners 23A (an affiliate of J.P. Morgan Securities Inc., one of the initial purchasers of the outstanding notes) own a majority of our common stock. Robert Egan, a member of our Board of Directors, is a Senior Advisor to J.P. Morgan Partners, LLC and a Partner of J.P. Morgan Entertainment Partners, LLC, each of which is an affiliate of JPMorgan Partners 23A. The interests of Mr. Watts, Mr. Egan and JPMorgan Partners 23A may not in all cases be aligned with your interests as a holder of the notes. There is only one independent director (as defined under the federal securities laws) on our Board of Directors and, as a result, our Board of Directors, Audit Committee and Compensation Committee have not met, and do not meet, the standard “independence” requirements that would be applicable if our equity securities were traded on NASDAQ or the New York Stock Exchange, when they have considered numerous issues of importance to us. We have engaged in a number of related party transactions. For example, from 1999 through 2002, we engaged in several transactions with Sand Hill Systems, Inc., an entity in which Mr. Watts and other of our officers and directors had a financial interest. See “Related party transactions” and Note 15 of the Notes to consolidated financial statements.

USE OF PROCEEDS

      We will not receive any proceeds in connection with the exchange offer. In consideration for issuing the exchange notes in exchange for the outstanding notes as described in this prospectus, we will receive, retire and cancel the outstanding notes tendered in the exchange offer.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

      The following unaudited pro forma consolidated financial statements have been prepared to give effect to (i) our acquisition on September 19, 2003 of all of the outstanding stock of Tech Industries, Inc., and Tech Industries, Inc.’s concurrent acquisition of Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates, affiliated entities (Tech Industries, Inc. and such affiliated entities are referred to collectively as “Tech Industries”) and (ii) the Financing Transactions. These pro forma financial statements are presented for information purposes only and do not purport to be indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had Portola and Tech Industries been a consolidated company during the specified periods.

      We accounted for the acquisition of Tech Industries using the purchase method of accounting pursuant to which the purchase price at closing was allocated to the tangible and intangible assets based on their estimated fair values. The purchase allocations were made based upon valuations and other studies that have not yet been finalized. The final allocation of purchase price may differ significantly from the pro forma amounts included herein.

      The unaudited pro forma consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with our historical consolidated financial statements and the historical combined financial statements of Tech Industries and the notes thereto included elsewhere in this prospectus and the information set forth in “Management’s discussion and analysis of results of operations and financial conditions.”

      The unaudited pro forma consolidated balance sheet was prepared as if the Financing Transactions had occurred on February 29, 2004. The unaudited pro forma consolidated statements of operations for the year ended August 31, 2003 and the six-month periods ended February 29, 2004 and February 28, 2003 were prepared as if the acquisition and the Financing Transactions had occurred on September 1, 2002. To prepare the unaudited pro forma consolidated statement of operations for the year ended August 31, 2003, our statement of operations for the year ended August 31, 2003 has been combined with Tech Industries’ unaudited statement of operations for the 52-week period ended August 24, 2003. To prepare the unaudited pro forma consolidated statement of operations for the six months ended February 28, 2003, our statement of operations for the six months ended February 28, 2003 has been combined with Tech Industries’ unaudited statement of operations for the twenty-six-week period ended February 24, 2003. Tech Industries’ fiscal year and fiscal quarters end on the last Sunday of each calendar quarter. The 52-week period ended August 24, 2003 and the twenty-six-week period ended February 24, 2003 are not usual period ends for Tech Industries.

27

UNAUDITED PRO FORMA CONSOLIDATED

STATEMENT OF OPERATIONS

For the Fiscal Year Ended August 31, 2003

		Portola			Tech Industries						Portola
		Twelve Months			52 Weeks			Tech Industries			Pro Forma
		Ended			Ended			Acquisition			Before			Financing
		August 31,			August 24,			Pro Forma			Financing			Pro Forma			Portola
Dollars in thousands		2003			2003			Adjustments			Adjustments			Adjustments			Pro Forma
Sales		$	215,315		$	33,934		$	—		$	249,249		$	—		$	249,249
Cost of sales			166,689			25,698			981	(1)		193,368			—			193,368
	Gross profit		48,626			8,236			(981	)		55,881			—			55,881
Selling, general and administrative			29,307			4,047			(75	)(2)		33,279			—			33,279
Research and development			4,729			167			—			4,896			—			4,896
Amortization of intangibles			903			—			285	(3)		1,188			—			1,188
Impairment charge			207			—			—			207			—			207
Restructuring costs			405			—			—			405			—			405
			35,551			4,214			210			39,975			—			39,975
Income from operations			13,075			4,022			(1,191	)		15,906			—			15,906
Other (income) expense:
	Interest income		(120	)		(85	)		—			(205	)		120	(7)		(85	)
	Interest expense		12,544			—			1,842	(4)		14,386			597	(8)		14,983
	Amortization of debt financing cost		777			—			167	(5)		944			1,072	(9)		2,016
	Minority interest expense		73			—			—			73			—			73
	Equity income of affiliates		(415	)		—			—			(415	)		—			(415	)
	(Gain) loss from sale of property, plant and equipment and securities		30			(1,000	)		1,000	(2)		30			—			30
	Other (income) expense, net		(154	)		(226	)		—			(380	)		—			(380	)
			12,735			(1,311	)		3,009			14,433			1,789			16,222
Income (loss) before income taxes			340			5,333			(4,200	)		1,473			(1789	)		(316	)
Income tax expense			2,071			1			—	(6)		2,072			—			2,072
Net income (loss)		$	(1,731	)	$	5,332		$	(4,200	)	$	(599	)	$	(1,789	)	$	(2,388	)

The accompanying notes are an integral part of these

unaudited pro forma consolidated financial statements.

28

UNAUDITED PRO FORMA CONSOLIDATED

STATEMENT OF OPERATIONS

For the Six Months Ended February 28, 2003

								Tech			Portola
								Industries			Pro Forma
								Acquisition			Before			Financing			Portola
					Tech			Pro Forma			Financing			Pro Forma			Pro
Dollars in thousands		Portola			Industries			Adjustments			Adjustments			Adjustments			Forma
Sales		$	103,062		$	17,169		$	—		$	120,231		$	—		$	120,231
Cost of sales			81,846			13,167			490	(1)		95,503			—			95,503
	Gross profit		21,216			4,002			(490	)		24,728			—			24,728
Selling, general and administrative			15,156			1,819			(68	)(2)		16,907			—			16,907
Research and development			2,415			167			—			2,582			—			2,582
Amortization of intangibles			432			—			142	(3)		574			—			574
Restructuring costs			405			—			—			405			—			405
			18,408			1,986			74			20,468			—			20,468
	(Loss) income from operations		2,808			2,016			(564	)		4,260			—			4,260
Other (income) expense:
	Interest income		(31	)		(46	)		—			(77	)		60	(7)		(17	)
	Interest expense		6,268			—			776	(4)		7,044			298	(8)		7,342
	Warrant interest income		(68	)		—			—			(68	)		—			(68	)
	Amortization of debt financing costs		373			—			84	(5)		457			536	(9)		993
	Loss (gain) from sale of property, plant and equipment		29			(649	)		632	(2)		12			—			12
	Loss on warrant redemptions		—			—			—			—			—			—
	Foreign currency transaction (gain) loss		252			—			—			252			—			252
	Other (income) expense, net		(34	)		15			—			(19	)		—			(19	)
			6,789			(680	)		1,492			7,601			894			8,495
	Income (loss) before income taxes		(3,981	)		2,696			(2,056	)		(3,341	)		(894	)		(4,235	)
Income tax (benefit) expense			(1,573	)		—			—	(6)		(1,573	)		—			(1,573	)
Net income (loss)		$	(2,408	)	$	2,696		$	(2,056	)	$	(1,768	)	$	(894	)	$	(2,662	)

The accompanying notes are an integral part of these

unaudited pro forma consolidated financial statements.

29

UNAUDITED PRO FORMA CONSOLIDATED

STATEMENT OF OPERATIONS

For the Six Months Ended February 29, 2004

					Tech
					Industries			Tech			Portola
					September 1,			Industries			Pro Forma
					2003 to			Acquisition			Before			Financing			Portola
					September 18,			Pro Forma			Financing			Pro Forma			Pro
Dollars in thousands		Portola			2003			Adjustments			Adjustments			Adjustments			Forma
Sales		$	114,047		$	2,103		$	—		$	116,150		$	—		$	116,150
									(46	)(1)
Cost of sales			95,415			3,484			(1,833	)(10)		97,020			—			97,020
	Gross profit		18,632			(1,381	)		1,879			19,130			—			19,130
Selling, general and administrative			15,664			4,019			(3,597	)(10)		16,086			—			16,086
Research and development			2,926			—			—			2,926			—			2,926
Amortization of intangibles			622			—			12	(3)		634			—			634
Restructuring costs			1,866			—			—			1,866			—			1,866
			21,078			4,019			(3,585	)		21,512			—			21,512
	(Loss) income from operations		(2,446	)		(5,400	)		5,464			(2,382	)		—			(2,382	)
Other (income) expense:
	Interest income		(24	)		(1	)		—			(25	)		60	(7)		35
	Interest expense		7,410			—			65	(4)		7,475			(737	)(8)		6,738
	Warrant interest income		(57	)		—			—			(57	)		—			(57	)
	Amortization of debt financing costs		1,560			—			7	(5)		1,567			(278	)(9)		1,289
	Equity income of affiliates		—			(27	)		—			(27	)		—			(27	)
	Loss (gain) from sale of property, plant and equipment		5			—			—			5			—			5
	Loss on warrant redemptions		1,867			—			—			1,867			—			1,867
	Foreign currency transaction (gain) loss		(2,255	)		—			—			(2,255	)		—			(2,255	)
	Other (income) expense, net		36			2			—			38			—			38
			8,542			(26	)		72			8,588			(955	)		7,633
	Income (loss) before income taxes		(10,988	)		(5,374	)		5,392			(10,970	)		955			(10,015	)
Income tax (benefit) expense			742			—			—	(6)		742			—			742
Net income (loss)		$	(11,730	)	$	(5,374	)	$	5,392		$	(11,712	)	$	955		$	(10,757	)

The accompanying notes are an integral part of these

unaudited pro forma consolidated financial statements.

30

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED

STATEMENTS OF OPERATIONS

(Dollars in thousands)

      The unaudited pro forma consolidated statements of operations give effect to the following unaudited pro forma adjustments:

(1) Adjustment to reflect depreciation expense on increase of book value of property, plant and equipment to fair market value as follows:

	Depreciation								9/1/03
	Period in								Through
	Years		Amount		Annual		Semi-Annual		9/18/03
Buildings		39	$	340	$	8	$	4	$	—
Machinery and equipment		7		6,785		970		485		46
Furniture and fixtures		5		15		3		1		—
			$	7,140	$	981	$	490	$	46

(2)

Adjustment to eliminate $75 and $68 in selling, general, and administrative expenses and $1,000 and $632 in gain on sale of assets of Tech Industries Ireland Ltd. (“Tech Ireland”) for the year ended August 31, 2003 and the six-month period ended February 28, 2003, respectively. Tech Ireland was distributed to the shareholders of Tech Industries prior to, and in contemplation of, the acquisition of Tech Industries.

(3)

Adjustment to reflect amortization of identifiable intangible assets as follows:

	Amortization								9/1/03
	Period in								Through
	Years		Amount		Annual		Semi-Annual		9/18/03
Customer relationships		20	$	2,600	$	130	$	65	$	5
Website		5		400		80		40		4
Covenant not to compete		5		374		75		37		3
Trademark and tradename		Indefinite		5,000		—		—		—
			$	8,374	$	285	$	142	$	12

(4)	Adjustment to record interest expense on the additional borrowings due to the acquisition of Tech Industries.
(5)	Adjustment to record amortization of debt financing costs for the amended and restated senior credit facility to finance the Tech Industries acquisition of $167, $84 and $7 for the year ended August 31, 2003, the six-month period ended February 28, 2003 and the period from September 1 to September 18, 2003, respectively.
(6)	Tech Industries terminated its “S” Corporation status at the time of the acquisition. No corporate income tax provision has been recorded since Tech Industries’ income would have been offset by the reversal of a portion of Portola’s valuation allowance provided against its net deferred tax assets.
(7)	Adjustment to record the reversal of interest income relating to revaluation of the redeemable warrants recognized during the respective periods.

31

(8) Adjustment to reflect the increase in interest expense associated with the refinancing, as follows:

	Annual			Semi-Annual
Interest on $180,000 senior notes at 8.25%	$	14,850		$	7,425
Interest on $110,000 existing 10.75% senior notes		(11,825	)		(5,913	)
Adjustment for paydown of our senior secured credit facilities		(2,428	)		(1,214	)
	$	597		$	298

In addition, an adjustment of $(985) has been made for one month of duplicative interest paid resulting from the timing of the redemption of the $110,000 in aggregate principal amount of 10.75% senior notes.

A  1/8 percentage basis point change in interest rates for the senior credit facilities would result in less than a $100 change in annual interest expense subsequent to the Financing Transactions. A  1/8 percentage point change in the assumed rate on the outstanding notes would result in a $500 change in annual interest expense subsequent to the Financing Transactions.

(9) Adjustment to record amortization of debt financing costs for the amended and restated senior secured credit facility and the outstanding notes as follows:

	Amortization
	Period in
	Years		Amount		Annual		Semi-Annual
New amended and restated senior secured
credit facility		5	$	520	$	104	$	52
New amended and restated senior admin fee		1		50		50		25
8.25% senior notes due 2012		8		7,344		918		459
			$	7,914	$	1,072	$	536

In addition, the remaining amortization of debt financing costs relating to the $110,000 in aggregate principal amount of 10.75% senior notes in the amount of $725 was deducted as an adjustment.

(10) Adjustment to reflect a discretionary bonus paid to employees of Tech Industries immediately prior to, and in contemplation of, the acquisition of Tech Industries by Portola. This adjustment totaling $5,430 does not include the normalized bonus of $191 based on Tech Industries’ historical and prospective bonus plan.

32

SELECTED CONSOLIDATED FINANCIAL DATA

      The following table sets forth Portola’s selected consolidated historical financial data for each of the five years in the period ended August 31, 2003, which have been derived from the consolidated financial statements of Portola, which have been audited by PricewaterhouseCoopers LLP, independent registered public accounting firm. The consolidated financial statements of Portola for the three years in the period ended August 31, 2003 appear elsewhere in this prospectus. The following table also sets forth Portola’s selected consolidated historical financial data for the six months ended February 29, 2004 and February 28, 2003, which have been derived from unaudited consolidated financial statements that appear elsewhere in this prospectus and in the opinion of management include all adjustments consisting only of normal recurring adjustments considered necessary for a fair presentation. Results for the six months ended February 29, 2004 and February 28, 2003 are not necessarily indicative of results to be expected for the full year or any future period. The following data should be read in conjunction with our consolidated financial statements and related notes, “Management’s discussion and analysis of financial condition and results of operations,” “Unaudited pro forma consolidated financial data,” and the other financial information included elsewhere in this prospectus.

33

																	Six Months Ended
		Year Ended August 31,
																	February 28,			February 29,
		1999			2000			2001			2002			2003			2003			2004
		(Dollars in thousands)
Consolidated statements of operations data:
	Sales(1)	$	195,900		$	208,919		$	219,418		$	210,757		$	215,315		$	103,062		$	114,047
	Cost of sales(1)		149,031			162,294			169,544			157,133			166,689			81,846			95,415
	Gross profit		46,869			46,625			49,874			53,624			48,626			21,216			18,632
	Selling, general and administrative		27,941			30,379			28,774			30,844			29,307			15,156			15,664
	Research and development		2,717			2,922			3,096			3,069			4,729			2,415			2,926
	Amortization of intangibles(2)		2,583			3,457			4,176			1,551			903			432			622
	Impairment charge(3)		—			—			—			—			207			—			—
	Restructuring costs(4)		—			493			1,939			—			405			405			1,866
			33,241			37,251			37,985			35,464			35,551			18,408			21,078
	Income (loss) from operations		13,628			9,374			11,889			18,160			13,075			2,808			(2,446	)
	Interest income(5)		(181	)		(75	)		(75	)		(1,083	)		(120	)		(99	)		(81	)
	Interest expense		14,443			14,486			14,453			13,251			12,544			6,268			7,410
	Amortization of debt financing costs		546			428			718			756			777			373			1,560
	Minority interest expense(6)		(97	)		(118	)		278			113			73			38			27
	Equity (income) loss of unconsolidated affiliates, net(7)		120			469			37			(340	)		(415	)		(52	)		(6	)
	Loss (gain) on sale of property plant and equipment(8)		82			106			(6,784	)		(20	)		30			29			5
	Income on dissolution of joint venture(9)		—			—			—			(475	)		—			—			—
	Income on recovery of investment(10)		—			—			—			(1,103	)		—			—			—
	Loss on warrant redemption(11)		—			—			—			—			—			—			1,867
	Foreign currency transaction (gain) loss		(165	)		31			50			285			(348	)		252			(2,255	)
	Other (income) expense, net		(152	)		(45	)		108			(39	)		194			(20	)		15
			14,596			15,282			8,785			11,345			12,735			6,789			8,542
	Income (loss) before income taxes		(968	)		(5,908	)		3,104			6,815			340			(3,981	)		(10,988	)
	Income tax provision (benefit)		(352	)		(2,165	)		2,074			2,242			2,071			(1,573	)		742
	Net (loss) income	$	(616	)	$	(3,743	)	$	1,030		$	4,573		$	(1,731	)	$	(2,408	)	$	(11,730	)
Consolidated balance sheet data:
	Working capital	$	17,005		$	18,213		$	18,665		$	18,147		$	10,449		$	15,931		$	33,269
	Total assets		157,444			154,335			149,635			136,589			132,773			132,555			186,544
	Total debt		137,095			134,848			131,872			120,552			116,933			119,041			191,309
	Redeemable warrants(11)(12)		—			—			10,510			10,359			10,302			10,291			1,453
	Total shareholders’ equity (deficit)		(26,017	)		(30,956	)		(27,283	)		(24,913	)		(26,199	)		(27,065	)		(37,808	)
Cash flow data:
	Net cash provided by operating activities	$	11,612		$	17,578		$	15,020		$	24,405		$	14,291		$	6,420		$	254
	Net cash used in investing activities		(21,435	)		(11,717	)		(4,102	)		(11,041	)		(10,579	)		(4,726	)		(45,319	)
	Net cash (used in) provided by financing activities		8,725			(4,304	)		(11,569	)		(12,135	)		(3,870	)		(1,599	)		55,278
Other data:
	Closure unit volume (in millions) (unaudited)		12,236			11,939			12,871			12,693			12,337			6,107			5,939
	Closure unit volume growth (unaudited)		6.9	%		(2.4	)%		7.8	%		(1.4	)%		(2.8	)%		(0.3	)%		(2.8	)%
	EBITDA(13)	$	31,535		$	29,862		$	40,223		$	40,112		$	31,627		$	11,404		$	6,806
	Depreciation and amortization		17,514			20,856			21,948			19,290			17,966			8,744			8,824
	Capital expenditures		16,604			10,943			14,088			10,488			11,081			4,999			8,121
Fixed charge coverage ratio(14)			0.9	x		0.6	x		1.2	x		1.5	x		1.0	x		0.4	x		(0.1	)x

See next page for notes to selected consolidated financial data.

34

NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA

(1)	During the fourth quarter of fiscal 2001, we adopted the Financial Accounting Standards Board’s Emerging Issues Task Force (“EITF”) Issue 00-10, “Accounting for Shipping and Handling Fees and Costs,” which requires all shipping and handling fees billed to customers to be classified as revenue. Prior to August 31, 2001, we included both shipping revenues and shipping and handling charges in cost of sales. We adopted EITF Issue 00-10 in the fourth quarter of fiscal 2001 and reclassified the previously reported results for fiscal years ended 2000 and 1999 to conform with the new standard, which had no effect on net income (loss). The effect of this accounting policy change was to increase revenue and cost of sales during fiscal 2001, 2000 and 1999 by $5.1 million, $5.9 million and $5.2 million, respectively.
(2)	Includes amortization of patents and technology, licenses, tradename, covenants not-to-compete and customer relationships for all years presented and also includes goodwill amortization for fiscal 2001, 2000 and 1999. Effective September 1, 2001, we adopted the Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” for existing goodwill and other identifiable assets, which resulted in the discontinuance of goodwill amortization.
(3)	At August 31, 2003, we used the discounted cash flows methodology to value our goodwill by operating unit as of August 31, 2003. Based on this review, we recorded a $0.2 million impairment related to Shanghai Portola Packaging Company Limited in fiscal 2003.
(4)	During the first six months of fiscal 2004, we incurred $1.9 million in restructuring charges primarily related to employee severance costs due to the closure of our manufacturing facilities in Sumter, South Carolina and Chino California and one of our two facilities in San Jose, California. The manufacturing facilities located in Chino, California and San Jose, California were relocated to a new facility located in Tolleson, Arizona, a suburb of Phoenix, during the second quarter of fiscal 2004. We have relocated the operations of our South Carolina facility primarily to our existing facility in Kingsport, Tennessee. In June 2003, we entered into a fifteen-year lease commencing December 1, 2003 for the Tolleson, Arizona facility. We have entered into a contract to sell the manufacturing building in San Jose, California, and we sold the facility in Chino, California in April 2004. In addition to the restructuring charges discussed above, we have incurred approximately $1.1 million in relocation expenses during the first six months of fiscal 2004 related to the closing of the three plants in the first and second quarters of fiscal 2004, which is included in cost of sales in the statement of operations. As of February 29, 2004, approximately $0.7 million had been charged against the restructuring reserve for the employee severance costs. In addition, we expect to incur approximately $1.0 million in restructuring charges during the third quarter of fiscal 2004 primarily related to employee severance costs.
	During the second quarter of fiscal 2003, we announced a restructuring plan to reduce our work force. During fiscal 2003, we incurred restructuring charges of $0.4 million for employee severance costs. The restructuring affected nine employees in general and administration, two employees in customer service, one employee in research and development and two employees in sales, totaling fourteen severed employees.
	During the first quarter of fiscal 2001, we announced a restructuring plan involving the relocation of our New Castle, Pennsylvania closure operation to Sumter, South Carolina and Kingsport, Tennessee, and the relocation of the Cap Snap Equipment Manufacturing group from San Jose, California to New Castle, Pennsylvania. These relocations affected approximately 88 employees. We recorded restructuring charges during fiscal year 2001 totaling approximately $1.9 million, which consisted of approximately $0.9 million for employee severance costs and approximately $1.0 million for the non-cash write-down of certain assets.
(5)	Interest income includes income on the revaluation of the redeemable warrants and in fiscal 2002 interest income also included $0.8 million recognized on the recovery of an investment in Sand Hill Systems, Inc., an entity of which our chief executive officer, Jack L. Watts, was the chief executive officer through January 2000, and in which Mr. Watts and certain other officers held a financial interest. See Note 15 (Related party transactions) of the Notes to consolidated financial statements.

35

(6)	Represents minority interest expense for our consolidated subsidiaries which are not wholly owned.
(7)	Represents equity (income) loss relating to our 50% interest in Capsnap Europe Packaging GmbH.
(8)	Loss (gain) on sale of property, plant and equipment includes a $6.8 million gain on the sale of real estate in San Jose, California in fiscal 2001.
(9)	Represents income relating to the forgiveness of debt in the dissolution of one of our joint ventures.

(10)	Represents income on recovery on our investment in Sand Hill Systems, Inc. as described in Note 15 of the Notes to consolidated financial statements.
(11)	We had two outstanding warrants, which were each redeemable at the option of the holder upon 60 days’ prior written notice to us. These warrants were redeemable through June 30, 2004 and June 30, 2008, respectively. The redemption price of the warrants was calculated based on the higher of the current market price per share of our common stock or an amount computed under formulas in the warrant agreements. Following the offering of $180.0 million of senior notes, on January 23, 2004, we offered to repurchase both of the warrants. During February 2004, one warrant holder agreed to our repurchase of a warrant convertible into 2,052,526 shares of our Class A common stock at a net purchase price of $5.19 1/3 per share. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of 60 2/3 cents for each share of Class A common stock. The aggregate warrant repurchase price was $10.7 million. We recognized a loss of $1.7 million on the transaction during the second quarter of 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to $5.80 per share as agreed with the warrant holder. During March 2004, the second warrant holder agreed to our repurchase of the warrant that was convertible into 440,215 shares of our Class A common stock at a net purchase price of $3.30 per share. This new price was based upon the same agreed current market price per share of common stock of $5.80, minus the warrant exercise price of $2.50 for each share of Class A common stock. The aggregate warrant repurchase price was $1.5 million and the funds were paid on May 4, 2004. We recognized a loss of $0.2 million on the transaction during the second quarter of fiscal 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to the agreed-upon price of $5.80 per share. Prior to the redemption of the warrants, the carrying value of the warrants totaled $10.2 million, which represented the estimated fair value of the instruments as determined by our management using the Black-Scholes pricing model. In accordance with EITF Issue 00-19, the change in the fair market price of the warrants of zero and $(87,000) was recognized as interest (income) expense during the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $(57,000) and $(68,000) of interest (income) expense during the six-month periods ended February 29, 2004 and February 28, 2003, respectively.
(12)	As of June 30, 2001, we applied EITF Issue 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” The effect of the application of Issue 00-19 was to reclassify our redeemable warrants from temporary equity to a liability on June 30, 2001.
(13)	EBITDA represents, for any relevant period, net income (loss) before interest expense, taxes, depreciation of property, plant and equipment, amortization of debt financing costs and amortization of intangibles. On a historical basis, for fiscal 2003 other items included $0.2 million of expenses associated with plant consolidation and relocation costs and for the six months ended February 29, 2004, other items included $0.1 million of plant consolidation costs and relocation expenses and $0.3 million of professional fees related to the Tech Industries acquisition. EBITDA is not a recognized term under GAAP and does not purport to be an alternative to net income as a measure of operating performance or to cash flow from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, this presentation of EBITDA may not be comparable to other

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similarly titled measures of other companies. Set forth below is a reconciliation of our reported net income to EBITDA as disclosed.

																	Six Months Ended
		Year Ended August 31,
																	February 28,			February 29,
		1999			2000			2001			2002			2003			2003			2004
		(Dollars in thousands)
Consolidated net (loss) income		$	(616	)	$	(3,743	)	$	1,030		$	4,573		$	(1,731	)	$	(2,408	)	$	(11,730	)
Add: Interest expense			14,443			14,486			14,453			13,251			12,544			6,268			7,410
	Taxes		(352	)		(2,165	)		2,074			2,242			2,071			(1,573	)		742
	Depreciation and amortization		17,514			20,856			21,948			19,290			17,966			8,744			8,824
	Amortization of debt financing   costs		546			428			718			756			777			373			1,560
EBITDA(a)		$	31,535		$	29,862		$	40,223		$	40,112		$	31,627		$	11,404		$	6,806
Add (subtract):
	Cash received from unconsolidated affiliates		—			—			173			319			374			374			377
	(Income) loss on unconsolidated affiliates		—			—			37			(340	)		(415	)		(52	)		(6	)
	Loss (gain) on sale of property, plant and equipment		82			106			(6,784	)		(20	)		30			29			5
	Interest income		—			(75	)		(75	)		(1,083	)		(120	)		(31	)		(24	)
	Impairment loss		—			—			—			—			207			—			—
	Income on dissolution of joint venture		—			—			—			(475	)		—			—			—
	Income on recovery of investment		—			—			—			(1,103	)		—			—			—
	Other items		—			—			—			—			176			—			395
	Change in operating assets		(20,005	)		(12,314	)		(18,554	)		(13,005	)		(17,588	)		(5,304	)		(7,299	)
Net cash provided by operations		$	11,612		$	17,579		$	15,020		$	24,405		$	14,291		$	6,420		$	254

 (a)  EBITDA for the six months ended February 29, 2004 includes a non-cash gain of $2.3 million on foreign exchange transactions, compared to a loss of $0.3 million in the six months ended February 28, 2003.

(14)  The ratio of earnings to fixed charges has been computed by dividing income (loss) before income taxes, plus fixed charges (excluding capitalized interest and amortization of capitalized interest) plus the interest factor component of rental expense, by fixed charges, which consist of interest charges (including capitalized interest) plus the portion of rental expense that includes an interest factor (See Exhibit 12.01).

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk factors” section of this prospectus. Our actual results may differ materially from those contained in any forward-looking statements.

Overview

      We are a leading designer, manufacturer and marketer of plastic closures, bottles and related equipment used for packaging applications in the non-carbonated beverage and institutional food markets. Our products provide our customers with a number of value-added benefits, such as the ability to increase the security and safety of their products by making them tamper evident and leak-resistant. In addition, in September 2003, we entered the cosmetic, fragrance and toiletries (CFT) market with the acquisition of Tech Industries, a leading provider of closures and jars to the CFT market. Our quarterly and year to date financial statements include Tech Industries results beginning September 19, 2003.

Critical accounting policies and estimates

      General. The unaudited condensed consolidated financial statements and notes to unaudited condensed consolidated financial statements contain information that is pertinent to “Management’s discussion and analysis of financial conditions and results of operations.” The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, current and expected economic conditions and, in some cases, actuarial techniques. We constantly re-evaluate these factors and make adjustments where facts and circumstances dictate. We believe that the following accounting policies are critical due to the degree of estimation required.

      Allowance for doubtful accounts. We provide credit to our customers in the normal course of business, perform ongoing credit evaluations of our customers and maintain reserves for potential credit losses. The allowance for doubtful accounts related to trade receivables is determined based on two methods. The amounts calculated from each of these methods are combined to determine the total amount reserved. First, an evaluation of specific accounts is conducted when information is available indicating that a customer may not be able to meet its financial obligations. Judgments are made in these specific cases based on available facts and circumstances, and a specific reserve for that customer may be recorded to reduce the receivable to the amount that is expected to be collected. These specific reserves are re-evaluated and adjusted as additional information is received that impacts the amount reserved. Second, a general reserve is established for all customers based on historical collection and write-off experience. The collectibility of trade receivables could be significantly reduced if default rates are greater than expected or if an unexpected material adverse change occurs in a major customer’s ability to meet its financial obligations. The allowance for doubtful accounts totaled approximately $1.7 million and $1.2 million as of February 29, 2004 and August 31, 2003, respectively. See “Risk factors.”

      Revenue recognition. We follow Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements,” in recognizing revenues within our financial statements. This bulletin requires, among other things, that revenue be recognized only when title has transferred and risk of loss has passed to a customer with the capability to pay, and when we have no significant remaining obligations related to the sale.

      Impairment of assets. We periodically evaluate our property, plant and equipment, goodwill and other intangible assets for potential impairment. Management’s judgment regarding the existence of impairment

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indicators are based on market conditions and operational performance of the business. Future events could cause management to conclude that impairment indicators exist and that property, plant and equipment, goodwill and other intangible assets may be impaired. Any resulting impairment loss could have a material adverse impact on our results of operations and financial condition. No impairment loss was recognized during the three- and six-month periods ended February 29, 2004 and February 28, 2003, respectively.

      Inventory valuation. Cap and bottle related inventories are stated at the lower of cost (first-in, first-out method) or market and equipment related inventories are stated at the lower of cost (average cost method) or market. We record reserves against the value of inventory based upon ongoing changes in technology and customer needs. These reserves are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from our expectations.

      Income taxes. We estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the unaudited condensed consolidated balance sheet. We then assess the likelihood that the deferred tax assets will be recovered from future taxable income, and, to the extent recovery is not likely, a valuation allowance is established. When an increase in this allowance within a period is recorded, we include an expense in the tax provision in the unaudited condensed consolidated statements of operations. Management’s judgment is required in determining the provision (benefit) for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. Although realization is not assured, management believes that the deferred tax assets will be realized before expiration through the recognition of future taxable income, except where a valuation allowance has been provided. While the deferred tax assets for which valuation allowances have not been provided are considered realizable, actual amounts could be reduced if future taxable income is not achieved. We provided valuation allowances against net deferred tax assets of $9.1 million and $4.0 million as of February 29, 2004 and August 31, 2003, respectively.

      Foreign currency translation. Our foreign subsidiaries use the local currency as their functional currency. Assets and liabilities are translated at quarter end exchange rates. Items of income and expense are translated at average exchange rates for the relevant period. Translation gains and losses are not included in determining net income (loss) but are accumulated as a separate component of shareholders’ equity (deficit). Gains (losses) arising from foreign currency transactions and the revaluation of certain intercompany debt are included in determining net income (loss).

      Impact of equity issuances. As of November 30, 2003, we had two outstanding warrants, which were each redeemable at the option of the holder upon 60 days’ prior written notice to us. These warrants were redeemable through June 30, 2004 and June 30, 2008, respectively. The redemption price of the warrants was calculated based on the higher of the current market price per share of our common stock or an amount computed under formulas in the warrant agreements. Following the offering of $180.0 million of senior notes, on January 23, 2004, we offered to repurchase both of the warrants. During February 2004, one warrant holder agreed to our repurchase of 2,052,526 shares of our Class A common stock into which the warrant was convertible at a net purchase price of $5.19 1/3 per share into which the warrant was convertible. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of 60 2/3 cents for each share of Class A common stock. The aggregate warrant repurchase price was $10.7 million. We recognized a loss of $1.7 million on the transaction during the second quarter of 2004 due to having increased the current market price of our common stock from $5.00 per share to $5.80 per share as agreed with the warrant holder. During March 2004, the second warrant holder agreed to our repurchase of 440,215 shares of our Class A common stock into which the warrant was convertible at a net repurchase price of $3.30 per share. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of $2.50 for each share of class A common stock. The aggregate warrant repurchase price was $1.5 million and the funds were paid on May 4, 2004. We recognized a loss of $0.2 million on the transaction during the second quarter of fiscal 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to an agreed-upon price of $5.80 per share.

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Prior to the redemption of the warrants, the carrying value of the warrants totaled $10.2 million, which represented the estimated fair value of the instruments as determined by our management using the Black-Scholes pricing model. In accordance with EITF Issue 00-19, the change in the fair market price of the warrants of zero and $(87,000) was recognized as interest (income) expense during the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $(57,000) and $(68,000) during the six-month periods ended February 29, 2004 and February 28, 2003, respectively.

Results of Operations

Comparison of the six months ended February 29, 2004 to the six months ended February 28, 2003

      Sales. For the first six months of fiscal year 2004, sales were $114.0 million compared to $103.1 million for the first six months of fiscal year 2003, an increase of $10.9 million, or 10.7%. The increase in sales for the first six months of fiscal 2004 compared to the same period in fiscal 2003 was mainly attributable to the acquisition of Tech Industries, which contributed sales of $12.5 million. Canada’s sales increased $2.9 million due to increased pricing and volume. China’s sales increased $1.4 million, Allied increased $0.9 million and Mexico increased $0.6 million, all due to increased volumes due to market demand. The United Kingdom increased $0.8 million due to the effect of the exchange rate to U.S. dollars, which was offset by price decreases in the United Kingdom in our high volume dairy closure as a result of competitive pricing pressures. The increases in our sales for the first six months of fiscal 2004 were offset by decreased sales in the U.S. closure operations of $6.3 million. The primary reasons for these decreases were due to competitive pricing pressures; loss of customers; timing of resin change increases to contract customers; reduced sales volumes for certain higher priced and higher margin products and cold weather and severe winter storms experienced in the eastern U.S. as compared to the same period in fiscal 2003. Equipment sales decreased $1.9 million due to lower customer orders.

      Gross profit. Gross profit decreased $2.6 million, or 12.2%, to $18.6 million for the six months ended February 29, 2004 from $21.2 million for the same period in fiscal year 2003. The margin decrease occurred primarily in the domestic closure operations and to a lesser extent in the U.K. and Mexico. Gross profit as a percentage of sales decreased to 16.3% for the six months ended February 29, 2004 from 20.6% for the six months ended February 28, 2003. The margin decrease was primarily due to the following factors: increases in resin prices as we are generally obligated to delay price increases to contract customers by forty-five to sixty days; competitive pricing pressures in the U.S. and U.K. markets; loss of customers in the U.S. market, reduced sales volumes for certain higher priced and higher margin products; and cold weather and severe winter storms that occurred in the eastern U.S. The margin decrease in Mexico was due primarily to subcontracting certain closure purchases to our U.S. facilities and the related freight charges to ship these closures from the U.S. to Mexico. This was done purposefully to take on a large new customer.

      In addition, we incurred one-time relocation and plant consolidation expenses of $1.1 million related to the move from six facilities to four facilities in our U.S. closures operations. These expenses were charged to cost of goods sold for the six-month period ended February 29, 2004. In addition we also incurred one-time charges of approximately $0.5 million associated with the integration and process improvement costs at the Tech Industries facility in Rhode Island.

      For the first six months of fiscal 2004, direct materials, labor and overhead costs represented 40.4%, 19.3% and 27.9% of sales, respectively, compared to the first six months of fiscal 2003 percentages of 37.6%, 17.0% and 28.0%, respectively. Direct material costs increased for the six-month period ended February 29, 2004 compared to the six-month period ended February 28, 2003 due to an increase in resin costs and lower volume and, to a lesser extent, the acquisition of Tech Industries whose products generally have a higher cost of materials as a percentage of total costs. Direct labor costs increased primarily due to the Tech Industries acquisition.

      Selling, general and administrative expense. For the six months ended February 29, 2004, selling, general and administrative expenses were $15.7 million, an increase of $0.5 million, or 3.4%, from $15.2 million for the same period in fiscal year 2003. As a percentage of sales, selling, general and administrative expenses were 13.7% for the six months ended February 29, 2004 compared to 14.7% for the

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same period in fiscal year 2003. The increase in dollars was primarily due to the inclusion of Tech Industries’ selling, general and administrative expenses of $1.2 million after September 19, 2003. This increase was offset by a $0.7 million decrease in discretionary spending (such as travel and consulting expenses) and decreased telephone costs, e-commerce costs, commission expense, bonus expense and employee costs.

      Research and development expenses. Research and development expense increased $0.5 million to $2.9 million for the six-month period ended February 29, 2004 as compared to $2.4 million for the same period in fiscal 2003. As a percentage of sales, research and development expense was 2.6% for the six months ended February 29, 2004 as compared to 2.3% for the same period in fiscal 2003. The increase in dollars was primarily due to the inclusion of Tech Industries’ research and development expenses of $0.5 million after September 19, 2003.

      Amortization of intangibles. Amortization of intangibles (consisting of amortization of patents and technology licenses, tradename, covenants not-to-compete and customer relationships) increased $0.2 million, or 44.0%, to $0.6 million for the six months ended February 29, 2004 as compared to $0.4 million for the same period in fiscal 2003. The increase was primarily due to the amortization of Tech Industries’ intangible assets acquired in September 2003 and amortization of signing bonuses.

      Restructuring. During the first six months of fiscal 2003, we announced a restructuring plan to reduce our work force and we incurred approximately $0.4 million of employee severance costs.

      During the first six months of fiscal 2004, we incurred restructuring charges of $1.9 million for employee severance costs related to the closing and relocation of our three plants in Chino and San Jose, California and Sumter, South Carolina. The operations from the two California plants have been relocated to a new facility located in Tolleson, Arizona, a suburb of Phoenix. The move will be fully completed during the third quarter of fiscal year 2004. The operations from the South Carolina plant were relocated in the first quarter of fiscal 2004 primarily to our existing facility in Kingsport, Tennessee as well as to other facilities within our Company. As of February 29, 2004, approximately $0.7 million had been charged against the restructuring reserve for the employee severance costs. We expect to incur additional restructuring charges and moving costs during the third quarter of fiscal 2004. Management anticipates the reserve balance will be paid by the end of fiscal 2004. In addition, we expect to incur approximately $1.0 million in restructuring charges during the third quarter of fiscal 2004 primarily related to employee severance costs.

      Income from operations. Reflecting the effect of the factors summarized above, income from operations decreased $5.2 million to an operating loss of $2.4 million for the first six months of fiscal year 2004 as compared to operating income of $2.8 million for the first six months of fiscal year 2003 and decreased as a percentage of sales to (2.1)% in the second quarter of fiscal year 2004 as compared to 2.7% in the same period of fiscal year 2003. Moving and relocation costs, integration and process improvement costs, and severance accounted for $3.5 million that contributed to this loss during the six-month period ended February 29, 2004.

      Other (income) expense. Other (income) expense includes interest income, interest expense, amortization of debt financing costs, gain or loss on the sale of property, plant and equipment, minority interest expense, equity (income) loss of unconsolidated affiliates, loss on warrant redemption and other expense, net.

      Interest expense increased $1.1 million to $7.4 million for the six-month period ended February 29, 2004, as compared to $6.3 million for the six-month period ended February 28, 2003. The increase in interest expense was due to the issuance of $180.0 million of senior notes due 2012 in January 2004. Due to the 30 day call notice and timing of the repurchase of the $110.0 million of senior notes due 2005, we paid approximately thirty days of duplicative interest on the $110.0 million of senior notes due 2005 and accrued 30 days of interest on the $180.0 million of senior notes due 2012. In addition, the interest expense will be $0.8 million higher per quarter due to the increase in the principal amount of outstanding senior notes from $110.0 million to $180.0 million, which is partially offset by the decrease in interest rates from 10.75% to 8.25%.

      Amortization of debt financing costs increased $1.2 million for the six-month period ended February 29, 2004 to $1.6 million from $0.4 million for the six-month period ended February 28, 2003. We wrote off financing fees related to the $110.0 million senior notes due 2005. In addition, amortization expense increased

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due to debt financing costs capitalized related to the financing of the $180.0 million senior notes due 2012 and the fourth amendment of our senior secured credit facility.

      Warrant interest income decreased $11,000 to $57,000 for the six-month period ended February 29, 2004 compared to $68,000 for the same period in fiscal year 2003 due to the repurchase of the Class A common stock warrants. We incurred a loss on the redemption of $1.9 million during the second quarter of fiscal 2004.

      We recognized a net loss of $5,000 on the sale of property, plant and equipment during the six-month period ended February 29, 2004, compared to a net loss of $29,000 incurred during the same period of fiscal year 2003.

      Other expenses, net, consisted primarily of (gain) loss on foreign exchange transactions. We recognized a gain of $2.3 million for the six-month period ended February 29, 2004 compared to a loss of $0.2 million for the six-month period ended February 28, 2003. The foreign exchange gain related primarily to the revaluation of an intercompany note payable.

      Income tax benefit. We recorded a provision from income taxes of $0.7 million for the six months ended February 29, 2004 due to taxable income in certain foreign jurisdictions. The Company provided a valuation allowance against new deferred tax assets in certain foreign jurisdictions and for a portion of our domestic operations. The Company recorded a benefit from income taxes of $1.6 million for the six-month period ended February 28, 2003 based on its pre-tax loss.

      Net loss. Net loss was $11.7 million for the six-month period ended February 29, 2004 compared to a net loss of $2.4 million for the same period in fiscal year 2003. Moving and relocation costs, integration and process improvement costs, severance, loss on redemption of warrants and the duplicative interest on the senior note refinancing accounted for $6.4 million of this loss during the six-month period ended February 29, 2004.

Comparison of the fiscal year ended August 31, 2003 to the fiscal year ended August 31, 2002

      Sales. Sales increased $4.5 million, or 2.2%, from $210.8 million for fiscal 2002 to $215.3 million for fiscal 2003. The increase in sales for fiscal 2003 from fiscal 2002 was mainly attributable to increased sales of $4.6 million in Canada, $3.3 million in the United Kingdom and $0.4 million in Mexico primarily due to increased unit pricing as a result in increased resin prices, and increased volume growth due to increased market share. Offsetting these increases were decreased sales of $3.8 million in U.S. operations due to decreased sales volume with certain customers, as well as dairy customer consolidation, which resulted in lower selling prices for certain products.

      During fiscal 2003, our top ten customers accounted for approximately 38% of our sales and no customer accounted for 10% of total sales. During fiscal 2002 one customer accounted for approximately 10% of total sales.

      Gross profit. Gross profit decreased $5.0 million to $48.6 million for fiscal 2003 from $53.6 million for fiscal 2002 and decreased as a percentage of sales from 25.4% in fiscal 2002 to 22.6% in fiscal 2003. The margin decrease occurred primarily in the U.S., Canadian and U.K. operations, and was primarily due to increases in resin prices, increased sales of lower margin products, dairy customer consolidation (which resulted in lower selling prices for certain products), increased competition affecting certain products due to the expiration of patents previously held by us, and, to a lesser extent, increased employee costs.

      Overall, fiscal 2003 direct materials, labor and overhead costs represented 38.2%, 16.1% and 26.7% of sales, respectively, compared to fiscal 2002 percentages of 35.1%, 15.7% and 27.6%. Direct material costs as a percentage of sales increased for fiscal 2003 from fiscal 2002 due to increased resin prices.

      Selling, general and administrative expenses. Selling, general and administrative expense decreased from $30.8 million in fiscal 2002 to $29.3 million in fiscal 2003 and decreased as a percentage of sales from 14.6% for fiscal 2002 to 13.6% for fiscal 2003. These decreases were primarily due to decreased compensation costs and decreased bad debt expense, offset in part by increased consulting costs.

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      Research and development expenses. Research and development expenses were $4.7 million and $3.1 million in fiscal 2003 and 2002, and increased as a percentage of sales from 1.5% in fiscal 2002 to 2.2% in fiscal 2003. The increase in research and development expenses was due primarily to an increase in prototype expenses related to new products and, to a lesser extent, to increased consulting and employee costs.

      Amortization of intangibles. Amortization of intangibles (consisting of amortization of patents, acquisition costs, technology, tradename and covenants not-to-compete) decreased $0.4 million, or 28.4%, to $1.1 million for fiscal 2003 from $1.6 million in fiscal 2002. This decrease was due to certain intangibles related to the acquisitions of Allied Tool, Inc. (“Portola Allied”) and Consumer Cap Corporation (“Consumer”) being fully amortized in March 2002 and June 2002, respectively, offset by an impairment loss of $0.2 million included in amortization expense in fiscal 2003.

      Restructuring costs. During the second quarter of fiscal 2003, we announced a restructuring plan to reduce our work force. During fiscal 2003, we incurred restructuring charges of $0.4 million for employee severance costs. The restructuring affected nine employees in general and administration, two employees in customer service, one employee in research and development and two employees in sales, totaling 14 severed employees. As of August 31, 2003, approximately $0.3 million had been charged against the restructuring reserve for the employee severance costs. Management anticipates the accrual balance will be paid by the end of fiscal 2004.

      Income from operations. Due to the effect of the factors summarized above, income from operations decreased $5.1 million, or 28.0%, to $13.1 million for fiscal 2003 from $18.2 million for fiscal 2002 and decreased as a percentage of sales from 8.6% in fiscal 2002 to 6.1% in fiscal 2003.

      Other (income) expense. Other (income) expense includes interest income, interest expense, amortization of debt financing costs, minority interest expense, equity (income) loss of unconsolidated affiliates, net gain or loss on the sale of property, plant and equipment, income on dissolution of a joint venture, income on recovery of a note receivable and other expense, net.

      Interest income decreased $1.0 million to $0.1 million during fiscal 2003 from $1.1 million in fiscal 2002, primarily due to $0.8 million of interest income recognized in fiscal 2002 with respect to a promissory note payable to us by Sand Hill Systems, Inc. (the “SHS Note”) in connection with a related party transaction described in “Related party transactions” and Note 15 of the Notes to consolidated financial statements. Interest expense decreased by $0.7 million to $12.5 million in fiscal 2003 from $13.3 million in fiscal 2002. This decrease was primarily due to the decrease in borrowings on the revolving credit facility and the effect of a decrease in the LIBOR rate. Amortization of debt financing costs totaled $0.8 million in each of fiscal 2003 and fiscal 2002.

      In fiscal 2002, we recognized income of $0.5 million on the dissolution of a joint venture (see Note 2 of the Notes to consolidated financial statements) and recognized income of $1.1 million on the recovery with respect to the SHS Note. (See Note 15 of the Notes to consolidated financial statements). We recognized a net loss of $30,000 on the sale of property, plant and equipment during fiscal 2003, compared to a gain of $20,000 recognized on the sale of property, plant and equipment during the same period in fiscal 2002.

      Other expense, net consisted primarily of gain and loss on foreign exchange transactions. We recognized a gain of $0.3 million on foreign exchange transactions for fiscal 2003, included in other expense, net, compared to a loss of $0.3 million in fiscal 2002. In addition, we recognized income of $58,000 as a result of the change in the fair market value of our outstanding warrants as of August 31, 2003 as compared to $0.2 million, as of August 31, 2002.

      Income tax provision. The income tax provision for fiscal 2003 was $2.1 million on income before income taxes of $0.3 million, compared to an income tax provision of $2.2 million in fiscal 2002 on income before income taxes of $6.8 million. Our effective tax rate differs from the U.S. statutory rate principally due to providing a valuation allowance against net deferred tax assets in certain foreign jurisdictions, and for a portion of our domestic jurisdictions.

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      Net (loss) income. Net loss was $1.7 million in fiscal 2003 compared to net income of $4.6 million in fiscal 2002.

Comparison of the fiscal year ended August 31, 2002 to the fiscal year ended August 31, 2001

      Sales. Sales decreased $8.6 million, or 4.0%, from $219.4 million for fiscal 2001 to $210.8 million for fiscal 2002. The decrease in sales for fiscal 2002 compared to fiscal 2001 was mainly attributable to decreased sales of $7.3 million from the United States closure division primarily due to price reductions to customers to reflect lower resin costs and product mix. Equipment sales decreased $2.7 million mainly due to the timing of customer orders. Sales decreased by $0.9 million in Mexico due to sales volume and also decreased by $1.2 million in bottle sales due to discontinuation of one of our consolidated joint ventures. Offsetting these decreases were increased sales of $2.7 million in the United Kingdom due to sales volume and $0.8 million in tooling due to timing of customer orders.

      Gross profit. Gross profit increased $3.7 million to $53.6 million for fiscal 2002 as compared to $49.9 million for fiscal 2001 and increased as a percentage of sales from 22.7% in 2001 to 25.5% in 2002. The margin increase was due to overall lower raw material costs, primarily due to the lower resin prices in the closure and bottle operations and improved margins in our equipment sales.

      Overall, fiscal 2002 direct materials, labor and overhead costs represented 35.1%, 15.7% and 27.6% of sales, respectively, compared to fiscal 2001 percentages of 40.1%, 14.7% and 26.4%.

      Selling, general and administrative expenses. Selling, general and administrative expenses increased from $28.8 million in fiscal 2001 to $30.8 million in fiscal 2002 and increased as a percentage of sales from 13.1% for fiscal 2001 to 14.6% for fiscal 2002. These increases were primarily due to increased expenses for consulting fees for our product expansion project and ERP system upgrade, employee costs, travel expenses and bad debt charges.

      Research and development expenses. Research and development expenses were $3.1 million in both fiscal 2001 and 2002, and increased slightly as a percentage of sales from 1.4% in fiscal 2001 to 1.5% in fiscal 2002.

      Amortization of intangibles. Amortization of intangibles (consisting of amortization of patents, goodwill, tradename, covenants not-to-compete and customer lists) decreased $2.6 million, or 62.9%, to $1.6 million for fiscal 2002 as compared to $4.2 million in fiscal 2001. The decrease was primarily due to the elimination of goodwill amortization expense due to the early adoption of SFAS No. 142 effective September 1, 2001. The effect of the adoption was to eliminate goodwill amortization expense of $2.6 million in fiscal 2002. There was an additional decrease of amortization expense of $0.3 million primarily due to certain Portola Allied intangibles becoming fully amortized in March 2002. Offsetting this decrease was an increase of $0.2 million in amortization expense for additional patent, tradename, covenants not-to-compete and customer list assets relating to the acquisition of Consumer during fiscal 2001.

      Restructuring costs. We did not incur restructuring charges during fiscal 2002, compared to the $1.9 million incurred during fiscal 2001, which consisted of approximately $0.9 million for employee severance costs and approximately $1.0 million for the non-cash write-down of certain assets.

      Income from operations. Due to the effect of the factors summarized above, income from operations increased $6.3 million, or 52.8%, to $18.2 million for fiscal 2002 as compared to $11.9 million for fiscal 2001 and increased as a percentage of sales from 5.4% in fiscal 2001 to 8.6% in fiscal 2002.

      Other (income) expense. Interest income increased $1.0 million to $1.1 million during fiscal 2002 as compared to $75,000 in fiscal 2001 primarily due to $0.8 million interest income recognized with respect to the SHS Note payable to us (see Note 15 of the Notes to consolidated financial statements), and we also recognized $0.2 million as a result of the change in the fair market value of the warrants as of August 31, 2002.

      Interest expense decreased by $1.2 million to $13.3 million in fiscal 2002 as compared to $14.5 million in fiscal 2001. This decrease was primarily due to the decrease in borrowings on the revolving credit facility and the effect of a decrease in the LIBOR rate during fiscal 2002, as compared to the same period in fiscal 2001.

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      Amortization of debt financing costs increased $38,000 to $0.8 million in fiscal 2002 as compared to $0.7 million for the same period in fiscal 2001 due to the additional loan fees that are being amortized as a result of the amended and restated senior revolving credit facility entered into on September 29, 2000.

      We recognized a net gain of $20,000 on the sale of property, plant and equipment during fiscal 2002, compared to a gain of $7.0 million recognized on the sale of certain real estate located in San Jose, California, during the same period in fiscal 2001, offset by a $0.2 million loss on the sale of property, plant and equipment.

      In fiscal 2002, we recognized income of $0.5 million and $1.1 million on the dissolution of a joint venture and the recovery of the SHS Note, respectively. See Notes 2 and 15 of the Notes to consolidated financial statements.

      Income tax provision. The income tax provision for fiscal 2002 was $2.2 million compared to an income tax benefit of $2.1 million in fiscal 2001. Our effective tax rate differs from the U.S. statutory rate principally due to providing a valuation allowance against net deferred tax assets in certain foreign jurisdictions and nondeductible goodwill and amortization expense in fiscal 2001.

      Net income (loss). Net income was $4.6 million in fiscal 2002 compared to net income of $1.0 million in fiscal 2001.

Liquidity and Capital Resources

Six months ended February 29, 2004 compared to the six months ended February 28, 2003

      In recent years, we have relied primarily upon cash from operations, borrowings from financial institutions and proceeds from our issuance of $180.0 million in principal amount of senior notes to finance our operations, repay long-term indebtedness and fund capital expenditures and acquisitions. At February 29, 2004, we had cash and cash equivalents of $14.8 million, an increase of $10.5 million from August 31, 2003. Of the $14.8 million, approximately $1.5 million dollars was allocated for the repurchase of our then unredeemed Class A common stock warrants and approximately $7.8 million was allocated for our repurchase of our common stock in connection with our self tender offer, each as authorized under the terms of the indenture relating to the $180.0 million of senior notes due 2012. Payment for shares of our common stock in the self tender offer has been delayed until at least the fourth quarter of fiscal year 2004. Without taking into account the cash reserved for the repurchase of our Class A common stock warrants and shares of our common stock in the self tender offer, cash and cash equivalents increased $1.2 million to $5.5 million at February 29, 2004 from $4.3 million August 31, 2004.

      Operating activities. Cash provided by operations totaled $0.3 million for the six-month period ended February 29, 2004, which represented a $6.1 million decrease from the $6.4 million provided by operations for the six months ended February 28, 2003. Net cash provided by operations for both quarters was the result of a net loss offset primarily by non-cash charges for depreciation and amortization. Working capital (current assets less current liabilities) increased $22.8 million as of February 29, 2004 to $33.3 million, compared to $10.4 million as of August 31, 2003.

      Investing activities. Cash used in investing activities was $45.3 million for the six months ended February 29, 2004, compared to $4.7 million for the six months ended February 28, 2003. In the first six months of fiscal year 2004, cash used in investing activities consisted primarily of $36.5 million for the acquisition of Tech Industries, $8.1 million for additions to property, plant and equipment and $0.7 million for intangible and other assets. In the first six months of fiscal year 2003, cash used in investing activities consisted primarily of $5.0 million for additions to property plant and equipment.

      We have retained a real estate broker to sell our manufacturing building in San Jose, California, and we have entered into a contract to sell our facility in Chino, California for a purchase price of $3.5 million. The transaction closed in April 2004. We expect to realize a small gain on this sale during the third quarter of fiscal 2004. The proposed sales of real estate are related to the closure of these two manufacturing plants and relocation of their operations from California to Arizona during fiscal 2004. We expect to recover our

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investments upon the sale of these buildings. However, we cannot assure you that the San Jose building will be sold in the near future or that if sold, the selling terms will be favorable to us.

      We expect that our total capital expenditures for fiscal 2004 will be at least $16.0 million. We invested in a new facility in Arizona during our first and second quarters of fiscal 2004, and plan to add equipment in existing facilities to support new products and the transition of existing product manufacturing from other facilities. Our principal sources of cash to fund ongoing operations and capital requirements have been and are expected to continue to be net cash provided by operating activities and borrowings under our credit agreement. We believe that these sources will be sufficient to fund our ongoing operations and our foreseeable capital requirements.

      Financing activities. At February 29, 2004, we had total indebtedness of $192.8 million, $180.0 million of which was attributable to our senior notes due 2012. Of the remaining indebtedness, $11.1 million was attributable to our senior secured credit facility and $0.2 million was principally composed of capital lease obligations. In addition, our total indebtedness at February 29, 2004 included redeemable warrants with a carrying value of $1.5 million.

      On September 19, 2003, we entered into an amendment to our senior secured credit facility, increasing the credit facility to $54.0 million in connection with our purchase of Tech Industries, subject to a borrowing base of eligible receivables and inventory, plus net property and equipment and covenants similar to those in the amended and restated senior secured credit facility existing at February 28, 2003. An unused fee was payable on the facility based on the total commitment amount less the balance outstanding plus the average daily aggregate amount of outstanding credit facility liability, at the rate of 0.50% per annum. Interest payable was based on either the Bank Prime Loan rate plus 1.50% or the LIBOR loan rate plus 2.75%.

      On January 23, 2004, we completed an offering of $180.0 million of senior notes that mature on February 1, 2012 and bear interest at 8.25% per annum. Interest payments of approximately $7.4 million are due semi-annually on February 1 and August 1 of each year. Interest will accrue from January 23, 2004 and the first interest payment date will be August 1, 2004. The senior notes’ indenture contains covenants and provisions that restrict, among other things, the Company’s ability to: (i) incur additional indebtedness or issue preferred stock, (ii) incur liens on its property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, (vi) engage in certain sales of assets and subsidiary stock, (vii) engage in certain transactions with affiliates, (viii) engage in sale/leaseback transactions (ix) engage in any business other than a related business (x) make restricted payments, and (xi) declare or pay dividends.

      Concurrently with the offering of $180.0 million of senior notes, on January 23, 2004, we entered into an amended and restated five-year senior revolving credit facility of up to $50.0 million, maturing on January 23, 2009. The credit facility contains covenants and provisions that restrict, among other things, our ability to: (i) redeem warrants and repurchase stock, except during the first year, (ii) incur additional indebtedness, (iii) incur liens on our property, (iv) make investments, (v) enter into guarantees and other contingent obligations, (vi) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vii) engage in certain transactions with affiliates, (viii) make restricted junior payments, and (viii) declare or pay dividends. An unused fee is payable on the facility based on the total commitment amount less the balance outstanding plus the average daily aggregate amount of outstanding liability, at the rate of 0.50% per annum. In addition, interest payable is based on either the Bank Prime Loan rate plus 1.25% or the LIBOR loan rate plus 2.75% determined by a pricing tabled based on the outstanding credit facility balance. On May 21, 2004, we entered into an amendment of the senior secured credit facility in order to modify certain of the covenants, including revising the definition of EBITDA to exclude specified charges, which affects the calculation of the fixed charge coverage ratio.

      Our senior secured credit facility and the indenture governing our 8.25% senior notes contain a number of significant restrictions and covenants as discussed above. Adverse changes in our operating results or other adverse factors, including a significant increase in interest rates or in resin prices, a severe shortage of resin supply or a significant decrease in demand for our products, could result in our being unable to comply with the financial covenants in our senior secured credit facility. If we violate these covenants and are unable to

46

obtain waivers from our lenders, we would be in default under these agreements and our lenders could accelerate our obligations thereunder. If our indebtedness is accelerated, we may not be able to repay our debt or borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us. If our expectations of future operating results are not achieved, or our debt is in default for any reason, our business, financial condition and results of operations would be materially and adversely affected. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy and compete against companies who are not subject to such restrictions.

      Pursuant to an Offer to Purchase dated March 5, 2004, we offered to purchase for cash up to 1,319,663 shares of our common stock at $5.80 per share from our stockholders of record as of March 5, 2004. The offer was to expire on April 9, 2004, at which time we would purchase all shares of our common stock that were properly tendered and not withdrawn. On March 31, 2004, we announced that we extended the tender offer to purchase our common stock to at least June 21, 2004, and on June 18, 2004, we announced that we had further extended the tender offer to at least August 23, 2004. We have the right to further amend the terms of the tender offer. We have $7.9 million being held in a cash investment account for the distribution.

      Cash and cash equivalents. At February 29, 2004, we had $14.8 million in cash and cash equivalents as well as borrowing capacity of approximately $13.9 million under the senior revolving credit facility, less a minimum availability requirement of $3.0 million. In May 2004, the appraisals of our property, plant and equipment assets in the U.S., Canada and the U.K. have been completed and these assets have been included in the borrowing base of our revolving credit line, substantially increasing our borrowing capacity as well as increasing our minimum availability requirement to $5.0 million.

      We believe that our existing financial resources, together with our current and anticipated results of operations, will be adequate for the foreseeable future to make required payments of principal and interest on our debt and fund our working capital and capital expenditure requirements. We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowing will be available under the amended and restated senior secured credit facility in an amount sufficient to enable us to service our debt, including the $180.0 million of senior notes due 2012, or to fund our other liquidity needs. Further, any future acquisitions, joint ventures, arrangements or similar transactions will likely require additional capital, and we cannot assure you that this capital will be available to us.

Fiscal year ended August 31, 2003 compared to the fiscal year ended August 31, 2002

      Operating activities. Net cash provided by operations totaled $14.3 million and $24.4 million in fiscal 2003 and 2002, respectively. Net cash provided by operations for fiscal 2003 was principally the result of non-cash charges for depreciation and amortization offset, in small part, by our net loss. Net cash provided by operations for fiscal 2002 was the result of net income plus non-cash charges for depreciation and amortization, offset by an aggregate of $2.4 million of non-cash items included in other (income) expense. See Notes 2 and 15 of the Notes to consolidated financial statements. Working capital decreased $7.7 million to $10.4 million as of August 31, 2003 from $18.1 million as of August 31, 2002, primarily due to the re-classification of a warrant with a carrying value of $9.0 million as current due to its expiration in June 2004, in addition to increases in accounts payable and a decrease in inventory, offset in part by an increase in accounts receivable.

      Investing activities. Cash used in investing activities was $10.6 million in fiscal 2003 as compared to $11.0 million in fiscal 2002, and consisted primarily of additions to property, plant and equipment of $11.1 million and $10.5 million in fiscal 2003 and 2002, respectively. Cash used in investing activities was reduced by $0.1 million and $0.4 million in fiscal 2003 and 2002, respectively, by proceeds from the sale of property, plant and equipment.

      Financing activities. At August 31, 2003, we had total indebtedness of $127.2 million, $110.0 million of which was attributable to our senior notes. Of the remaining indebtedness, $6.6 million was attributable to our senior credit facility and $0.3 million was principally composed of capital lease obligations. In addition, our

47

total indebtedness at August 31, 2003 included redeemable warrants with a carrying value of $10.3 million. See Note 10 of the Notes to consolidated financial statements for additional information on the redeemable warrants. On September 29, 2000, we entered into a four-year amended and restated senior secured revolving credit facility of up to $50.0 million, subject to a borrowing base of eligible receivables and inventory, plus net property, plant and equipment. This credit facility contains covenants and provisions that restrict, among other things, our ability to: (i) incur additional indebtedness, (ii) incur liens on our property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vi) engage in certain transactions with affiliates, (vii) make restricted junior payments and (viii) declare or pay dividends. See Note 8 of the Notes to consolidated financial statements for additional information.

      Cash and cash equivalents. At August 31, 2003, we had $4.3 million in cash and cash equivalents as well as borrowing capacity of approximately $34.2 million under the $50.0 million revolving credit facility, less a minimum availability requirement of $3.0 million.

Comparison of the fiscal year ended August 31, 2002 to the fiscal year ended August 31, 2001

      Operating activities. Cash provided by operations totaled $24.4 million and $15.0 million in fiscal 2002 and 2001, respectively. Net cash provided by operations for fiscal 2002 was the result of net income plus non-cash charges for depreciation and amortization, offset by an aggregate of $2.4 million in other income and interest income recognized on the dissolution of a joint venture and settlement on a promissory note. See Notes 2 and 14 of the Notes to consolidated financial statements. Due to the adoption of SFAS No. 142, amortization expense for fiscal 2002 did not include goodwill amortization. Net cash provided by operations for fiscal 2001 was the result of net income plus non-cash charges for depreciation and amortization, reduced by the net gain on the sale of property of $6.8 million, which is reflected in cash flows from investing activities. Working capital decreased $0.9 million as of August 31, 2002 to $18.1 million, as compared to $19.0 million as of August 31, 2001, primarily as a result of a decrease in accounts receivable and inventory, offset by a decrease in accounts payable and accrued liabilities.

      Investing activities. Cash used in investing activities was $11.0 million in fiscal 2002 as compared to $4.1 million in fiscal 2001. This consisted primarily of additions to property, plant and equipment of $10.5 million and $14.1 million, in fiscal 2002 and 2001, respectively. Fiscal 2001 included additions to intangible and other assets relating to the acquisition of Consumer. Cash used in investing activities was reduced by $0.4 million in fiscal 2002 by proceeds from the sale of property, plant and equipment and by $10.1 million in fiscal 2001 by proceeds from the sale of property, plant and equipment, primarily related to the sale of certain real estate located in San Jose, California.

      Financing activities. At August 31, 2002, we had total indebtedness of $131.0 million, $110.0 million of which was attributable to our senior notes. Of the remaining indebtedness, $9.8 million was attributable to our senior credit facility and $0.7 million of the indebtedness was principally composed of capital lease obligations. In addition, our total indebtedness at August 31, 2002 included redeemable warrants with a carrying value of $10.4 million. See Note 10 of the Notes to consolidated financial statements for additional information on the redeemable warrants.

      Cash and cash equivalents. At August 31, 2002, we had $4.6 million in cash and cash equivalents as well as unused borrowing capacity of approximately $33.0 million under the revolving credit facility, less a minimum availability requirement of $3.0 million.

Off-balance sheet arrangements

      We currently own a 50% interest in Capsnap Europe Packaging GmbH (“CSE”). CSE currently sells five-gallon closures and bottles that are produced by our United Kingdom subsidiary and our joint venture partner in CSE. CSE has a 50% ownership interest in Watertek, a joint venture in Turkey, which produces and sells five-gallon water bottles and closures for the European and Middle Eastern market places. Watertek is the owner of a 50% interest in a Greek company, Cap Snap Hellas, that will be selling our products in Greece. In addition, in 2003 CSE acquired all of the stock of Semopac, a French producer of five gallon polycarbonate

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bottles, for a note having a principal amount of approximately $3.0 million and a three-year term. Our portion of the results of these joint venture operations are reflected in other (income) expense, net. See “— Contractual obligations” and Note 10 of the Notes to unaudited condensed consolidated financial statements.

Contractual obligations

      Our contractual cash obligations as of February 29, 2004 are summarized in the following table:

		Payments Due by Period
				<1		1-3		3-5		>5
		Total		Year		Years		Years		Years
		(Dollars in thousands)
Contractual obligations:
Long-term debt, including current portion:
	Senior notes(1)	$	180,000	$	—	$	—	$	—	$	180,000
	Revolver(2)		11,060		—		—		11,060		—
	Capital lease obligations(3)		249		199		50		—		—
Redeemable warrants(4)			1,453		1,453		—		—		—
Operating lease obligations(5)			33,634		3,744		6,194		5,166		18,530
Guarantees(6)			1,381		—		435		—		946
Total contractual cash obligations(7)		$	227,777	$	5,396	$	6,679	$	16,226	$	199,476

(1)	On January 23, 2004, we completed an offering of $180.0 million of senior notes that mature on February 1, 2012 and bear interest at 8.25% per annum. Interest payments of approximately $7.4 million are due semi-annually on February 1 and August 1 of each year. Interest will accrue from January 23, 2004 and the first interest payment date will be August 1, 2004. The indenture governing the senior notes contains certain restrictive covenants and provisions.
(2)	Concurrently with the offering of $180.0 million of senior notes due 2012, on January 23, 2004, we entered into an amended and restated five-year senior revolving credit facility of up to $50.0 million. The credit facility contains covenants and provisions that restrict, among other things, our ability to: (i) redeem warrants and repurchase stock, except during the first year, (ii) incur additional indebtedness, (iii) incur liens on our property, (iv) make investments, (v) enter into guarantees and other contingent obligations, (vi) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vii) engage in certain transactions with affiliates, (viii) make restricted junior payments, and (viii) declare or pay dividends. An unused fee is payable on the facility based on the total commitment amount less the balance outstanding plus the average daily aggregate amount of outstanding liability, at the rate of 0.50% per annum. In addition, interest payable is based on either the Bank Prime Loan rate plus 1.25% or the LIBOR loan rate plus 2.75% determined by a pricing tabled based on the outstanding credit facility balance.
(3)	We acquired certain machinery and office equipment under non-cancelable capital leases.
(4)	We had two outstanding warrants, which were each redeemable at the option of the holder upon 60 days’ prior written notice to us. These warrants were redeemable through June 30, 2004 and June 30, 2008, respectively. The redemption price of the warrants was calculated based on the higher of the current market price per share of our common stock or an amount computed under formulas in the warrant agreements. Following the offering of $180.0 million of senior notes, on January 23, 2004, we offered to repurchase both of the warrants. During February 2004, one warrant holder agreed to our repurchase of 2,052,526 shares of our Class A common stock into which the warrant was convertible at a net purchase price of $5.19 1/3 per share. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of 60 2/3 cents for each share of Class A common stock. The aggregate warrant repurchase price was $10.7 million. We recognized a loss of $1.7 million on the transaction during the second quarter of 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to $5.80 per share as agreed with the warrant holder.

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	During March 2004, the second warrant holder agreed to our repurchase of 440,215 shares of our Class A common stock into which the warrant was convertible at a net purchase price of $3.30 per share. This new price was based upon an agreed current market price per share of common stock of $5.80, minus the warrant exercise price of $2.50 for each share of Class A common stock. The aggregate warrant repurchase price was $1.5 million and the funds were paid on May 4, 2004. We recognized a loss of $0.2 million on the transaction during the second quarter of fiscal 2004 due to having increased the deemed current market price of our common stock from $5.00 per share to the agreed-upon price of $5.80 per share. Prior to the redemption of the warrants, the carrying value of the warrants totaled $10.2 million, which represented the estimated fair value of the instruments as determined by our management using the Black-Scholes pricing model. In accordance with EITF Issue 00-19, the change in the fair market price of the warrants of zero and $(87,000) was recognized as interest (income) expense during the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $(57,000) and $(68,000) of interest (income) expense during the six- month periods ended February 29, 2004 and February 28, 2003, respectively.
(5)	We lease certain office, production and warehouse facilities under operating lease agreements expiring on various dates through 2021. Under the terms of the facilities’ leases, we are responsible for common area maintenance expenses, which include taxes, insurance, repairs and other operating costs. Base rent expense for fiscal 2004 is estimated to be $3.7 million.
(6)	We issued a letter of credit in October 1999, expiring December 2010, that guarantees $0.4 million of a loan related to the purchase of machinery for CSE’s 50% owned Turkish joint venture, Watertek. CSE is an unconsolidated, 50% owned Austrian joint venture that sells five-gallon water bottles and closures that are produced by our United Kingdom subsidiary and our joint venture partner in CSE. We extended the expiration date of a letter of credit in February 2004, that now expires in February 2007, and that guarantees a loan of $0.4 million for the purchase of machinery by CSE. These guarantee agreements are in Eurodollars and were valued using a conversion rate as of February 29, 2004.

In November 2000, our Mexican consolidated subsidiary entered into a ten-year lease for a building in Guadalajara, Mexico commencing in May 2001. Our Mexican operations relocated to the new building during May 2001. We guaranteed approximately $0.6 million in future lease payments relating to the lease as of February 29, 2004. In April 2004, we amended the lease of our Guadalajara, Mexico plant to allow for construction of a 20,000 square foot expansion to our existing facilities. Construction of this expansion began in the third quarter of fiscal 2004 and has a targeted completion date of September 1, 2004, at which time the amended lease will become effective. The Company will guarantee approximately $0.2 million in future lease payments related to the amended lease. This is in addition to the guaranty of approximately $0.6 million related to the original lease. The amended lease extends the lease term 10 years from the last day of the month of the targeted completion date of September 1, 2004. Also in April 2004, we entered into leases of two buildings, totaling 31,860 square feet, in Shanghai, China to serve the Pacific Rim markets for CFT products. The building A lease was effective May 1, 2004 and the building B lease will be effective November 1, 2004. The lease term for building A is 24 months and the lease term for building B is 18 months.

In June 2003, we entered into a fifteen-year lease for a new facility in Tolleson, Arizona, commencing December 1, 2003. The closure manufacturing operations in San Jose, California and Chino, California were relocated to the new facility during the second quarter of fiscal 2004. We have entered into a contract to sell the manufacturing building in San Jose and we sold the Chino facility in April 2004. (Note 12).

(7)  The Company had $0.3 million in firm commitments as of May 31, 2004 for capital expenditures for international expansion. In addition, it is our intention to continue to expand internationally during fiscal years 2005 and beyond.

Related party transactions

      We incur certain related party transactions throughout the course of our business. In connection with the financing transactions related to the $180.0 million offering of our senior notes due 2012, we paid fees to

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JPMorgan Securities Inc. (Robert Egan, one of our directors, is a senior adviser to JP Morgan Partners, an affiliate of JP Morgan Securities Inc.), The Breckenridge Group (of which Larry Williams, one of our directors, is a principal), Tomlinson Zisko LLP and Timothy Tomlinson (one of our directors until February 29, 2004, and a partner in Tomlinson Zisko LLP), and Themistocles Michos (Vice President, General Counsel and Secretary) for services rendered. We repurchased a warrant from JPMorgan Partners, of which we recognized a loss on the redemption. In addition, we paid fees to The Breckenridge Group, Tomlinson Zisko LLP and Themistocles Michos for services rendered related to other operational matters. Mr. Tomlinson resigned from the Board on February 29, 2004.

      Related party sales consisted primarily of closures produced by our U.K. operations that were sold to our joint venture, CSE. The related party transactions are disclosed on the face of the unaudited condensed consolidated financial statements included in this prospectus. There have been no other significant additional related party transactions from those disclosed in “Item 13. — Certain Relationships and Related Transactions” and Note 15 of Notes to Consolidated Financial Statements of our most recent Annual Report on Form 10-K.

Raw material price volatility

      Most of our closures are priced based in part on the cost of the plastic resins from which they are produced. Historically, we have been able to pass on increases in resin prices directly to our customers, although that practice has proven more difficult in the past two years because of increased price competition in the beverage related markets.

Seasonality

      Our sales and earnings reflect a slightly seasonal pattern as a result of greater sales volumes during the summer months. In both fiscal 2003 and 2002, 48% of sales occurred in the first half of the year (September through February) while 52% of sales were generated in the second half (March through August).

Income taxes

      The relationship of income tax expense to income before income taxes is affected primarily by not providing a benefit for losses generated in certain foreign jurisdictions and a portion of our domestic operations and, in fiscal 2001, by non-deductible goodwill arising from our acquisitions. See Note 13 of the Notes to consolidated financial statements.

Recent Accounting Pronouncements

      Effective September 1, 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 establishes accounting standard for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. The adoption of SFAS No. 143 had no impact on our financial statements for the three- and six-month periods ended February 29, 2004 and February 28, 2003.

      Effective September 1, 2002, we adopted SFAS No. 146, “Accounting for Exit or Disposal Activities.” The standard requires companies to recognize costs associated with exit or disposal activities when incurred rather than at the date of a commitment to exit or disposal plan. Examples of costs covered by the standard include (1) costs to terminate contracts that are not capital leases; (2) costs to consolidate facilities or relocate employees; and (3) termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. Previous accounting guidance was provided by EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 replaces EITF 94-3 and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. During the three- and six-month periods ended February 29, 2004, we incurred restructuring charges of $1,523 and $1,866, respectively, which were determined in accordance with the provisions of SFAS No. 146 (Note 7).

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      In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees that are issued or modified after December 31, 2002. The provisions of FIN 45 did not have a material impact on our results of operations or financial condition as there were no new guarantees or significant modifications of existing guarantees during the six-month period ended February 29, 2004.

      In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 was effective January 31, 2003 for newly created and existing variable interest entities. On October 8, 2003, the FASB issued FASB Staff Position No. 46-e, which allows public entities, who meet certain criteria, to defer the effective date for applying the provisions of FIN 46 to interests held by the public entity in certain variable interest entities or potential variable interest entities until the end of the first interim or annual period ending after December 15, 2003. On December 24, 2003, the FASB extended the effective date to periods ending after March 15, 2004. Management is currently analyzing the impact of FIN 46 on the consolidated financial statements.

      Effective April 1, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends SFAS No. 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG) process and further clarifies the accounting and reporting standards for derivative instruments including derivatives embedded in other contracts and for hedging activities. The provisions of this statement are to be prospectively applied effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this statement did not have a material impact on our results of operations or financial condition for the three- and six-month periods ended February 29, 2004.

      Effective May 1, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. On November 7, 2003, the FASB issued FASB Staff Position No. 150-3, which allows entities, who meet certain criteria, to defer the effective date for periods beginning after December 15, 2004. The adoption of this statement did not have a material impact on our results of operations or financial condition.

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BUSINESS

      We are a leading designer, manufacturer and marketer of plastic closures, bottles and related equipment used for packaging applications in the non-carbonated beverage and institutional food markets. In September 2003 we entered the CFT markets with the acquisition of Tech Industries, a leading provider of closures in these markets.

      We believe that we are the sole or largest supplier to many of our customers of the products we supply. Our consistent product quality and customer service have allowed us to develop strong relationships with our customers, and we have supplied products to our top 25 customers for an average of 13 years. We sold over 12.6 billion closures (pro forma) in fiscal 2003 to over 1,000 customers under the names Snap Cap, Nepco, Portola, Tech Industries and other brand names. Closure sales represented a majority of our 2003 pro forma sales. We sell our products to such beverage, food and consumer product companies as Dean Foods, Dairyworld Foods, Dairy Crest, Arla Dairies, Kroger, Perrier Water/ Nestle, Estée Lauder, Avon and Coca-Cola. Our products provide our customers with a number of value-added benefits, such as the ability to increase the security and safety of their products by making them tamper evident and leak-resistant.

      Many features of our products have been developed through our extensive research and development efforts. For example, we developed the “tear strip” feature that has become a standard tamper evident mechanism for non-carbonated beverage and food products. In addition, we have developed most of the technology and know-how that we believe necessary to operate our business. We hold more than 125 domestic and foreign patents, with over 70 additional patent applications pending, on the design and manufacture of container closures and containers, as well as compatible neck finishes.

      Our products are manufactured through technologically advanced, high speed injection molding, compression molding and blowmolding processes at twelve manufacturing facilities, including five located in the United States, four located in Canada, and one located in each of the United Kingdom, Mexico and China. In addition, we have two facilities located in the United States that produce equipment for our customers’ bottle filling lines and tooling for blowmolding equipment. We are developing a new advanced manufacturing facility in the Czech Republic to produce closures and CFT products for European markets and intend to begin construction of this facility in fiscal 2005.

History

      We were founded in 1964 and were acquired from our founders in 1986 by a group led by Jack L. Watts, our current Chairman of the Board and Chief Executive Officer. We have grown from $31.4 million in sales and 2.4 billion in closure units sold in fiscal 1988 to $249.2 million in pro forma sales and over 12.6 billion closures (pro forma) and 235.0 million bottles sold in fiscal 2003. The members of Portola’s senior management have significant experience in the plastic packaging business and an average tenure of over eight years.

      On June 30, 1994, we acquired Northern Engineering & Plastics Corp., a Pennsylvania corporation, and certain related companies and assets (collectively, “Pennsylvania Nepco”) for a purchase price of $43.7 million. The acquisition of Pennsylvania Nepco, a designer, manufacturer and marketer of tamper evident plastic closures in markets similar to those served by Portola, enabled us to establish new customer relationships, diversify and expand our product offerings and customer base and benefit from Pennsylvania Nepco’s proprietary product designs.

      On June 16, 1995, we purchased for $13.6 million the 50% interest we had not previously owned in Canada Cap Snap Corporation, a British Columbia corporation engaged in manufacturing and distributing small closures in western Canada, together with all the capital stock of two affiliated plastic bottle manufacturers. On September 1, 1996, we purchased for $2.1 million Rapid Plast J-P, Inc., a company headquartered in Montreal, Quebec engaged in manufacturing and distributing plastic bottles, primarily in eastern Canada. The Canadian acquisitions enabled us to establish a position in the Canadian bottle manufacturing market and to advance our position in the Canadian closure market.

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      On September 1, 1995, we completed the acquisition of the 50% interest we had not previously owned in Cap Snap (U.K.) Ltd., now known as Portola Packaging Limited (“Portola Packaging Ltd. (U.K.)”), for a purchase price of approximately $1.5 million. Portola Packaging Ltd. (U.K.), a corporation organized under the laws of England and Wales, is engaged in manufacturing closures for distribution primarily in the United Kingdom with some exports to other European countries and the Middle East.

      During fiscal 1999, we entered into a joint venture with Greiner A.G. of Austria to form an Austrian company now named Capsnap Europe Packaging GmbH (“CSE”), which is 50% owned by us and 50% by Greiner. CSE currently sells five-gallon closures and bottles that are produced by our United Kingdom subsidiary and Greiner. CSE owns Semopac, a French producer of five-gallon polycarbonate bottles. CSE also owns a 50% ownership interest in Watertek, a joint venture in Turkey which produces and sells five-gallon water bottles and closures for the European and Middle Eastern market places. Watertek owns a 50% interest in a new Greek company, Cap Snap Hellas, that sells our products in Greece.

      On March 31, 1999, we purchased certain operating and intangible assets and repaid certain liabilities of Portola Allied for a total purchase price of $2.2 million. Portola Allied is located in Michigan and is engaged primarily in the manufacture and sale of tooling and molds used in the blowmolding industry.

      Effective March 22, 2000, we acquired the remaining 45% ownership interest in PPI China that we did not previously own for $1.4 million. PPI China is located in the Shanghai province of China and is engaged in the manufacture and distribution of plastic closures and plastics components for the electronics industry in Southeast Asia, Australia and New Zealand.

      Effective January 1, 2001, we purchased certain assets and assumed certain liabilities of Consumer Cap Corporation (“Consumer”) for approximately $9.9 million. Consumer’s manufacturing and distributing operations were merged with our operations in Chino, California, Batavia, Illinois, and Sumter, South Carolina.

      On September 19, 2003, we acquired all of the outstanding capital stock of Tech Industries for approximately $35.7 million in cash (excluding items classified as assumed liabilities and transaction costs). During the 52 weeks ended August 24, 2003, Tech Industries had sales of $33.9 million. Tech Industries is a manufacturer of plastic closures and containers for the CFT industries. Tech Industries’ customers include Estée Lauder and Avon, each of which has used Tech Industries’ products for over 20 years. Tech Industries provides us with a position in the CFT markets, where advanced design capabilities and specialized manufacturing processes are required and gross margins are typically higher than our existing markets. We plan to implement our efficient manufacturing processes within Tech Industries’ operations to improve their profitability and contribution to our cash flow. We funded the acquisition principally through borrowings under our then-existing credit facility.

      On March 16, 2004, we purchased certain machinery and equipment used for the production of dairy closures, together with certain inventory, accounts receivable, and other assets, from a competitor in the United Kingdom. The purchase price was £2,235,000. We expect to utilize this machinery and equipment in our U.K. facility and other Portola facilities outside of the U.K.

Business Strategy

      Our primary strategy is to increase cash flow by maintaining and extending our position as a leader in significant segments in the plastic closure and bottle markets, as well as the newly entered CFT markets. The key elements of this strategy are as follows:

      Emphasizing research and development and product engineering. Packaging of beverages and food is rapidly changing in the marketplace as producers encounter increased competition and sophistication among their customers. The demands for new packaging solutions can only be met by using innovative design and manufacturing techniques and new materials. We are continuing our commitment to the research and development of new containers, closures and packaging systems and the manufacturing techniques to produce them. We have introduced three new products in fiscal 2004.

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      Emphasizing customer support and total product solutions. We build long-term relationships with customers and attract new customers by providing on-time delivery and technical service and support and by selling our products and services as “total product solutions.” We work closely with our customers to design closures and compatible container neck finishes and neck inserts that meet their specific needs, provide them with a wide range of stock and customizable products and support their needs for service and support. Many of our closure customers also use our custom capping equipment, which we believe improves their products and strengthens our relationships with them.

      Expanding sales in markets outside of the United States. We expect significant growth in markets outside of the United States for plastic closures and capping and filling equipment, as bottled water and other non-carbonated beverage producers in international markets adopt more advanced packaging materials and techniques. We are seeking to capitalize on these growth opportunities by entering into joint ventures with local bottle manufacturers, bottlers and distributors, by increasing exports and by establishing manufacturing and sales operations in local markets. We have commenced expansion in China and Mexico and are developing a greenfield manufacturing facility in the Czech Republic to serve European markets for closures and CFT products. We intend to begin construction of the latter facility in fiscal 2005.

      Product Integrity. Our goal is to promote our customers’ product safety and brand equity. Product Integrity encompasses safety and security products and services designed to protect the integrity of our customers’ manufacturing process and to protect their products as they move through the distribution chain. Accordingly, we design our products to assure customers that their products will be received by end-users as the manufacturer intended, with the taste, freshness, odor and effectiveness unimpaired. Other Product Integrity initiatives include the development of an anti-counterfeit system designed to be integrated into customer packaging lines. The system will be sold as a service that enables customers to identify and potentially eliminate counterfeit items from their distribution systems. The system is scalable, internet-based, and inexpensive to implement. The service may be sold independently of the closure used including to companies operating in adjacent markets such as pharma- and nutra-ceuticals, customers not otherwise purchasing our closures. We believe that our attention to the protection of our customers’ brands and products differentiates us from competitors.

      Pursuing strategic acquisitions. We intend to selectively pursue strategic acquisitions, focusing on markets with higher growth rates than those we currently serve and in which we can leverage our strengths in Product Integrity and manufacturing efficiency. For example, in September 2003, we acquired Tech Industries to gain access to the CFT markets.

Plastic Closure Market

      We compete in the closure segment of the worldwide plastic container packaging industry, focusing on proprietary tamper evident plastic closure applications. Plastic closures have various applications and are designed and engineered to meet specific uses. Our major plastic closure products are used for beverages, including dairy, fruit juice, bottled water, sport drinks and other non-carbonated drinks and institutional food products.

      Closure design is a function of the type of container and its contents. Products which are perishable, highly acidic or susceptible to tampering all require specialized capping applications. In many instances, it may be necessary for the container to be re-sealable, or it may be preferable for the contents to be dispensed through the closure without the closure being removed.

      The use of plastic closures has grown as the demand for tamper evident packaging has grown. A tamper evident feature is highly valued by the non-carbonated beverage and food market. While certain tamper evident devices can be incorporated into metal closures, the most sophisticated devices have been developed for plastic closures. We invented the original snap-on cap design as well as the “tear strip” feature with breakaway bands for plastic closures. These Portola innovations established the standard tamper evident mechanisms for the non-carbonated beverage and food industries.

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      Historically, growth in demand for our products has been driven by population growth, increasing concerns about the sanitation and safety of packaged food and beverage products and the continued shift from glass or metal to plastic containers throughout the packaged food and beverage industry. In addition, in many international markets demand for plastic containers is growing with increasing consumer disposable income. For the juice, dairy and bottled water markets, demand is also a function of climate and weather, with warmer temperatures tending to increase consumption. In the CFT markets, growth has been driven by trends such as the aging of the population, increasing demand by younger consumers and the development of new cosmetic and skin care products. As packaging has shifted from glass and metal to plastic containers, which largely rely on plastic closures, the use of plastic closures has grown at a faster rate than the overall closures market. See “— Products” and “— Product development.”

Products

      We design, manufacture and sell a wide array of tamper evident plastic closures for dairy, fruit juice, bottled water, sport drinks and other non-carbonated drinks, for institutional food products and for cosmetics, fragrances and toiletries. We also design, manufacture and sell (i) blowmolded bottles used in the dairy, water, juice and industrial markets, (ii) injection stretch blowmolded bottles for bottled water markets, (iii) jars for CFT products, (iv) high-speed capping equipment used by our plastic closure customers in their bottling and packaging operations, (v) tooling and molds used in the blowmolding industry to manufacture bottles and (vii) customized bottling and capping systems for returnable water cooler bottles.

      Plastic closures. We offer a wide variety of plastic closures under each of our principal product lines to satisfy a great number of application and customer requirements. Our plastic closures for beverages are broadly grouped into five categories: (i) small closures used to cap blowmolded plastic bottles, (ii) closures for five-gallon returnable glass and plastic water cooler bottles, (iii) widemouth closures for institutional food products, (iv) fitments for gable-top containers (such as conventional paperboard milk and juice cartons) and (v) push-pull sport cap closures for bottled water, flavored water and sports drinks. Our plastic closures range in size from 26 mm to 110 mm and conform to international packaging standards. We offer 30 standard colors, and also offer a high degree of product distinction for our customers through over 300 custom-blended colors and sophisticated printing, embossing and labeling capabilities. Most of our plastic closures offer a snap-on, snap-screw or screw feature, designs which are preferred by packagers because they reduce production costs. Our plastic closures also incorporate tear strips, breakaway bands or other visible tamper evident devices, a feature that has become an industry standard for non-carbonated beverage and food products. Our sales of plastic closures represented approximately 75%, 80% and 79% of total pro forma sales in fiscal 2003, 2002 and 2001, respectively.

      In September 2003, we entered the CFT markets through our acquisition of Tech Industries. Tech Industries produces and markets custom bottle caps, jar covers and jars for personal care and cosmetics products.

      The following describes our principal closure lines:

•  Closures for gallon and half-gallon plastic containers. We are a leading provider of 38 mm closures used primarily for gallon and half-gallon plastic containers for milk and fruit juices in the United States and similar plastic containers for milk in Mexico and the United Kingdom. These closures represented a majority of our total closure sales in fiscal 2003.

•  Five-gallon closures. We are a leading provider of plastic closures for five-gallon returnable glass and plastic water cooler bottles in the United States, and we also sell these products in Canada, Mexico, Europe and Asia.

•  Other food and beverage closures. We produce a variety of specialty closures for the beverage and food markets. These products include (i) wide mouth closures for plastic containers used in institutional food applications such as packaging for condiments, mayonnaise and salad dressing, (ii) re-closeable plastic dispensing fitments for gable-top paperboard cartons used for orange juice, lemonade, other juice, dairy and soy products, and (iii) push-pull sport caps for bottled water, juices

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and sport drinks. We believe that we are a leader in many of these markets in the United States, the United Kingdom and Canada.

•

Closures and jars for the cosmetics, fragrance and toiletry markets. With the acquisition of Tech Industries, we believe that we have become a leader in closures for the CFT markets, with particular strength in compression-molded closures used for high-end products. Tech Industries has had long-standing relationships, averaging over 25 years, with seven of the ten major global cosmetics companies, including Avon, Estée Lauder and L’Oreal.

      Plastic bottles. We produce a wide variety of blowmolded high density plastic bottles in Canada for use primarily in the dairy, water and juice industry. We also produce five-gallon polycarbonate water bottles in Mexico and the United Kingdom. The ability to sell the closures and bottles together enables the Canadian, Mexican and the United Kingdom operations to provide their customers with a complete packaging system. Through our joint venture, CSE, we sell five-gallon polycarbonate bottles and closures primarily in Europe. In the CFT markets, Tech Industries offers a line of heavy wall PETG and polypropylene jars that complements our closure offerings.

      Capping equipment and tooling. We design, manufacture and sell capping equipment for use in high-speed bottling, filling and packaging production lines. A substantial majority of our plastic closure customers use our capping equipment. Our ability to supply capping equipment and technical assistance along with our plastic closures represents an important competitive advantage, as customers have confidence that our plastic closures will be applied properly to provide a high degree of protection against leaks and that line shut-downs and other problems will be resolved quickly.

      We also manufacture and sell high quality tooling and molds used in the blowmolding industry for the manufacture of bottles. These capabilities allow us to respond rapidly to customers tooling needs, enhancing our ability to provide a complete solution to our customers.

      Bottling and capping systems. We design, manufacture and sell customized high production water treatment, bottling and robotic palletizing equipment for five-gallon and other refillable water containers. Our most comprehensive five-gallon water bottling system is our PortaPlant system. Our PortaPlant, Adapta and ValuLine systems are compact bottle washing, filling, capping and conveying systems for glass and plastic refillable water bottles. Our Roboloader system is a robotic palletizing system for automated rack loading and unloading at speeds up to 2,200 bottles per hour (“BPH”). The PortaPlant system can process 800 to 3,000 BPH, the Adapta system can process 300 to 600 BPH and the ValuLine can process 150 BPH. Adapta’s modular and expandable design make it ideal for new and small water bottling companies whose growth requires integrated expansion.

Product development

      Our research and development group and engineering staff, augmented by skilled package design consultants, engage in a range of design and development services focusing on (i) new closure products and existing product enhancements, (ii) tooling and molds necessary for manufacturing plastic closures and (iii) capping equipment compatible with our closures and our customers’ containers. Research and development expenditures for fiscal 2003, 2002 and 2001 were $4.7 million, $3.1 million and $3.1 million, respectively, and research and development expenses for the first six months of 2004 were $2.9 million.

      We have made a substantial investment in developing both new and enhanced products. To facilitate this process and to increase the chances of ultimate market acceptance of such products, we encourage ongoing exchanges of ideas with customers, container manufacturers, machinery manufacturers and sales and service personnel. Ongoing consultations with our customers have enabled us to identify new product opportunities and to improve existing products. During the past two years, we have increased the size of our research and development staff and have added experienced new research and development management.

      We have accelerated the pace of our product development activities to address the increasing rate of innovation in the worldwide plastic packaging industry. However, in many cases, customers who are comfortable with their existing closure products can be slow to switch to a new design.

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Intellectual property

      As of February 29, 2004, we held over 125 domestic and foreign patents on the design and manufacture of our products, including container closures and containers, compatible neck finishes, handling equipment and related processes, and we had over 70 patent applications pending. We rely primarily on our patents to protect our intellectual property and are committed to developing new proprietary innovations in and continuing to apply for patents covering tamper evident plastic closures, bottles, related equipment and tooling for the food and beverage industry which we expect to provide us with a competitive advantage in new product areas. A number of our patents relating to one of our closure product lines have expired in recent years, and we believe that such expirations have, to varying effect, adversely affected our margins, as competitors who become free to imitate Portola designs have begun to compete aggressively by lowering prices. We also have a number of trademarks that are deemed valuable to our business. We have developed most of the technology and know-how necessary to operate our business. In addition, in 2003 we entered into a licensing agreement with a third party licensor for a type of closure valve for containers of liquids that we believe may have significant market potential.

Raw materials and production

      The principal raw materials for our plastic closures and bottles are injection and blowmolding grade resins, which accounted for approximately 60% of the cost of all raw materials purchased for our plastic closures and bottles in fiscal 2003. Resin can be purchased from a number of reliable, competitive producers and is priced as a commodity. The majority of the resin we use in production is low density polyethylene (LDPE). We also use high density polyethylene, linear low polyethylene, polypropylene and polycarbonate. We have contracts with our three principal resin suppliers that provide for the adjustment of prices payable by us depending on periodic increases or decreases in published indices of national bulk resin pricing. While resin prices can fluctuate substantially over relatively short periods of time, we have not experienced any significant difficulties over the past ten years in obtaining sufficient quantities of resin. In the past, we have been able to eventually pass on increases in resin prices directly to our customers, although during the past two years, given the significant increases in resin prices, we experienced difficulty passing on all of such resin price increases to certain customers in a timely manner. Significant increases in resin prices from current levels, coupled with an inability to promptly pass such increases on to customers, could have a material adverse effect on our sales and margins. We experienced decreases in margins due to the impact of resin price increases during fiscal 2002, 2003 and 2004.

      To produce plastic closures and bottles, resin, which is delivered as small pebble-size pellets to large storage silos, is conveyed through a pipeline system to injection or compression molding or blowmolding machines where it is melted into a thick liquid state. Coloring agents are added as appropriate and the mixture is injected or blowmolded at high pressure into a specially designed, multi-cavity mold. The principal equipment in our plants includes injection molding, compression molding and blowmolding machines, finishing lines that print, label and insert closures with foam or foil to meet customer requirements and automated systems for handling and processing raw materials and finished goods. We use a similar automated process in the production of our bottles.

      Our operations use advanced automated and proprietary manufacturing processes to provide high quality products at relatively low production costs. We have implemented a continuous improvement process, based on the Toyota production system, designed to further automate our production flow, enhance the capabilities and efficiency of our workforce and upgrade our molds, equipment and systems. This enables us to limit our direct labor costs while meeting the strict sanitary requirements necessary for producing food and beverage packaging products. For example, from fiscal 1997 through fiscal 2003, we increased the productivity of our United States closure manufacturing employees by 25% (as measured in units per manufacturing employee). We recently began to apply our continuous improvement process to the operations of Tech Industries, and we believe that this can yield significant improvements in its operations over time.

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Backlog

      Production and delivery cycles for closures and bottles are very short, and our backlog is generally cancelable on short notice. Backlog for closures and bottles is generally two to three weeks of orders and is relatively constant from period to period. Due to the short production and delivery cycles for closures and bottles, we do not believe backlog information is a material factor in understanding our business. Contracts for equipment purchases generally include cancellation penalties.

      At Tech Industries, the backlog for CFT closures and containers has greater variability than Portola’s other businesses. CFT orders received from customers may require product deliveries that may be immediate or may extend over a three- to nine-month period. In addition, one of Tech’s major customers receives shipments under a consignment arrangement. Revenue for this customer is recognized upon consumption. Due to these factors, it is difficult to predict Tech’s sales for any given period based on our backlog.

Sales, marketing and customer service

      We sell our products through our in-house sales staff, sales representatives and, to a lesser extent, distributors. Domestically, a substantial portion of our sales and marketing activities are conducted by majority-owned subsidiaries in which management of the subsidiaries hold the minority interests. Calls on customers and participation at trade shows are our primary means of customer contact. A number of our customers are large corporate clients with numerous production facilities, and each facility may make its purchase decisions autonomously. Our customers include processors and packagers of fluid milk, non-carbonated bottled water, chilled juice and flavored drink products sold on the retail level and condiments sold in the wholesale and institutional market, as well as producers and distributors of CFT products. Our top ten customers (including our European joint venture) accounted for approximately 38% of our sales during fiscal 2003. No customer accounted for 10% or more of total sales during fiscal 2003. We believe that we are the sole or largest supplier to many of our customers for the products we supply. Our consistent product quality and customer service have allowed us to develop strong relationships with our customers. Our relationships with our top 25 customers average 13 years in length. For information regarding sales by geographical region, see Note 14 of the Notes to consolidated financial statements.

      Attention to customer service is a critical component of our marketing efforts. Our customers generally operate high-speed, high-volume production lines, many of which handle perishable products. In order to help assure that the production lines operate efficiently and avoid costly line stoppages, many customers rely on our ability to provide reliable, on-time delivery of our closure and bottle products and to maintain uniform quality of those products. We also provide technical assistance to domestic and foreign customers by dispatching service personnel on short notice to solve bottling line problems. Several of our field service representatives have extensive blowmolding technical expertise that is especially important in resolving bottle leakage problems for customers.

International sales and joint ventures

      Our international sales have increased substantially in recent years. Export sales from the United States and sales from our non-U.S. facilities increased to $92.8 million in fiscal 2003 from $84.4 million and $83.7 million in fiscal 2002 and 2001. Bottled water companies and other non-carbonated beverage companies in Europe, East Asia, Latin America, Australia and elsewhere have continued to adopt more advanced packaging materials and techniques and have increasingly chosen to purchase our products from our plants in the region rather than from the U.S. facilities. Correspondingly, our foreign subsidiaries have increased their production, and total sales by our non-U.S. facilities accounted for 39% of our consolidated sales in fiscal 2003. For fiscal 2003, 2002 and 2001, export closure sales from the United States to unaffiliated customers were $3.9 million, $3.6 million and $2.8 million, respectively. For information regarding international sales by geographical region, see Note 14 of the Notes to consolidated financial statements.

      We have historically entered new markets outside of the United States through joint ventures with bottle manufacturers, bottlers and distributors that have an established presence in the local market. We currently are a party to a joint venture that sells certain products in Europe. For risks associated with our foreign

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operations, see “Risk factors — Difficulties presented by non-U.S. economic, political, legal, accounting and business factors could negatively affect our interests and business efforts.”

      In November 2003, we purchased land in the Czech Republic, where we intend to begin construction of a closure manufacturing plant in 2005 to serve the European markets for closures and CFT products. In April 2004, we amended the lease of our Guadalajara, Mexico plant to allow for construction of a 20,000 square foot expansion to our existing facilities to serve the Latin American markets for CFT products. Construction of this expansion will begin in the third quarter of fiscal 2004 with a targeted completion date of September 1, 2004, at which time the amended lease will become effective. The Company will guarantee approximately $0.2 million in future lease payments related to the amended lease. This is in addition to the guaranty of approximately $0.6 million related to the original lease. Also in April 2004, we entered into leases of two buildings, totaling 31,860 square feet, in Shanghai, China to serve the Pacific Rim markets for CFT products. The building A lease was effective May 1, 2004 and the building B lease will be effective November 1, 2004. The lease term for building A is 24 months and the lease term for building B is 18 months.

Competition

      We compete in sales of container closures and bottles to the beverage and food industry on the basis of price, product design, product quality and reliability, on-time delivery and customer service. We believe that our proprietary products and our ability to provide our customers with innovative, low-cost closures and complete capping systems, as well as our reputation for quality, reliability and service, and our automated and strategically located production facilities give us a competitive advantage.

      While no single competitor offers products that compete with all of our product lines, we face direct competition in each of those lines from a number of companies, many of which have financial and other resources that are substantially greater than ours. For example, we compete with divisions or subsidiaries of Alcoa, Berry Plastics, Crown Cork & Seal, International Paper and Rexam, as well as a number of smaller companies. Additionally, we from time to time also face direct competition from bottling companies and other beverage and food providers that elect to produce their own closures rather than purchase them from outside sources. A significant increase in competition, through technological innovations, offerings of lower priced products or introduction of new products not offered by us could have a material adverse effect on our financial condition and results of operations.

Employees

      As of February 29, 2004, we had 1,308 full-time employees, 62 of whom were engaged in product development, 131 in marketing, sales and customer support, 1,020 in manufacturing and 95 in finance and administration. We use seasonal and part-time employees for training, vacation replacements and other short-term requirements. None of our employees in the United States is covered by any collective bargaining agreement. Approximately 35 employees of our Canadian subsidiary are members of the Teamsters union, and during fiscal 2002, the affected plant entered into a three-year agreement with the Teamsters union. In addition, approximately 69 of our employees are covered by a collective bargaining agreement in Mexico. We have never experienced a work stoppage and believe that employee relations are good.

Legal Proceedings

      In the normal course of business we are subject to various legal proceedings and claims. Based on the facts currently available, management believes that the ultimate amount of liability beyond reserves provided, if any, for such pending actions in the ordinary course of business will not have a material adverse effect on our financial position.

      We are currently a defendant in a suit filed by Blackhawk Molding Co., Inc. on August 28, 2003 in the U.S. District Court for the Northern District of Illinois, Eastern Division, in which Blackhawk Molding alleges that a “single-stick” label attached to our five–gallon caps infringes a patent held by it. We have answered the complaint denying all allegations and asserting that the patent is invalid and that we have not infringed Blackhawk Molding patents. Discovery is in an early stage. The Court held a hearing on claim

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construction at the end of May 2004, but has not yet rendered a decision. While we believe that we have substantial defenses in the matter, the ultimate outcome of any litigation is uncertain, and an unfavorable result could result in our sustaining material damages. In addition, any litigation concerning intellectual property could be protracted and costly and could have a material adverse effect on our business and results of operations regardless of its outcome.

Properties

      We believe that our facilities are well-maintained, are in good operating condition and are suitably located. We believe our facilities are adequate for our current needs and near-term growth requirements. However, substantial capital expenditures will be required to meet production requirements as new product lines are introduced. We cannot assure you that developments will not occur that would require us to add production facilities sooner than expected. The table below indicates the locations, functions, square footage and nature of ownership of our current facilities. In addition, in November 2003 we purchased land in the Czech Republic where we intend to begin construction of a closure manufacturing facility in 2005 to serve the European markets for closures and CFT products.

				Nature of
Location	Functions	Square Feet		Ownership(1)
San Jose, CA(2)	Executive Office/Closure Mfg./Warehouse/Engineering/Research and Development		89,400		Owned
Kingsport, TN	Closure Mfg./Warehouse		93,400		Owned
Clifton Park, NY(1)	Closure Mfg./Warehouse		51,400		Leased
Batavia, IL(1)	Closure Mfg./Warehouse/Executive Office/Engineering/Research and Development		73,100		Leased
New Castle, PA	Corporate Office/Warehouse/ Equipment Division		56,900		Owned
Indialantic, FL(1)	Sales Representative Organization		1,000		Leased
Onsted, MI	Sales Representative Organization		250		Leased
Kansas City, MO	Sales Representative Organization		150		Leased
Michigan Center, MI(1)	Tool Manufacturing		12,000		Leased
Tolleson, AZ	Closure Mfg/Warehouse		115,000		Leased
Woonsocket, RI(3)	Closure and Container Mfg./Warehouse		495,000		Owned
Shanghai, China(1)(5)	Closure Mfg./Warehouse/Engineering/Research and Development		49,130		Leased
Richmond, British Columbia, Canada	Bottle & Closure Mfg./Warehouse		49,000		Leased
Edmonton, Alberta, Canada	Bottle Mfg./Warehouse		55,600		Leased
Toronto, Ontario, Canada	Bottle Mfg./Warehouse		47,000		Leased
Montreal, Quebec, Canada	Bottle Mfg./Warehouse		43,500		Leased
Guadalajara, Mexico(4)	Bottle & Closure Mfg./Warehouse		60,000		Leased
Doncaster, South Yorkshire, England	Bottle & Closure Mfg./Warehouse/Engineering/Research and Development		80,000		Leased

(1)  The facilities shown as leased in the table above are subject to long-term leases or lease options that extend for at least five years, except as follows: (a) the lease for Michigan Center, MI expires in October 2005, (b) the lease for Shanghai, China expires in November 2007, (c) the lease for Batavia, IL expires in July 2007, (d) the lease for Clifton Park, NY expires in June 2005, and (e) the lease for Indialantic, FL expires in November 2005.

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(2)	We have entered into a contract to sell one of our two buildings in San Jose, California, as this facility is redundant for our operations, and we have sold the Chino facility and are relocating their operations to a newly-leased facility in Tolleson, Arizona (a suburb of Phoenix) in fiscal 2004.
(3)	This facility was acquired with Tech Industries on September 19, 2003. See Note 18 of the Notes to consolidated financial statements.
(4)	In April 2004, we amended the lease of our Guadalajara, Mexico plant to allow for construction of a 20,000 square foot expansion to our existing facilities. Construction of this expansion began in the third quarter of fiscal 2004 and has a targeted completion date of September 1, 2004, at which time the amended lease will become effective. The Company will guarantee approximately $0.2 million in future lease payments related to the amended lease. This is in addition to the guaranty of approximately $0.6 million related to the original lease. The amended lease extends the lease term 10 years from the last day of the month of the targeted completion date of September 1, 2004.
(5)	In April 2004, we entered into leases of two buildings, totaling 31,860 square feet, in Shanghai, China. The building A lease was effective May 1, 2004 and building B lease will be effective November 1, 2004. The lease term for building A is 24 months and the lease term for building B is 18 months.

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MANAGEMENT

      Our directors and executive officers and their ages as of the date of this prospectus are as follows:

Name	Age		Title
Jack L. Watts		56	Chairman of the Board and Chief Executive Officer
James A. Taylor		58	President and Chief Operating Officer
Dennis L. Berg		54	Vice President, Finance and Chief Financial Officer
M. Craig Akins		53	Vice President, U.S. Sales and Service
Frederick K. Janz		53	Managing Director, International Corporate Development
Richard D. Lohrman		50	Vice President, Engineering/ R&D
E. Scott Merritt		48	Vice President, Corporate Services
Themistocles G. Michos		71	Vice President, General Counsel and Secretary
Robert Egan(1)		40	Director
Martin Imbler(1)		56	Director
Larry C. Williams(2)		54	Director

(1)	Member of the Compensation Committee.
(2)	Member of the Audit Committee.

      Jack L. Watts has been our Chairman of the Board and Chief Executive Officer since January 1986. From 1982 to 1985, he was Chairman of the Board of Faraday Electronics, a supplier of integrated circuits and board level microprocessors.

      James A. Taylor has been our President and Chief Operating Officer since July 1999. He joined us in July 1998 as Vice President and Chief Financial Officer. From February 1996 to July 1998, he was Vice President, Finance and Treasurer at Seagate Technology, Inc., an international manufacturer and distributor of computer disk drives. He joined Seagate Technology following its acquisition of Conner Peripherals, Inc. where he had been Vice President and Treasurer from December 1993 through February 1996. Conner also manufactured and distributed computer disk drives globally.

      Dennis L. Berg has been our Vice President of Finance and Chief Financial Officer since July 1999. He joined us in February 1999 as Vice President, Finance. From February 1988 to February 1999, he was employed by Seagate Technology, Inc., an international manufacturer and distributor of computer disk drives. During his tenure at Seagate, Mr. Berg held many financial management positions including Director of Worldwide Internal Audit, Controller of Heppenheim, Germany and Omaha, Nebraska manufacturing plants, Senior Director of Corporate Accounting and External Reporting and most recently Senior Director of Financial Planning and Analysis.

      M. Craig Akins has been our Vice President of U.S. Sales and Service since March 2002. Mr. Akins was the Vice President of Sales for Consolidated Coca-Cola Bottling Company from 1999 until he left in 2002 and held various sales and sales management positions during his 22 years with the company.

      Frederick K. Janz has been our Managing Director, International Corporate Development since May 2004. From February 2003 to April 2004, he was President, America Group and from June 2000 to February 2003, he was President, International Group. He joined us in April 1995 as Vice President of Pennsylvania Nepco. Prior to 1995, Mr. Janz was Vice President of the CMS Materials division of CMS Gilbreth, a leading supplier of decorated plastic packaging and application equipment. Mr. Janz also held several positions in Owens-Illinois and Johnson Controls Plastics Division as Operations Manager and Regional Manufacturing Manager.

      Richard D. Lohrman has been our Vice President, Engineering/ R&D since July 2002. He has 25 years of product development experience in the packaging field. Prior to joining Portola, Mr. Lohrman was Manager of Technology for the Closure and Specialty group of Owens-Illinois. Mr. Lohrman also held a Vice President

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position in R&D for Zeller Plastik, Inc., a company owned by Crown Cork and Seal and was Vice President of Manufacturing for Betts Packaging.

      E. Scott Merritt has been our Vice President, Corporate Services since October 2001. He was the Vice President, U.S. Closures and Equipment from July 1999 to October 2001 and was the Vice President, U.S. Operations from July 1997 to July 1999. Mr. Merrit was Vice President of Manufacturing Technology from April 1996 to July 1997 and President and General Manager, Fitment Equipment from February 1995 until April 1996. From August 1992 to February 1995, he was an Advisor, General Assembly for New United Motor Manufacturing, Inc., an automobile manufacturing joint venture between General Motors and Toyota. From 1978 to August 1992, he was employed by General Motors of Canada, Ltd., where he held various positions, most recently as Manufacturing Superintendent, Components Plant.

      Themistocles G. Michos has been our Vice President and General Counsel since November 1996. He became Secretary during fiscal 2001. Prior to his association with us, he was and continues to be in private practice in San Francisco, California.

      Robert Egan has been a Partner of J.P. Morgan Entertainment Partners, L.L.C. since 1998 and a Senior Advisor to J.P. Morgan Partners, LLC since 2003. J.P. Morgan Partners, LLC is one of the largest private equity funds in the world. From 1995 to 1998, Mr. Egan was the President of Hudson River Capital LLC, a private equity fund which focused on investments in middle market companies. Prior to Hudson, Mr. Egan was a Principal and founding member of Chase Capital Partners, a predecessor to J.P. Morgan Partners, LLC. In addition, Mr. Egan has served as a Vice President of The Chase Manhattan Bank’s Merchant Banking Group.

      Martin Imbler is currently Chairman and co-founder of Riverbend Capital Resources Corporation. Prior to founding Riverbend in 2002, Mr. Imbler was President and CEO of Berry Plastics Corporation, a position he held from 1991 until 2002. Berry Plastics is a leading manufacturer of proprietary plastic packaging, serving a variety of markets in the United States and abroad. From 1987 to 1991, Mr. Imbler was President and CEO of Risdon Corporation, a manufacturer of metal and plastic packaging for the cosmetics industry. From 1973 to 1987, he held various executive positions with American Can Company, Conrail, Gulf Oil and The Boston Consulting Group. Previously, he was a Captain in the U.S. Army.

      Larry C. Williams has been one of our directors since January 1989. He co-founded The Breckenridge Group, Inc., an investment banking firm in Atlanta, Georgia, in April 1987 and is one of its principals.

      Each director listed above was elected at our Annual Meeting of Shareholders held in March 2003 and will serve until his successor has been elected and qualified or until his earlier resignation or removal.

      Our Board of Directors has an Audit Committee that is responsible, among other things, for overseeing our accounting and financial reporting processes and audits of our financial statements. Mr. Williams is the sole member of the Audit Committee. Our Board of Directors has determined that Mr. Williams qualifies as an “audit committee financial expert”; however, he is not “independent” as defined in federal securities laws. We intend to add an additional member to our Board of Directors, whom we expect to appoint to Audit Committee as an independent member. We cannot, however, assure you as to whether, or when, we will succeed in recruiting an independent director to our Board of Directors and Audit Committee.

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Executive Compensation

      The following table summarizes all compensation awarded to, earned by or paid for services rendered to us in all capacities during fiscal 2003, 2002 and 2001 by our Chief Executive Officer and our four other most highly compensated executive officers during fiscal 2003 (together, the “Named Officers”).

Summary Compensation Table

										Long-Term
										Compensation
										Awards
		Annual Compensation								Securities
								Other Annual		Underlying		All Other
Name and Principal Position		Year		Salary		Bonus(1)		Compensation		Options(5)		Compensation
Jack L. Watts(2)(3)			2003	$	350,260	$	—	$	42,000		200,000	$	—
	Chairman of the Board and		2002		361,770		183,750		41,800		—		152,465
	Chief Executive Officer		2001		344,995		218,160		41,800		50,000		109,080
James A. Taylor			2003		252,400		—		—		337,500		—
	President and		2002		262,252		168,750		—		—		—
	Chief Operating Officer		2001		250,000		201,798		—		50,000		—
M. Craig Akins(4)			2003		192,308		—		—		—		—
	Vice President,		2002		88,462		—		25,000		110,000		—
	U.S. Sales and Services
E. Scott Merritt			2003		182,692		—		—		108,600		—
	Vice President,		2002		188,462		52,500		—		—		—
	Corporate Services		2001		177,692		65,448		—		15,400		—
Frederick K. Janz			2003		176,539		—		—		115,000		—
	Managing Director, International		2002		178,462		67,500		—		—		—
	Corporate Development		2001		167,692		70,902		—		27,000		—

(1)	With respect to each fiscal year, bonuses are accrued each quarter for services rendered during the quarter and are generally paid within thirty days after the quarter has ended. With respect to fiscal 2002 and 2001, all bonuses relate to profit sharing distributions.
(2)	With respect to each fiscal year, other annual compensation includes $41,800 in consulting fees with respect to Mr. Watts paid to PPI Management Corporation, a company of which Mr. Watts is the controlling shareholder and the sole employee.
(3)	With respect to fiscal 2001, all other compensation represents forgiveness of certain principal and interest on a note receivable from Mr. Watts. With respect to fiscal 2002, all other compensation represents forgiveness of $91,875 of principal and interest on the same note receivable and $60,590 of reimbursed living expenses incurred while Mr. Watts was overseeing our operations in the United Kingdom.
(4)	Mr. Akins joined us in March 2002 and received a $25,000 signing bonus, which is reflected in other annual compensation.
(5)	With respect to fiscal 2003, all of the underlying stock options granted were related to our stock option exchange program, except for Messrs. Merritt and Janz, who received 8,200 and 27,500 shares, respectively. The shares received through the exchange program were originally issued under the 1994 Stock Option Plan.

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      The following table sets forth information concerning individual grants of stock options made during fiscal 2003 to the Named Officers.

Option Grants in Fiscal 2003

											Potential Realizable
											Value at Assumed
	Number of			% of Total							Annual Rates of Stock
	Securities			Options Granted							Price Appreciation for
	Underlying			to Employees			Exercise or				Option Term(4)
	Options			in Fiscal			Base Price		Expiration
Name	Granted(1)			Year(2)			($/Sh)(3)		Date		5%($)		10%($)
Jack L. Watts		200,000	(5)		—		$	5.50		9/29/2012		691,784		1,753,117
James A. Taylor		337,500	(5)		—		$	5.00		9/29/2012		1,167,386		2,958,384
M. Craig Akins		—			—			—		—		—		—
Frederick K. Janz		87,500	(5)		—		$	5.00		9/29/2012		302,656		766,989
		27,500			6.85	%	$	5.00		9/29/2012		95,120		241,054
E. Scott Merritt		100,400	(5)		—		$	5.00		9/29/2012		347,276		880,065
		8,200			2.04	%	$	5.00		9/29/2012		28,363		71,878

(1)	The options were granted under our 2002 Stock Option Plan. Except for the replacement options granted under our option exchange program, which were vested as of the date of grant to the extent the original options would have been vested, the options become exercisable for 20% of the shares on the first anniversary of the date of grant and the balance vests 5% for each calendar quarter of the individual’s employment thereafter. The stock options granted to Messrs. Watts and Taylor provide for acceleration of vesting upon a change in control. The individuals identified in the table received incentive or nonstatutory stock option grants.
(2)	The percentage of total options granted to employees in the last fiscal year is based on options to purchase an aggregate of 401,400 shares of common stock granted to employees during fiscal 2003, and does not include options issued in connection with the option exchange program.
(3)	Except for Mr. Watts, the exercise price on the date of grant was equal to 100% of the fair market value as determined by our Board of Directors on the date of grant. Mr. Watts’ options were granted at 110% of fair market value at the date of issuance.
(4)	The 5% and 10% assumed rates of appreciation are mandated by the rules of the SEC and do not represent our estimate or projection of our future common stock price.
(5)	Reflects options granted in connection with the stock option exchange program. See “— Option exchange program.”

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Fiscal Year-End Option Holdings

      The following table provides information on the number of exercisable and unexercisable management stock options held by the Named Officers at August 31, 2003.

Fiscal Year-End Option Values

					Number of Securities				Value of Unexercised
	Shares				Underlying Unexercised				In-The-Money Options at
	Acquired				Options at August 31, 2003				August 31, 2003(1)
	on		Value
Name	Exercise		Realized		Exercisable		Unexercisable		Exercisable		Unexercisable
Jack L. Watts		—		n/a		262,500		37,500	$	5,000		—
James A. Taylor		—		n/a		288,125		49,375		—		—
M. Craig Akins		—		n/a		27,500		82,500		—		—
Frederick K. Janz		—		n/a		103,925		41,075		—		—
E. Scott Merritt		—		n/a		146,714		21,855		—		—

(1)  None of Portola’s capital stock is currently publicly traded. The value of an “in-the-money” option represents the difference between the estimated fair market value of the underlying securities at August 31, 2003 of $5.00 per share, as determined by our Board of Directors, minus the exercise price of the option.

      The following is a summary of Portola’s employee equity plans and certain employment agreements Portola has entered into with Portola’s Chief Executive Officer and each of its other four most highly compensated executive officers, based on compensation paid for services rendered during the 2002 fiscal year.

Option Exchange Program

      On February 6, 2002 we announced a voluntary stock option exchange program for our employees, under which our employees could elect to cancel their outstanding options to purchase shares of our common stock that had an exercise price greater than $5.00 per share in exchange for an equal number of new incentive and/or nonstatutory stock options to be granted more than six months after the effective date of cancellation under our 2002 Stock Option Plan. The election became effective for all participants on February 28, 2002. Approximately 63 employees, including some of our executive officers, cancelled options to purchase approximately 922,839 shares of our common stock with exercise prices ranging from $5.25 to $6.875 per share.

      On September 3, 2002, in accordance with the exchange program, we granted options to purchase approximately 1,736,996 shares of our common stock to 63 employees. The exercise price of each of these new stock options was $5.00 per share, representing our Board of Directors’ determination of the fair market value of our common stock on the date the new options were granted, with the exception that options granted to Jack L. Watts, our Chairman of the Board and Chief Executive Officer, each had an exercise price of $5.50 per share, or 110% of the board’s determination of the fair market value of our common stock on the date the new options where granted. The new stock options have a new ten-year term, and were vested on the date of grant to the extent that the cancelled options were vested of the cancellation date.

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      The following table presents, for each of the Named Officers, the number of shares of common stock subject to stock options awarded in connection with the option exchange program, the fair market value of our common stock at the time of cancellation, the exercise price at the time of cancellation, the exercise price of the new options, and the length of the original option term remaining at the time of cancellation.

											Length of Original
			Number of		Fair Value						Option Term
			Securities		of Stock at		Exercise Price		New		Remaining at
			Underlying		Time of		at Time of		Exercise		Date of
			Options		Cancellation		Cancellation		Price		Cancellation
Name	Date		Cancelled		($)		($)		($)		(Months)
Jack Watts		09/03/02		50,000	$	5.00	$	5.775	$	5.50		64
		09/03/02		50,000	$	5.00	$	5.775	$	5.50		76
		09/03/02		50,000	$	5.00	$	6.875	$	5.50		88
		09/03/02		50,000	$	5.00	$	6.875	$	5.50		100
James A. Taylor		09/03/02		71,391	$	5.00	$	5.25	$	5.00		84
		09/03/02		6,000	$	5.00	$	5.25	$	5.00		84
		09/03/02		78,609	$	5.00	$	5.25	$	5.00		84
		09/03/02		31,500	$	5.00	$	5.25	$	5.00		84
		09/03/02		100,000	$	5.00	$	6.25	$	5.00		88
		09/03/02		50,000	$	5.00	$	6.25	$	5.00		100
Frederick K. Janz		09/03/02		5,000	$	5.00	$	5.25	$	5.00		72
		09/03/02		28,000	$	5.00	$	5.25	$	5.00		93
		09/03/02		27,500	$	5.00	$	6.25	$	5.00		97
		09/03/02		27,000	$	5.00	$	6.25	$	5.00		100
M. Craig Akins		—		—		—		—		—		—
E. Scott Merritt		09/03/02		15,000	$	5.00	$	5.25	$	5.00		72
		09/03/02		15,000	$	5.00	$	5.25	$	5.00		72
		09/03/02		6,350	$	5.00	$	5.25	$	5.00		75
		09/03/02		21,150	$	5.00	$	5.25	$	5.00		75
		09/03/02		27,500	$	5.00	$	6.25	$	5.00		97
		09/03/02		15,400	$	5.00	$	6.25	$	5.00		100

Director Compensation

      During fiscal 2003, each of Dr. Pfeffer, who resigned from the Board of Directors in October 2003, Mr. Tomlinson, who resigned from the Board of Directors in February 2004, and Mr. Williams received as compensation for services as a director $4,250 per quarter and $2,000 for each meeting of the Board attended, up to $25,000 per year, and also was reimbursed for reasonable expenses in attending Board meetings. Martin Imbler joined the Board of Directors on March 31, 2003. Mr. Imbler received a prorated portion of his first quarter compensation and thereafter received the same compensation as Dr. Pfeffer and Messrs. Tomlinson and Williams for the remainder of the fiscal year. Neither Mr. Egan nor Mr. Watts is compensated as a director. Messrs. Williams and Tomlinson received annual retainers for their services as members of the Audit Committee of the Board in the amount of $4,000 each, paid on a quarterly basis. Each of Dr. Pfeffer and Messrs. Tomlinson and Williams received an annual retainer for his services as a member of the Compensation Committee of the Board of Directors in the amount of $4,000, paid on a quarterly basis.

Employment and Change of Control Arrangements

      Certain of our stock option agreements provide for acceleration of vesting in the event of a “change in control,” as defined in such stock option agreements. In this regard, certain of the stock options granted during fiscal 2003, 2002 and 2001 to the members of the Board of Directors, Messrs. Behrens, Pfeffer, Tomlinson and Williams, and to certain of our executive officers, M. Craig Akins, Laurie D. Bassin, Dennis L. Berg, James A. Taylor and Jack L. Watts, provide for acceleration of vesting upon a change in control of our company. Stock options granted to certain of these individuals in prior fiscal years also provide for acceleration of vesting upon a change in control.

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PRINCIPAL STOCKHOLDERS

      The following table sets forth certain information with respect to beneficial ownership of each class of our voting securities as of May 20, 2004 by (i) each person known by us to be the beneficial owner of more than 5% of such class, (ii) each director, (iii) each Named Officer and (iv) all executive officers and directors as a group. Our equity securities are privately held and no class of our voting securities is registered pursuant to Section 12 of the Securities Exchange Act of 1934.

	Shares of Class A					Shares of Class B
	Common Stock					Common Stock
	Beneficially Owned(1)					Beneficially Owned(2)
Name of Beneficial Owner	Number(3)		Percent(3)			Number(3)		Percent(3)
Suez Equity Investors, L.P.(4)		2,134,992		100.0	%		—		—
SEI Associates(4)		2,134,992		100.0			—		—
Robert Egan(5)		—		—			2,385,798		24.4	%
J.P. Morgan Partners 23A SBIC, LLC (formerly Chase Manhattan Capital Corporation)(6)		—		—			2,385,798		24.4
Jack L. Watts(7)		—		—			3,604,446		35.8
Gary L. Barry(8)		—		—			607,965		6.2
James A. Taylor(9)		—		—			312,500		3.0
E. Scott Merritt(10)		—		—			160,755		1.6
Frederick K. Janz(11)		—		—			123,213		1.2
Larry C. Williams(12)		—		—			79,442		*
All executive officers and directors as a group (12 persons)(13)		—		—			7,139,123		66.1	%

* Less than 1%

(1)	As of May 20, 2004, there were 2,134,992 shares of Class A Common Stock issued and outstanding. The Class A Common Stock is non-voting and each share of Class A Common Stock may be converted into one share of Class B Common Stock, Series 1 in the event that shares of Class B Common Stock, Series 1 shall be sold in a firm commitment public offering in which the aggregate public offering price is equal to or greater than $10.0 million or there is a capital reorganization or reclassification of our capital stock. See Note 11 of Notes to consolidated financial statements.
(2)	Our Class B Common Stock, Series 1 carry voting rights of one vote per share. Holders of Class B Common Stock, Series 2 have a number of votes equal to the number of shares of Class B Common Stock, Series 1 into which such holder’s shares of Class B Common Stock, Series 2 is then convertible. The Class B Common Stock, Series 2 has a liquidation preference equal to $0.60 on each distributed dollar in the event that the value of our assets available for distribution is less than $1.75 per share. Each share of Class B Common Stock, Series 2 is convertible at any time at the option of the holder into that number of shares of Class B Common Stock, Series 1 which results from dividing the Conversion Price (as defined in our certificate of incorporation) by $1.75 and will be automatically converted into one such share (i) in the event that shares of Class B Common Stock, Series 1 shall be sold in a firm commitment public offering in which the aggregate public offering price is equal to or greater than $10 million or (ii) immediately prior to the effectiveness of a merger or consolidation in which Portola Packaging is not the surviving entity and in which the value of the property to be received by the stockholders shall be not less than $1.75 per share. As of May 20, 2004, there were 9,772,761 shares of Class B Common Stock issued and outstanding, consisting of 8,602,366 shares of Class B Common Stock, Series 1 and 1,170,395 shares of Class B Common Stock, Series 2. See Note 11 of Notes to consolidated financial statements.
(3)	In accordance with the rules of the SEC, shares are beneficially owned by the person who has or shares voting or investment power with respect to such shares. Unless otherwise indicated below, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock

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	issuable upon exercise of outstanding options identified in the footnotes to this table and exercisable on May 20, 2004 or within 60 days thereafter are included, and deemed to be outstanding and to be beneficially owned by the person holding such option for the purpose of computing the percentage ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(4)	Represents 2,028,242 shares held by Suez Equity Investors, L.P. and 106,750 shares held by SEI Associates, an affiliate of Suez Equity Investors, L.P. The address of both Suez Equity Investors, L.P. and SEI associates is 712 5th Avenue, 24th Floor, New York, New York 10019.
(5)	Mr. Egan is a principal of JPMorgan Partners (formerly Chase Capital Partners), an affiliate of JPMorgan Partners 23A (formerly Chase Manhattan Capital Corporation). Includes (i) 1,552,333 shares of Class B Common Stock, Series 1 held of record by JPMorgan Partners 23A and affiliates (of which 149,047 shares are held by Archery Partners and 99,800 shares held by Baseball Partners) and 10,000 shares of Class B Common Stock, Series 1 subject to options held by JPMorgan Partners Global 2001 SBIC, LLC, an affiliate of JPMorgan Partners 23A, that are exercisable within 60 days of May 6, 2004, and (ii) 7,750 shares of Class B Common Stock, Series 1 subject to options held by JPMorgan Partners 23A that are exercisable within 60 days of May 20, 2004. Also includes 726,095 shares of Class B Common Stock, Series 2 held of record by JPMorgan Partners 23A, 39,620 shares of Class B Common Stock, Series 2 held of record by Archery Partners and 50,000 shares of Class B Common Stock, Series 2 held of record by Baseball Partners, both affiliates of JPMorgan Partners 23A. Mr. Egan disclaims beneficial ownership of the 1,569,333 shares of Class B Common Stock, Series 1 owned by JPMorgan Partners 23A and affiliates and the 815,715 shares of Class B Common Stock Series 2 owned by JPMorgan Partners 23A and affiliates. The address of this shareholder is 1221 Avenue of the Americas, New York, New York 10017.
(6)	With respect to Class B Common Stock, Series 1, includes (i) 149,047 shares held by Archery Partners, (ii) 99,800 shares held by Baseball Partners, and (iii) (a) 10,000 shares subject to options held by JPMorgan Partners Global 2001 SBIC, LLC, an affiliate of JPMorgan Partners 23A, and (b) 7,750 shares subject to options held by JPMorgan Partners 23A that are exercisable within 60 days of May 20, 2004. With respect to Class B Common Stock, Series 2, includes 39,620 shares held of record by Archery Partners and 50,000 shares held of record by Baseball Partners, such entities being affiliates of JPMorgan Partners 23A. The address of this shareholder is 1221 Avenue of the Americas, New York, New York 10017.
(7)	Includes 280,000 shares subject to options that are exercisable within 60 days of May 20, 2004. Also includes 424,474 shares held of record by LJL Cordovan Partners, L.P., of which Mr. Watts is the general partner, and 10,000 shares held of record by the Watts Family Foundation, of which Mr. Watts is a trustee. The shares listed do not include 55,332 shares held in the names of trusts for the benefit of Mr. Watts’ children, due to the fact that Mr. Watts does not exercise voting or investment control over such trusts. Mr. Watts’ address is 898A Faulstich Court, San Jose, California 95112.
(8)	Mr. Barry’s address is 885 Portola Road, Portola Valley, California 94028.
(9)	Composed entirely of shares subject to options that are exercisable within 60 days of May 20, 2004. Mr. Taylor’s address is 898A Faulstich Court, San Jose, California 95112.

(10)	Composed of 5,000 shares held by a trust for the benefit of Mr. Merritt’s family and 155,755 shares subject to options that are exercisable within 60 days of May 20, 2004. Mr. Merritt’s address is 898A Faulstich Court, San Jose, California 95112.
(11)	Includes 120,375 shares subject to options that are exercisable within 60 days of May 20, 2004. Mr. Janz’s address is 898A Faulstich Court, San Jose, California 95112.
(12)	Includes 28,000 shares subject to options that are exercisable within 60 days of May 20, 2004. Excludes shares held in the individual names of three other principals of The Breckenridge Group, Inc., of which Mr. Williams is a principal. Mr. Williams’ address is Resurgens Plaza, Suite 2100, 945 East Paces Ferry Road, Atlanta, Georgia 30326.
(13)	Includes the shares shown in footnotes 5, 7, and 9 through 12.

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RELATED PARTY TRANSACTIONS

Loans and Transactions with Senior Management and Other Employees

      In January 1992, we loaned Jack L. Watts, our Chairman of the Board and Chief Executive Officer, $250,000 evidenced by a promissory note secured by a pledge of certain shares of Class B Common Stock, Series 1 owned by Mr. Watts. The note plus accrued interest was originally due in January 1993 and accrued interest at a rate equal to 2% above the borrowing rate on our revolving credit facility. In January 1997, the rate was changed to equal the Short Term Applicable Federal Rate, compounded annually. In December 2002, our Board of Directors agreed to extend until January 17, 2006, the due date of all principal and accrued interest owing to us. Also, in December 2001 and November 2000, our Board of Directors authorized the application of approximately one-third of management bonuses otherwise payable in cash to Mr. Watts to forgive the repayment of principal and interest accrued on the note in amounts of approximately $92,000 and $109,000, respectively. The principal plus accrued interest outstanding at August 31, 2003 was approximately $155,000. On May 19, 2004, Mr. Watts was awarded a cash bonus in the amount of $100,000, which is expected to be credited against any bonus otherwise payable to Mr. Watts in the future. Under the terms of our executive bonus plan, an amount equal to one-half of this amount was credited as a payment of principal outstanding under the loan, and Mr. Watts paid all remaining outstanding principal and interest due under the loan on May 20, 2004.

Transactions with Officers and Directors and Transactions with Entities Affiliated with Officers and Directors

      In addition to a base salary of $12,000, we incurred fees and expenses of $159,000, $182,000 and $234,000 in fiscal 2001, 2002 and 2003, respectively, to our Vice President, General Counsel and current Secretary, Themistocles G. Michos, for legal services rendered.

      In connection with the Financing Transactions, we paid fees of $4,950,000 to J.P. Morgan Securities Inc. (Robert Egan, one of our directors, is a senior advisor to JP Morgan Partners, an affiliate of J.P. Morgan Securities Inc.), $1,105,000 to The Breckenridge Group (of which Larry Williams, one of our directors, is a principal), $150,000 to Tomlinson Zisko LLP and $30,000 to Timothy Tomlinson (one of our directors at the time of the transaction and a general partner in Tomlinson Zisko LLP, one of our legal counsel), and $69,000 to Themistocles Michos (our Vice President, General Counsel and Secretary) for services rendered. We repurchased a warrant for $10,659,000 from JPMorgan Partners, of which we recognized a loss on the redemption. In addition, we paid fees to The Breckenridge Group, Tomlinson Zisko LLP and Themistocles Michos for services rendered related to other operational matters. Mr. Tomlinson has since resigned from the Board on February 29, 2004.

      For legal services rendered during fiscal 2001, 2002 and 2003, we incurred an aggregate of fees and expenses of $897,000, $410,000 and $314,000, respectively, to Tomlinson Zisko.

      On March 1, 2003, we entered into a consulting agreement with The Breckenridge Group, Inc., of which Larry Williams is a principal, for certain investment advisory and banking services. Pursuant to such agreement, we paid to The Breckenridge Group $30,000 during the year ended August 31, 2003. Mr. Williams is a member of our Audit Committee and was also a member of our Compensation Committee until November 2003.

      On November 1, 2001, we entered into a consulting agreement with Mr. Tomlinson pursuant to which we paid him consulting fees and an expense allowance totaling approximately $60,000 in fiscal 2002.

      In August 2001, we paid The Breckenridge Group a fee of approximately $92,000 for certain investment advisory and banking services performed on our behalf during fiscal 2001. We also reimbursed The Breckenridge Group for certain costs incurred by it. In addition, we issued 35,000 shares of Class B common stock to principals of The Breckenridge Group, 7,000 of which shares were issued to Larry Williams.

      In connection with our acquisition of Consumer in February 2001, we paid Mr. Tomlinson a fee consisting of $100,000 and 4,000 shares of Class B common stock, for services rendered to us.

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      In May 2001 in connection with the acquisition of Consumer, we paid The Breckenridge Group a fee of $100,000 for services rendered to us.

      In fiscal 2001, 2002 and 2003, we paid an annual management fee of approximately $42,000 to a corporation of which Jack Watts was the principal shareholder. We expect to pay a management fee of $60,000 for fiscal 2004 to this corporation.

      In June 1994, a predecessor of JPMorgan Partners 23A purchased shares of our Class B Common Stock, Series 1 from us and certain of our insiders, and shares of our Class B Common Stock, Series 2 from Robert Fleming Nominees, Ltd., now known as Chase Nominees Limited (“RFNL”). In connection with these purchases, JPMorgan Partners 23A, RFNL and GECC (formerly Heller Financial, Inc.), the lender under a credit facility entered into with us, received certain demand and piggyback registration rights. In addition, JPMorgan Partners 23A assumed the rights and obligations of Chase Manhattan Investment Holdings, Inc. (“CMIHI”) in an earlier agreement between us, CMIHI and RFNL under which (i) we have the right of first offer to purchase any shares of our capital stock that RFNL proposes to sell to any non-related party and (ii) RFNL and JPMorgan Partners 23A, amongst other investors, each have a right of first offer to purchase any Class B Common Stock, Series 1 that we propose to sell. JPMorgan Partners 23A is also a party to certain shareholders agreements providing for certain rights of first refusal as described below under the heading “Shareholders Agreements.” In addition, the parties to these shareholders agreements have granted to JPMorgan Partners 23A certain co-sale rights to participate in the sale by any such shareholders of more than 25% of the outstanding shares of our common stock. One of the shareholders agreements also provides that we are prohibited from (i) entering into any merger, consolidation or repurchase of capital stock, (ii) making certain amendments to our Bylaws or Certificate of Incorporation or (iii) entering into certain other significant transactions, without the approval of a majority of shares owned by certain investors, including shares owned by JPMorgan Partners 23A. Pursuant to that agreement, Jack L. Watts, LJL Cordovan Partners, RFNL and their permitted transferees have agreed to vote their shares in favor of a nominee of JPMorgan Partners 23A as one of our directors. Mr. Egan is JPMorgan Partners 23A’s current nominee. In addition, JPMorgan Partners 23A is a holder of a warrant that was redeemed by us with a portion of the net proceeds of the sale of the notes, and an affiliate of JPMorgan Partners 23A was an initial purchaser of the notes.

      On July 1, 1999, we entered into an agreement with Sand Hill Systems, Inc. (“SHS”), then a wholly-owned unrestricted subsidiary, to provide a total of $3.5 million in support services to SHS. The agreement terminated September 30, 1999, when the services provided under the agreement reached an aggregate value of $3.5 million, including approximately $1.5 million in a mark-up of the cost of the services rendered. In consideration for those services, we received a promissory note in the principal amount of $3.5 million from SHS, bearing interest at a rate equal to the base rate charged under our senior revolving credit facility less one-half of one percent. In September 1999, Portola IV LLC, a limited liability company (“LLC”), acquired an ownership interest in SHS in exchange for assuming the obligations of SHS under the note. Certain of the members of the LLC (the “Members”) were at the same time our officers or directors, including Jack L. Watts, Laurie D. Bassin and Larry Williams. The LLC secured payment of the note by pledging 500,000 shares of our Class B Common Stock that had been contributed to the LLC by the Members to capitalize the LLC (the “Portola Shares”). The note provided that all outstanding principal and interest amounts due thereunder were payable in full on the earlier date of July 1, 2003, or the occurrence of one of certain events, including the sale of all or substantially all of the assets of SHS. At May 31, 2002, we (and a wholly owned consolidated subsidiary) had a combined 6% equity ownership in SHS, which we accounted for under the cost method. Effective June 1, 2002, the assets of SHS were sold, with no assets available for distribution to the stockholders of SHS. On August 22, 2002, the LLC transferred the Portola Shares to us in lieu of foreclosure and in payment of all amounts due under the note. See Note 15 of Notes to consolidated financial statements.

      Effective July 1, 2000, we sold substantially all of the assets of our wholly owned unrestricted e-commerce subsidiary, BNI, to SHS in exchange for a non-interest bearing, unsecured promissory note for $1.5 million, which was fully reserved for as of August 31, 2000. In conjunction with SHS’s merger with Neptune Technologies in April 2001, the note was converted into SHS convertible preferred stock. Effective June 1, 2002, the assets of SHS were sold, effectively liquidating the company, with no return to shareholders.

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Shareholders Agreements

      A majority of our shares, including shares held by Jack L. Watts and his affiliates, are subject to shareholders agreements under which we have a right of first refusal in the event of a proposed transfer of such shares of our common stock to a transferee not related to the shareholder. In the event we do not exercise our right of first refusal, the other shareholders that are parties to the agreements have similar first refusal rights.

DESCRIPTION OF OTHER INDEBTEDNESS

Amendment and Restatement of Senior Secured Credit Facility

      On January 16, 2004, we entered into an amended and restated senior secured credit facility with GECC, as a lender and as the agent for the other lenders under such facility, which became effective upon the closing of the offering of the outstanding notes. We entered into a further amendment to this senior secured credit facility on May 21, 2004. The terms of the amended and restated credit facility are described below.

Revolving Credit Facility

      The amended and restated senior secured credit facility allows us to obtain up to $50.0 million of revolving credit loans for operating purposes subject to a borrowing base of the sum of (i) up to 85% of the net amount of eligible accounts receivables, (ii) the lesser of (A) up to 60% of the net amount of eligible raw materials and finished goods inventory and (B) up to 85% of the net orderly liquidation value of eligible raw materials and finished goods inventory, (iii) up to 80% of the net orderly liquidation value of eligible machinery and equipment and (iv) up to 50% of the fair market value of our eligible real estate holdings, which will serve as collateral for the facility. The borrowing base is subject to discretionary reserves and a fixed asset sub-limit totaling 40% of the borrowing base. As of February 29, 2004, our initial borrowing base would have supported borrowings of approximately $24.6 million under the amended and restated senior secured credit facility. Since the borrowing base under our amended and restated senior secured credit facility is based on our actual inventory and accounts receivable levels and values of other assets, available borrowings under the facility will fluctuate, and these fluctuations could be significant.

Letter of Credit Subfacility

      The amended and restated senior secured credit facility includes a letter of credit subfacility, which allows us to obtain up to $5.0 million of letters of credit instead of borrowing.

Maturity Date and Repayment

      The amended and restated senior secured credit facility has a term of five years. There is no required amortization of borrowings under the facility. Outstanding borrowings under the amended and restated senior secured credit facility may be repaid at any time and may be re-borrowed at any time prior to maturity.

Interest Rate and Fees

      Borrowings under the amended and restated senior secured credit facility bear interest, at our option, at either (i) an index rate (defined as a floating rate of interest per annum equal to the higher of the rate publicly quoted by The Wall Street Journal as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks” and the Federal Funds Rate plus 0.50%) plus a margin initially equal to 1.00% or (ii) the LIBOR loan rate (defined as the greater of (A) 2.00% per annum or (B) the offered rate for deposits in U.S. dollars in the London interbank market for the relevant interest period) plus 2.50%. In the event that “excess availability” under the amended and restated senior secured credit facility is less than $12.5 million, the applicable interest rate would increase by 0.25% until such time as excess availability exceeds $12.5 million.

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      The amended and restated senior secured credit facility also requires us to pay the following fees:

•  upfront fees of $570,000;

•  commitment fees equal to (i) 0.50% per annum on the average daily unused portion of the $50.0 million amended and restated senior secured credit facility if less than 50% of the amended and restated senior secured credit facility is drawn or (ii) 0.375% per annum on the average daily unused portion of the amended and restated senior secured credit facility if greater than 50% of the amended and restated senior secured credit facility is drawn; and

•  with respect to the letter of credit subfacility, a fee equal to the product of the average daily undrawn face amount of all letters of credit issued, guaranteed or supported by risk participation agreements multiplied by 2.50% per annum, together with any bank fees and charges incurred by GECC to a letter of credit issuer.

Security

      Our obligations under the amended and restated senior secured credit facility will be secured by a first priority security interest (with certain exceptions) in substantially all of our assets and the assets of the guarantors described below and, in addition, by a pledge of 100% of the shares of such guarantors and by a pledge of promissory notes evidencing our inter-company debt).

Guarantors

      Each of our existing wholly-owned subsidiaries (other than certain inactive U.S. subsidiaries, Tech Industries U.K. Ltd. and certain non-U.S. subsidiaries), and any other subsidiaries created in the future not specifically designated by us as “unrestricted” (subject to certain limitations that local law and Section 956 of the Internal Revenue Code may impose on the guarantee (and stock pledge) of certain non-U.S. subsidiaries), as well as any holding company formed to hold our partnership, membership or equity interests, will guarantee our obligations under the amended and restated senior secured credit facility. Each of the subsidiaries of Portola that have guaranteed the amended and restated senior secured credit facility will guarantee obligations of Portola under the indenture. The remaining subsidiaries are designated as “unrestricted subsidiaries” under the amended and restated senior secured credit facility and therefore are not subject to the restrictive covenants of such facility. Notwithstanding the designation of such subsidiaries as “unrestricted” under the amended and restated senior secured credit facility, such subsidiaries are initially restricted subsidiaries under the indenture.

Representations and Warranties

      The amended and restated senior secured credit facility contains representations and warranties customary for this type of financing.

Covenants and Conditions

      The amended and restated senior credit agreement contains affirmative, financial and negative covenants relating to our operations and financial condition. The financial covenants require us to maintain a minimum fixed charge coverage ratio of 1.0x for measurement periods ending on or before August 31, 2004 and 1.1x thereafter. We are required to maintain a minimum excess availability under the amended and restated senior secured credit facility of $3.0 million, increasing to $5.0 million upon GECC’s receipt of fixed asset appraisals acceptable to it and the inclusion of fixed assets in the borrowing base.

      The amended and restated senior secured credit facility includes negative covenants that restrict our ability to, among other things:

•  redeem warrants and repurchase stock, other than repurchases and redemptions during the first year of the agreement for an aggregate amount not to exceed $10.0 million, provided, after giving effect to each such redemption or repurchase, no default shall exist and excess availability under the amended

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	and restated senior secured credit facility is no less than $5.0 million; provided, however, that we may redeem warrants and repurchase stock from the proceeds of this offering in an aggregate amount not to exceed $20.0 million;
•	incur additional secured indebtedness other than indebtedness secured by purchase money liens and capital leases not to exceed $8.0 million in the aggregate;
•	incur additional unsecured indebtedness in excess of $1.5 million in the aggregate (not including the notes and guarantees offered hereby);
•	incur liens on our property, except for certain permitted liens and other liens not to exceed $2.0 million in the aggregate;
•	obtain intercompany loans from our subsidiaries unless such loans are subordinated to the amended and restated senior secured credit facility;
•	make investments and intercompany loans to our unrestricted subsidiaries and certain other subsidiaries other than (i) investments and intercompany loans in an individual amount not to exceed $5.0 million and in an aggregate amount not to exceed $10.0 million and (ii) investments in an aggregate amount not to exceed $10.6 million in certain of our non-U.S. subsidiaries or future joint ventures with Greiner AG and its affiliates;
•	enter into guarantees and other contingent obligations, except for certain permitted contingent liabilities and other contingent liabilities not to exceed $10.0 million in the aggregate;
•	pay fees to our Board of Directors in excess of $500,000 per annum, or enter into certain other transactions with affiliates;
•	sell assets other than (i) inventory in the ordinary course, (ii) the sale of our Chino, California and Sumter, South Carolina facilities and one of our San Jose, California facilities and (iii) other asset sales not to exceed $1.0 million individually and in an aggregate amount not to exceed $5.0 million per annum; and
•	invest in other persons, other than up to the sum of (i) $10.0 million plus (ii) the aggregate proceeds from the issuance of capital stock or other equity securities on or after the Closing Date (less proceeds used or segregated to repurchase Notes or capital stock or equity securities), in persons principally engaged in businesses similar to ours.

      Certain conditions must be met for us to borrow under the amended and restated senior secured credit facility in the future, including the absence of certain material adverse changes.

Events of Default

      The amended and restated senior secured credit facility contains customary events of default, which are subject to customary grace periods and materiality standards. The occurrence of a default, an event of default or a material adverse effect on Portola could result in our inability to obtain further borrowings under our amended and restated senior secured credit facility, which could materially and adversely affect our business. In addition, an event of default under the amended and restated senior secured credit facility could result in the acceleration of our obligations under our other debt agreements, including the notes.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

      When we sold the outstanding notes on January 23, 2004, we entered into a registration rights agreement with the initial purchasers of the outstanding notes that requires us to:

•  file with the SEC a registration statement related to the exchange notes;

•  offer to the holders of the outstanding notes the opportunity to exchange their outstanding notes for a like principal amount of exchange notes upon the effectiveness of the registration statement; and

•  use our reasonable best efforts to issue on or prior to 30 days after the date the registration statement is declared effective by the SEC, the exchange notes for all notes tendered in the exchange offer.

      If we fail to satisfy our registration and exchange obligations under the registration rights agreement, we will be required to pay additional interest to the holders of the notes.

      The following description of the registration rights agreement is a summary of the material provisions of the registration rights agreement. It is not complete and does not describe all of the provisions of the registration rights agreement. For more information, you should review the registration rights agreement which is filed as an exhibit to the registration statement of which this prospectus is a part.

Terms of the Exchange Offer

      This prospectus and the accompanying letter of transmittal together constitute the exchange offer. Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange outstanding notes that are validly tendered on or before the expiration date and are not properly withdrawn as permitted below. The expiration date for this exchange offer is 5:00 p.m., New York City time, on                     , 2004, or such later date and time to which we, in our sole discretion, extend the exchange offer.

      The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that:

•  The exchange notes will bear a Series B designation and have a different CUSIP number than the outstanding notes;

•  the exchange notes will have been registered under the Securities Act;

•  the exchange notes will not bear the restrictive legends restricting their transfer under the Securities Act; and

•  the exchange notes will not contain the additional interest provisions contained in the outstanding notes.

      Any holder may tender some or all of its outstanding notes pursuant to the exchange offer. However, notes tendered in the exchange offer must be in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof.

      We expressly reserve the right, in our sole discretion:

•  to extend the expiration date;

•  to delay accepting any outstanding notes;

•  if any of the conditions set forth below under “Conditions to the exchange offer” have not been satisfied, to terminate the exchange offer and not accept any outstanding notes for exchange; or

•  to amend the terms of the exchange offer in any manner.

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      We will give oral or written notice of any extension, delay, non-acceptance, termination or amendment as promptly as practicable to the exchange agent, as well as to the holders by means of a press release or other public announcement, and in the case of an extension, no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

      During an extension, all outstanding notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any outstanding notes not accepted for exchange for any reason will be returned without cost to the holder that tendered them as promptly as practicable after the expiration or termination of the exchange offer.

How to Tender Notes for Exchange

      When the holder of outstanding notes tenders, and we accept, such notes for exchange, a binding agreement between us and the tendering holder is created, subject to the terms and conditions set forth in this prospectus and the accompanying letter of transmittal. Except as set forth below, a holder of outstanding notes who wishes to tender such notes for exchange must, on or prior to the expiration date:

•  transmit a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, to U.S. Bank National Association, which will act as the exchange agent, at the address set forth below under the heading “The exchange agent”; or

•  if outstanding notes are tendered pursuant to the book-entry procedures set forth below, the tendering holder must transmit an agent’s message to the exchange agent at the address set forth below under the heading “The exchange agent.”

      In addition, either:

•  the exchange agent must receive the certificates for the outstanding notes and the letter of transmittal;

•  the exchange agent must receive, prior to the expiration date, a timely confirmation of the book-entry transfer of the outstanding notes being tendered into the exchange agent’s account at the Depository Trust Company, or DTC, along with the letter of transmittal or an agent’s message; or

•  the holder must comply with the guaranteed delivery procedures described below.

      The term “agent’s message” means a message, transmitted to DTC and received by the exchange agent and forming a part of a book-entry transfer, or “book-entry confirmation,” which states that DTC has received an express acknowledgement that the tendering holder agrees (i) to participate in the Automated Tender Offer Program System of DTC, or ATOP, (ii) to be bound by the letter of transmittal and (iii) that we may enforce the letter of transmittal against such holder.

      The method of delivery of the outstanding notes, the letters of transmittal and all other required documents is at the election and risk of the holders. If such delivery is by mail, we recommend registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. No letters of transmittal or notes should be sent directly to us.

      Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the outstanding notes surrendered for exchange are tendered:

•  by a registered holder of the outstanding notes; or

•  for the account of an eligible institution.

      An “eligible institution” is a firm that is a member of a registered national securities exchange or a member 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 under the Securities Exchange Act of 1934.

      If signatures on a letter of transmittal or notice of withdrawal are required to be guaranteed, the guarantor must be an eligible institution. If outstanding notes are registered in the name of a person other than the signer

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of the letter of transmittal, the outstanding notes surrendered for exchange must be endorsed by, or accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the holder’s signature guaranteed by an eligible institution.

      We will determine all questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of outstanding notes tendered for exchange in our sole discretion. Our determination will be final and binding. We reserve the absolute right to:

•  reject any and all tenders of any outstanding note improperly tendered;

•  refuse to accept any outstanding note if, in our judgment or the judgment of our counsel, acceptance of the outstanding note may be deemed unlawful; and

•  waive any defects or irregularities or conditions of the exchange offer as to any particular outstanding note either before or after the expiration date, including the right to waive the ineligibility of any holder who seeks to tender outstanding notes in the exchange offer.

      Our interpretation of the terms and conditions of the exchange offer as to any particular outstanding notes either before or after the expiration date, including the letter of transmittal and the instructions to it, will be final and binding on all parties. Holders must cure any defects and irregularities in connection with tenders of notes for exchange within such reasonable period of time as we will determine, unless we waive such defects or irregularities. Neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor shall any of us incur any liability for failure to give such notification. Tenders of outstanding notes will not be deemed to have been made until the defects or irregularities have been cured or waived. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

      If a person or persons other than the registered holder or holders of the outstanding notes tendered for exchange signs the letter of transmittal, the tendered outstanding notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the outstanding notes with the signature guaranteed by an eligible institution.

      If trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity sign the letter of transmittal or any outstanding notes or any power of attorney, such persons should so indicate when signing, and proper evidence, satisfactory to us, of such person’s authority to so act must be submitted to us unless we waive this requirement.

      By tendering, each holder will represent to us that, among other things, the person acquiring exchange notes in the exchange offer is obtaining them in the ordinary course of its business, whether or not such person is the holder, and neither the holder nor such other person is participating, intends to participate or has any arrangement or understanding with any person to participate in the distribution of the exchange notes issued in the exchange offer. If any holder or any such other person is an “affiliate,” as defined under Rule 405 of the Securities Act, of us, or is engaged in or intends to engage in or has an arrangement or understanding with any person to participate in a distribution of such notes to be acquired in the exchange offer, such holder or any such other person:

•  may not rely on applicable interpretations of the staff of the SEC; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction.

      Each broker-dealer who acquired its outstanding notes as a result of market-making activities or other trading activities, and thereafter receives exchange notes issued for its own account in the exchange offer, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes issued in the exchange offer. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a

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broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. See “Plan of distribution” for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer.

Acceptance of Outstanding Notes for Exchange; Delivery of Notes Issued in the Exchange Offer

      Upon satisfaction or waiver of all the conditions to the exchange offer, we will accept, promptly after the expiration date, all outstanding notes properly tendered and will issue exchange notes registered under the Securities Act. For purposes of the exchange offer, we shall be deemed to have accepted validly tendered outstanding notes for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter. See “— Conditions to the exchange offer” for a discussion of the conditions that must be satisfied before we accept any outstanding notes for exchange.

      For each outstanding note accepted for exchange, the holder will receive an exchange note registered under the Securities Act having a principal amount equal to that of the surrendered outstanding note. Accordingly, registered holders of exchange notes issued in the exchange offer on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from the most recent date to which interest has been paid. Outstanding notes that we accept for exchange will cease to accrue interest from and after the date of consummation of the exchange offer.

      In all cases, we will issue exchange notes for outstanding notes that are accepted for exchange only after the exchange agent timely receives:

•  certificates for such outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at DTC;

•  a properly completed and duly executed letter of transmittal or an agent’s message; and

•  all other required documents.

      If for any reason set forth in the terms and conditions of the exchange offer we do not accept any tendered outstanding notes, or if a holder submits outstanding notes for a greater principal amount than the holder desires to exchange, we will return such unaccepted or nonexchanged notes without cost to the tendering holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent’s account at DTC, such nonexchanged notes will be credited to an account maintained with DTC. We will return the outstanding notes or have them credited to DTC account as promptly as practicable after the expiration or termination of the exchange offer.

Book-entry Transfer

      The exchange agent will make a request to establish an account with respect to the outstanding notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution that is a participant in DTC’s system must make book-entry delivery of outstanding notes by causing DTC to transfer such outstanding notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. Such participant should transmit its acceptance to DTC on or prior to the expiration date or comply with the guaranteed delivery procedures described below. DTC will verify such acceptance, execute a book-entry transfer of the tendered outstanding notes into the exchange agent’s account at DTC and then send to the exchange agent confirmation of such book-entry transfer. The confirmation of such book-entry transfer will include an agent’s message confirming that DTC has received an express acknowledgment from such participant that such participant has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against such participant. Delivery of exchange notes issued in the exchange offer may be effected through book-entry transfer at DTC. However, the letter of

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transmittal or facsimile thereof or an agent’s message, with any required signature guarantees and any other required documents, must:

•  be transmitted to and received by the exchange agent at the address set forth below under “— The exchange agent” on or prior to the expiration date; or

•  comply with the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

      If a holder of outstanding notes desires to tender such notes and (i) the holder’s outstanding notes are not immediately available, (ii) time will not permit such holder’s outstanding notes or other required documents to reach the exchange agent before the expiration date, or (iii) the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:

•  the holder tenders the outstanding notes through an eligible institution;

•  prior to the expiration date, the exchange agent receives from such eligible institution a properly completed and duly executed notice of guaranteed delivery, acceptable to us, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the outstanding notes tendered, the certificate number or number of such outstanding notes and the amount of the outstanding notes being tendered. The notice of guaranteed delivery shall state that the tender is being made and guarantee that within three New York Stock Exchange trading days after the expiration date, the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal or agent’s message with any required signature guarantees and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

•  the exchange agent receives the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal or agent’s message with any required signature guarantees and any other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery.

      Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their outstanding notes according to the guaranteed delivery procedure set forth above.

Withdrawal Rights

      Except as otherwise provided in this prospectus, you may withdraw tenders of your outstanding notes at any time prior to 5:00 p.m., New York City time, on the expiration date.

      For a withdrawal to be effective, you must send a written notice of withdrawal to the exchange agent at the address set forth below under “The exchange agent.” Any such notice of withdrawal must:

•  specify the name of the person that has tendered the outstanding notes to be withdrawn;

•  identify the outstanding notes to be withdrawn, including the principal amount of such outstanding notes;

•  Be signed by the holder in the same manner as the original signature on the letter of transmittal by which the outstanding notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the outstanding notes register the transfer of the outstanding notes into the name of the person withdrawing the tender; and

•  where certificates for outstanding notes are transmitted, specify the name in which outstanding notes are registered, if different from that of the withdrawing holder.

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      If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If outstanding notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn notes and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices and our determination will be final and binding on all parties. Any tendered notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to the holder thereof without cost to such holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent’s account at DTC, the outstanding notes withdrawn will be credited to an account maintained with DTC for the outstanding notes. The outstanding notes will be returned or credited to DTC account as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be re-tendered by following one of the procedures described under “— How to tender notes for exchange” above at any time on or prior to 5:00 p.m., New York City time, on the expiration date.

Conditions to the Exchange Offer

      Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or exchange notes for, any outstanding notes, and may, prior to the expiration of the exchange offer, terminate or amend the exchange offer as provided in this prospectus before the acceptance of the outstanding notes if:

•  any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which we reasonably believe might materially impair our ability to proceed with the exchange offer or any material adverse development has occurred in any existing action or proceeding with respect to us or any of our subsidiaries;

•  any governmental approval has not been obtained, which approval we reasonably believe to be necessary for the consummation of the exchange offer as contemplated by the prospectus;

•  any law, statute, rule or regulation shall have been proposed, adopted or enacted that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer;

•  any stop order shall be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended; or

•  there shall occur a change in the current interpretation by the staff of the SEC that would reasonably be expected to impair our ability to proceed with the exchange offer.

      The preceding conditions are for our sole benefit, and we may assert them regardless of the circumstances giving rise to any such condition. We may waive the preceding conditions in whole or in part at any time and from time to time in our sole discretion. Our failure at any time to exercise the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that we may assert at any time and from time to time.

The Exchange Agent

      U.S. Bank National Association has been appointed as our exchange agent for the exchange offer. All executed letters of transmittal should be directed to our exchange agent at the address set forth below. Questions and requests for assistance, requests for additional copies of this prospectus or of the letter of

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transmittal and requests for notices of guaranteed delivery should be directed to the exchange agent addressed as follows:

By U.S. mail, hand delivery, or overnight mail:

U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN 55107-2292

Mail Code: EP-MN-WS3C

Attention: Specialized Finance

By telecopier:

(651) 495-8097

      Originals of all documents sent by facsimile should be promptly sent to the exchange agent by registered or certified mail, by hand, or by overnight delivery service.

      Delivery of the letter of transmittal to an address other than as set forth above or transmission of such letter of transmittal via facsimile other than as set forth above does not constitute a valid delivery of such letter of transmittal.

Fees and Expenses

      We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telecopy, telephone or in person by our and our affiliates’ officers and regular employees.

      We have 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. We will, however, pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses incurred in connection with these services.

      The cash expenses to be incurred in connection with the exchange offer will be paid by us and are estimated in the aggregate to be approximately $0.3 million.

Transfer Taxes

      Holders who tender their outstanding notes for exchange notes will not be obligated to pay any transfer taxes in connection with the exchange. If, however, exchange notes issued in the exchange offer are to be delivered to, or are to be issued in the name of, any person other than the holder of the outstanding notes tendered, or if a transfer tax is imposed for any reason other than the exchange of outstanding notes in connection with the exchange offer, then the holder must pay any such transfer taxes, whether imposed on the registered holder or on any other person. If satisfactory evidence of payment of, or exemption from, such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder.

Consequences of Failure to Exchange Outstanding Notes

      Holders who desire to tender their outstanding notes in exchange for notes registered under the Securities Act should allow sufficient time to ensure timely delivery. Neither the exchange agent nor our company is under any duty to give notification of defects or irregularities with respect to the tenders of notes for exchange.

      Outstanding notes that are not tendered or are tendered but not accepted will, following the consummation of the exchange offer, continue to accrue interest and to be subject to the provisions in the indenture regarding the transfer and exchange of the outstanding notes and the existing restrictions on transfer set forth in the legend on the outstanding notes and in the offering memorandum dated January 20, 2004, relating to the outstanding notes. Except in limited circumstances with respect to specific types of holders of outstanding notes, we will have no further obligation to provide for the registration under the Securities Act of such

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outstanding notes. In general, outstanding notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently anticipate that we will take any action to register the outstanding notes under the Securities Act or under any state securities laws.

      Upon completion of the exchange offer, holders of the outstanding notes will not be entitled to any further registration rights under the registration rights agreement, except under limited circumstances.

Consequences of Exchanging Outstanding Notes

      Based on interpretations of the staff of the SEC, as set forth in no-action letters to third parties, we believe that the notes issued in the exchange offer may be offered for resale, resold or otherwise transferred by holders of such notes, other than by any holder that is an “affiliate” of us within the meaning of Rule 405 under the Securities Act. Such notes may be offered for resale, resold or otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act, if:

•  such holder is not a broker-dealer tendering notes acquired directly from us;

•  such notes issued in the exchange offer are acquired in the ordinary course of such holder’s business; and

•  such holder, other than broker-dealers, has no arrangement or understanding with any person to participate in the distribution of such notes issued in the exchange offer.

      However, the SEC has not considered the exchange offer in the context of a no-action letter, and we cannot guarantee that the staff of the SEC would make a similar determination with respect to the exchange offer as in such other circumstances.

      Each holder, other than a broker-dealer, must furnish a written representation, at our request, that:

•  it is not an affiliate of us;

•  it is not a broker-dealer tendering notes acquired directly from us;

•  it is not engaged in, and does not intend to engage in, a distribution of the notes issued in the exchange offer and has no arrangement or understanding to participate in a distribution of notes issued in the exchange offer; and

•  it is acquiring the notes issued in the exchange offer in the ordinary course of its business.

      Each broker-dealer that receives notes issued in the exchange offer for its own account in exchange for outstanding notes must acknowledge that such outstanding notes were acquired by such broker-dealer as a result of market-making or other trading activities and that it will deliver a prospectus in connection with any resale of such notes issued in the exchange offer. See “Plan of distribution” for a discussion of the exchange and resale obligations of broker dealers in connection with the exchange offer.

      In addition, to comply with state securities laws of certain jurisdictions, the notes issued in the exchange offer may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and complied with by the holders selling the exchange notes. We have not agreed to register or qualify the exchange notes for offer or sale under state securities laws.

DESCRIPTION OF EXCHANGE NOTES

      The Company will issue the exchange notes (the “Notes”) under the Indenture dated as of January 23, 2004 (the “Indenture”), among itself, the Subsidiary Guarantors and U.S. Bank National Association, as trustee (the “Trustee”), which is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part. A copy of the Indenture is available upon request to the Company. The Indenture contains provisions that define your rights under the Notes. In addition, the Indenture governs the

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obligations of the Company and of each Subsidiary Guarantor under the Notes. The terms of the Notes include those expressly set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The Indenture is unlimited in aggregate principal amount, although the issuance of Notes will be limited to $180.0 million, which is the aggregate principal amount of outstanding notes. We may issue an unlimited principal amount of additional notes having identical terms and conditions as the Notes (the “Additional Notes”). We will only be permitted to issue such Additional Notes if at the time of such issuance, we are in compliance with the covenants contained in the Indenture. Any Additional Notes will be part of the same issue as the Notes and will vote on all matters with the holders of the Notes.

      This description of the Notes is intended to be a useful overview of the material provisions of the Notes and the Indenture. Since this description of the Notes is only a summary, you should refer to the Indenture for a complete description of the obligations of the Company and your rights.

      You will find the definitions of capitalized terms used in this section under the heading “— Certain definitions.” For purposes of this section, reference to “the Company,” we,” “our” and “us” refer only to Portola Packaging, Inc. and not to its subsidiaries.

General

      The Notes. The Notes:

•  are general unsecured, senior obligations of the Company;

•  are limited to an aggregate principal amount of $180.0 million, subject to our ability to issue Additional Notes;

•  mature on February 1, 2012;

•  will be issued in denominations of $1,000 and integral multiples of $1,000;

•  will be represented by one or more registered Notes in global form, but in certain circumstances may be represented by Notes in definitive form. See “Book-entry, delivery and form;”

•  rank equally in right of payment to any future senior Indebtedness of the Company, without giving effect to collateral arrangements; and

•  are unconditionally guaranteed on a senior unsecured basis by our existing and future subsidiaries that guarantee other indebtedness of Portola Packaging, Inc. until such guarantees of other indebtedness are released. See “Subsidiary guarantees.”

Interest

      Interest on the Notes will compound semi-annually and:

•  accrue at the rate of 8 1/4% per annum;

•  accrue from the date of original issuance or, if interest has already been paid, from the most recent interest payment date;

•  be payable in cash semi-annually in arrears on February 1 and August 1, commencing on August 1, 2004;

•  be payable to the holders of record on the January 15 and July 15 immediately preceding the related interest payment dates; and

•  be computed on the basis of a 360-day year composed of twelve 30-day months.

      We also will pay additional interest to holders of the Notes if we fail to complete the exchange offer by August 20, 2004 or if certain other conditions contained in the Registration Rights Agreement are not satisfied.

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Payments on the Notes; Paying Agent and Registrar

      The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose within the City and State of New York or, in certain circumstances set forth in the Indenture, payment of interest may be made by check mailed to the holders of the Notes at their respective addresses set forth in the register of holders of Notes. Until otherwise designated by the Company, the Company’s office or agency in New York will be the office of the Trustee maintained for such purpose.

      We will pay principal of, premium, if any, and interest on, Notes in global form registered in the name of or held by The Depository Trust Company or its nominee in immediately available funds to The Depository Trust Company or its nominee, as the case may be, as the registered holder of such global Note.

Transfer and Exchange

      A holder may transfer or exchange Notes in accordance with the Indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be imposed by the Company, the Trustee or the registrar for any registration of transfer or exchange of Notes, but the Company may require a holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

      The registered holder of a Note will be treated as the owner of it for all purposes.

Optional Redemption

      Except as set forth in the next paragraph, the Notes will not be redeemable at the Company’s option prior to February 1, 2007. Thereafter the Notes will be redeemable at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days notice, at the following redemption prices (expressed as percentages of principal amount) if redeemed during the twelve-month period beginning on February 1 of the years indicated below:

	Redemption
Year	Price
2007		106.188	%
2008		104.125	%
2009		102.063	%

and thereafter at 100% of the principal amount, in each case, together with accrued and unpaid interest to the redemption date. Notwithstanding the foregoing, at any time prior to February 1, 2007, the Company may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of one or more Equity Offerings at 108.25% of the aggregate principal amount thereof, together with accrued and unpaid interest, if any, to the date of redemption; provided that such redemption shall occur within 60 days of the date of the closing of any such Equity Offering; and further provided at least 65% of the original principal amount of the Notes (after giving effect to any future issuance of Additional Notes) remains outstanding after each such redemption.

Selection and Notice

      If we redeem less than all of the Notes at any time, the Trustee will select the Notes to be redeemed in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate, provided that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address. If we redeem any Note in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A

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new 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 Note. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, we will pay the accrued and unpaid interest, if any, to the Person in whose name the Note is registered at the close of business, on such record date, and no additional interest will be payable to holders whose Notes will be redeemed.

Mandatory Redemption

      The Company will not be required to make mandatory redemption or sinking fund payments with respect to the Notes.

Ranking

      The Notes will be general unsecured obligations of the Company that rank senior in right of payment to all existing and future Indebtedness that is expressly subordinated in right of payment to the Notes. The Notes will rank equally in right of payment with all existing and future liabilities of the Company that are not so subordinated and will be effectively subordinated to all of our secured Indebtedness to the extent of the value of the assets securing such Indebtedness and liabilities of our Subsidiaries that do not guarantee the Notes. In the event of bankruptcy, liquidation, reorganization or other winding up of the Company or its Subsidiary Guarantors or upon a default in payment with respect to, or the acceleration of, any Indebtedness under the Senior Secured Credit Agreement or other secured Indebtedness, the assets of the Company and its Subsidiary Guarantors that secure Indebtedness will be available to pay obligations on the Notes and the Subsidiary Guarantees only after all Indebtedness under the Senior Secured Credit Agreement and other secured Indebtedness has been repaid in full from such assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the Notes and the Subsidiary Guarantees then outstanding.

Subsidiary Guarantees

      The Subsidiary Guarantors will, jointly and severally, unconditionally guarantee on a senior basis the Company’s obligations under the Notes and all obligations under the Indenture. Such Subsidiary Guarantors will agree to pay, in addition to the amount stated above, any and all costs and expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the holders in enforcing any rights under the Subsidiary Guarantees. The obligations of Subsidiary Guarantors under the Subsidiary Guarantees will rank equally in right of payment with other Indebtedness of such Subsidiary Guarantor, except to the extent such other Indebtedness is expressly subordinate to the obligations arising under the Subsidiary Guarantee.

      Although the Indenture limits the amount of indebtedness that Restricted Subsidiaries may incur, such indebtedness may be substantial.

      The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee will be limited as necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

      In the event a Subsidiary Guarantor is sold or disposed of (whether by merger, consolidation, the sale of its Capital Stock or the sale of all or substantially all of its assets (other than by lease)) and whether or not the Subsidiary Guarantor is the surviving corporation in such transaction to a Person that is not the Company or a Restricted Subsidiary of the Company, such Subsidiary Guarantor will be released from its obligations under its Subsidiary Guarantee if:

      (x) the sale or other disposition is in compliance with the Indenture, including the covenant “Asset Sales”; and

      (y) all the obligations of such Subsidiary Guarantor under any Credit Facility and related documentation and any other agreements relating to any other indebtedness of the Company or its Restricted Subsidiaries terminate upon consummation of such transaction.

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      In addition, a Subsidiary Guarantor will be released from its obligations under the Indenture, its Subsidiary Guarantee and the Registration Rights Agreement if the Company designates such Subsidiary as an Unrestricted Subsidiary and such designation complies with the other applicable provisions of the Indenture.

Repurchase at the Option of Holders

     Change of Control

      Upon the occurrence of a Change of Control, each holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder’s Notes pursuant to the offer described below (the “Change of Control Offer”) at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest to the date of purchase (the “Change of Control Payment”). Within 30 days following any Change of Control, unless the Company has exercised its right to redeem all of the Notes in accordance with the Indenture, the Company will mail a notice to each holder stating: (1) that the Change of Control Offer is being made pursuant to the covenant entitled “Offer to Repurchase Upon Change of Control” and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”); (3) that any Note not tendered will continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date; (5) that holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed, to the paying agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that holders will be entitled to withdraw their election if the paying agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount of Notes delivered for purchase, and a statement that such holder is withdrawing his election to have such Notes purchased; and (7) that holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof.

      If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders who tender pursuant to the Change of Control Offer.

      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes in connection with a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in the Indenture by virtue of the conflict.

      On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of the Notes or portions thereof being purchased by the Company. The paying agent will promptly mail to each holder of Notes so accepted the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. The Company will send to the Trustee and the

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holders on or as soon as practicable after the Change of Control Payment Date a notice setting forth the results of the Change of Control Offer.

      Prior to mailing a Change of Control Offer, and as a condition to such mailing (i) the requisite holders of each issue of Indebtedness issued under an indenture or other agreement that may be violated by such payment shall have consented to such Change of Control Offer being made and waived the event of default, if any, caused under such indenture or other agreement by the Change of Control or (ii) the Company will repay all outstanding Indebtedness issued under an indenture or other agreement that may be violated by a payment to the Holder of Securities under a Change of Control Offer or (iii) the Company must offer to repay all such Indebtedness, and make payment to the holders of such Indebtedness that accept such offer, and obtain waivers of any event of default from the remaining holders of such Indebtedness. The Company will be required to effect such repayment or obtain such consent and/or waiver within 30 days following any Change of Control.

      The Change of Control provisions described above may deter certain mergers, tender offers and other takeover attempts involving the Company by increasing the capital required to effectuate such transactions. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the Company’s assets. Although there is a developing body of case law interpreting the phrase “substantially all” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company to another Person may be uncertain.

      The Company’s ability to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. The occurrence of certain of the events that constitute a Change of Control would constitute a default under the Senior Secured Credit Agreement. In addition, certain events that may constitute a change of control under the Senior Secured Credit Agreement and cause a default under that agreement may not constitute a Change of Control under the Indenture. Future Indebtedness of the Company and its Subsidiaries may also contain prohibitions of certain events that would constitute a Change of Control or require such Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the holders of their right to require the Company to repurchase the Notes could cause a default under such Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company’s ability to pay cash to the holders upon a repurchase may be limited by the Company’s then existing financial resources. There can be no assurance that the Company will have sufficient funds to pay the repurchase price for Notes tendered by the holders thereof.

      In addition, a Change of Control would constitute a default under the Senior Secured Credit Agreement and, since Indebtedness under the Senior Secured Credit Agreement will effectively rank senior in priority to Indebtedness under the Notes, the Company would be obligated to repay Indebtedness under the Senior Secured Credit Agreement in advance of Indebtedness under the notes. See “Risk factors — We may be unable to purchase the notes upon a change of control.” The Company’s repurchase of Notes as a result of the occurrence of a Change of Control may be prohibited or limited by, or create an event of default under, the terms of other agreements relating to borrowings into which the Company may enter from time to time, including agreements relating to secured Indebtedness. Failure by the Company to make or consummate a Change of Control Offer would constitute an immediate Event of Default under the Indenture, thereby entitling the Trustee or holders of at least 25% in principal amount of the then outstanding Notes to declare all of the Notes to be due and payable immediately; provided that so long as any Indebtedness permitted to be incurred pursuant to the Senior Secured Credit Agreement is outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration of any such Indebtedness under the Senior Secured Credit Agreement or (ii) five business days after receipt by the Company of written notice of such acceleration under the Indenture. In the event all of the Notes are declared due and payable, the Company’s ability to repay the Notes would be subject to the limitations referred to above.

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      Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar restructuring.

      “Change of Control” as used herein, means (a) any sale, lease, exchange or transfer (in one transaction or in a series of related transactions) of all or substantially all the assets of the Company to any Person or group of related Persons (other than Permitted Investors), (b) the merger or consolidation of the Company with or into another corporation or the merger of another corporation into the Company with the effect that immediately after such transaction the stockholders of the Company immediately prior to such transaction hold less than 50% of the total voting power of all securities generally entitled to vote in the election of directors, managers or trustees of the Person surviving such merger or consolidation, (c) the acquisition by any “person” or “group” (as those terms are used in Sections 13(d) and 14(d) of the Exchange Act (other than the Permitted Investors) of the ultimate “beneficial ownership” as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership,” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time) of more than 50% of the voting power of the Voting Stock of the Company, (d) during any period of twenty-four consecutive months, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors of the Company, or (e) the stockholders of the Company shall approve any plan for the liquidation or dissolution of the Company.

      “Permitted Investors” means Jack L. Watts, JPMorgan Partners 23A and Related Parties of any of the foregoing.

      “Related Party” with respect to any Permitted Investor means (A) (x) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Permitted Investor or (y) a trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Permitted Investor and/or such other persons referred to in the immediately preceding clause (x) or (B) with respect to JPMorgan Partners 23A, any Person controlled by J.P. Morgan Partners, LLC.

     Asset Sales

      The Indenture provides that the Company will not conduct, and will not permit any of its Restricted Subsidiaries to conduct, an Asset Sale (as defined below) unless (x) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value (evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee prior to, or contemporaneously with, the consummation of the Asset Sale) of the assets sold or otherwise disposed of, and (y) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided, however, that the amount of (A) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the notes thereto) of the Company or any Restricted Subsidiary (other than Disqualified Stock and liabilities that are by their terms subordinated to the Notes or the Subsidiary Guarantees that are assumed by the transferee of any such assets), and (B) any securities, Notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary in a reasonable and prompt manner 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 at its option (a) to permanently reduce debt outstanding under secured Indebtedness (other than Disqualified Stock) of the Company and/or its Restricted Subsidiaries (and to make corresponding reductions to the commitments in respect thereof) or (b) to make an investment in a business or capital expenditure or other

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long-term assets of the Company or its Restricted Subsidiaries. Pending the final application of any such Net Proceeds, the Company may 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.” When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an offer to all holders of notes (an “Asset Sale Offer”) and, to the extent required by any Pari Passu Indebtedness, to all holders of Pari Passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Pari Passu Indebtedness with the proceeds from any Asset Sale (“Pari Passu Notes”) to purchase the maximum principal amount of Notes and Pari Passu Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes and Pari Passu Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes and Pari Passu Notes surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and the Pari Passu Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, even if Notes less than the Excess Proceeds are tendered for purchase, the amount of Excess Proceeds shall be reset to zero.

      “Asset Sale” means (i) the sale, lease, conveyance or other disposition of any property or assets of the Company or any Restricted Subsidiary (including by way of a sale-and-leaseback) other than sales of inventory (including equipment held as inventory) and obsolete equipment or redundant properties, or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries, 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 will be governed by the provisions of the Indenture described above under the caption “— Change of Control” and/or the provisions described below under the caption “— Merger, Consolidation, or Sale of Assets” and not by the provisions of this covenant), or (ii) the issuance of Equity Interests by any of its Restricted Subsidiaries, or the sale of Equity Interests by the Company or any of its Restricted Subsidiaries in any of its Subsidiaries, in the case of either clause (i) above or this clause (ii), whether in a single transaction or a series of related transactions, (a) that have an aggregate fair market value in excess of $1.0 million, or (b) for aggregate net proceeds in excess of $1.0 million. For purposes of this definition, the term “Asset Sale” shall not include (i) any issuance of Equity Interests by the Company, (ii) any transfer of assets permitted pursuant to the covenant entitled “Restricted Payments” or pursuant to clause (d) or (e) of the definition of “Permitted Investments;” (iii) the transfer of assets or Equity Interests by the Company to a Restricted Subsidiary of the Company or by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary of the Company; (iv) dispositions in connection with Permitted Liens; (v) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings; or (vi) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business that do not materially interfere with the business of the Company and its Restricted Subsidiaries.

Certain Covenants

     Restricted Payments

      The Indenture provides that the Company will not, and, will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Person making such dividend or distribution, or dividends or distributions payable to the Company or any Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of Common Stock on a pro rata basis)); (ii) purchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent of the Company; (iii) purchase, redeem, repay, defease, pay any amount of principal of or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or subordinated to the Subsidiary

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Guarantees prior to the scheduled principal payment, sinking fund payment or maturity thereof; (iv) make any Investment in any Person (other than Permitted Investments); or (v) guarantee any Indebtedness of any Affiliate of the Company other than a Restricted Subsidiary of the Company or pursuant to a Guarantee that constitutes a Permitted Investment pursuant to clause (d) or (e) of the definition thereof (all such payments and other actions set forth in clauses (i) through (v) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment 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 and its Restricted Subsidiaries 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 Preferred Stock”; and

      (c) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (including Restricted Payments permitted by the next succeeding paragraph), is less than the sum, without duplication, of (i) 50% of the cumulative Consolidated Net Income of the Company for the period (taken as one accounting period) from the first day of the fiscal quarter in which the Issuance Date occurred to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a loss, 100% of such loss), plus (ii) 100% of the aggregate net cash proceeds received by the Company from the issue or sale since the date of the Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into Disqualified Stock), plus (iii) 100% of any dividends or interest actually received in cash by the Company or a Restricted Subsidiary after the date of the Indenture from an Unrestricted Subsidiary, a Person that is not a Subsidiary or a Person that is accounted for on the equity method of accounting; provided, however that no amount will be included under this clause (iii) to the extent it is already included in Consolidated Net Income, plus (iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries in any Person (including Investments in Unrestricted Subsidiaries) resulting from (A) repurchases or redemptions of such Restricted Investments by such Person (including Unrestricted Subsidiaries), proceeds realized upon the sale of such Restricted Investment (including Investments in Unrestricted Subsidiaries) to an unaffiliated purchaser or repayments of loans or advances by such Person (including Unrestricted Subsidiaries) to the Company or any Restricted Subsidiary of the Company or (B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income, plus (v) $10.0 million.

      The foregoing provisions will not prohibit (i) the payment of up to an aggregate of $20.0 million (A) to the holders of the Company’s Common Stock as a dividend or to repurchase outstanding shares of Common Stock of the Company, which dividend or repurchase shall occur on or before March 31, 2005 and (B) to redeem the Redeemable Warrants, in each case in the manner described in the Prospectus, provided, however, that (x) the aggregate dividend on or repurchase of Common Stock permitted by this clause (i) shall not exceed $10.0 million and (y) such dividend, repurchase and redemption will be excluded in subsequent calculations of the amount of Restricted Payments; (ii) 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; provided, however, that such dividends will be included in subsequent calculations of the

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amount of Restricted Payments; (iii) the redemption, repurchase, retirement or other acquisition of any Equity Interests of the Company in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of other Equity Interests of the Company (other than any Disqualified Stock); provided, however, that (a) such repurchase, redemption, retirement or other acquisition will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the amount of any such net cash proceeds used therefor shall be excluded from clause (c)(ii) of the preceding paragraph to the extent otherwise included therein; (iv) the defeasance, redemption or repurchase of subordinated Indebtedness of the Company or Indebtedness of a Subsidiary Guarantor that is subordinated to the Subsidiary Guarantees with the net proceeds from an incurrence of Permitted Refinancing Indebtedness or in exchange for or out of the proceeds of a substantially concurrent sale (other than to a Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock) or upon the conversion of subordinated Indebtedness into Equity Interests of the Company (other than Disqualified Stock); provided, however, in each case that (a) such defeasance, redemption or repurchase will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the amount of any such net cash proceeds used therefor shall be excluded from clause (c)(ii) of the preceding paragraph to the extent otherwise included therein; (v) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any member of the Company’s (or any of its Subsidiaries’) management or any director or employee pursuant to any management equity subscription agreement, stock option agreement or stock plan in effect as of the date of the Indenture or entered into thereafter in the ordinary course of business; provided, however, that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.5 million, plus the aggregate cash proceeds received by the Company from any reissuance of Equity Interests by the Company to members of management of the Company and its Subsidiaries; provided that such repurchase, redemption, acquisition or retirement will be included in subsequent calculations of the amount of Restricted Payments; and no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (vi) the payment of dividends on the Company’s common stock following the first Public Equity Offering of the Company’s common stock after the Issuance Date of up to 6% per annum of the net proceeds received by the Company in such Public Equity Offering, other than public offerings of the Company’s common stock registered on Form S-4 or S-8; provided, however, that such payment will be included in subsequent calculations of the amount of Restricted Payments and no Default or Event of Default shall have occurred and be continuing immediately after such transaction; (vii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any subordinated Indebtedness of the Company (a) at a purchase price not greater than 101% of the principal amount of such subordinated Indebtedness of the Company in the event of a Change of Control in accordance with provisions similar to the “Change of Control” covenant or (b) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to the “— Asset Sales” covenant; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Sale Offer, as applicable, as provided in such covenants with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Sale Offer; and (viii) so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in accordance with the terms of the Indenture to the extent such dividends are included in the definition of “Fixed Charges”; provided that the payment of such dividends will be excluded in subsequent calculations of the amount of Restricted Payments. For purposes of the preceding sentence, payment of the option exercise price of stock options held by members of management, employees or directors by the tender of shares of the Company’s Common Stock shall not be deemed to constitute a repurchase, redemption, acquisition or retirement of Equity Interests held by such members of management, employees or directors. A tender of the Company’s Common Stock by members of management in payment of withholding taxes shall be a repurchase, redemption, acquisition or retirement of Equity Interests held by members of management only to the extent that the amount of withholding taxes the Company pays on behalf of such member of management exceeds the reduction in the Company’s state and federal taxes caused by the exercise of the stock option to which the withholding payment relates.

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      The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a Default. Such designation will reduce the amount available for Restricted Payments under the first paragraph of this covenant as determined in accordance with the definition of Investment and will only be permitted if such Restricted Payment would be permitted at such time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

      The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith whose resolution with respect thereto shall be delivered to the Trustee, such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value is estimated in good faith by the Board of Directors of the Company to exceed $10.0 million.

      Not later than the date of making any Restricted Payment with a fair market value equal to or in excess of $500,000, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant “Restricted Payments” were computed, which calculations may be based upon the Company’s latest available financial statements.

Incurrence of Indebtedness and Issuance of Preferred Stock

      The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt) and that the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Company or any Subsidiary Guarantor may incur Indebtedness or the Company may issue shares of Disqualified Stock, if:

      (i) the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.00 to 1.00 if such Indebtedness is incurred or such Disqualified Stock is issued, after giving pro forma effect to the incurrence or issuance thereof; and

      (ii) if such Indebtedness is subordinated in right of payment to the Notes, the final stated maturity of such Indebtedness is later than the final stated maturity of the Notes and the Weighted Average Life to Maturity of such Indebtedness is greater than the remaining Weighted Average Life to Maturity of the Notes.

      The foregoing limitations will not apply to the incurrence by the Company or its Subsidiaries of Permitted Indebtedness, which means:

      (a) The Notes, the outstanding notes and the Subsidiary Guarantees;

      (b) the incurrence by the Company, any Subsidiary Guarantor or any Restricted Subsidiary that is a Foreign Subsidiary of Indebtedness under a Credit Facility (and guarantees thereof by the Company’s Restricted Subsidiaries) in an aggregate principal amount at any one time outstanding not to exceed the greater of (i) $50.0 million or (ii) the Borrowing Base, less the aggregate amount of all Net Proceeds of Asset Sales applied to reduce permanently the commitment with respect to such Indebtedness pursuant to the covenant described under the caption “— Asset Sales;”

      (c) any Indebtedness of the Company and its Restricted Subsidiaries (other than under the Credit Facility and the Notes) in existence on the date of original issuance of the Notes (after giving effect to the application of the net proceeds of the sale of the Notes);

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      (d) the incurrence of Indebtedness by the Company or its Restricted Subsidiaries pursuant to letters of credit in an aggregate principal amount not to exceed $1.0 million (such letters of credit being deemed to have a principal amount equal to the maximum potential liability thereunder);

      (e) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness pursuant to letters of credit or Guarantees for the benefit of Persons in which the Company or a Restricted Subsidiary may make Permitted Investments pursuant to clause (d) or (e) of the definition thereof, provided that for purposes of calculating the amount permitted to be invested pursuant to such clause (d) or (e), any such letter of credit or Guarantee shall be deemed to represent an Investment in such Person by the Company or Restricted Subsidiary in the amount of the maximum potential liability thereunder;

      (f) Guarantees by the Subsidiary Guarantors of Indebtedness incurred in accordance with the provisions of the Indenture; provided that in the event such Indebtedness that is being Guaranteed is subordinated to the notes or the Subsidiary Guarantees, then the related Guarantee shall be subordinated in right of payment to the Subsidiary Guarantee;

      (g) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations (including Acquired Debt that constitutes Capital Lease Obligations, mortgage financings or purchase money obligations), in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property used in the business of the Company or such Restricted Subsidiary in an aggregate principal amount not to exceed $5.0 million at any one time outstanding;

      (h) intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however, that (i) any subsequent issuance or transfer of Capital Stock or any other event that results in any such Indebtedness being beneficially held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person other than the Company or a Restricted Subsidiary of the Company shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be;

      (i) the incurrence by the Company or its Restricted Subsidiaries of (i) 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; (ii) Currency Agreements and (iii) Commodity Agreements; provided, however that such Hedging Obligations, Currency Agreements and Commodity Agreements are entered into for bona fide purposes and not for speculative purposes;

      (j) the incurrence of Permitted Refinancing Indebtedness by the Company or its Restricted Subsidiaries in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund, Indebtedness (other than the Redeemable Warrants) described in clause (a) or (c) of this paragraph or described in the first paragraph of this covenant; and

      (k) the incurrence of Indebtedness by the Company or Subsidiary Guarantors (in addition to Indebtedness permitted by any other clause of this paragraph) in an aggregate principal amount at any time outstanding not to exceed $5.0 million.

      For purposes of the foregoing provision, the cash flow generated by any Person, business, property or asset acquired during the immediately preceding four fiscal quarter period (or subsequent to the end thereof and on or prior to the Calculation Date) shall be determined on the same basis provided in the definition of Consolidated Cash Flow. Whenever pro forma effect is to be given to any calculation under this covenant, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Company (including pro forma expense and cost reductions calculated in accordance with Regulation S-X under the Securities Act). In addition, for purposes of the Fixed Charge Coverage Ratio test set forth in the first paragraph of this covenant, Consolidated Cash Flow and Fixed Charges shall be calculated after giving effect on a pro forma basis for the period of such calculation to the incurrence of any Indebtedness at any time during the period commencing on the first day of the four full fiscal quarter period that precedes the

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Calculation Date and ending on and including the Calculation Date (and that is outstanding or available to be borrowed on the Calculation Date), including without limitation the incurrence of the Indebtedness giving rise to the need to make such calculation, in each case as if such incurrence occurred and the proceeds therefrom had been applied on the first day of such four full fiscal quarter period. Further, for purposes of the Fixed Charge Coverage Ratio test set forth in the first paragraph of this covenant, consolidated interest expense attributable to any Indebtedness (whether existing or being incurred) bearing a floating interest rate shall be computed on a pro forma basis at an assumed rate equal to the higher of (i) the actual rate in effect on the date of computation under the instrument governing such Indebtedness, or (ii) the average of the floating rate for such Indebtedness for the one-year period immediately prior to the date of computation, as if such assumed rate had been the applicable rate for the entire period.

      For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness incurred pursuant to and in compliance with, this covenant:

      (1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant, the Company, in its sole discretion, will classify such item of Indebtedness on the date of incurrence and will only be required to include the amount and type of such Indebtedness in the chosen clause or clauses, and the Company may reclassify any such Indebtedness between clauses (b) and (k) of the second paragraph of this covenant, between clauses (d) and (k) of the second paragraph of this covenant, and between clauses (g) and (k) of this covenant to the extent such Indebtedness could be incurred pursuant to such clause at the time of such reclassification;

      (2) all Indebtedness outstanding on the date of the Indenture under the Senior Secured Credit Agreement shall be deemed initially incurred on the Issuance Date under clause (b) of the second paragraph of this covenant and not the first paragraph or any other clause of the second paragraph of this covenant;

      (3) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

      (4) if obligations in respect of letters of credit are incurred pursuant to a Credit Facility and are being treated as incurred pursuant to clause (b) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

      (5) the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof, in each case at the time of determination;

      (6) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and

      (7) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

      Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

      In addition, we will not permit any of our Unrestricted Subsidiaries to incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt.

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      If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, the Company shall be in Default of this covenant).

      For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Negative Pledge

      The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien, other than Permitted Liens, on any asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, unless all payments due under the Indenture and the Notes (including the Subsidiary Guarantees) are secured by a Lien on such property that is (i) equal and ratable with such Lien or (ii) in the case of Indebtedness that is subordinated in right of payment to the Notes (or such Subsidiary Guarantees), the Notes (or such Subsidiary Guarantees) are secured by a Lien on such asset that is senior to such Lien.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

      The Indenture provides that the Company will not, and will not permit any of its Restricted 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 Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (b) make loans or advances to the Company or any of its Restricted Subsidiaries or (c) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) Indebtedness as in effect on the date of the Indenture, (ii) the Credit Facility as in effect as of the date of the Indenture, and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the Credit Facility as in effect on the date of the Indenture, (iii) the Indenture and the Notes, (iv) applicable law, (v) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that the Consolidated Cash Flow of such Person is not taken into account in determining whether such acquisition was permitted by the terms of the Indenture, (vi) in the case of clause (c),

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customary non-assignment provisions in leases, licenses or similar contracts entered into in the ordinary course of business and consistent with past practices or any encumbrance or restriction contained in mortgages, pledges or other security agreements permitted under the Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements, (vii) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature described in clause (c) above on the property so acquired, (viii) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced, (ix) encumbrances or restrictions arising under Liens created pursuant to clause (g) of the definition of Permitted Liens, (x) the Subsidiary Guarantees, (xi) encumbrances or restrictions (x) contained in indentures or other debt instruments or debt arrangements incurred by any Subsidiary Guarantor in accordance with “Incurrence of Indebtedness and Issuance of Preferred Stock” that are not more materially restrictive, taken as a whole, than those applicable to the Company in either the Indenture governing the Notes or the Senior Secured Credit Agreement on the date of the Indenture (which may result in encumbrances or restrictions comparable to those applicable to the Company at a Restricted Subsidiary level) or (y) with respect to Restricted Subsidiaries that are not Subsidiary Guarantors, that are incurred subsequent to the Issuance Date pursuant to clauses (b) of the second paragraph of the covenant described under “Incurrence of Indebtedness and Issuance of Preferred Stock” by Restricted Subsidiaries, or (xii) any restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary, or any property or assets that are subject to such restriction, pending the closing of such sale or disposition.

Merger, Consolidation, or Sale of Assets

      The Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another Person unless (i) the Company is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Company, the “Successor Company”) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the Successor Company or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company pursuant to a supplemental Indenture in a form reasonably satisfactory to the Trustee; (iii) immediately before and, on a pro forma basis, immediately after giving effect to such transaction no Default or Event of Default exists; (iv) the Company or Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (A) will have Consolidated Net Worth (immediately after the transaction but prior to any purchase accounting adjustments resulting from the transaction) equal to or greater than the Consolidated Net Worth of the Company 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 Preferred Stock;” (v) each Subsidiary Guarantor (unless it is the other party to the transactions above, in which case clause (1) shall apply) shall have by supplemental indenture confirmed that its Subsidiary Guarantee shall apply to such Person’s obligations in respect of the Indenture and the Notes and its obligations under the Registration Rights Agreement shall continue to be in effect; and (vi) the Company shall have delivered to the Trustee an Officers’ Certificate that items (i) to (v) have been satisfied and a legal opinion as to certain legal matters.

      For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the

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properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

      The Successor Company will succeed to, and be substituted for (with a release of the predecessor company), and may exercise every right and power of, the Company under the Indenture, but, in the case of a lease of all or substantially all its assets, the predecessor Company will not be released from the obligation to pay the principal of and interest on the Notes.

      Although there is a developing body of case law interpreting the phrase “substantially all” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company to another person may be uncertain.

      Notwithstanding the preceding clause (iv), (x) any Restricted Subsidiary may consolidate with, or merge into, the Company and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax benefits; provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with the preceding clause (vi).

      In addition, the Company will not permit any Subsidiary Guarantor to consolidate or merge with or into (other than another Subsidiary Guarantor) and will not permit the sale, assignment, transfer, lease, conveyance or other disposal of all or substantially all of the properties or assets of any Subsidiary Guarantor unless:

      (1) (a) the Subsidiary Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia; (b) the Person formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Subsidiary Guarantor pursuant to a supplemental Indenture in a form reasonably satisfactory to the Trustee; (c) immediately before and, on a pro forma basis, immediately after giving effect to such transaction no Default or Event of Default exists; and (d) the Company shall have delivered to the Trustee an Officers’ Certificate that items (a) to (c) have been satisfied and, in the event such Subsidiary Guarantor or the Person formed by or surviving any such consolidation or merger has assets with a book value in excess of $250,000, a legal opinion as to certain legal matters; or

      (2) the transaction is made in compliance with the conditions described under “Repurchase at the Option of Holders-Asset Sales.”

Transactions with Affiliates

      The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each 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 Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person 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 members of the Board of Directors and by a majority of the members of such Board having no personal stake in such transaction and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $10.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary from a financial point of view issued

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by an investment banking firm of national standing; provided, however, that each of the following shall not be deemed Affiliate Transactions: (i) any employment, stock option, stock purchase or stock grant agreement entered into by the Company or any of its Restricted Subsidiaries with directors, officers and employees in the ordinary course of business and consistent with the past practice of the Company or such Restricted Subsidiary; (ii) transactions between or among the Company and/or its Restricted Subsidiaries; (iii) transactions permitted by the provisions of the Indenture described above under the covenant “Restricted Payments” or pursuant to clause (d) or (e) of the definition of “Permitted Investments”; (iv) the payment of compensation, and indemnity provided on behalf of, directors or employees of the Company or any Restricted Subsidiary in the ordinary course of business; (v) loans and advances to officers and employees of the Company or any of its Restricted Subsidiaries in the ordinary course of business in an amount not to exceed $1.5 million at any one time outstanding; provided that the Company and its Restricted Subsidiaries will comply in all material respects with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated in connection therewith in connection with such loans or advances; (vi) the issuance of Capital Stock (other than Disqualified Stock) of the Company to any Affiliate; and (vii) the provision by Persons who may be deemed Affiliates or stockholders of the Company (other than such provision by JPMorgan Partners 23A and Persons directly or indirectly controlled by JPMorgan Partners 23A) of investment banking, commercial banking, trust, lending or financing, investment, underwriting, placement agent, financial advisory or similar services to the Company or its Restricted Subsidiaries performed after the Issuance Date.

Future Subsidiary Guarantees

      The Company will cause each Restricted Subsidiary that is not at that time a Subsidiary Guarantor and that is required to Guarantee any Indebtedness of the Company, including, without limitation, a Credit Facility, to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest on the Notes on a senior basis and all other obligations under the Indenture. Notwithstanding the foregoing, in the event the Subsidiary Guarantor is released and discharged in full from all of its obligations under Guarantees of (1) any Credit Facility and (2) all other Indebtedness of the Company, then the Subsidiary Guarantee of such Subsidiary Guarantor shall be automatically and unconditionally released or discharged; provided, that such Restricted Subsidiary has not Incurred any Indebtedness in reliance on its status as a Subsidiary Guarantor under the covenant “Incurrence of Indebtedness and Issuance of Preferred Stock” unless such Indebtedness so Incurred is similarly released or discharged.

      On the Issuance Date, Associated Sales Group, LLC, Atlantic Packaging Sales, LLC, Buyerlink Networks, Inc., Cap Snap Co., Cap Snap Seal, Inc., Great Lake Sales Associates, LLC, Leonard S. Slaughter and Associates, LLC, Northern Engineering and Plastics Corp., Northern Plastics Corporation, Portola (Asia Pacific) Holding Limited, Portola GmbH, Portola Packaging Holding B.V., Portola Packaging Foreign Sales Corporation, Portola s.r.o., Shanghai Portola Packaging Company Limited and Tech Industries U.K. Ltd., each of which were not required to Guarantee obligations under the Credit Facility in existence on the Issuance Date, were not required to issue Subsidiary Guarantees on the Issuance Date, but may be required to do so in the future pursuant to the foregoing paragraph.

Limitation on Sale/ Leaseback Transactions

      The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any Sale/ Leaseback Transaction unless:

      (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Sale/ Leaseback Transaction at least equal to the fair market value (as evidenced by a resolution of the Board of Directors of the Company) of the property subject to such transaction;

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      (2) the Company or such Restricted Subsidiary could have Incurred Indebtedness in an amount equal to the Attributable Indebtedness in respect of such Sale/ Leaseback Transaction pursuant to the covenant described under “— Incurrence of Indebtedness and Issuance of Preferred Stock”;

      (3) the Company or such Restricted Subsidiary would be permitted to create a Lien on the property subject to such Sale/ Leaseback Transaction without securing the notes by the covenant described under “— Negative Pledge”; and

      (4) the Sale/ Leaseback Transaction is treated as an Asset Sale and all of the conditions of the Indenture described under “Repurchase at the Option of Holders-Asset Sales” (including the provisions concerning the application of Net Proceeds) are satisfied with respect to such Sale/ Leaseback Transaction, treating all of the consideration received in such Sale/ Leaseback Transaction as Net Proceeds for purposes of such covenant.

Limitation on Sale of Capital Stock of Restricted Subsidiaries

      The Company will not, and will not permit any Restricted Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted Subsidiary or, with respect to a Restricted Subsidiary, to issue any of its Voting Stock (other than, if necessary, shares of its Voting Stock constituting directors’ qualifying shares) to any Person except:

      (1) to the Company or a Wholly-Owned Subsidiary; or

      (2) in compliance with the conditions described under “Repurchase at the Option of Holders-Asset Sales” and immediately after giving effect to such issuance or sale, such Restricted Subsidiary either continues to be a Restricted Subsidiary or if such Restricted Subsidiary would no longer be a Restricted Subsidiary, then the remaining Investment of the Company or a Restricted Subsidiary in such Person (after giving effect to such issuance or sale), if any, would have been permitted to be made under the “Restricted Payments” covenant (excluding clause (a) of the definition of “Permitted Investments”) as if made on the date of such issuance or sale.

Limitation on Lines of Business

      The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than a Related Business.

Reports

      Whether or not required by the rules and regulations of the Securities and Exchange Commission (the “Commission”), so long as any Notes are outstanding, the Company (and the Subsidiary Guarantors, if applicable) will furnish to the Trustee and to the holders of 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 the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of the Company and its Subsidiaries on a consolidated basis and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants and (ii) all reports that would be required to be filed with the Commission on Form 8-K if the Company (and the Subsidiary Guarantors, if applicable) were required to file such reports, in each case within the time periods specified therein. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports, and any other information required by Section 13 or 15(d) of the Exchange Act, 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.

      If the Company has designated any of its Subsidiaries to be Unrestricted Subsidiaries that, alone or taken together, represent 10% or more of the Consolidated Cash Flow of the Company for the most recent consecutive four-quarter period, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in

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the footnotes to the financial statements or in the “Management’s discussion and analysis of financial condition and results of operations” section, of the financial condition and results of operations of the Company and its Restricted Subsidiaries.

      Concurrently with the delivery of the reports required to be delivered pursuant to the preceding paragraph, the Company shall deliver to the Trustee and to each holder annual and quarterly financial statements with appropriate footnotes of the Company and its Restricted Subsidiaries, all prepared and presented in a manner substantially consistent with those of the Company and its Subsidiaries on a consolidated basis required by the preceding paragraph.

Payments for Consent

      Neither the Company nor any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fees or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.

Events of Default and Remedies

      The Indenture provides that each of the following constitutes an Event of Default: (i) default in any payment of interest or additional interest, if any, (as required by the Registration Rights Agreement) on any Note when the same becomes due and payable, and such default continues for a period of 30 days; (ii) default in the payment of principal of or premium, if any, on any Note when the same becomes due and payable at its fixed maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise; (iii) failure by the Company to make or consummate a Change of Control Offer or an Asset Sale Offer or to comply with the provisions described under the covenants “Restricted payments,” “Incurrence of indebtedness and issuance of preferred stock” or “Merger, consolidation, or sale of assets;” (iv) failure by the Company or a Restricted Subsidiary for 60 days after notice from the Trustee or the holders of at least 25% in principal amount of the Notes then outstanding to comply with any of its agreements in the Indenture or the Notes or of any Subsidiary Guarantor to perform any of its other covenants under its Subsidiary Guarantee; (v) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any Restricted Subsidiary) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by 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 $5.0 million or more; (vi) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged, bonded or stayed for a period of 60 days; (vii) any Subsidiary Guarantee of a Significant Subsidiary (or group of Subsidiaries that, taken together, constitutes a Significant Subsidiary) shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor that is a Significant Subsidiary (or group of Subsidiary Guarantors that, taken together, constitutes a Significant Subsidiary), or any Person acting on behalf of any such Subsidiary Guarantor or Subsidiary Guarantors, shall deny or disaffirm its obligations under its Subsidiary Guarantee; or (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Significant Subsidiaries (or group of Subsidiary Guarantors that, taken together, constitutes a Significant Subsidiary).

      If any Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately; provided, that so long as any Indebtedness permitted to be incurred pursuant to the Senior Secured Credit Agreement

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shall be outstanding, such acceleration shall not be effective until the earlier of (i) an acceleration of any such Indebtedness under the Senior Secured Credit Agreement or (ii) five business days after receipt by the Company of written notice of such acceleration under the Indenture. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company or any Restricted Subsidiary, all outstanding Notes will become due and payable without further action or notice. The holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.

      In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (v) under “Events of Default” has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or Payment Default triggering such Event of Default pursuant to clause (v) shall be remedied or cured by the Company or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.

      Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest.

      Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder may pursue any remedy with respect to the Indenture or the Notes unless:

      (1) such holder has previously given the Trustee notice that an Event of Default is continuing;

      (2) holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy;

      (3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;

      (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

      (5) the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

      The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company 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.

      In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture or was required to repurchase the Notes, an equivalent

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premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to February 1, 2007 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to February 1, 2007, the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes.

No Personal Liability of Directors, Officers, Employees and Stockholders

      No director, officer, employee, incorporator or stockholder of the Company or a Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or such Subsidiary Guarantor under the Notes, the Indenture or a Subsidiary Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 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.

Legal Defeasance and Covenant Defeasance

      The Company may, at its option and at any time, elect to have all of its and the Subsidiary Guarantors’ obligations discharged with respect to the outstanding Notes (“Legal Defeasance”) except for (i) the rights of holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (ii) the Company’s and the Subsidiary Guarantors’ obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and the Subsidiary Guarantors’ obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Subsidiary Guarantors 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 Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the Notes.

      In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the Notes, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be; (ii) in the case of Legal Defeasance, 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 the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (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 incurrence of Indebtedness all or a portion of which will be used to defease the Notes pursuant to the Indenture concurrently with such incurrence) or insofar as Events of Default from bankruptcy

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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 shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an opinion of counsel to the effect that after the later of (x) the 91st day following the deposit or (y) the day ending on the day following the expiration of the longest preference period under any bankruptcy law applicable to us in respect of such deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; (vii) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the holders of Notes over the other creditors of the Company or the Subsidiary Guarantors with the intent of defeating, hindering, delaying or defrauding creditors of the Company or such Subsidiary Guarantors; (viii) we deliver to the Trustee an opinion of counsel (subject to customary assumptions and exclusions) to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; and (ix) the Company shall have delivered to the Trustee an Officers’ Certificate and an opinion of counsel as to matters of law, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Amendment, Supplement and Waiver

      Except as provided in the next succeeding paragraphs, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Notes with the consent of the holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for Notes).

      Without the consent of each holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder of Notes): (i) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the caption “Repurchase at the Option of Holders”); (iii) reduce the rate of or change the time for payment of interest or additional 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 Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (v) make any Note payable in money other than that stated in the Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults, waiver of certain covenants, supplemental indentures requiring the consent of holders, or the rights of holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (vii) waive a redemption or purchase payment with respect to any Note (other than a payment required by one of the covenants described above under the caption “Repurchase at the Option of Holders”); (viii) impair the right of any holder to institute suit for the enforcement of any payment under any Note after the maturity thereof; (ix) release any Subsidiary Guarantor other than in accordance with the Indenture, or change any Subsidiary Guarantee in any manner that would adversely affect the holders; or (x) make any change in the foregoing amendment and waiver provisions.

      Notwithstanding the foregoing, without the consent of any holder of Notes, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for any supplemental indenture required by the covenant described under the caption “Subsidiary Guarantees,” to add Subsidiary Guarantees with respect to the Notes or release a Subsidiary Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in accordance with the Indenture; to secure the Notes, to provide for the assumption of the Company’s or any Subsidiary Guarantor’s obligations

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to holders of the 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 the Notes or that does not materially adversely affect the legal rights under the Indenture of any such holder, to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to provide for the issuance of exchange securities that shall have terms substantially identical in all respects to the Notes (except that the transfer restrictions contained in the Notes shall be modified or eliminated as appropriate) and that shall be treated, together with any outstanding Notes, as a single class of securities.

      The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. A consent to any amendment or waiver under the Indenture by any holder of Notes given in connection with a tender of such holder’s Notes will not be rendered invalid by such tender. After an amendment or supplement under the Indenture becomes effective, the Company is required to mail to the holders a notice briefly describing such amendment or supplement. However, the failure to give such notice to all the holders, or any defect in the notice will not impair or affect the validity of the amendment.

Concerning the Trustee

      U.S. Bank National Association is the Trustee under the Indenture and has been appointed by the Company as registrar and paying agent with regard to the Notes. The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, the Subsidiary Guarantors or any Affiliate of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign.

      The holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (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 person in the conduct of his or her own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Notes, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Additional Information

      Anyone who receives this Prospectus may obtain a copy of the Indenture without charge by writing to Portola Packaging, Inc., 898A Faulstich Court, San Jose, California 95112, Attention: Dennis L. Berg, Vice President, Finance and Chief Financial Officer.

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 merged with or into or became a Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Subsidiary of such specified Person and (ii) Indebtedness encumbering any asset acquired by such specified Person. Acquired Debt shall be deemed to have been incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets.

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      “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 Stock, by agreement or otherwise.

      “Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded semi-annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended).

      “Board of Directors” means, as to any Person, the board of directors of such Person or any duly authorized committee thereof.

      “Borrowing Base” means, as of any date, an amount equal to the sum, without duplication, of (a) 85% of the net book value of the accounts receivable owned by the Company and its Restricted Subsidiaries, (b) 60% of the net book value of inventory owned by the Company and its Restricted Subsidiaries and (c) 40% of the net book value of property, plant and equipment owned by the Company and its Restricted Subsidiaries, provided, that the Borrowing Base shall be adjusted to give pro forma effect to the acquisition of any Person, property or assets by the Company or by any Restricted Subsidiary of the Company that is a Subsidiary Guarantor, so long as (i) such acquisition is consummated on or prior to the date of calculation of the Borrowing Base and (ii) in the case of an acquisition of a Person, such Person (y) becomes a Restricted Subsidiary of the Company or a Subsidiary Guarantor or (z) is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company that is a Subsidiary Guarantor.

      “Calculation Date” means the date on which the calculation of the Fixed Charge Coverage Ratio is made.

      “Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be so required to be capitalized on the balance sheet in accordance with GAAP.

      “Capital Stock” of any Person means any and all shares, interests, participation, rights or other equivalents (however designated) of equity of such Person, 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 and overnight bank deposits, in each case with any lender party to the Senior Secured Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500.0 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.

      “Commodity Agreement” means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any Subsidiary designed to protect the Company or any of its Subsidiaries against fluctuations in the price of commodities actually used in the ordinary course of business of the Company and its Subsidiaries.

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      “Common Stock” means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the date of this prospectus, and includes, without limitation, all series and classes of such common stock.

      “Consolidated Cash Flow” means, with respect to any Person for any period, without duplication, the Consolidated Net Income of such Person for such period plus the following to the extent deducted in calculating such Consolidated Net Income: (a) provision for taxes based on income or profits of such Person for such period, plus (b) consolidated interest expense of such Person for such period, whether paid or accrued and whether or not capitalized (including amortization and write-offs of debt discount and debt issuance cost, non-cash interest payments and the interest component of any payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred with respect to letters of credit and bankers’ acceptance financing and net payments (if any) pursuant to Hedging Obligations), plus (c) depreciation, amortization (including amortization of goodwill and other intangibles) and other non-cash changes (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person for such period, plus (d) impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 “Goodwill and Other Intangibles” plus (e) any charge incurred relating to the redemption of the Redeemable Warrants.

      Notwithstanding the preceding sentence, clauses (a), (c), (d) and (e) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated Cash Flows of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (a), (c), (d) and (e) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

      “Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, that (i) the Net Income of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be excluded, whether or not distributed to the Company or one of its Subsidiaries, (ii) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Subsidiaries, (iii) any Net Income (but not loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: (a) subject to the limitations contained in clause (iv) below, the Company’s equity in the Net Income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and (b) the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; 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 Restricted 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

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acquisition of such business) subsequent to the date of the Indenture in the book value of any asset owned by such Person or a consolidated Restricted Subsidiary of such Person, and (y) all unamortized debt discount and expense and unamortized deferred charges as of such date, all of the foregoing determined in accordance with GAAP.

      “Credit Facility” means, with respect to the Company or a Subsidiary Guarantor or any Restricted Subsidiary that is a Foreign Subsidiary, one or more debt facilities (including, without limitation, the Senior Secured Credit Agreement or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (and whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders and whether provided under the original Senior Secured Credit Agreement or any other credit or other agreement or indenture).

      “Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuation in the values of the currencies of the countries (other than the United States) in which the Company or its Restricted Subsidiaries conduct business.

      “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 that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatory redeemable, pursuant to a sinking fund obligation or otherwise, is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock that is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary), or is redeemable at the option of the holder thereof, in whole or in part, on or prior to a date that is one year after the date on which the Notes mature.

      “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for Capital Stock).

      “Equity Offering” means a private placement to institutional investors or a bona fide public underwritten sale of common stock of the Company for cash pursuant to a registration statement (other than on Form S-4 or Form S-8 or any other form relating to securities issuable under any benefit plan of the Company or its Subsidiaries) that is declared effective by the SEC.

      “Fixed Charges” means, with respect to any Person for any period, without duplication, the sum of (a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of debt discount and debt issuance cost, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP, and net payments (if any) pursuant to Hedging Obligations), (b) commissions, discounts and other fees and charges incurred with respect to letters of credit and bankers’ acceptances financing, (c) consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, (d) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or any of its Restricted Subsidiaries or secured by a Lien on assets of such Person or any of its Restricted Subsidiaries (other than on the Capital Stock of Unrestricted Subsidiaries), (e) preferred stock dividend requirements on any series of preferred stock of such Person or any of its Restricted Subsidiaries times a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person and its Restricted Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP, and (f) Receivable Fees.

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      “Fixed Charge Coverage Ratio” means with respect to any Person for any period, the ratio of the Consolidated Cash flow of such Person and its Restricted Subsidiaries for such period (exclusive of amounts attributable to discontinued operations, as determined in accordance with GAAP, or operations and businesses disposed of prior to the Calculation Date) to the Fixed Charges of such Person and its Restricted Subsidiaries for such period (exclusive of amounts attributable to discontinued operations, as determined in accordance with GAAP or operations and businesses disposed of prior to the Calculation Date, but only to the extent that the obligations giving rise to such Fixed Charges would no longer be obligations contributing to such Person’s Fixed Charges subsequent to the Calculation Date).

      “Foreign Subsidiary” means any Restricted Subsidiary that (x) is not organized under the laws of the United States of America or any state thereof or the District of Columbia or (y) is organized under the laws of the United States of America or any state thereof or the District of Columbia but has no material asset other than Capital Stock of one or more Persons described in clause (x) above.

      “GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Indenture.

      “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 (including reimbursement agreements in respect thereto, except to the extent such letters of credit relate to trade payables and the obligation to reimburse the issuer of the trade letter of credit for any payment thereunder is satisfied within 30 days of incurrence) or representing Capital Lease Obligations, Attributable Indebtedness or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock, all Indebtedness of others secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any Indebtedness of any other Person.

      “Investments” means, with respect to any Person, all Investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees), letters of credit (or reimbursement agreements in respect thereof), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), or 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; provided, however, that none of the following will be deemed to be an Investment:

      (1) Hedging Obligations, Commodity Agreements and Currency Agreements entered into in the ordinary course of business and in compliance with the Indenture;

      (2) endorsements of negotiable instruments and documents in the ordinary course of business; and

      (3) an acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Company.

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      For purposes of “Certain Covenants — Restricted Payments,” “Investment” will include the portion (proportionate to the Company’s Equity Interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company’s Equity Interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary.

      “Issuance Date” means January 23, 2004.

      “JPMorgan Partners 23A” means J.P. Morgan Partners (23A SBIC), LLC.

      “JPMorgan Partners 23A Warrant” means the redeemable warrant that entitled JPMorgan Partners 23A to purchase 2,052,526 shares of Class A Common Stock of the Company as described in the Prospectus.

      “Lender Warrant” means the redeemable warrant that entitled Heller Financial, Inc. to purchase 440,215 shares of the Class A Common Stock of the Company as described in the Prospectus.

      “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

      “Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions), or (b) the disposition of any securities or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (ii) all extraordinary items (together with any related tax provision pertaining to such extraordinary items).

      “Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees, and sales commissions) and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (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 the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets.

      “Non-Recourse Debt” means Indebtedness (i) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender, other than pursuant to loans that also constitute an Investment permitted to be made under the covenant entitled “Restricted Payments” or pursuant to clause (d) or (e) of the definition of “Permitted Investments”; (ii) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (iii) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Company or any of its Restricted Subsidiaries (other than the capital stock of one or more Unrestricted Subsidiaries).

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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 of the Company relating to the offering of the 8 1/4% senior notes due 2012, dated January 20, 2004.

      “Officers’ Certificate” means a certificate signed by the Chairman of the Board, the President, Chief Financial Officer, any Vice President, the Treasurer or the Controller and the Secretary or the Assistant Secretary of the Company.

      “Pari Passu Indebtedness” means Indebtedness of the Company that ranks equally in right of payment to the Notes.

      “Permitted Investments” means (a) any Investments in the Company or in a Restricted Subsidiary of the Company; (b) any Investments in cash or Cash Equivalents; (c) Investments by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investments (i) such Person becomes a Restricted Subsidiary of the Company or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (d) any Investments made on or after the Issuance Date not to exceed $10.0 million in aggregate amount at any one time outstanding (measured by the fair market value of such investments as of the date made); (e) any Investments made in a Permitted Joint Venture of the Company or its Restricted Subsidiaries on or after the Issuance Date not to exceed $15.0 million in aggregate amount at any one time outstanding (measured by the fair market value of such investments as of the date made) so long as such Permitted Joint Venture is engaged only in a Related Business; (f) Receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (g) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (h) loans or advances to employees, directors or consultants not exceeding $1.5 million in the aggregate outstanding at any one time; provided that such loans comply with the Sarbanes-Oxley Act and the related rules and regulations; (i) Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; (j) Investments made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with “Repurchase at the Option of Holders — Asset Sales;” (k) deposits, prepayments or other advances to customers or suppliers in the ordinary course of business; and (l) Guarantees issued in accordance with “Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock.” For purposes of calculating the aggregate amount of Permitted Investments permitted to be outstanding at any one time pursuant to clause (d) and (e) of the preceding sentence, (i) the aggregate amount of such Investments made by the Company and its Restricted Subsidiaries on or after the Issuance Date will be decreased (but not below zero) by an amount equal to the lesser of (y) the cash return of capital to the Company or a Restricted Subsidiary and (z) the initial amount of such investment with respect to such Investment that is sold for cash or otherwise liquidated or repaid for cash (less, in each case, the cost of disposition, including applicable taxes, if any) and (ii) in the case of Investments made by issuing letters of credit (or reimbursement agreements in respect thereof) or making Guarantees, the aggregate amount of such Investments will be decreased by the amount remaining unpaid in respect of such letters of credit or under the underlying Indebtedness Guaranteed by the Company or a Restricted Subsidiary upon termination of the Company’s or a Restricted Subsidiary’s obligations thereunder or by the permanent reduction of the amount guaranteed or secured by the letter of credit.

      “Permitted Joint Venture” means, with respect to any Person, (a) any corporation, association, or other business entity (other than a partnership) of which at least 30% 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 (or persons performing similar functions) is at the time of determination owned

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or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof and (b) any partnership, joint venture, limited liability company or similar entity of which at least 30% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Restricted Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership interests or otherwise.

      “Permitted Liens” means (a) purchase money Liens securing trade payables; (b) Liens existing on the date of the Indenture; (c) Liens on Equity Interests in Unrestricted Subsidiaries; (d) Liens securing Indebtedness incurred under a Credit Facility in an aggregate principal amount at any time outstanding not to exceed the amount permitted to be incurred under clause (b) of the second paragraph of the covenant entitled “Incurrence of Indebtedness and Issuance of Preferred Stock”, provided that for this purpose a Credit Facility shall not be deemed to include Indebtedness issued, created or incurred pursuant to a registered offering of securities under the Securities Act or a private placement of securities (under Rule 144A or Regulation S under the Securities Act) pursuant to an exemption from the registration requirements of the Securities Act; (e) Liens securing Capital Lease Obligations or purchase money Indebtedness otherwise permitted under the Indenture; (f) 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 conducted; provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (g) Liens (including extensions and renewals thereof) upon property or assets (including Equity Interests) acquired after the Issuance Date; provided that (x) such Lien is created solely for the purpose of securing Indebtedness incurred (A) to finance the cost (including the cost of improvement or construction) of the item of property or assets (including Equity Interests) subject thereto and such Lien is created prior to, at the time of or within six months after the later of the acquisition, the completion of construction or the commencement of full operation of such property or (B) to refinance any Indebtedness previously so secured, (y) the principal amount of Indebtedness secured by such Lien does not exceed 100% of such cost and (z) any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements of such item (it being expressly understood and acknowledged that any such Lien may extend to or cover items of property or assets (and any improvements of such items) owned by a Person whose Equity Interests are acquired by the Company or a Restricted Subsidiary and that becomes a Restricted Subsidiary concurrently with such acquisition); (h) any Lien securing Acquired Debt created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Restricted Subsidiary, in each case which Indebtedness is permitted under the covenant entitled “Incurrence of Indebtedness and Issuance of Preferred Stock;” provided that any such Lien only extends to the assets that were subject to such Lien securing such Acquired Debt prior to the related transaction by the Company or its Restricted Subsidiaries; (i) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar Liens imposed by law that are incurred in the ordinary course of business for sums not more than thirty (30) days delinquent or that are being contested in good faith, provided that a reserve or other appropriate provision shall have been made therefor; (j) Liens (other than Liens imposed under the Employee Retirement Income Security Act of 1974, as amended) incurred or deposits made in the ordinary course of business (including workers’ compensation, unemployment insurance, social security, bonds, leases, and other similar obligations) (exclusive of obligations for the payment of borrowed money); (k) deposits, in an aggregate amount not to exceed $500,000, made in the ordinary course of business to secure liabilities to insurance carriers; (l) easements, rights-of-way, restrictions, and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries and not lessening in any material respect the value of such property being encumbered; and (m) Liens securing Hedging Obligations so long as the related Indebtedness, if any, is secured by a Lien on the same property securing such Hedging Obligation.

      “Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries; provided that: (1) (a) if the fixed maturity of the Indebtedness being refinanced is earlier than the fixed maturity of the Notes, the Permitted Refinancing Indebtedness has a fixed maturity no earlier than the fixed maturity of the

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Indebtedness being refinanced or (b) if the fixed maturity of the Indebtedness being refinanced is later than the fixed maturity of the Notes, the Permitted Refinancing Indebtedness has a fixed maturity at least 91 days later than the fixed maturity of the Notes; (2) the principal amount of such Indebtedness does not exceed the principal amount of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses and premiums incurred in connection therewith); (3) such 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; (4) such Indebtedness is subordinated in right of payment to the Notes or the Subsidiary Guarantee, as the case may be, on terms at least as favorable to the holders of Notes as those, if any, contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (5) such Indebtedness is incurred by the Company or the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

      “Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

      “Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

      “Public Equity Offering” means a bona fide public underwritten sale of common stock of the Company for cash pursuant to a registration statement (other than on Form S-4 or Form S-8 or any other form relating to securities issuable under any benefit plan of the Company or its Subsidiaries) that is declared effective by the Securities and Exchange Commission.

      “Receivable” means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an “account,” “chattel paper,” “payment intangible” or “instrument” under the Uniform Commercial Code as in effect in the State of New York and any “supporting obligations” as so defined.

      “Receivable Fees” means any fees or interest paid to purchasers or lenders providing the financing in connection with a Receivable financing, factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a Receivable financing, factoring agreement or other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off- balance sheet or through a Restricted Subsidiary or an Unrestricted Subsidiary.

      “Redeemable Warrants” means, collectively, the JPMorgan Partners 23A Warrant and the Lender Warrant.

      “Registration Rights Agreement” means that certain registration rights agreement dated as of the date of the Indenture by and among the Company, the Subsidiary Guarantors and the initial purchasers set forth therein and any similar registrations rights agreements executed in connection with an offering of Additional Notes.

      “Related Business” means any business that is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the date of the Indenture.

      “Restricted Investment” means any Investment other than a Permitted Investment.

      “Restricted Subsidiary” means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

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      “Sale/ Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person.

      “Securities Act” means the Securities Act of 1933, as amended.

      “Senior Secured Credit Agreement” means the Amended and Restated Senior Secured Credit Facility dated as of January 16, 2004 by and among the Company and General Electric Credit Corporation and any other lenders parties thereto from time to time.

      “Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act as such regulation is in effect on the date hereof.

      “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. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

      “Subsidiary Guarantee” means, individually, any Guarantee of payment of the outstanding notes and the Notes and, collectively, all such Guarantees. Each such Subsidiary Guarantee will be in the form prescribed by the Indenture.

      “Subsidiary Guarantor” means each subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture.

      “Unrestricted Subsidiary” means a Subsidiary of the Company that at the time of determination is designated an Unrestricted Subsidiary (as designated by the Board of Directors of the Company as provided below) and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary as an Unrestricted Subsidiary so long as (a) all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt (except as permitted by clause (c) below), (b) no default with respect to any Indebtedness of such Subsidiary would permit (upon notice, lapse of time or both) any holder of any Indebtedness of the Company or a Restricted Subsidiary to declare a default on such Indebtedness of the Company or a Restricted Subsidiary or cause the payment thereof to be accelerated or payable prior to the stated maturity of the Notes, if such declaration of default, acceleration or payment would constitute an Event of Default under the Indenture, (c) neither the Company nor any Restricted Subsidiary shall have made any loan or advance to or an Investment in such Subsidiary in an amount that, at the date of designation, could not have been made in another Person pursuant to the covenant entitled “Restricted Payments” or pursuant to clause (d) or (e) of the definition of “Permitted Investments” (it being understood that any such loan, advance or Investment existing at the date of designation shall be deemed to be a Restricted Payment or a Permitted Investment under clause (d) or (e) of the definition thereof, as the case may be, made as of such date), (d) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary, (e) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries, (f) such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation to subscribe for additional Capital Stock of such Person or to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results, and (g) on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company. Any such designation by the Board of Directors of the Company shall be

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evidenced by a resolution of the Board of Directors filed with the Trustee and an Officers’ Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred as of such date. The Board of Directors of the Company may designate any Unrestricted Subsidiary as a Restricted Subsidiary at any time in the same manner as it would designate a Subsidiary as an Unrestricted Subsidiary, so long as immediately after such designation as a Restricted Subsidiary, there would be no Default or Event of Default under the Indenture and the Company could incur $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 Preferred Stock.” When an Unrestricted Subsidiary is designated a Restricted Subsidiary it will be treated for purposes of the covenants similar to the acquisition of an unrelated entity that becomes a Restricted Subsidiary.

      “Voting Stock” of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors.

      “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness.

      “Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by the Company or another Wholly-Owned Subsidiary.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

      The following summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of the notes is based on the Internal Revenue Code of 1986, as amended (which we refer to in this prospectus as the “Code”), the Treasury regulations under the Code (which we refer to in this prospectus as the “Treasury Regulations”), and administrative and judicial interpretations of the Code, as of the date of this prospectus, all of which are subject to change, possibly on a retroactive basis. This summary is for general information only and does not consider all aspects of U.S. federal income taxation that may be relevant to the purchase, ownership and disposition of the notes by a prospective investor in light of his, her or its personal circumstances.

      This discussion generally is limited to the U.S. federal income tax consequences to investors who are beneficial owners of the notes and who hold the notes as capital assets within the meaning of Section 1221 of the Code. This discussion does not address the U.S. federal income tax consequences to investors subject to special treatment under the U.S. federal income tax laws, such as broker-dealers in securities or foreign currency, tax-exempt investors, banks and financial institutions, thrifts, insurance companies or persons who hold the notes as part of a “straddle,” as part of a “hedge” against currency risk or as part of a “conversion transaction,” have a “functional currency” other than the U.S. dollar, trade in securities and elect to use a mark-to-market method of accounting for their securities holdings, are liable for alternative minimum tax, or are investors in pass-through entities that hold the notes. Each type of investor listed above may be subject to tax rules that differ significantly from those summarized below. You are advised to consult your own tax adviser with respect to your particular circumstances. If a partnership holds the notes, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding the notes, you should consult your tax advisor. In addition, this discussion does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction, or, except to a limited extent, any possible applicability of U.S. federal gift or estate tax.

      We have not sought any rulings from the Internal Revenue Service (which we refer to in this prospectus as the “IRS”), nor an opinion of counsel with respect to the U.S. federal income tax consequences discussed below. The discussion below is not binding on the IRS or the courts. Accordingly, there can be no assurance that the IRS will not take, or that a court will not sustain, a position concerning the tax consequences of the purchase, ownership or disposition of the notes different from that discussed below.

      Persons considering the purchase of notes should consult their own tax advisors concerning the application of U.S. federal tax laws, as well as the law of any state, local or foreign taxing jurisdiction, to their particular situations.

      As used in this summary, the term “United States Holder” means any beneficial owner of notes who is:

•  a citizen or resident of the United States for U.S. federal income tax purposes;

•  a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

•  an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

•  a trust if (1) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) the trust has in effect a valid election in effect under applicable Treasury Regulations to be treated as a domestic trust for U.S. federal income tax purposes.

      A “Non-United States Holder” is an individual, corporation, estate or trust that is not a United States Holder.

United States Holder

      Stated interest. Interest received on the notes by a United States Holder will generally be taxable as ordinary income. A United State Holder generally must pay United States federal income tax with respect to

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the interest on the notes: (i) when it accrues, if the holder uses the accrual method of accounting for United States federal income tax purposes; or (ii) when the holder receives or is treated as receiving it, if the holder uses the cash method of accounting for United States federal income tax purposes.

      Additional interest/repurchase options. Our failure to comply with the registration rights agreement, as described under “Exchange offer; registration rights,” will cause the annual interest rate on the notes to increase. According to applicable Treasury Regulations, the possibility of a change in the interest rate on the notes will not affect the amount or timing of interest income recognized by a United States Holder of a note if the likelihood of the change, as of the date the notes are issued, is remote or incidental. We intend to take the position that the potential payments resulting from the failure to comply with the registration rights agreement will not affect the yield to maturity of the notes (for purposes of the original issue discount provisions of the Code). Accordingly, any such increase in interest payable to a holder should be includible in such holder’s gross income as interest income at the time the payment is paid or accrues in accordance with such holder’s regular method of tax accounting,

      In the event that there is a change of control, holders of notes will have the right to require us to repurchase their notes at 101% of the principal amount plus accrued and unpaid interest, if any (see “Description of notes — Repurchase at the option of holders — Change of control”). Further, under certain circumstances we are allowed to redeem notes for an amount in excess of the principal amount of notes at our option (see “Description of notes — Optional redemption”). As with the possibility of our failure to comply with the registration rights agreement, we similarly do not intend to treat these possibilities as affecting the yield to maturity of the notes (for purposes of the original issue discount provisions of the Code). Our determination that the contingencies discussed in the above two paragraphs do not affect the yield to maturity of the notes is binding on a holder, unless such holder discloses its contrary position in the manner required by applicable Treasury Regulations. Our determination is not, however, binding on the IRS. Thus, there is no assurance that the IRS would not take a contrary position.

      Market discount. If a U.S. Holder purchases a note for an amount that is less than its stated redemption price at maturity, the amount of the difference will be treated as “market discount,” unless that difference is less than a specified de minimis amount. Under the market discount rules, U.S. Holders will be required to treat any payment on, or any gain recognized on the sale, exchange, retirement or other disposition (including a gift or redemption at maturity) of the note (other than in connection with certain nonrecognition transactions) as ordinary income to the extent of the market discount that U.S. Holders are treated as having accrued on the note at the time of the payment or disposition and have not previously included in income. In addition, U.S. Holders may be required to defer, until the maturity of the note or its earlier disposition in a taxable transaction (or certain non-recognition transactions where market discount is required to be taken into account), the deduction of all or a portion of the interest expense on any indebtedness attributable to the note.

      Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the note, unless the U.S. Holder elects to accrue on a constant interest method. U.S. Holders may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest expense deductions will not apply. A U.S. Holder’s election to include market discount in income currently, once made, applies to all market discount obligations acquired by such holder on or after the first taxable year to which such holder’s election applies and the election may not be revoked without the consent of the IRS.

      Bond premium. If a U.S. Holder purchases a note for an amount in excess of the sum of all amounts payable on the note after the purchase date, other than qualified stated interest, such holder will be considered to have purchased the note at a “premium.” A U.S. Holder generally may elect to amortize the premium over the remaining term of the note on a constant yield method as an offset to interest when includible in income under such holder’s regular accounting method. If a U.S. Holder does not elect to amortize bond premium, that premium will decrease the gain or increase the loss such holder would otherwise recognize on disposition of the note. The election to amortize premium on a constant yield method will also apply to all debt obligations held or subsequently acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies. A U.S. Holder may not revoke the election without the consent of the IRS.

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      Sale or other disposition of the notes. Except as discussed below under “Receipt of exchange notes” and subject to the market discount and bond premium rules discussed above, a United States Holder generally will recognize gain or loss on the sale, exchange, redemption, repurchase, retirement or other taxable disposition of a note. The amount of a United States Holder’s gain or loss equals the difference between the amount received for the note (in cash or other property, valued at fair market value), minus the amount attributable to accrued interest on the note (which will be taxable as ordinary income if not previously included in gross income), and the holder’s adjusted tax basis in the note. A United States Holder’s initial tax basis in a note equals the price paid for the note. Special rules may apply to notes redeemed in part.

      Any such gain or loss on a taxable disposition of a note as described in the foregoing paragraph will generally constitute capital gain or loss and will be long-term capital gain or loss if such note was held by the United States Holder for more than one year. Under current law, net long-term capital gains of non-corporate holders generally are taxed at a maximum rate of 15%. Capital gain of a non-corporate holder that is not long-term capital gain will be taxed at ordinary income tax rates. The deduction of capital losses is subject to certain limitations.

      Receipt of exchange notes. If we successfully register freely tradable exchange notes with the SEC, we will offer to transfer these exchange notes to holders in exchange for their notes, as described elsewhere in this prospectus. This exchange will not be a taxable exchange. As a result:

•  a holder will not recognize taxable gain or loss solely by reason of the receipt of exchange notes in exchange for notes;

•  the holding period in the exchange notes will include the holder’s holding period in the notes; and

•  the basis in the exchange notes will equal your basis in the notes.

      Information reporting and backup withholding. A United States Holder will generally be subject to information reporting and may also be subject to backup withholding tax, currently at a rate of 28%, when such holder receives interest payments on the note or proceeds upon the sale or other disposition of a note. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to information reporting or backup withholding. In addition, the backup withholding tax will not apply if a United States Holder if such holder provides his taxpayer identification number (“TIN”) in the prescribed manner unless:

•  the IRS notifies us or our agent that the TIN the holder provides is incorrect;

•  the holder fails to report interest and dividend payments that the holder receives on his tax return and the IRS notifies us or our agent that withholding is required; or

•  the holder fails to certify under penalties of perjury that (i) the holder provided to us his or her correct TIN, (ii) the holder is not subject to backup withholding, and (iii) the holder is a U.S. person (including a U.S. resident alien).

      If the backup withholding tax does apply to a particular United States Holder, such holder may use the amounts withheld as a refund or credit against his United States federal income tax liability as long as the holder provides certain information to the IRS.

Non-United States Holder

      This section applies to Non-United States Holders.

      For purposes of the discussion below, interest and gain on the sale, exchange, redemption or repayment of notes will be considered to be “U.S. trade or business income” if such income or gain is (i) effectively connected with the conduct of a U.S. trade or business or (ii) in the case of a treaty resident, attributable to a U.S. permanent establishment (or, in the case of an individual, a fixed base) in the United States.

      Special rules may apply to certain Non-United States Holders (or their beneficial owners), such as “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding compa-

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nies” and certain expatriates, that are subject to special treatment under the Code. Such Non-United States Holders (or their beneficial owners) should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.

      Stated interest. Subject to the discussion below regarding backup withholding, interest paid on the notes (including any “additional interest” as discussed above at “— Additional interest/repurchase options”) to a Non-United States Holder generally will not be subject to U.S. federal income or withholding tax if such interest is not U.S. trade or business income and is “portfolio interest.” Generally, interest on the notes will qualify as portfolio interest if the Non-United States Holder (i) does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote, (ii) is not a controlled foreign corporation with respect to which we are a “related person” within the meaning of the Code, (iii) is not a bank that is receiving the interest on a loan made in the ordinary course of its trade or business, and (iv) certifies, under penalties of perjury on a Form W-8BEN (or such successor form as the IRS designates), prior to the payment that such holder is not a United States person and provides such holder’s name and address.

      The gross amount of payments of interest that do not qualify for the portfolio interest exception and that are not U.S. trade or business income will be subject to U.S. withholding tax at a rate of 30% unless a treaty applies to reduce or eliminate withholding. U.S. trade or business income will be taxed at regular, graduated U.S. rates rather than the 30% gross rate. In the case of a Non-United States Holder that is a corporation, such U.S. trade or business income may also be subject to the branch profits tax equal to 30% (or lesser amount under an applicable income tax treaty) of such amount, subject to adjustments. To claim the benefits of a treaty exemption from or reduction in withholding, a Non-United States Holder must provide a properly executed Form W-8BEN (or such successor form as the IRS designates), and to claim an exemption from withholding because income is U.S. trade or business income, a Non-United States Holder must provide a properly executed Form W-8ECI (or such successor form as the IRS designates), as applicable prior to the payment of interest. These forms may need to be periodically updated. A Non-United States Holder who is claiming the benefits of a treaty may be required in certain instances to obtain and to provide a U.S. taxpayer identification number on a Form W-8BEN. As an alternative to providing a Form W-8BEN, in certain circumstances, a Non-United States Holder may provide certain documentary evidence issued by foreign governmental authorities to prove residence in the foreign country. Also, under applicable Treasury Regulations, special procedures are provided for payments through qualified intermediaries or certain financial institutions that hold customers’ securities in the ordinary course of their trade or business.

      Gain on disposition. Subject to the discussion below concerning backup withholding, a Non-United States Holder will generally not be subject to U.S. federal income tax on gain recognized on a sale, exchange, redemption or repayment of a note (other than gain representing accrued but unpaid interest, which will be treated as such) unless (i) the gain is U.S. trade or business income in which case the branch profits tax may also apply to a corporate Non-United States Holder or (ii) the Non-United States Holder is an individual who is present in the United States for 183 or more days in the taxable year of the disposition and certain other requirements are met. Special rules may apply to notes redeemed in part.

      Federal estate taxes. Notes held (or treated as held) by an individual who is a Non-United States Holder at the time of his or her death will not be subject to U.S. federal estate tax, provided that the interest on such notes would have been exempt as portfolio interest if received by the Non-United States Holder at the time of his or her death without regard to whether the Non-United States Holder has completed Form W-8BEN and further provided that income on the notes was not U.S. trade or business income. Because U.S. federal tax law uses different tests to determine whether an individual is a non-resident alien for income tax and estate tax purposes, some individuals may be “Non-U.S. Holders” for purposes of the U.S. federal income tax discussion above, but not for purposes of the U.S. federal estate tax discussion, and vice versa.

      Information reporting and backup withholding. We must report annually to the IRS and to each Non-United States Holder any interest that is paid to the Non-United States Holder. Copies of these information returns may also be made available under the provisions of a specific treaty or other agreement to the tax authorities of the country in which the Non-U.S. Holder resides.

119

      Treasury Regulations provide that the backup withholding tax (currently at a rate of 28%) and certain information reporting will not apply to such payments of interest with respect to which either the requisite certification, as described above, has been received or an exemption has otherwise been established; provided that neither we nor our payment agent has actual knowledge, or reason to know, that the holder is a United States person or that the conditions of any other exemption are not in fact satisfied. The payment of the gross proceeds from the sale, exchange, redemption or repayment of notes to or through the United States office of any broker, U.S. or foreign, will be subject to information reporting and possible backup withholding unless the owner certifies as to its non-U.S. status under penalty of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge, or reason to know, that the holder is a United States person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the gross proceeds from the sale, exchange, redemption or repayment of notes to or through a non-U.S. office of a non-U.S. broker will not be subject to information reporting or backup withholding unless the non-U.S. broker has certain types of relationships with the United States (a “United States Related Person”).

      In the case of the gross payment of proceeds from the sale, exchange, redemption or repayment of notes to or through a non-United States office of a broker that is either a United States person or a United States Related Person, the Treasury Regulations require information reporting (but not backup withholding) on the payment unless the broker has documentary evidence in its files that the owner is a Non-United States Holder and the broker has no knowledge, or reason to know, to the contrary.

      Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Non-United States Holder may be refunded or credited against the Non-United States Holder’s U.S. federal income tax liability, provided that the required information is furnished to the IRS.

      THE PRECEDING DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF PURCHASING, HOLDING AND DISPOSING OF NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAW.

120

CERTAIN ERISA CONSIDERATIONS

      The following is a summary of certain considerations associated with the notes by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements (each, a “Plan”).

General Fiduciary Matters

      ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

      In considering an investment in the notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws

Prohibited Transaction Issues

      Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes by an ERISA Plan with respect to which the Issuer, the Underwriter, or the Guarantor is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers, although there can be no assurance that all of the conditions of any such exemptions will be satisfied.

      Because of the foregoing, the notes should not be held by any person investing “plan assets” of any Plan, unless the exchange of notes will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable Similar Laws.

Representation

      Accordingly, by acceptance of a note, each purchaser and subsequent transferee will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire and hold the notes constitutes assets of any Plan or (ii) the exchange of notes by such purchaser or transferee will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or similar violation under any applicable Similar Laws.

121

      The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the notes (and holding the notes or exchange notes) on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the holding of the notes.

PLAN OF DISTRIBUTION

      Based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for the outstanding notes may be offered for resale, resold and otherwise transferred by holders thereof, other than any holder which is (A) an “affiliate” of our company within the meaning of Rule 405 under the Securities Act, (B) a broker-dealer who acquired notes directly from our company or (C) broker-dealers who acquired notes as a result of market-making or other trading activities, without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such exchange notes are acquired in the ordinary course of such holders’ business, and such holders are not engaged in, and do not intent to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such exchange notes. However, broker-dealers receiving the exchange notes in the exchange offer will be subject to a prospectus delivery requirement with respect to resales of such exchange notes. To date, the staff of the SEC has taken the position that these broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as the exchange pursuant to the exchange offer, other than a resale of an unsold allotment from the sale of the outstanding notes to the initial purchasers thereof, with the prospectus contained in the exchange offer registration statement. Pursuant to the registration rights agreement, we have agreed to permit these broker-dealers to use this prospectus in connection with the resale of such exchange notes. We have agreed that, for a period of 180 days after the exchange offer has been completed, we will make this prospectus, and any amendment or supplement to this prospectus, available to any broker-dealer that requests such documents in the letter of transmittal.

      Each holder of outstanding notes who wishes to exchange its outstanding notes for exchange notes in the exchange offer will be required to make certain representations to us as set forth in “The exchange offer.”

      Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market-making activities or other trading activities.

      We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale. Any such resale may be directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account in the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act, and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

122

      We have agreed to pay certain expenses incident to the exchange offer and will indemnify the holders of the exchange notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act, as set forth in the registration rights agreement.

      Certain of the initial purchasers and their affiliates perform various financial advisory, investment banking and commercial banking services from time to time for us and our affiliates. Robert Egan, one of our directors, is a partner of J.P. Morgan Entertainment Partners, LLC and a Senior Advisor to J.P. Morgan Partners, LLC, each of which is an affiliate of JPMorgan Partners 23A. JPMorgan Partners 23A holds 20.0% of our outstanding common equity and will receive a portion of the Distribution to the extent it is made. In addition, in February 2004, J.P. Morgan Partners, LLC received $10.7 million in connection with the Warrant Redemption. JPMorgan Partners 23A is an affiliate of J.P. Morgan Securities Inc., one of the initial purchasers of the outstanding notes.

LEGAL MATTERS

      The validity of the exchange notes will be passed upon for us by Fenwick & West LLP, Mountain View, California.

EXPERTS

      The financial statements as of August 31, 2003 and 2002 and for each of the three years in the period ended August 31, 2003 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

      The financial statements as of December 29, 2002 and December 30, 2001 and for each of the three years in the period ended December 29, 2002 included in this prospectus have been so included in reliance on the report of Prescott Chatellier Fontaine & Wilkinson, LLP, independent registered public accounting firm, given on the authority of said firm’s experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

      This prospectus is part of a registration statement on Form S-4 that we filed with the SEC. This prospectus does not contain all of the information in that registration statement. For further information with respect to us and the notes, see the registration statement, including the exhibits.

      Although we are not subject to the reporting requirements of the Securities Exchange Act of 1934, we voluntarily file annual, quarterly and current reports with the SEC to fulfill our obligations under the indenture related to the notes. These reports may be obtained:

•  at the public reference room of the SEC, Room 1024-Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;

•  from the SEC, Public Reference Room, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; or

•  from the Internet site maintained by the SEC at http://www.sec.gov, which contains reports and other information regarding issuers, including us, that file electronically with the SEC.

      Some locations may charge prescribed rates or modest fees for copies. For more information on the public reference room, call the SEC at 1-800-SEC-0330. Our filings will also be available to the public from commercial document retrieval services.

123

      You may obtain these reports at no cost by writing or telephoning us at the following address and telephone number:

Portola Packaging, Inc.

898A Faulstich Court

San Jose, California 95112

Attn: Dennis L. Berg

(408) 453-8840

      Statements made in this prospectus as to the contents of any contract, agreement, or other documents referred to are not necessarily complete. For a more complete understanding and description of each contract, agreement or other document filed as an exhibit to the registration statement, we encourage you to read the documents contained in the exhibits.

      Following the consummation of the exchange offer, whether or not required by the SEC, we will file a copy of all the information mentioned above with the SEC for public availability within the time periods specified in the SEC’s rule and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

      In addition, we have agreed that we will furnish to holders and securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act of 1933 until such time as we have either exchanged the notes pursuant to the exchange offer or until such time as holders of the notes have disposed of their notes pursuant to an effective registration statement under the Securities Act.

124

PORTOLA CORPORATION

INDEX TO FINANCIAL STATEMENTS

	Page
PORTOLA PACKAGING, INC. AUDITED FINANCIAL STATEMENTS
Report of independent registered public accounting firm		F-2
Consolidated balance sheets as of August 31, 2003 and 2002		F-3
Consolidated statements of operations for the years ended August 31, 2003, 2002 and 2001		F-4
Consolidated statements of cash flows for the years ended August 31, 2003, 2002 and 2001		F-5
Consolidated statements of shareholders’ equity (deficit) for the years ended August 31, 2003, 2002 and 2001		F-6
Notes to consolidated financial statements		F-7
PORTOLA PACKAGING, INC. UNAUDITED INTERIM FINANCIAL STATEMENTS
Unaudited condensed consolidated balance sheets as of February 29, 2004 and August 31, 2003 (audited)		F-39
Unaudited condensed consolidated statements of operations for the three and six months ended February 29, 2004 and February 28, 2003		F-40
Unaudited condensed consolidated statements of cash flows for the six months ended February 29, 2004 and February 28, 2003		F-41
Notes to unaudited condensed consolidated financial statements		F-42
TECH INDUSTRIES, INC. AUDITED FINANCIAL STATEMENTS
Report of independent registered public accounting firm		F-59
Combined balance sheets as of December 29, 2002 and December 30, 2001		F-60
Combined statements of Income (Loss) for the years ended December 29, 2002, December 30, 2001 and December 31, 2000		F-61
Combined statements of equity for the years ended December 29, 2002, December 30, 2001 and December 31, 2000		F-62
Combined statements of cash flows for the years ended December 29, 2002, December 30, 2001 and December 31, 2000		F-63
Notes to combined financial statements		F-64
TECH INDUSTRIES, INC. UNAUDITED INTERIM FINANCIAL STATEMENTS
Unaudited condensed combined balance sheets as of June 29, 2003		F-71
Unaudited condensed combined statements of income for the six months ended June 29, 2003 and June 30, 2002		F-72
Unaudited condensed combined statements of cash flows for the six months ended June 29, 2003 and June 30, 2002		F-73
Notes to unaudited condensed combined financial statements		F-74

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

of Portola Packaging, Inc. and Subsidiaries:

      In our opinion, the accompanying consolidated financial statements of Portola Packaging, Inc. and Subsidiaries listed in the accompanying index present fairly, in all material respects, the financial position of Portola Packaging, Inc. and its subsidiaries at August 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2003 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      As discussed in Note 7 to the Consolidated Financial Statements, the Company changed its method of accounting for long-lived asset impairments, goodwill and other intangible assets in fiscal 2002.

/s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania

November 18, 2003 except for Note 19,

as to which the date is December 10, 2003 and

     Note 17, as to which the date is May 21, 2004

F-2

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

			August 31,			August 31,
			2003			2002
ASSETS
Current assets:
	Cash and cash equivalents		$	4,292		$	4,566
	Accounts receivable, net of allowance for doubtful accounts of $1,244 and $1,151, respectively			28,948			25,810
	Inventories			11,306			13,272
	Other current assets			3,309			2,533
	Deferred income taxes			1,363			643
		Total current assets		49,218			46,824
Property, plant and equipment, net				66,004			71,455
Goodwill, net				10,468			10,342
Patents, net of accumulated amortization of $7,072 and $6,494, respectively				2,548			3,127
Debt financing costs, net of accumulated amortization of $4,500 and $3,686, respectively				1,585			2,280
Covenants not-to compete, trademarks and other intangible assets, net of accumulated amortization of $728 and $1,757, respectively				488			570
Other assets				2,462			1,991
	Total assets		$	132,773		$	136,589
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Current portion of long-term debt		$	287		$	426
	Current portion of redeemable warrants to purchase Class A Common Stock			9,025			—
	Accounts payable			15,291			13,828
	Accrued liabilities			6,457			6,746
	Accrued compensation			2,781			2,749
	Accrued interest			4,928			4,928
		Total current liabilities		38,769			28,677
	Long-term debt, less current portion			116,646			120,126
	Redeemable warrants to purchase Class A Common Stock			1,277			10,359
	Deferred income taxes			1,848			1,601
	Other long-term obligations			385			681
	Total liabilities			158,925			161,444
	Minority interest			47			58
	Commitments and contingencies (Note 9)
Shareholders’ equity (deficit):
	Class A convertible Common Stock of $.001 par value: Authorized: 5,203 shares; Issued and outstanding: 2,135 share in 2003 and 2002			2			2
	Class B, Series 1, Common Stock of $.001 par value: Authorized: 17,715 shares; Issued and outstanding: 8,600 shares in 2003 and 8,597 shares in 2002			8			8
	Class B, Series 2 convertible Common Stock of $.001 par value: Authorized: 2,571 shares; Issued and outstanding: 1,170 shares in 2003 and 2002			1			1
	Additional paid-in capital			6,582			6,570
	Notes receivable from shareholders			(161	)		(158	)
	Accumulated other comprehensive loss			(1,882	)		(2,318	)
	Accumulated deficit			(30,749	)		(29,018	)
	Total shareholders’ equity (deficit)			(26,199	)		(24,913	)
	Total liabilities and shareholders’ equity (deficit)		$	132,773		$	136,589

The accompanying notes are an integral part of these consolidated financial statements.

F-3

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

		Year Ended August 31,
		2003			2002			2001
Sales		$	215,315		$	210,757		$	219,418
Cost of sales			166,689			157,133			169,544
	Gross profit		48,626			53,624			49,874
Selling, general and administrative			29,307			30,844			28,774
Research and development			4,729			3,069			3,096
Amortization of intangibles			903			1,551			4,176
Impairment charge			207			—			—
Restructuring costs			405			—			1,939
			35,551			35,464			37,985
	Income from operations		13,075			18,160			11,889
Other (income) expense:
	Interest income		(120	)		(1,083	)		(75	)
	Interest expense		12,544			13,251			14,453
	Amortization of debt financing costs		777			756			718
	Minority interest expense		73			113			278
	Equity (income) loss of unconsolidated affiliates, net		(415	)		(340	)		37
	Loss (gain) from sale of property, plant and equipment		30			(20	)		(6,784	)
	Income on dissolution of joint venture		—			(475	)		—
	Income on recovery of investments		—			(1,103	)		—
	Other expense, net		(154	)		246			158
			12,735			11,345			8,785
	Income before income taxes		340			6,815			3,104
Income tax provision			2,071			2,242			2,074
Net (loss) income		$	(1,731	)	$	4,573		$	1,030

The accompanying notes are an integral part of these consolidated financial statements.

F-4

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

					Year Ended August 31,
					2003			2002			2001
Cash flows from operating activities:
	Net (loss) income				$	(1,731	)	$	4,573		$	1,030
	Adjustments to reconcile net (loss) income to net cash provided by operating activities:
		Depreciation and amortization				17,966			19,290			21,948
		Amortization of debt issuance costs				777			756			718
		Deferred income taxes				(473	)		(199	)		950
		Loss (gain) on property and equipment dispositions				30			(20	)		(6,784	)
		Impairment charge				207			—			—
		Provision for doubtful accounts				417			567			320
		Provision for excess and obsolete inventories				(31	)		45			26
		Provision for restructuring costs				405			—			1,939
		Minority interest expense				73			113			278
		Equity (income) loss of unconsolidated affiliates, net				(415	)		(340	)		37
		Interest income on warrants				(58	)		(151	)		—
		Income on dissolution of joint venture				—			(475	)		—
		Income on recovery of investment				—			(1,940	)		—
		(Increase) decrease in notes receivable from shareholders				(3	)		114			104
		Changes in working capital:
			Accounts receivable			(3,321	)		3,270			(788	)
			Inventories			1,942			1,794			1,072
			Other current assets			808			420			(2,167	)
			Accounts payable			464			(2,444	)		(2,836	)
			Accrued liabilities and compensation			(2,766	)		(977	)		(822	)
			Accrued interest			—			9			(5	)
				Net cash provided by operating activities		14,291			24,405			15,020
Cash flows from investing activities:
	Additions to property, plant and equipment					(11,081	)		(10,488	)		(14,088	)
	Proceeds from sale of property, plant and equipment					114			404			10,113
	Additions to intangible assets					(117	)		(427	)		(362	)
	Decrease (increase) in notes receivable					5			—			30
	Decrease (increase) in other assets					500			(530	)		205
				Net cash used in investing activities		(10,579	)		(11,041	)		(4,102	)
Cash flows from financing activities:
	Decrease in book overdraft					—			—			(1,390	)
	Repayments under revolver, net					(3,220	)		(11,105	)		(3,613	)
	Repayments of long-term debt arrangements					(398	)		(612	)		(4,741	)
	Payment of debt issuance costs					—			—			(1,202	)
	Issuance of common stock					12			9			318
	Payments on other long-term obligations					(181	)		(346	)		(394	)
	Repurchase of common stock					—			—			(284	)
	Distributions to minority owners					(83	)		(81	)		(263	)
				Net cash used in financing activities		(3,870	)		(12,135	)		(11,569	)
Effect of exchange rate changes on cash and cash equivalents						(116	)		22			53
		(Decrease) increase in cash and cash equivalents				(274	)		1,251			(598	)
Cash and cash equivalents at beginning of year						4,566			3,315			3,913
Cash and cash equivalents at end of year					$	4,292		$	4,566		$	3,315

See Note 16 for supplemental cash flow disclosures.

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(in thousands)

		Class A				Class B
																			Notes
						Series 1					Series 2					Additional			Receivable
																Paid-in			from
		Shares		Amount		Shares			Amount		Shares			Amount		Capital			Shareholders
Balance, August 31, 2000			2,135	$	2		8,865		$	8		1,171		$	1	$	8,277		$	(376	)
	Repurchase of common stock		—		—		(60	)		—		—			—		(284	)		—
	Issuance of common stock		—		—		163			—		—			—		1,068			—
	Exercise of stock options		—		—		130			—		—			—		100			—
	Increase in value of stock purchase warrants		—		—		—			—		—			—		—			—
	Increase in notes receivable from shareholders		—		—		—			—		—			—		—			104
	Net income		—		—		—			—		—			—		—			—
	Other comprehensive loss		—		—		—			—		—			—		—			—
Balance, August 31, 2001			2,135		2		9,098			8		1,171			1		9,161			(272	)
	Repayment of promissory note with stock		—		—		(524	)		—		(1	)		—		(2,625	)		—
	Issuance of common stock		—		—		2			—		—			—		9			—
	Exercise of stock options		—		—		21			—		—			—		25			—
	Decrease in notes receivable from shareholders		—		—		—			—		—			—		—			114
	Net income		—		—		—			—		—			—		—			—
	Other comprehensive income		—		—		—			—		—			—		—			—
Balance, August 31, 2002			2,135		2		8,597			8		1,170			1		6,570			(158	)
	Issuance of common stock		—		—		3			—		—			—		12			—
	Decrease in notes receivable from shareholders		—		—		—			—		—			—		—			(3	)
	Net loss		—		—		—			—		—			—		—			—
	Other comprehensive income		—		—		—			—		—			—		—			—
Balance, August 31, 2003			2,135	$	2		8,600		$	8		1,170		$	1	$	6,582		$	(161	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Accumulated
		Other						Total			Total
		Comprehensive			Accumulated			Shareholders’			Comprehensive
		Income (Loss)			Deficit			Equity (Deficit)			Income (Loss)
Balance, August 31, 2000		$	(2,127	)	$	(36,741	)	$	(30,956	)		—
	Repurchase of common stock		—			—			(284	)		—
	Issuance of common stock		—			—			1,068			—
	Exercise of stock options		—			—			100			—
	Increase in value of stock purchase warrants		—			2,120			2,120			—
	Increase in notes receivable from shareholders		—			—			104			—
	Net income		—			1,030			1,030		$	1,030
	Other comprehensive loss		(465	)		—			(465	)		(465	)
Balance, August 31, 2001			(2,592	)		(33,591	)		(27,283	)	$	565
	Repayment of promissory note with stock		—			—			(2,625	)		—
	Issuance of common stock		—			—			9			—
	Exercise of stock options		—			—			25			—
	Decrease in notes receivable from shareholders		—			—			114			—
	Net income		—			4,573			4,573		$	4,573
	Other comprehensive income		274			—			274			274
Balance, August 31, 2002			(2,318	)		(29,018	)		(24,913	)	$	4,847
	Issuance of common stock		—			—			12			—
	Decrease in notes receivable from shareholders		—			—			(3	)		—
	Net loss		—			(1,731	)		(1,731	)	$	(1,731	)
	Other comprehensive income		436			—			436			436
Balance, August 31, 2003		$	(1,882	)	$	(30,749	)	$	(26,199	)	$	(1,295	)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data)

1. Summary of Significant Accounting Policies

Nature of Operations

      Portola Packaging, Inc. and Subsidiaries (the “Company” or “PPI” or “Portola”) designs, manufactures and markets tamper-evident plastic closures and related equipment used for packaging applications in dairy, fruit juice, bottled water, sport drinks, institutional foods and other non-carbonated beverage products. The Company’s Canadian subsidiary also designs, manufactures and markets a wide variety of plastic bottles for use in the dairy, juice and water industries. The Company’s Mexican and United Kingdom subsidiaries manufacture five-gallon polycarbonate water bottles. The Company has production facilities throughout the United States, Canada, the United Kingdom, Mexico and China. The Company also has facilities in the United States and Europe through joint venture agreements.

Principles of Consolidation

      The consolidated financial statements of the Company include the financial statements of Portola Packaging, Inc. and all of its subsidiaries. Joint venture investments are accounted for by the equity method. All material intercompany accounts and transactions between consolidated entities have been eliminated.

Revenue Recognition

      The Company recognizes revenue when title, ownership and risk of loss pass to the customer and collectibility is probable.

Cash Equivalents

      The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Inventories

      Cap and bottle related inventories are stated at the lower of cost (first-in, first-out method) or market and equipment related inventories are stated at the lower of cost (average cost method) or market.

Property, Plant and Equipment

      Property, plant and equipment are stated at cost and depreciated on the straight-line basis over their estimated useful lives. The cost of maintenance and repairs is charged to income as incurred. Leasehold improvements are amortized on a straight-line basis over their useful lives or the lease term, whichever is shorter. When assets are disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are included in the results of operations.

Intangible Assets

      Patents, licenses, technology, tradenames, covenants not-to-compete and customer lists are valued at cost and are amortized on a straight-line basis over the lesser of their remaining useful or contractual lives (generally two to sixteen years). During fiscal 2001, the Company capitalized approximately $399 of litigation costs related to the successful defense of certain of its patents used in products marketed by the U.S. domestic plants. These costs are being amortized on a straight-line basis over the remaining useful life of the related patents. During fiscal 2001, the Company allocated $3,612 to identifiable intangibles (including $1,800 to patents, $1,000 to customer lists, $452 to non-compete agreements and $360 to tradename) due to the

F-7

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

acquisition of Consumer Cap Corporation (“Consumer”) (Note 2). The identifiable intangibles are being amortized over three to sixteen years.

      Goodwill, representing the excess of cost over the net tangible and identifiable intangible assets, recorded in connection with acquisitions by the Company of Northern Engineering & Plastics Corp. (“Pennsylvania Nepco”), Portola Packaging Canada Ltd., Portola Packaging Limited (“Portola Packaging Ltd. (U.K.)”), Portola Packaging Inc. Mexico, S.A. de C.V. (“PPI Mexico”), Shanghai Portola Packaging Company Limited (“PPI China”) and the assets of Allied Tool, Inc., acquired by Portola Allied Tool, Inc. (“Portola Allied”), was amortized on a straight-line basis over periods ranging from three to twenty-five years through August 31, 2001. Effective September 1, 2001, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 eliminates the amortization of goodwill as well as intangible assets with indefinite useful lives, and requires annual testing for impairment. See Recent Accounting Pronouncements below and Note 7.

Debt Financing Costs

      Debt financing costs are amortized using the straight-line method over the term of the related loans.

Research and Development Expenditures

      Research and development expenditures are generally charged to operations as incurred.

Income Taxes

      The Company accounts for income taxes under the liability method, which requires that deferred taxes be computed annually on an asset and liability basis and adjusted when new tax laws or rates are enacted. Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established where necessary to reduce deferred tax assets to the amount expected to be realized.

Accounting for Stock-Based Compensation

      The Company has adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Accordingly, no compensation expense has been recognized for the Company’s stock plans. Had compensation expense for the stock plans been determined based on the fair value at the grant date for options granted in fiscals 2003, 2002 and 2001 consistent with the provisions of SFAS No. 123, the pro forma net income (loss) would have been reported as follows:

	2003			2002		2001
Net income (loss) as reported	$	(1,731	)	$	4,573	$	1,030
Net income (loss) — pro forma	$	(1,851	)	$	4,350	$	327

      These pro forma results are not likely to be representative of the effects on reported net income (loss) for future years.

Concentrations of Credit Risk and Other Risks and Uncertainties

      Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents, and trade receivables. The Company’s cash and cash equivalents are concentrated primarily in several United States banks, as well as in banks in Canada, Mexico, China and the United Kingdom. At times, such deposits may be in excess of insured limits. Management believes that the

F-8

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

financial institutions, which hold the Company’s financial instruments, are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments.

      The Company’s products are principally sold to entities in the beverage and food industries in the United States, Canada, the United Kingdom, Mexico, China, Australia, New Zealand and throughout Europe. Ongoing credit evaluations of customers’ financial condition are performed and collateral is generally not required. The Company maintains reserves for potential credit losses, which, on a historical basis, have not been significant. There were no customers that accounted for more than 10% of sales for the fiscal years ended August 31, 2003 or 2001. During fiscal year ended August 31, 2002, one United States customer accounted for approximately 10% of sales and owed the Company $1,600 as of August 31, 2002.

      The majority of the Company’s products are molded from various plastic resins, which comprise a significant portion of the Company’s cost of sales. These resins are subject to substantial price fluctuations, resulting from shortages in supply, changes in prices in petrochemical products and other factors. During fiscal 2003, the Company incurred increases in resin prices. The Company passes the majority of these increases on to its customers depending upon the competitive environment and contractual terms for customers with contracts. Significant increases in resin prices coupled with an inability to promptly pass such increases on to customers could have a material adverse impact on the Company. Resin price increases had a negative impact on the Company during the year ended August 31, 2003.

     Use of Estimates

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

      The Company’s foreign subsidiaries use the local currency as their functional currency. Assets and liabilities are translated at year end exchange rates. Items of income and expense are translated at average exchange rates for the relevant year. Translation gains and losses are not included in determining net income (loss) but are accumulated as a separate component of shareholders’ equity (deficit). Gains (losses) arising from foreign currency transactions are included in determining net income (loss). Gains (losses) arising from foreign currency transactions for the years ended August 31, 2003, 2002 and 2001 totaled $348, $(285) and $(50), respectively, and are included in “Other (income) expense” in the accompanying consolidated statements of operations. To date, the Company has not entered into any foreign currency forward exchange contracts or other derivative financial instruments relative to foreign currency exchange rates. In addition, the Company has two guarantee agreements in Eurodollars that were valued using a conversion rate as of August 31, 2003 (Note 9).

Carrying Value of Long-Lived Assets

      Long-lived assets, including property, plant and equipment and other intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in relation to the operating performance and future undiscounted cash flows of the underlying assets. Adjustments are made if the sum of expected future cash flows is less than book value. Based on management’s assessment of the carrying values of such long-lived assets, no impairment charge has been deemed necessary as of August 31, 2003 and 2002.

F-9

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Fair Value of Financial Instruments

      Carrying amounts of certain of the Company’s financial instruments including cash and cash equivalents, accounts payable and other liabilities approximate fair value due to their short maturities. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of long-term debt except for the senior notes, approximates fair value. The fair value of the senior notes is estimated to be approximately $113,600 as of August 31, 2003 (Note 8).

      In addition, the Company has outstanding warrants, whose carrying value at August 31, 2003 approximated fair value of the instruments, as determined by the Company’s management (Note 10).

Recent Accounting Pronouncements

      Effective September 1, 2001, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” for existing goodwill and other identifiable assets. This standard requires that goodwill and intangible assets with indefinite lives should not be amortized but should be tested for impairment annually. At August 31, 2003, the Company used the discounted cash flows methodology to measure its goodwill by operating unit and review for impairment. Based on this review, the Company recorded an impairment loss of $207 during the year ended August 31, 2003 for goodwill related to its purchase of the remaining 45% interest in PPI China in March 2000 (Note 7).

      Effective September 1, 2002, the Company adopted SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. The adoption of SFAS No. 143 had no impact on the Company’s financial statements for fiscal 2003.

      Effective September 1, 2002, the Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes or amends existing accounting literature related to the impairment and disposal of long-lived assets. SFAS No. 144 requires long-lived assets to be tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable from future cash flows of the particular asset group or there is an expectation that it is more likely than not that a long-lived group will be sold or otherwise disposed of before the end of its previously estimated useful life. The adoption of SFAS No. 144 had no impact on the Company’s financial statements for fiscal 2003.

      Effective September 1, 2002, the Company adopted SFAS No. 145, “Rescission of Financial Accounting Standards Board’s (“FASB”) Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections.” This statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” and an amendment of SFAS No. 64, “Extinguishment of Debt Made to Satisfy Sinking-Fund Requirements.” This statement also rescinds SFAS No. 44, “Accounting for Intangible Assets of Motor Carriers.” This statement updates, clarifies and simplifies existing accounting pronouncements. While the technical corrections to existing pronouncements are not substantive in nature, in some instances they may change accounting practice. The provisions of this standard related to SFAS No. 13, “Accounting for Leases,” are effective for transactions occurring after May 15, 2002. Prospectively, as a result of the adoption of SFAS No. 145, debt extinguishment costs will no longer be treated as extraordinary items. The impact of adopting SFAS No. 145 was not material to the Company’s financial statements for fiscal 2003.

      Effective September 1, 2002, the Company adopted SFAS No. 146, “Accounting for Exit or Disposal Activities.” The standard requires companies to recognize costs associated with exit or disposal activities when incurred rather than at the date of a commitment to exit or disposal plan. Examples of costs covered by the standard include (1) costs to terminate contracts that are not capital leases; (2) costs to consolidate facilities or relocate employees; and (3) termination benefits provided to employees who are involuntarily terminated

F-10

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. Previous accounting guidance was provided by EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 replaces EITF 94-3 and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. During fiscal 2003, the Company incurred restructuring charges of $405, which were determined in accordance with the provisions of SFAS No. 146 (Note 4).

      Effective December 31, 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This Statement also amends the disclosure provision of SFAS No. 123 and APB No. 28, “Interim Financial Reporting,” to require disclosure in the summary of significant accounting policies footnote in the financial statements of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. The Company has elected to continue to follow the disclosure-only provisions of SFAS No. 123 and has adopted the required disclosure provisions of SFAS No. 148 (Note 11).

      In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees that are issued or modified after December 31, 2002. The recognition provisions of FIN 45 did not have a material impact on the Company’s results of operations or financial condition for fiscal 2003 as there were no new guarantees or modifications of existing guarantees during fiscal 2003.

      In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 was effective January 31, 2003 for newly created and existing variable interest entities. On October 8, 2003, the FASB issued FASB Staff Position No. 46-e, which allows public entities, who meet certain criteria, to defer the effective date for applying the provisions of FIN 46 to interests held by the public entity in certain variable interest entities or potential variable interest entities until the end of the first interim or annual period ending after December 15, 2003. FIN 46 did not have a material impact on the Company’s results of operations or financial condition for fiscal 2003. The Company is analyzing the impact of FIN 46 on fiscal 2004.

      Effective April 1, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends SFAS No. 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG) process and further claries the accounting and reporting standards for derivative instruments including derivatives embedded in other contracts and for hedging activities. The provisions of this statement are to be prospectively applied effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this statement did not have a material impact on the Company’s results of operations or financial condition for fiscal 2003.

      Effective May 1, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer

F-11

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this statement is not expected to have a material impact on the Company’s results of operations or financial condition.

2. New Business Activity

Acquisition of Consumer Cap Corporation

      On December 30, 2000, the Company entered into an agreement with Consumer Cap Corporation (“Consumer”), a manufacturer of plastic closures, for the purchase of substantially all of Consumer’s assets and the assumption of certain of Consumer’s liabilities for a purchase price of approximately $1,477, including acquisition costs of $475, plus the assumption of liabilities totaling approximately $8,374. On January 12, 2001, the acquisition was completed through the purchase of the assets of Consumer by Northern Engineering and Plastics Corporation (“Delaware Nepco”), a Delaware corporation and a wholly owned subsidiary of the Company. The transaction was accounted for as a purchase and accordingly, the purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair market values. The purchase price was financed through the issuance of $550 of the Company’s common stock and the incurrence of obligations for non-compete agreements of $452. In addition, the Company borrowed $4,474 under its senior revolving credit facility and issued $300 in common stock to extinguish a portion of the assumed debt obligations of Consumer at the time of the acquisition. The remaining balance of the assumed liabilities was paid from the Company’s cash flows from operations.

      The allocation of the purchase price was based on an independent valuation and included an allocation of $3,612 to identifiable intangibles (including $1,800 to patents, $1,000 to customer lists, $452 to non-compete agreements and $360 to a tradename). The identified intangibles are being amortized over three to sixteen years.

      Delaware Nepco is being operated as a “restricted” subsidiary pursuant to the terms of the Company’s senior revolving credit facility and the senior note indenture (Notes 8 and 17). The operating results of Consumer have been included in the Company’s consolidated financial statements since January 1, 2001.

      The following presents unaudited pro forma information assuming that the Consumer acquisition had occurred at the beginning of the year ended August 31, 2001. Adjustments that have been included to arrive at the pro forma totals primarily relate to the amortization of identifiable intangible assets and the adjustment in interest expense to reflect the extinguishment of a portion of Consumer’s debt and the related borrowings under the Company’s senior revolving credit facility. An income tax benefit was not recognized for the net loss of Consumer due to the limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and due to the Company’s current tax position.

	(Unaudited)
Pro forma sales	$	222,845
Pro forma net loss	$	(456	)

      The unaudited pro forma results are not necessarily indicative of what actually would have occurred if the transaction had been in effect for the entire period presented, are not intended to be a projection of future results, and do not reflect any cost savings that might be achieved from the combined operations.

F-12

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      Cash flow information (note 16):

      The details related to the Consumer acquisition for the year ended August 31, 2001 were as follows:

Fair value of assets acquired	$	9,851
Fair value of liabilities assumed	$	8,374
Fair value of common stock issued	$	550
Fair value of obligations for non-compete agreements	$	452
Issuance of common stock for extinguishment of debt	$	300

Other

      In November 2003, the Company formed a wholly owned subsidiary, Portola s.r.o. under the laws of the Czech Republic. The Company purchased land in the Czech Republic and intends to begin construction of a closure manufacturing plant on this property in fiscal 2005 to serve the European markets for closures and cosmetics, fragrance and toiletry products. Portola s.r.o. is designated as an unrestricted subsidiary under the Company’s existing 10.75% Senior Notes (Note 17).

      On September 19, 2003, the Company acquired all of the issued and outstanding capital stock of Tech Industries, Inc., and in connection with this purchase, the Company also acquired all of the issued and outstanding capital stock of Tech Industries U.K. Ltd. and certain land, buildings and fixtures leased and used by Tech Industries Inc. in its manufacturing operations (collectively “Tech Industries”). The Company paid cash of approximately $35,663 from borrowings under its credit facility to purchase Tech Industries. In November 2003, the Company paid the final working capital adjustment of $231. Tech Industries is a manufacturer of plastic closures and containers for the personal care and cosmetic industries. Tech Industries will continue to operate as a wholly owned subsidiary of PPI and is designated as a restricted subsidiary under the Company’s existing 10.75% Senior Notes (Note 17).

      On June 30, 2003, the Company formed a wholly owned subsidiary, Portola GmbH (“Portola Austria”). Portola Austria was formed to manage sales of the Company’s products on the European continent and to facilitate the growth of European operations. Portola Austria is designated as a restricted subsidiary under the Company’s existing 10.75% Senior Notes (Note 17).

      On May 15, 2003, the Company formed a wholly owned subsidiary and holding company, Portola Ltd. (“PLtd”). The Company’s European operations have been consolidated under the management of PLtd. PLtd now owns the equity interest in Portola Packaging Ltd. (U.K.), CSE, Portola GmbH. PLtd is designated as a restricted subsidiary under the Company’s existing 10.75% Senior Notes (Note 17).

      On January 19, 2001, the Company formed a wholly owned subsidiary, now known as Portola (Asia Pacific) Holding Limited (“PH”). PH was formed to facilitate international business relations with the Company’s Chinese operations and customers throughout Australia, New Zealand and other markets in Southeast Asia. PH is designated as an unrestricted subsidiary under the Company’s existing 10.75% Senior Notes (Note 17).

      In February 2000, the Company incorporated an e-commerce company, Buyerlink Networks, Inc. The name of that corporation was subsequently changed to BLN Acquisition Corporation (“BNI”). Effective as of July 2000, the Company sold the assets of that corporation to Sand Hill Systems, Inc., (“SHS”) in exchange for an unsecured promissory note in the principal amount of $1,500. The Company fully reserved against non-payment of that note on August 31, 2000. SHS merged with Neptune Technologies in April 2001, and as a result the promissory note was converted into SHS convertible preferred stock (Note 15). Effective June 1, 2002, the assets of SHS were sold, and SHS’s stock was determined to be worthless.

F-13

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      During fiscal 1999, the Company entered into a joint venture with Kimex Group, LLC (“Kimex”) to form Sterling Containers, LLC (“Sterling”), a 50% owned company that produced and sold five-gallon PET water bottles out of one of the Company’s domestic plants. During fiscal 2002, the Company dissolved the partnership. Kimex agreed to forgive debt of $475, which was recognized in other (income) expense included in the Consolidated Statement of Operations.

3. Other Comprehensive (Income) Loss

      Other comprehensive (income) loss consisted of cumulative foreign currency translation adjustments of $(436), $(274) and $465 for the years ending August 31, 2003, 2002 and 2001, respectively.

4. Restructuring

      During the second quarter of fiscal 2003, the Company announced a restructuring plan to reduce its work force. During fiscal 2003, the Company incurred restructuring charges of $405 for employee severance costs, which were determined in accordance with the provisions of SFAS No. 146. The restructuring affected nine employees in general and administration, two employees in customer service, one employee in research and development and two employees in sales, totaling fourteen severed employees. As of August 31, 2003, approximately $300 had been charged against the restructuring reserve for the employee severance costs.

      The Company expects to incur additional restructuring costs in fiscal 2004 related to the closing and relocation of three plants located in Chino and San Jose, California and Sumter, South Carolina. The operations from the two California plants will be relocated to a new facility located in Tolleson, Arizona, a suburb of Phoenix, towards the end of the second quarter of fiscal 2004. The Company, in June 2003, entered into a fifteen-year lease commencing December 1, 2003 for the Tolleson, Arizona facility (Note 9). The Company has retained real estate brokers to sell the manufacturing buildings in Chino and San Jose, California. The operations from the South Carolina plant will be relocated in the first quarter of fiscal 2004 primarily to the Company’s existing facility in Kingsport, Tennessee as well as to other facilities within the Company. The Company estimates that it will incur approximately $1,275 in relocation expenses and stay bonuses and $2,171 in restructuring costs related to the closing of the three plants during fiscal 2004.

5. Inventories:

	August 31,
	2003		2002
Raw materials	$	5,785	$	6,644
Work in process		528		1,047
Finished goods		4,993		5,581
	$	11,306	$	13,272

F-14

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

6. Property, Plant and Equipment:

	August 31,
	2003			2002
Assets (asset lives in years):
Buildings and land (35)	$	17,962		$	17,667
Machinery and equipment (3-10)		161,160			155,674
Leasehold improvements (10-35)		6,022			5,934
		185,144			179,275
Less accumulated depreciation		(119,140	)		(107,820	)
	$	66,004		$	71,455

      Depreciation expense charged to operations was $17,100, $17,700 and $17,800 for the years ended August 31, 2003, 2002 and 2001, respectively.

7. Goodwill and Intangible Assets

      As of August 31, 2003 and 2002, goodwill and accumulated amortization by segment category (Note 14) consisted of the following:

			August 31, 2003					August 31, 2002
			Gross					Gross
			Carrying		Accumulated			Carrying		Accumulated
			Amount		Amortization			Amount		Amortization
Goodwill:
	United States		$	12,585	$	(6,667	)	$	12,585	$	(6,667	)
	Canada			4,437		(1,239	)		3,975		(1,110	)
	Mexico			3,801		(2,534	)		3,801		(2,534	)
	China			392		(392	)		392		(185	)
	Other			449		(364	)		449		(364	)
		Total consolidated	$	21,664	$	(11,196	)	$	21,202	$	(10,860	)

      Effective September 1, 2001, the Company adopted SFAS No. 142 for existing goodwill and other identifiable assets and, at August 31, 2002, the Company used the discounted cash flows methodology to measure goodwill by operating unit and reviewed for impairment. Based on this review, the Company did not record an impairment loss during fiscal 2002. The effect of the adoption was to eliminate goodwill amortization expense of $2,600 in fiscal 2002. Prior to the adoption, the Company had recorded goodwill amortization expense of $2,700 in 2001.

      The change in the gross carrying amount and accumulated amortization for Canada from August 31, 2002 to August 31, 2003 was due to foreign currency translation. The Company performed its annual review for impairment and recognized $207 for impairment losses related to PPI China’s goodwill for the year ended August 31, 2003.

F-15

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      In connection with the adoption of SFAS No. 142, effective September 1, 2001, the Company reassessed the useful lives and the classification of its identifiable intangible assets and determined that they continue to be appropriate. The components of the Company’s intangible assets are as follows:

			August 31, 2003					August 31, 2002
			Gross					Gross
			Carrying		Accumulated			Carrying		Accumulated
			Amount		Amortization			Amount		Amortization
Intangible assets:
	Patents		$	9,620	$	(7,072	)	$	9,621	$	(6,494	)
	Debt financing costs			6,085		(4,500	)		5,966		(3,686	)
	Covenants not-to-compete			455		(243	)		555		(252	)
	Trademarks			360		(320	)		360		(200	)
	Technology and other			401		(165	)		412		(305	)
		Total consolidated	$	16,921	$	(12,300	)	$	16,914	$	(10,937	)

      The gross carrying amounts and accumulated amortization may fluctuate between periods due to foreign currency translation. In addition, amortization expense for the net carrying amount of intangible assets, including debt financing costs, at August 31, 2003 was $1,685 for fiscal 2003 and is estimated to be $1,885 for fiscal 2004, $931 in fiscal 2005, $408 in fiscal 2006, $266 in fiscal 2007, $123 in fiscal 2008 and $1,008 in the remaining years thereafter.

8. Debt

	August 31,
	2003			2002
Debt:
Senior notes	$	110,000		$	110,000
Senior revolving credit facility		6,561			9,781
Capital lease obligations		302			663
Other		70			108
		116,933			120,552
Less: Current portion long-term debt		(287	)		(426	)
	$	116,646		$	120,126

Senior Notes

      On October 2, 1995, the Company completed an offering of $110,000 of senior notes that mature on October 1, 2005 and bear interest at 10.75% per annum. Interest payments of approximately $5,900 are due semi-annually on April 1 and October 1 of each year, which commenced on April 1, 1996. The senior notes’ indenture contains covenants and provisions that restrict, among other things, the Company’s ability to: (i) incur additional indebtedness, (ii) incur liens on its property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, (vi) engage in certain sales of assets, (vii) engage in certain transactions with affiliates, (viii) make restricted junior payments, and (ix) declare or pay dividends.

F-16

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Senior Revolving Credit Facility

      Concurrently with the offering of senior notes, in October 1995, the Company entered into a five-year senior revolving credit facility of up to $35,000. On September 29, 2000, the Company entered into a new four year amended and restated senior secured credit facility of $50,000 for operating purposes subject to a borrowing base of eligible receivables and inventory, plus property, plant and equipment, net, which serve as collateral for the line. The credit facility, which was due to expire on August 31, 2004, contained covenants and provisions that restricted, among other things, the Company’s ability to: (i) incur additional indebtedness, (ii) incur liens on its property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vi) engage in certain transactions with affiliates, (vii) make restricted junior payments, and (viii) declare or pay dividends. An unused fee was payable on the facility based on the total commitment amount less the balance at the rate of 0.375% per annum. In addition, interest payable as of August 31, 2003 was based on either the Bank Prime Loan rate plus 1.00% or the LIBOR Loan rate plus 2.25% determined by a pricing table based on total indebtedness to EBITDA. At August 31, 2003, the Bank Prime Loan rate and the LIBOR Loan rate were 4.00% and 1.12%, respectively.

      On September 19, 2003, the Company entered into a consent and first amendment to the amended and restated senior secured credit facility, increasing the credit facility to $54,000 in connection with the Company’s purchase of Tech Industries, Inc. (Note 18), subject to a borrowing base and covenants similar to those in the amended and restated senior secured credit facility existing at August 31, 2003. An unused fee is payable on the facility based on the total commitment amount less the balance outstanding plus the average daily aggregate amount of outstanding letter of credit liability, at the rate of 0.50% per annum. Interest payable is based on either the Bank Prime Loan rate plus 1.50% or the LIBOR loan rate plus 2.75%. The amended and restated credit facility under the second amendment expires on September 7, 2004.

Capital Lease Obligations

      The Company acquired certain machinery and office equipment under noncancelable capital leases. Property, plant and equipment includes the following items held under capital lease obligations:

	August 31,
	2003			2002
Equipment	$	1,152		$	1,160
Less accumulated depreciation		(302	)		(225	)
	$	850		$	935

F-17

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Aggregate Maturities of Long-Term Debt

      The aggregate maturities of long-term debt as of August 31, 2003 were as follows:

	Fiscal
	Years Ended
	August 31,
2004	$	287
2005		6,627
2006		110,018
2007		1
2008		—
	$	116,933

9. Commitments and Contingencies

Legal

      The Company is subject to various legal proceedings and claims arising out of the normal course of business, including a suit alleging that a “single-stick” adhesive label attached to the Company’s five-gallon caps infringes a patent held by a competitor. Based on the facts currently available, management believes that the ultimate amount of liability beyond reserves provided, if any, for any pending actions will not have a material adverse effect on the Company’s financial position. However, the ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material impact on the results of operations or liquidity of the Company in a particular period.

Commitments and Contingencies

      The Company leases certain office, production and warehouse facilities under operating lease agreements expiring on various dates through 2021. Under the terms of the facilities’ leases, the Company is responsible for common area maintenance expenses, which include taxes, insurance, repairs and other operating costs.

      At August 31, 2003, future minimum rental commitments under agreements with terms in excess of twelve months were as follows:

	Fiscal
	Years Ended
	August 31,
2004	$	3,148
2005		3,059
2006		2,288
2007		2,019
2008		1,001
Thereafter		17,141
	$	28,656

      Base rent expense for the years ended August 31, 2003, 2002 and 2001 totaled $3,300, $3,400 and $3,600, respectively.

      The Company has issued a letter of credit in October 1999, expiring in December 2010, that guarantees $307 of a loan related to the purchase of machinery for Capsnap Europe Packaging GmbH’s (“CSE”) 50%

F-18

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

owned Turkish joint venture, Watertek. CSE is an unconsolidated, 50% owned Austrian joint venture that sells five-gallon water bottles and closures that are produced by the Company’s United Kingdom subsidiary and the Company’s joint venture partner in CSE. The Company has also issued a letter of credit in February 2000, expiring in February 2004, that guarantees a loan of $380 for the purchase of machinery by CSE, presently being used at the Company’s United Kingdom facility. These guarantee agreements are in Eurodollars and were valued using a conversion rate as of August 31, 2003.

      In November 2000, the Company’s Mexican consolidated subsidiary entered into a ten year lease for a building in Guadalajara, Mexico commencing in May 2001. The Company’s Mexican operations relocated to the new building during May 2001. The Company guaranteed approximately $595 in future lease payments relating to the lease as of August 31, 2003.

      In June 2003, the Company entered into a fifteen-year lease for a new facility in Tolleson, Arizona, commencing December 1, 2003. The lease provides for monthly rentals of approximately $22 for the first six months increased to monthly rentals of approximately $51 thereafter subject to annual CIP increases. The closure manufacturing operations from San Jose and Chino, California will be relocated to the new facility in Tolleson, Arizona towards the end of the second quarter fiscal 2004 (Note 4). The Company has retained real estate brokers to sell the manufacturing buildings in San Jose and Chino.

10. Redeemable Warrants

      The Company has outstanding two warrants to purchase an aggregate of 2,492,741 shares of its Class A Common Stock, which are held by certain shareholders and senior lenders of the Company. A warrant to purchase 2,052,526 shares of Common Stock is exercisable, in whole or in part, through June 30, 2004 at sixty and two-third cents per share, subject to certain anti-dilution provisions. Effective June 30, 1999, this warrant became redeemable at the option of the holder upon 60 days’ prior written notice to the Company. The redemption price of the warrants is based on the higher of the current market price per share of the Company’s Common Stock or an amount determined under a formula in the applicable warrant agreement. The obligation of the Company to redeem the warrant is deferred if the redemption of the warrant would cause a default or event of default under the Company’s credit facilities. At August 31, 2003 and 2002, the Company’s credit facilities did not permit redemption of the warrant. If the Company’s credit facilities do not permit the payout of the warrant upon expiration on June 30, 2004, the Company will be required to accrue interest on the amount that the Company would be required to pay the warrant holder, if the credit facilities permitted such payment at the higher of (i) the prime rate plus 6% or (ii) the federal funds rate plus 6.5% on the current market price of the unpaid portion of the warrant until the payout is permitted. Were the warrant holder able to exercise its put option to redeem the warrant, the cost to the Company is estimated to be approximately $10,300 at August 31, 2003 and 2002 based on a calculation using the fair value per share of the Company’s Common Stock. As of January 1, 2002, the Company has the right to repurchase the warrant at a price equal to the higher of the fair value per share of the Company’s Common Stock or an amount computed under an earnings formula in the warrant agreement. The earnings formula is based on a multiple of earnings before interest, taxes, depreciation and amortization, less debt outstanding to calculate an estimated value per share.

      A second warrant to purchase 440,215 shares of Class A Common Stock may be exercised at any time at $2.50 per share, until its expiration on June 30, 2008. Effective August 1, 2001, this warrant became redeemable at the option of the holder upon 60 days prior written notice to the Company based upon a price equal to the higher of the current fair value per share of the Company’s Common Stock or the net book value per share of the Company’s Common Stock as computed under a valuation formula in the warrant agreement. The obligation of the Company to redeem the warrant is deferred if the redemption of the warrant would cause a default or event of default under the Company’s credit facilities. At August 31, 2003 and 2002, the Company’s credit facilities did not permit redemption of the warrant. Were the warrant holder able to exercise

F-19

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

its put option to redeem the warrant, the cost to the Company is estimated to be approximately $1,300 at August 31, 2003 and 2002, based on a calculation using the fair value per share of the Company’s Common Stock. As of August 1, 2003, the Company has the right to repurchase the warrant at a price equal to the higher of the current fair value per share of the Company’s Common Stock or the net book value per share of the Company’s Common Stock as computed under a valuation formula in the warrant agreement.

      Through June 30, 2001, the Company accounted for the redeemable warrants under the provisions of EITF Issue 88-9, “Put Warrants” from the date of issuance of the warrants prior to the effective date of EITF Issue 96-13 “Accounting for the Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” Accordingly, an adjustment of the warrant from the value assigned at the date of issuance to the highest redemption price of the warrant was accreted over the period of the warrant. At June 30, 2001, the estimated redemption value of the warrants exceeded their carrying value. The difference was charged (credited) to accumulated deficit over the period from the date of issuance to the earliest put date of the warrants. (Reductions) charges to accumulated deficit related to the warrants amounted to $(2,100) for the period from September 1, 2000 to June 30, 2001. Through June 30, 2001, the accretion was determined based on a calculation using the fair market value of the Company’s Common Stock, as determined by the Company’s management.

      As of June 30, 2001, the Company applied EITF Issue 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” The effect of the application of Issue 00-19 was to reclassify the carrying amount of the warrant from temporary equity to a liability on June 30, 2001. There was no cumulative effect adjustment as a result of the application of Issue 00-19. Under Issue 00-19, the warrants are measured at fair value with changes in fair value reported in earnings. For the period July 1, 2001 to August 31, 2001, the Company’s management determined that the fair value of the warrants did not change. As of August 31, 2003 and 2002, the Company’s management determined that the fair value of the warrants had decreased, resulting in the recognition of interest income of $58 and $151 in the consolidated statements of operations for fiscal 2003 and 2002, respectively. The fair value of the warrants was estimated at August 31, 2003 using the Black-Scholes pricing model with the following assumptions: Fair market value of the Company’s stock of $5.00 per share; risk free interest rates of 1.35% and 3.49%; expected redemption period of June 30, 2004 and June 30, 2008; and volatility of 20% for each warrant, respectively. The fair value of the warrants was estimated at August 31, 2002 with the following assumptions: Fair market value of the Company’s stock of $5.00 per share; risk free interest rate of 2.01% and 3.34%; expected redemption period of June 30, 2004 and June 30, 2008: and volatility of 20% for each warrant, respectively. A change in the fair market value of the Company’s stock used in valuing the warrants at August 30, 2003 could have a material effect on the Company’s results of operations.

11. Shareholders’ Equity (Deficit)

Class A and B Common Stock

      The Company has authorized 5,203,000 shares of Class A Common Stock, of which 2,492,741 shares are reserved for the warrants described in Note 10. Class A common shareholders are not entitled to elect members of the Board of Directors. In the event of an aggregate public offering exceeding $10.0 million, the Class A Common Stock and Class B, Series 2, Common Stock is automatically converted into Class B, Series 1 Common Stock, based on a one to one ratio. The Class B common shareholders have the right to elect members of the Board of Directors, with the holders of Series 1 having one vote per share, and the holders of Series 2 having a number of votes equal to the number of shares into which the Series 2 shares are convertible into Series 1 shares.

      In the event of a liquidation or dissolution in which the value of the Company is less than $1.75 per share of common stock, the holders of Class B, Series 2 will receive 60% of the proceeds until they have received

F-20

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

$1.75 per share. All other amounts available for distribution shall be distributed to the Class B, Series 1 and Class A holders pro rata based on the number of shares outstanding. If the value of the Company is greater than or equal to $1.75 per share, the holders of all classes of Common Stock are entitled to a pro rata distribution based on the number of shares outstanding.

      The Company is required to reserve shares of Class B, Series 1 Common Stock for the conversion of Class A Common Stock and Class B, Series 2 Common Stock into Class B, Series 1 Common Stock.

                  2002 Stock Option Plan

      The Company’s 2002 Stock Option Plan (the “2002 Plan”) was adopted by the Company’s Board of Directors in December 2001 and by the Company’s stockholders in January 2002. A total of 5,000,000 shares of Class B Common Stock, Series 1 have been reserved for issuance under the 2002 Plan. Options may be granted under the 2002 Plan to employees, officers, directors, consultants and other independent contractors and service providers of the Company, or of any subsidiary or parent of the Company. Options granted under the 2002 Plan may be incentive stock options within the meaning of Section 422 of the Code, or non-statutory options; however, only employees of the Company, or a parent or subsidiary of the company may be granted incentive options. Generally, options under the 2002 Plan expire ten years after the date of grant (or five years in the case of any option granted to a person holding more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or subsidiary of the Company).

      The exercise price of an option granted under the 2002 Plan may not be less than 85% with respect to a non-statutory option or 100% with respect to an incentive option of the fair market value of the Company’s Class B Common Stock, Series 1 on the date of grant, except that for an incentive option granted to a person holding more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the exercise price must be not less than 110% of such fair market value. Options generally become exercisable as to 20% of the shares one year after the vesting start date and an additional 5% of the shares for each full quarter thereafter that the optionee renders services to the Company.

      The 2002 Plan may be administered by the Board of Directors or by a Compensation Committee appointed by the Board, which has discretion to select optionees and to establish the terms and conditions for the options, subject to the provisions of the 2002 Plan.

All Stock Option Plans

      At August 31, 2003, the Company had reserved 2,866,200, 3,500,000 and 5,000,000 shares of Class B, Series 1 Common Stock for issuance under the Company’s 1988, 1994 and 2002 stock option plans, respectively. Under all three plans, stock options are granted by the Board of Directors at prices not less than 85% of fair market value of the Company’s Common Stock at the date of grant for non-statutory options and not less than 100% of the fair market value of the Company’s Common Stock at the date of grant for incentive options, except that for an incentive option granted to a person holding more than 10% of the total combined voting power of all classes of the Company or any parent or subsidiary of the Company, the exercise price must be not less than 110% of such fair market value.

F-21

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      Aggregate option activity is as follows:

					Options Outstanding
		Available for			Number of			Weighted Average
		Grant			Shares			Exercise Price
Balances, August 31, 2000			1,062,000			2,630,000		$	5.07
	Granted		(399,000	)		399,000		$	6.33
	Exercised		—			(130,000	)	$	1.98
	Canceled		307,000			(307,000	)	$	4.71
Balances, August 31, 2001			970,000			2,592,000		$	5.47
	Reservation of shares		5,000,000			—
	Granted		(250,000	)		250,000		$	5.00
	Exercised		—			(43,000	)	$	2.50
	Canceled		2,078,000			(2,106,000	)	$	5.72
Balances, August 31, 2002			7,798,000			693,000		$	4.73
	Reservation of shares		130,000			—
	Granted		(2,274,000	)		2,274,000		$	5.04
	Exercised		—			—			—
	Canceled		122,000			(122,000	)	$	4.63
Balances, August 31, 2003			5,776,000			2,845,000		$	4.99

      At August 31, 2003, 2002 and 2001, vested options to purchase approximately 2.0 million, 0.4 million and 1.3 million shares, respectively, were unexercised.

      Effective March 1, 2002, the Company cancelled 1,857,296 options outstanding under its 1994 Stock Option Plan, as amended, in connection with the tender by the holders of such options pursuant to a stock option exchange program conducted by the Company during February 2002. The options tendered for cancellation represented approximately 96% of the options eligible to participate in the stock option exchange program. Approximately seven months from the date of cancellation, new options were granted to persons eligible to participate in the Company’s stock option exchange program during fiscal 2003.

      During fiscal 2001, an affiliate of a director exercised 90,000 option shares at an exercise price of $1.75 per share under the Company’s 1988 Stock Option Plan. Pursuant to a procedure authorized by the Board of Directors for select holders of options granted under the 1988 Stock Option Plan, the option holder elected a cashless exercise of the options whereby shares previously owned by the optionee or shares acquired by the optionee upon exercise of the option were surrendered to satisfy withholding and other taxes, and the exercise cost of the shares.

F-22

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      The following table summarizes information about fixed stock options outstanding at August 31, 2003:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
			Remaining		Average				Average
	Number		Contractual		Exercise		Number		Exercise
Range of Exercise Prices	Outstanding		Life (Years)		Price		Exercisable		Price
$2.50-$3.75		10,000		1.21	$	3.75		10,000	$	3.75
$4.00-$5.50		2,815,000		8.18	$	4.98		2,025,000	$	4.97
$6.25		20,000		6.75	$	6.25		13,000	$	6.25
		2,845,000						2,048,000

      The fair value of each option grant is estimated at the date of grant using the Black-Scholes pricing model with the following weighted average assumptions for grants in fiscal 2002, 2001 and 2000:

	2003			2002			2001
Risk-Free Interest Rate		2.98	%		4.33	%		5.72	%
Expected Life		5 years			5 years			5 years
Volatility		n/a			n/a			n/a
Dividend Yield		—			—			—

      The weighted average fair value per share of those options granted in fiscal 2003, 2002 and 2001 was $4.32, $4.05 and $4.73, respectively.

12. Employee Benefit Plans

      The Company maintains a defined contribution plan. To be eligible, employees of the Company must be 21 or older, not covered by a collective bargaining agreement and may begin to defer amounts the first of the month following the month of hire, but do not receive a match from the Company until they have completed one year of service. Employer matching contributions amounted to approximately $266, $351 and $317 for the years ended August 31, 2003, 2002 and 2001, respectively.

      In fiscal 1996, the Board of Directors approved an Employee Stock Purchase Plan (the “ESPP”) under which 750,000 shares of Class B, Series 1 Common Stock have been reserved for issuance to employees meeting minimum employment criteria. Employees may participate through payroll deductions in amounts related to their base compensation. The fair value of shares made available to any employee for purchase under the ESPP may not exceed $25 in any calendar year. The participant’s purchase price is 85% of the lower of the fair market value at the beginning or the end of the offering period. The ESPP has been terminated effective August 31, 2003. Shares purchased under the ESPP are issued by the Company once a year, at calendar year end. In fiscal 2003, 2002 and 2001, 2,833, 2,205 and 3,437 shares were issued to employees under the ESPP at an annual aggregate purchase price of $12, $9 and $18 respectively, bringing the total shares issued under the ESPP to 36,832 for an aggregate purchase price of $171 as of August 31, 2003. The Company has not recognized compensation expense related to the ESPP during fiscal 2003, 2002 and 2001.

F-23

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

13. Income Taxes

      Income tax provision (benefit) for the years ended August 31, consisted of the following:

		August 31,
		2003			2002			2001
Current:
	Federal	$	—		$	—		$	52
	State		—			16			48
	Foreign		2,544			2,425			1,024
			2,544			2,441			1,124
Deferred:
	Federal		(1,165	)		70			572
	State		(343	)		(18	)		24
	Foreign		1,035			(251	)		354
			(473	)		(199	)		950
		$	2,071		$	2,242		$	2,074

      The reconciliation setting forth the differences between the effective tax rate of the Company and the U.S. federal statutory tax rate is as follows:

	Fiscal Years Ended
	August 31,
	2003			2002			2001
Federal statutory rate (benefit)		34.0	%		34.0	%		34.0	%
State taxes, net of federal income tax benefit		—			—			1.5
Nondeductible amortization		—			—			28.4
Nondeductible portion of business meals and entertainment		26.5			1.8			9.4
Change in valuation allowance		550.1			1.1			(8.1	)
Other		(1.5	)		(4.0	)		1.6
Effective income tax rate		609.1	%		32.9	%		66.8	%

      Valuation allowances have been established against the net deferred tax assets in certain foreign jurisdictions and for a portion of the Company’s domestic jurisdictions to reduce the net deferred tax assets to the amounts expected to be realized.

F-24

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      The components of the net deferred tax liabilities are as follows:

				August 31,
				2003			2002
Deferred tax assets:
	Federal and state credits			$	465		$	452
	Accounts receivable				234			209
	Inventories				317			165
	Intangible assets				1,452			1,475
	Net operating loss-foreign				1,295			1,356
	Net operating loss-domestic				6,857			3,861
	Accrued liabilities and other				(1,128	)		269
		Total gross assets			9,492			7,787
			Less: valuation allowance		(3,989	)		(1,058	)
		Total assets			5,503			6,729
Deferred tax liabilities:
	Property, plant and equipment				5,988			7,687
		Total liabilities			5,988			7,687
Net deferred tax liabilities				$	485		$	958

      At August 31, 2003, the Company had a net operating loss carryforward of approximately $18,600 available to offset future U.S. federal income taxes through August 31, 2023.

14. Segment Information

      The Company’s reportable operating businesses are organized primarily by geographic region. The United Kingdom, Canada and Mexico offer both closure and bottle product lines and the United States and China offer closure product lines. The Company evaluates the performance of its segments and allocates resources to them based on earnings before interest expense, taxes, depreciation and amortization expense. Certain Company businesses and activities, including the equipment division, Portola Allied and general corporate costs, do not meet the definition of a reportable operating segment and have been aggregated into “Other.” The accounting policies of the segments are the same as those policies described in Note 1.

F-25

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      The table below presents information about reported segments for the years ended August 31,:

			2003			2002		2001
Revenues
	United States		$	116,866		$	121,295	$	128,728
	Canada			30,449			25,868		26,015
	United Kingdom			37,042			33,752		31,063
	Mexico			14,652			14,242		15,144
	China			2,669			2,720		2,575
	Other			13,637			12,880		15,893
		Total Consolidated	$	215,315		$	210,757	$	219,418
EBITDA
	United States		$	19,033		$	26,919	$	33,895
	Canada			4,351			2,727		1,904
	United Kingdom			6,236			6,824		5,641
	Mexico			1,595			2,063		2,383
	China			(50	)		730		302
	Other			462			849		(3,902	)
		Total Consolidated	$	31,627		$	40,112	$	40,223

      Intersegment revenues totaling $9,900, $10,600 and $11,100 have been eliminated from the segment totals presented above for fiscal 2003, 2002 and 2001, respectively.

      The table below presents a reconciliation of total segment consolidated income (loss) to total segment EBITDA for the years ended August 31,:

		2003			2002		2001
Consolidated net (loss) income		$	(1,731	)	$	4,573	$	1,030
Add: Interest expense			12,544			13,251		14,453
	Taxes		2,071			2,242		2,074
	Depreciation and amortization		17,966			19,290		21,948
	Amortization of debt financing costs		777			756		718
EBITDA		$	31,627		$	40,112	$	40,223

      The table below presents revenues by product line for the years ended August 31,:

			2003		2002		2001
Revenues:
	Closures		$	162,443	$	168,850	$	173,839
	Bottles			28,643		23,609		25,944
	Equipment			14,435		12,712		13,299
	Other			9,794		5,586		6,336
		Total	$	215,315	$	210,757	$	219,418

F-26

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      During the years ended August 31, 2003 and 2001, there were no customers that accounted for 10% of total sales. During the year ended August 31, 2002, one United States customer accounted for approximately 10% of sales and owed the Company $1,600 as of August 31, 2002.

      The following is a breakdown of revenue and long-lived assets by geographic region as of and for the years ended August 31,:

			2003		2002		2001
Revenue:
	United States		$	130,503	$	134,175	$	144,621
	Foreign			84,812		76,582		74,797
		Total	$	215,315	$	210,757	$	219,418
Long-lived assets:
	United States		$	59,678	$	65,540	$	72,986
	Foreign			23,877		24,225		25,712
		Total	$	83,555	$	89,765	$	98,698

15. Related Party Transactions

      On July 1, 1999, the Company entered into an agreement with SHS to provide a total of $3,500 in support services to SHS, then a wholly owned subsidiary. The agreement terminated September 30, 1999, when the services provided under the agreement reached an aggregate value of $3,500, including approximately $1,500 in a mark-up of the cost of the services rendered. In consideration for those services, the Company received a promissory note in the principal amount of $3,500 from SHS and bearing interest at a rate equal to the base rate charged under the Company’s senior revolving credit facility less one-half of one percent. In September 1999, Portola IV LLC, a limited liability company (“LLC”), acquired an ownership interest in SHS in exchange for assuming the obligations of SHS under the note. Certain of the members of the LLC (the “Members”) were at the same time officers of the Company. The LLC secured payment of the note by pledging 500,000 shares of the Class B Common Stock of the Company that had been contributed to the LLC by the Members to capitalize the LLC (the “Portola Shares”). The note provided that all outstanding principal and interest amounts due thereunder were payable in full on the earlier date of July 1, 2003, or the occurrence of one of certain events, including the sale of all or substantially all of the assets of SHS. At May 31, 2002, the Company (and a wholly owned consolidated subsidiary) had a combined 6% equity ownership in SHS, which it accounted for under the cost method. Effective June 1, 2002, the assets of SHS were sold, effectively liquidating SHS, with no assets available for distribution to the stockholders of SHS. On August 22, 2002, the LLC transferred the Portola Shares to the Company in lieu of foreclosure and in payment of all amounts due under the note. The Company’s carrying basis for its investment in SHS and the promissory note due from SHS was $600 at August 22, 2002. As a result of the share transfer, the Company recognized income from the recovery of the investment and interest income of approximately $1,100 and $800, respectively.

      Effective July 1, 2000, the Company sold the assets of a wholly owned e-commerce subsidiary, BNI, to SHS in exchange for a non-interest bearing, unsecured promissory note for $1,500, which was fully reserved for as of August 31, 2000. In conjunction with SHS’s merger with Neptune Technologies in April 2001, the note was converted into SHS convertible preferred stock. Effective June 1, 2002, the assets of SHS were sold, effectively liquidating the company, with no return to shareholders.

F-27

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      Options may be granted under the 1994 Stock Option Plan (“1994 Plan”) to officers, key employees, directors, advisors, consultants and independent contractors of the Company, or any subsidiary of the Company. On November 13, 2000, the Compensation Committee of the Board of Directors approved the grant to certain directors of the Company of non-qualified stock options pursuant to the terms of the 1994 Plan. Three directors and an affiliate of a director each received options to purchase 5,000 shares of Class B Common Stock, Series 1 of the Company, with an exercise price of $6.25 per share; the Chief Executive Officer received an option to purchase 50,000 shares of Class B Common Stock, Series 1 of the Company, with an exercise price of $6.875 per share. The non-qualified stock options for fiscal 2001, which were granted to such directors, will expire ten (10) years from the date of grant and will vest 20% one year after the vesting start date and 5% for each calendar quarter that such individual continues to serve as a member of the Board of Directors or is employed by the Company, provided that vesting of such options will be accelerated upon a change in control.

      In connection with the Company’s acquisition of Consumer (Note 2), in February 2001, the Company paid to a director, a fee consisting of $100 and 4,000 shares of Class B Common Stock, Series 1, valued at $6.25 per share, for services rendered to the Company. In addition, in May 2001 in connection with the acquisition, the Company paid to an investment banking firm $100 for services rendered to the Company. A principal of the investment banking firm is a director. Both directors serve as members of the Board’s Audit Committee and were also members of the Compensation Committee until October 2003. The one director was Secretary of the Company until his resignation as Secretary during fiscal 2001.

      In addition to a base salary of $12, the Company incurred $234, $182 and $159 for the years ended August 31, 2003, 2002 and 2001, respectively, to the Company’s Vice President, General Counsel and current Secretary, for legal services rendered.

      The Company incurred $314, $410 and $897 in the years ended August 31, 2003, 2002 and 2001, respectively, to a law firm for legal services rendered, a general partner of which is a director of the Company, a member of its Audit Committee and was also a member of its Compensation Committee until October 2003 and was Secretary of the Company until his resignation as Secretary during fiscal 2001.

      The Company incurred $42 for the years ended August 31, 2003, 2002 and 2001 to a corporation for management fees. The sole shareholder of the aforementioned corporation is an officer, a director and significant shareholder of the Company.

      The Company has a note receivable from an officer and director at an interest rate equal to the Short Term Applicable Federal Rate as of August 31, 2003. The balance due from the officer, including accrued and unpaid interest, amounted to $155 and $153 as of August 31, 2003 and 2002 respectively, and is classified in shareholders’ equity (deficit) in the consolidated balance sheets. In addition, during fiscal 2002, the Company paid approximately $61 for travel and living expenses for said officer.

      The Company sold products to and performed certain services for its non-consolidated affiliated companies totaling approximately $2,756, $6,496 and $4,265 for the years ended August 31, 2003, 2002 and 2001, respectively. The Company had trade receivables due from these non-consolidated affiliated companies, which amounted to $1,003 and $1,625 as of August 31, 2003 and 2002, respectively.

      On March 1, 2003, the Company entered into a consulting agreement with an investment banking firm, of which a director is a principal, for certain investment advisory and banking services. Pursuant to such agreement, the Company paid to the investment banking firm $30 during the year ended August 31, 2003. If the Company issues debt or equity securities during the term of the agreement or within twelve months after the termination of the agreement, the Company must pay 0.50% of the total amount of the debt offering plus 5.0% of the first $10,000 in equity raised and 3.0% of the amount over $10,000 in equity raised. In the event that the Company issues equity securities in a public offering, the Company must pay 1% of the total amount

F-28

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

of those securities issued. This agreement will expire August 31, 2004. Either party to the agreement can terminate the agreement by providing at least 10 days written notice to the other party. Said director is a member of the Board’s Audit Committee and was also a member of the Compensation Committee until October 2003.

      On November 1, 2001, the Company entered into a consulting agreement with a director. Pursuant to such agreement, the Company paid the director consulting fees and reimbursement of related expenses of approximately $60 in fiscal 2002. The director serves as a member of the Board’s Audit Committee and was also a member of the Compensation Committee until October 2003 and was Secretary of the Company until his resignation as Secretary during fiscal 2001.

      In August 2001, the Company paid to an investment banking firm, of which a director is a principal, a fee of approximately $92 for certain investment advisory and banking services performed by the director’s affiliate on behalf of the Company during fiscal 2001. Certain costs incurred by the affiliate of the director also were reimbursed by the Company. In addition, shares of Class B Common Stock, Series 1, valued at $5.00 per share, or $175 in the aggregate, were issued to principals of the investment banking firm, 7,000 of which shares were issued to the director with whom the investment banking firm is affiliated. Said director is a member of the Board’s Audit Committee and was also a member of the Compensation Committee until October 2003.

      In June 2001, an investment partnership, one of the general partners of which is a director, exercised its stock option for 90,000 shares granted under the Company’s 1988 Plan, at an exercise price of $1.75 per share. Under a procedure authorized by the Board of Directors, the affiliate of such director exercised its options in accordance with the so-called “cashless exercise” provisions of the Plan. Shares of the Company already owned by that investment partnership and shares acquired by the investment partnership upon exercise of the option were transferred to the Company in payment of the exercise price of the options and to satisfy withholding and other tax obligations incurred in connection with the exercise. The director of the Company serves as a member of the Board’s Audit Committee and was also a member of the Compensation Committee until October 2003 and was Secretary of the Company until his resignation as Secretary during fiscal 2001.

16. Supplemental Cash Flow Disclosures

      The Company paid $12,430, $13,072 and $15,413 in interest during the years ended August 31, 2003, 2002 and 2001, respectively.

      The Company paid $2,162, $2,594 and $951 in income taxes during the years ended August 31, 2003, 2002 and 2001, respectively.

      During fiscal 2002, the Company recognized $1,103 and $837 of other income and interest income on the recovery of a promissory note receivable (Note 15).

      During fiscal 2002, the Company recognized other income of $475 for debt forgiveness on the dissolution of a joint venture (Note 2).

      During fiscal 2003 and 2002, the Company wrote-off fully amortized intangible assets totaling approximately $1,360 and $174.

      During fiscal 2003, 2002 and 2001, the Company recorded a decrease in the value of stock purchase warrants of $58, $151 and $2,120, respectively.

      During fiscal 2003 and 2001, the Company acquired $32 and $1,120, respectively, of equipment under capital lease. No equipment was purchased under capital leases during fiscal 2002.

      During fiscal 2001, the Company issued $550 in Class B Common Stock, Series 1 related to the acquisition of Consumer and $300 in Class B Common Stock, Series 1 to extinguish a portion of the assumed debt obligations of Consumer (Note 2).

F-29

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

17. Supplemental Condensed Consolidated Financial Statements

      On January 23, 2004, the Company completed the offering of $180,000 principal amount of 8 1/4% Senior Notes due 2012 (the outstanding notes). The majority of the net proceeds of such offering were used to redeem all of the previously outstanding $110,000 of senior notes. The Company anticipates exchanging the outstanding notes for registered exchange notes that have substantially the same terms. The exchange notes have the following guarantors, all of which are subsidiaries of the Company: Portola Allied Tool, Inc.; Portola Limited; Portola Packaging, Inc. Mexico, S.A. de C.V.; Portola Packaging Canada Ltd.; Portola Packaging Limited; and Tech Industries, Inc. In connection with the exchange offer, the Company has supplied the following financial information for the above guarantors:

SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEET

August 31, 2003

						Combined			Combined
			Parent			Guarantor			Non-Guarantor
			Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
	Cash and cash equivalents		$	496		$	2,871		$	925		$	—		$	4,292
	Accounts receivable, net			15,352			13,701			945			(1,050	)		28,948
	Inventories			6,247			4,655			404			—			11,306
	Other current assets			3,734			478			460			—			4,672
		Total current assets		25,829			21,705			2,734			(1,050	)		49,218
Property, plant and equipment, net				46,785			16,952			2,267			—			66,004
Goodwill				5,917			4,551			—			—			10,468
Debt financing costs				1,548			37			—			—			1,585
Investment in subsidiaries				18,772			13,202			896			70			32,940
Common stock of subsidiary				(1,267	)		(26,313	)		(4,457	)		—			(32,037	)
Other assets				4,506			59			30			—			4,595
		Total assets		102,090			30,193			1,470			(980	)		132,773
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Current portion of redeemable warrants to purchase Class A Common Stock			9,025			—			—			—			9,025
	Accounts payable			6,872			8,951			518			(1,050	)		15,291
	Intercompany (receivable) payable			(23,986	)		21,404			2,582			—			—
	Other current liabilities			10,098			3,603			752			—			14,453
		Total current liabilities		2,009			33,958			3,852			(1,050	)		38,769
Long-term debt, less current portion				116,612			—			34			—			116,646
Other long-term obligations				3,337			173			(442	)		489			3,557
		Total liabilities		121,958			34,131			3,444			(561	)		158,972
	Other equity (deficit)			7,224			(372	)		(838	)		(1,464	)		4,550
	Accumulated deficit			(27,092	)		(3,566	)		(1,136	)		1,045			(30,749	)
		Total shareholders’ equity (deficit)		(19,868	)		(3,938	)		(1,974	)		(419	)		(26,199	)
		Total liabilities and equity (deficit)	$	102,090		$	30,193		$	1,470		$	(980	)	$	132,773

F-30

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEET

August 31, 2002

						Combined			Combined
			Parent			Guarantor			Non-Guarantor
			Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
	Cash and cash equivalents		$	663		$	2,237		$	1,666		$	—		$	4,566
	Accounts receivable, net			14,158			11,877			382			(607	)		25,810
	Inventories			7,938			4,992			342			—			13,272
	Other current assets			1,022			1,832			322			—			3,176
		Total current assets		23,781			20,938			2,712			(607	)		46,824
Property, plant and equipment, net				50,688			18,400			2,367			—			71,455
Goodwill				5,917			4,218			207			—			10,342
Debt financing costs				2,230			50			—			—			2,280
Investment in subsidiaries				23,746			—			686			70			24,502
Common stock of subsidiary				(1,268	)		(18,642	)		(3,900	)		—			(23,810	)
Other assets				4,852			114			30			—			4,996
		Total assets		109,946			25,078			2,102			(537	)		136,589
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Accounts payable			6,911			7,221			303			(607	)		13,828
	Intercompany (receivable) payable			(19,903	)		17,275			2,628			—			—
	Other current liabilities			10,693			3,460			696			—			14,849
		Total current liabilities		(2,299	)		27,956			3,627			(607	)		28,677
Long-term debt, less current portion				120,056			—			70			—			120,126
Warrants				10,359			—			—			—			10,359
Other long-term obligations				2,128			154			(358	)		416			2,340
		Total liabilities		130,244			28,110			3,339			(191	)		161,502
	Other equity (deficit)			7,068			(2,318	)		(645	)		—			4,105
	Accumulated deficit			(27,366	)		(714	)		(592	)		(346	)		(29,018	)
		Total shareholders’ equity (deficit)		(20,298	)		(3,032	)		(1,237	)		(346	)		(24,913	)
		Total liabilities and equity (deficit)	$	109,946		$	25,078		$	2,102		$	(537	)	$	136,589

F-31

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the fiscal year ended August 31, 2003

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	133,221		$	86,183		$	5,851		$	(9,940	)	$	215,315
Cost of sales			103,291			68,906			2,270			(7,778	)		166,689
	Gross profit		29,930			17,277			3,581			(2,162	)		48,626
Selling, general and administrative			22,641			5,277			3,551			(2,162	)		29,307
Research and development			4,484			245			—			—			4,729
Amortization of intangibles			899			4			207			—			1,110
Restructuring costs			398			7			—			—			405
	Income (loss) from operations		1,508			11,744			(177	)		—			13,075
Other (income) expense:
	Interest income		(83	)		(31	)		(6	)		—			(120	)
	Interest expense		12,524			17			3			—			12,544
	Amortization of debt financing costs		759			18			—			—			777
	Foreign currency transaction (gain) loss		—			1,107			9			(1,464	)		(348	)
	Intercompany interest (income) expense		(744	)		666			78			—			—
	Other (income) expense, net		(720	)		878			(349	)		73			(118	)
	Income (loss) before income taxes		(10,228	)		9,089			88			1,391			340
Income tax (benefit) expense			(1,532	)		3,485			118			—			2,071
Net income (loss)		$	(8,696	)	$	5,604		$	(30	)	$	1,391		$	(1,731	)

F-32

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the fiscal year ended August 31, 2002

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	138,016		$	77,852		$	5,491		$	(10,602	)	$	210,757
Cost of sales			99,171			63,429			2,542			(8,009	)		157,133
	Gross profit		38,845			14,423			2,949			(2,593	)		53,624
Selling, general and administrative			24,880			5,640			2,917			(2,593	)		30,844
Research and development			2,845			224			—			—			3,069
Amortization of intangibles			1,346			205			—			—			1,551
	Income (loss) from operations		9,774			8,354			32			—			18,160
Other (income) expense:
	Interest income		(1,025	)		(49	)		(9	)		—			(1,083	)
	Interest expense		13,163			85			3			—			13,251
	Amortization of debt financing costs		734			22			—			—			756
	Income on dissolution of joint venture		(475	)		—			—			—			(475	)
	Income on recovery of investments		(1,103	)		—			—			—			(1,103	)
	Foreign currency transaction (gain) loss		—			284			1			—			285
	Intercompany interest (income) expense		(1,189	)		1,106			83			—			—
	Other (income) expense, net		(724	)		621			(294	)		111			(286	)
	Income (loss) before income taxes		393			6,285			248			(111	)		6,815
Income tax (benefit) expense			397			1,731			114			—			2,242
Net income (loss)		$	(4	)	$	4,554		$	134		$	(111	)	$	4,573

F-33

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the fiscal year ended August 31, 2001

						Combined			Combined
			Parent			Guarantor			Non-Guarantor
			Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales			$	148,756		$	75,418		$	6,321		$	(11,077	)	$	219,418
Cost of sales				110,046			64,020			4,140			(8,662	)		169,544
	Gross profit			38,710			11,398			2,181			(2,415	)		49,874
Selling, general and administrative				22,784			5,318			3,087			(2,415	)		28,774
Research and development				3,081			15			—			—			3,096
Amortization of intangibles				2,045			2,001			130			—			4,176
Restructuring costs				1,939			—			—			—			1,939
		Income (loss) from operations		8,861			4,064			(1,036	)		—			11,889
Other (income) expense:
	Interest income			17			(87	)		(5	)		—			(75	)
	Interest expense			14,364			66			23			—			14,453
	Amortization of debt financing costs			699			19			—			—			718
	(Gain) loss from sale of property, plant and equipment			(6,838	)		49			5			—			(6,784	)
	Foreign currency transaction (gain) loss			—			49			1			—			50
	Intercompany interest (income) expense			(1,538	)		1,430			108			—			—
	Other (income) expense, net			(372	)		478			39			278			423
	Income (loss) before income taxes			2,529			2,060			(1,207	)		(278	)		3,104
Income tax (benefit) expense				715			1,353			6			—			2,074
Net income (loss)			$	1,814		$	707		$	(1,213	)	$	(278	)	$	1,030

F-34

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal year ended August 31, 2003

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow from operations		$	11,135		$	3,703		$	(547	)	$	—		$	14,291
	Additions to property, plant and equipment		(8,963	)		(2,986	)		(713	)		1,581			(11,081	)
	Other		1,162			129			792			(1,581	)		502
Net cash provided by (used in) investing activities			(7,801	)		(2,857	)		79			—			(10,579	)
	(Repayments) borrowings under revolver, net		(3,220	)		—			—			—			(3,220	)
	Other		(281	)		(100	)		(269	)		—			(650	)
Net cash provided by (used in) financing activities			(3,501	)		(100	)		(269	)		—			(3,870	)
Effect of exchange rate changes on cash			—			(112	)		(4	)		—			(116	)
Increase (decrease) in cash and cash equivalents			(167	)		634			(741	)		—			(274	)
Cash and cash equivalents at beginning of year			663			2,237			1,666			—			4,566
Cash and cash equivalents at end of year		$	496		$	2,871		$	925		$	—		$	4,292

F-35

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal year ended August 31, 2002

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow from operations		$	19,827		$	4,621		$	(43	)	$	—		$	24,405
	Additions to property, plant and equipment		(7,188	)		(3,569	)		(644	)		913			(10,488	)
	Other		(1,136	)		(17	)		1,513			(913	)		(553	)
Net cash provided by (used in) investing activities			(8,324	)		(3,586	)		869			—			(11,041	)
	(Repayments) borrowings under revolver, net		(11,105	)		—			—			—			(11,105	)
	Other		(377	)		(526	)		(127	)		—			(1,030	)
Net cash provided by (used in) financing activities			(11,482	)		(526	)		(127	)		—			(12,135	)
Effect of exchange rate changes on cash			—			21			1			—			22
Increase (decrease) in cash and cash equivalents			21			530			700			—			1,251
Cash and cash equivalents at beginning of year			642			1,707			966			—			3,315
Cash and cash equivalents at end of year		$	663		$	2,237		$	1,666		$	—		$	4,566

F-36

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal year ended August 31, 2001

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow from operations		$	8,644		$	4,314		$	672		$	1,390		$	15,020
	Additions to property, plant and equipment		(9,044	)		(5,861	)		(430	)		1,247			(14,088	)
	Proceeds from sale of property, plant and equipment		10,037			64			12			—			10,113
	Other		(191	)		1,299			12			(1,247	)		(127	)
Net cash provided by (used in) investing activities			802			(4,498	)		(406	)		—			(4,102	)
	(Repayments) borrowings under revolver, net		(3,613	)		—			—			—			(3,613	)
	(Repayments) borrowings under long-term debt arrangements		(4,835	)		58			36			—			(4,741	)
	Other		(723	)		(319	)		(783	)		(1,390	)		(3,215	)
Net cash provided by (used in) financing activities			(9,171	)		(261	)		(747	)		(1,390	)		(11,569	)
Effect of exchange rate changes on cash			—			53			—			—			53
Increase (decrease) in cash and cash equivalents			275			(392	)		(481	)		—			(598	)
Cash and cash equivalents at beginning of year			367			2,099			1,447			—			3,913
Cash and cash equivalents at end of year		$	642		$	1,707		$	966		$	—		$	3,315

18. Subsequent Events

      On September 19, 2003, the Company acquired all of the issued and outstanding capital stock of Tech Industries, Inc., and in concurrent transactions, Tech Industries, Inc. also acquired all of the issued and outstanding stock of Tech Industries U.K. Ltd. and certain land, buildings and fixtures leased and used by Tech Industries Inc. in its manufacturing operations (collectively “Tech Industries”). The Company paid cash of approximately $35,663 from borrowings under its credit facility to purchase Tech Industries. A final working capital adjustment of $231 was paid in November 2003. There are no other contingent payments due. Tech Industries is a manufacturer of plastic closures and containers for the cosmetics, fragrance and toiletry industries. Tech Industries will continue to operate as a wholly owned subsidiary of PPI and is designated as a restricted subsidiary (Note 17).

      The acquisition of Tech was accounted for using the purchase method of accounting pursuant to which the purchase price at closing was allocated to the tangible and intangible assets and liabilities assume based on their estimated fair values. The purchase allocations were made based upon valuations and other studies, which have not yet been finalized. The actual allocation of the purchase price may differ significantly from the amounts disclosed below.

F-37

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      The following represents the preliminary allocation of purchase price.

Intangible asset — trademark and trade name	$	5,000
Intangible asset — website		400
Intangible asset — customer relationships		2,600
Increase in book value of property plant & equipment		7,140
Increase in inventories		387
Goodwill		8,519
Net book value of assets acquired		13,963
Book value of liabilities assumed		(2,346	)
Total purchase price	$	35,663

      On September 19, 2003, the Company entered into a consent and first amendment to the amended and restated senior secured credit facility, increasing the credit facility to $54,000 in connection with the Company’s stock purchase of Tech Industries, subject to a borrowing base and covenants similar to those in the amended and restated senior secured credit facility existing at August 31, 2003. The credit facility under a second amendment expires on September 7, 2004 (Note 8).

      During November 2003, the Company formed a wholly owned subsidiary, Portola s.r.o. under the laws of the Czech Republic. The Company purchased land for $121 in fiscal 2003 and intends to begin construction of a closure manufacturing plant on this property in late fiscal 2004 or early fiscal 2005.

19. Quarterly Information (Unaudited)

      On December 10, 2003, the Company filed Amended Quarterly Reports on Form 10-Q/ A for each of the three quarters for the year ended August 31, 2003. The Amended Quarterly Reports were filed to reflect the recording of foreign currency gains and losses and certain inventory valuation adjustments in the quarters to which they relate, rather than in the fourth quarter of fiscal years ended August 31, 2003 and 2002. These adjustments resulted in a decrease in income from operations, income before income taxes and net income of $10, $137 and $82, respectively, from the amounts previously reported for the fourth quarter of fiscal year ended August 31, 2002. These adjustments had no effect on the Company’s consolidated financial statements for the fiscal year ended August 31, 2002.

F-38

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

			February 29,			August 31,
			2004			2003
ASSETS
Current assets:
	Cash and cash equivalents		$	14,831		$	4,292
	Accounts receivable, net (including $1,938 due from an affiliate as of February 29, 2004)			25,864			28,948
	Inventories			17,856			11,306
	Other current assets			4,427			3,309
	Deferred income taxes			1,366			1,363
		Total current assets		64,344			49,218
Property, plant and equipment, net				79,853			66,004
Goodwill				19,736			10,468
Patents, net				2,259			2,548
Debt financing costs, net (including $4,950 paid to JPMorgan, $1,105 paid to The Breckenridge Group, $150 paid to Tomlinson Zisko LLP, $69 paid to Themistocles Michos and $30 paid to Tim Tomlinson during fiscal 2004)				9,555			1,585
Trademarks, net				5,000			40
Customer relationships, net				2,542			—
Covenants not-to-compete and other intangible assets, net				1,334			448
Other assets, net				1,921			2,462
		Total assets	$	186,544		$	132,773
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Current portion of long-term debt		$	199		$	287
	Current portion of redeemable warrants to purchase Class A Common Stock			1,453			9,025
	Accounts payable			18,525			15,291
	Accrued liabilities			6,607			6,457
	Accrued compensation			3,415			2,781
	Accrued interest			876			4,928
		Total current liabilities		31,075			38,769
Long-term debt, less current portion				191,110			116,646
Redeemable warrants to purchase Class A Common Stock				—			1,277
Deferred income taxes				1,880			1,848
Other long-term obligations				247			385
		Total liabilities		224,312			158,925
Minority interest				40			47
Commitments and contingencies (Note 11)
Shareholders’ equity (deficit):
	Class A convertible Common Stock of $.001 par value: Authorized: 5,203 shares; Issued and outstanding: 2,135 shares in both periods			2			2
	Class B, Series 1, Common Stock of $.001 par value: Authorized: 17,715 shares; Issued and outstanding: 8,600 shares in both periods			8			8
	Class B, Series 2, convertible Common Stock of $.001 par value: Authorized: 2,571 shares; Issued and outstanding: 1,170 shares in both periods			1			1
Additional paid-in capital				6,593			6,582
Notes receivable from shareholders				(161	)		(161	)
Accumulated other comprehensive loss				(1,772	)		(1,882	)
Accumulated deficit				(42,479	)		(30,749	)
Total shareholders’ equity (deficit)				(37,808	)		(26,199	)
	Total liabilities, minority interest and shareholders’ equity (deficit)		$	186,544		$	132,773

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements

F-39

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

		Three Months Ended						Six Months Ended
		February 29,			February 28,			February 29,			February 28,
		2004			2003			2004			2003
Sales (including $1,825 and $4,585 in sales to an affiliate for the three- and six-month periods ended February 29, 2004, respectively)		$	54,209		$	51,108		$	114,047		$	103,062
Cost of sales			47,454			40,599			95,415			81,846
	Gross profit		6,755			10,509			18,632			21,216
Selling, general and administrative (including $127 and $269 legal expenses incurred for Tomlinson Zisko LLP, $35 and $116 legal expenses incurred for Themistocles Michos and $18 and $31 investment advisory costs for The Breckenridge Group for the three & six month periods ended February 29, 2004, respectively)			7,923			7,581			15,664			15,156
Research and development			1,530			1,226			2,926			2,415
Amortization of intangibles			327			228			622			432
Restructuring costs			1,523			405			1,866			405
			11,303			9,440			21,078			18,408
	(Loss) income from operations		(4,548	)		1,069			(2,446	)		2,808
Other (income) expense:
	Interest income		(21	)		(14	)		(24	)		(31	)
	Interest expense		4,005			3,101			7,410			6,268
	Warrant interest income		—			(87	)		(57	)		(68	)
	Amortization of debt financing costs		1,130			193			1,560			373
	Loss (gain) from sale of property, plant and equipment		8			(20	)		5			29
	Loss on warrant redemption (including $1,639 loss on redemption paid to JPMorgan)		1,867			—			1,867			—
	Foreign currency transaction (gain) loss		(920	)		(142	)		(2,255	)		252
	Other (income) expense, net		172			(74	)		36			(34	)
			6,241			2,957			8,542			6,789
	Loss before income taxes		(10,789	)		(1,888	)		(10,988	)		(3,981	)
Income tax (benefit) expense			(49	)		(792	)		742			(1,573	)
Net loss		$	(10,740	)	$	(1,096	)	$	(11,730	)	$	(2,408	)

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

F-40

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

			For the Six Months Ended
			February 29,			February 28,
			2004			2003
Cash flows provided by operating activities:			$	254		$	6,420
Cash flows from investing activities:
	Additions to property, plant and equipment			(8,121	)		(4,999	)
	Proceeds from sale of property, plant and equipment			57			85
	Payment for Tech Industries, Inc.			(35,894	)		—
	Payment of transaction costs			(633	)		—
	Additions to other intangible assets			(352	)		—
	(Increase) decrease in other assets, net			(376	)		188
		Net cash used in investing activities		(45,319	)		(4,726	)
Cash flows from financing activities:
	Borrowings under Senior Notes due 2012			180,000			—
	Payments of Senior Notes due 2005			(110,000	)		—
	Payments for warrant redemption (paid to JPMorgan)			(10,659	)		—
	Payments of debt issuance costs (including $4,950 paid to JPMorgan, $1,105 paid to The Breckenridge Group, $150 paid to Tomlinson Zisko LLP, $69 paid to Themistocles Michos and $30 paid to Tim Tomlinson)			(8,607	)		—
	Borrowings (repayments) under revolver, net			4,499			(1,383	)
	Borrowings (repayments)under long-term debt obligations, net			109			(128	)
	Payments on other long term obligations			(41	)		(41	)
	Distributions to minority owners			(34	)		(47	)
	Issuance of common stock through employee stock purchase program			11			—
		Net cash provided by (used in) financing activities		55,278			(1,599	)
Effect of exchange rate changes on cash				326			(44	)
Increase in cash and cash equivalents				10,539			51
Cash and cash equivalents at beginning of period				4,292			4,566
Cash and cash equivalents at end of period			$	14,831		$	4,617
Supplemental Non-Cash Investing Activity:
	Liabilities assumed in Tech Industries acquisition		$	2,513		$	—

The accompanying notes are an integral part of these unaudited condensed

consolidated financial statements.

F-41

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data)

1. Basis of Presentation and Accounting Policies

      The accompanying unaudited condensed consolidated financial statements included herein have been prepared by Portola Packaging, Inc. and its subsidiaries (the “Company” or “PPI” or “we”) without audit and in the opinion of management include all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K previously filed with the Securities and Exchange Commission on December 12, 2003. The August 31, 2003 condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Interim results are subject to seasonal variations and the results of operations for the three and six months ended February 29, 2004 are not necessarily indicative of the results to be expected for the full fiscal year ending August 31, 2004.

      As of February 29, 2004, we had three stock option plans, which are described in Note 11 of notes to our audited consolidated financial statements contained in our most recent Form 10-K. We have adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” No compensation expense has been recognized for our stock plans since the options were issued at fair market value or greater. Had compensation expense for the stock plans been determined based on the fair value at the grant date for options granted for the three and six month periods ended February 29, 2004 and February 28, 2003 consistent with the provisions of SFAS No. 123, the pro forma net loss would have been reported as follows:

	Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,
	2004			2003			2004			2003
Net loss as reported	$	(10,740	)	$	(1,096	)	$	(11,730	)	$	(2,408	)
Net loss-pro forma	$	(10,747	)	$	(1,126	)	$	(11,761	)	$	(2,482	)

      These results are not likely to be representative of the effects on reported net (loss) income for future years.

2. Recent Accounting Pronouncements

      Effective September 1, 2002, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. The adoption of SFAS No. 143 had no impact on our financial statements for the three- and six-month periods ended February 29, 2004 and February 28, 2003.

      Effective September 1, 2002, we adopted SFAS No. 146, “Accounting for Exit or Disposal Activities.” The standard requires companies to recognize costs associated with exit or disposal activities when incurred rather than at the date of a commitment to exit or disposal plan. Examples of costs covered by the standard include (1) costs to terminate contracts that are not capital leases; (2) costs to consolidate facilities or relocate employees; and (3) termination benefits provided to employees who are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. Previous accounting guidance was provided by EITF Issue No. 94–3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 replaces EITF 94–3 and is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. During the three- and six-month periods ended February 29, 2004, we incurred restructuring charges of $1,523 and $1,866, respectively, which were determined in accordance with the provisions of SFAS No. 146 (Note 7).

F-42

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees that are issued or modified after December 31, 2002. The provisions of FIN 45 did not have a material impact on our results of operations or financial condition as there were no new guarantees or significant modifications of existing guarantees during the six-month period ended February 29, 2004.

      In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 was effective January 31, 2003 for newly created and existing variable interest entities. On October 8, 2003, the FASB issued FASB Staff Position No. 46–e, which allows public entities, who meet certain criteria, to defer the effective date for applying the provisions of FIN 46 to interests held by the public entity in certain variable interest entities or potential variable interest entities until the end of the first interim or annual period ending after December 15, 2003. On December 24, 2003, the FASB extended the effective date to periods ending after March 15, 2004. Management is currently analyzing the impact of FIN 46 on the consolidated financial statements.

      Effective April 1, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends SFAS No. 133 for certain decisions made by the Board as part of the Derivatives Implementation Group (DIG) process and further clarifies the accounting and reporting standards for derivative instruments including derivatives embedded in other contracts and for hedging activities. The provisions of this statement are to be prospectively applied effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this statement did not have a material impact on our results of operations or financial condition for the three- and six-month periods ended February 29, 2004.

      Effective May 1, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. On November 7, 2003, the FASB issued FASB Staff Position No. 150-3, which allows entities, who meet certain criteria, to defer the effective date for periods beginning after December 15, 2004. The adoption of this statement did not have a material impact on our results of operations or financial condition.

3. Reclassifications

      Certain prior year balances have been reclassified to conform with the current quarter financial statement presentation.

4. Acquisitions

      On September 19, 2003, we acquired all of the issued and outstanding capital stock of Tech Industries, Inc., and in concurrent transactions, Tech Industries, Inc. acquired all of the issued and outstanding stock of

F-43

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Tech Industries U.K. Ltd. and certain land, buildings and fixtures leased and used by Tech Industries Inc. in its manufacturing operations (collectively “Tech Industries”). We paid cash of approximately $35,663 from borrowings under our credit facility to purchase Tech Industries. A final working capital adjustment of $231 was paid in November 2003. There are no other contingent payments due. Tech Industries is a manufacturer of plastic closures and containers for the cosmetics, fragrance and toiletry (“CFT”) industries. Tech Industries will continue to operate as a wholly owned subsidiary of PPI and is designated as a restricted subsidiary under the indenture relating to our Senior Notes due 2012 and senior secured credit facility (Note 10).

      The acquisition of Tech Industries was accounted for using the purchase method of accounting pursuant to which the purchase price at closing was allocated to the tangible and intangible assets and liabilities assumed based on their estimated fair values. The purchase price allocation was made based upon independent valuations. The operating results of Tech Industries have been included in PPI’s consolidated financial statements since September 19, 2003.

      The following represents the allocation of the purchase price of $35,894 plus $633 in transaction costs.

Intangible asset-trademark and trade name		$	5,000
Intangible asset-website			400
Intangible asset-customer relationships			2,600
Intangible asset-covenants not-to-compete			374
Property plant & equipment			12,468
Goodwill			9,140
Current assets acquired			9,058
Current liabilities assumed			(2,513	)
	Total purchase price	$	36,527

      The following presents unaudited pro forma information assuming that the Tech Industries acquisition had occurred at the beginning of the six-month period ended February 29, 2004 and the three- and six-month periods ended February 28, 2003:

	Three Months
	Ended			Six Months Ended
	February 28,			February 29,			February 28,
	2003			2004			2003
Pro forma sales	$	59,643		$	116,150		$	120,231
Pro forma net loss	$	(1,146	)	$	(11,712	)	$	(1,768	)

      On September 19, 2003, we entered into an amendment to the amended and restated senior secured credit facility, increasing the credit facility to $54,000 in connection with our purchase of Tech Industries, subject to a borrowing base and covenants similar to those in the amended and restated senior secured credit facility existing at August 31, 2003 (Note 10).

5. Other Comprehensive (Loss) Income

      Other comprehensive (loss) income consisted of cumulative foreign currency translation adjustments of $(150) and $(66) for the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $110 and $259 for the six-month periods ended February 29, 2004 and February 28, 2003 respectively.

F-44

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

6. Segment Information

      Our reportable operating businesses are organized primarily by geographic region. The United Kingdom, Canada and Mexico produce both closure and bottle product lines. The United States produces closure products and CFT jars. China produces closure products and also manufactures plastic parts for the high tech industry. We evaluate the performance of, and allocate resources to, regions based on earnings before interest expense, taxes, depreciation and amortization expenses. Certain Company businesses and activities, including the equipment division and our operating subsidiary Portola Allied Tool, do not meet the definition of a reportable operating segment and have been aggregated into “Other.” The accounting policies of the segments are consistent with those policies used by us as a whole.

      The table below presents information about reported segments for the three- and six-month periods ended February 29, 2004 and February 28, 2003, respectively:

	Three Months Ended				Six Months Ended
	February 29,		February 28,		February 29,		February 28,
	2004		2003		2004		2003
Revenues:
United States — Closures	$	24,322	$	29,192	$	51,712	$	58,521
United States — CFT		5,113		—		12,462		—
Canada		8,279		6,726		16,554		13,626
United Kingdom		8,665		8,384		17,681		16,871
Mexico		3,549		3,150		7,350		6,776
China		1,366		465		2,424		1,069
Other		2,915		3,191		5,864		6,199
Total consolidated	$	54,209	$	51,108	$	114,047	$	103,062

	Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,
	2004			2003			2004			2003
EBITDA:
United States Closures	$	(2,496	)	$	2,631		$	1,119		$	5,540
United States — CFT		(412	)		—			569			—
Canada		910			1,298			2,283			1,316
United Kingdom		1,093			1,865			2,539			3,932
Mexico		92			215			230			809
China		322			2			519			45
Other		(604	)		(263	)		(453	)		(238	)
Total consolidated	$	(1,095	)	$	5,748		$	6,806		$	11,404

      Intersegment revenues totaling $2,546 and $2,097 have been eliminated from the totals presented above for the three-month periods ended February 29, 2004 and February 28, 2003, respectively, and $5,634 and $4,691 for the six-month periods ended February 29, 2004 and February 28, 2003, respectively.

      One United States customer accounted for approximately 10% of sales for both the three- and six-month periods ended February 28, 2003. This customer owed the Company $1,444 as of February 28, 2003.

F-45

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      The table below presents a reconciliation of total consolidated loss to total EBITDA for the three- and six-month periods ended February 29, 2004 and February 28, 2003, respectively:

		Three Months Ended						Six Months Ended
		February 29,			February 28,			February 29,			February 28,
		2004			2003			2004			2003
Consolidated net loss		$	(10,740	)	$	(1,096	)	$	(11,730	)	$	(2,408	)
Add:
	Interest expense		4,005			3,101			7,410			6,268
	Tax (benefit) expense		(49	)		(792	)		742			(1,573	)
	Depreciation and amortization		4,559			4,342			8,824			8,744
	Amortization of debt financing costs		1,130			193			1,560			373
EBITDA		$	(1,095	)	$	5,748		$	6,806		$	11,404

7. Restructuring

      The Company incurred restructuring costs of $343 and $1,523 in the first and second quarter of fiscal 2004, respectively, related to the closing and relocation of three plants in San Jose and Chino, California and Sumter, South Carolina. At February 29, 2004, accrued restructuring costs amounted to $1,283 for employee severance costs. Management anticipates the accrual balance will be paid by the end of fiscal 2004. The operations from the two California plants have been relocated to a new facility located in Tolleson, Arizona, a suburb of Phoenix. The move will be fully completed during the third quarter of fiscal year 2004. We entered into a fifteen-year lease commencing December 1, 2003 for the Tolleson, Arizona facility. We have retained a real estate broker to sell the manufacturing building in San Jose, California, and we have entered into a contract to sell our facility in Chino, California, which should close in April 2004(Note 12). We expect to recover our investments upon the sale of these buildings. The operations from the South Carolina plant have been relocated primarily to our existing facility in Kingsport, Tennessee as well as to other facilities within the Company.

8. Inventories

      As of February 29, 2004 and August 31, 2003, inventories consisted of the following:

	February 29,		August 31,
	2004		2003
Raw materials	$	8,481	$	5,785
Work in process		928		528
Finished goods		8,447		4,993
	$	17,856	$	11,306

      The inventories as of February 29, 2004 include inventory of Tech Industries of $3,631.

F-46

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

9. Goodwill and Intangible Assets

      As of February 29, 2004 and August 31, 2003, goodwill and accumulated amortization by segment category (see Note 6) consisted of the following:

			February 29, 2004					August 31, 2003
			Gross Carrying		Accumulated			Gross Carrying		Accumulated
			Amount		Amortization			Amount		Amortization
Goodwill:
	United States		$	21,725	$	(6,667	)	$	12,585	$	(6,667	)
	Canada			4,615		(1,289	)		4,437		(1,239	)
	Mexico			3,801		(2,534	)		3,801		(2,534	)
	China			392		(392	)		392		(392	)
	Other			449		(364	)		449		(364	)
		Total consolidated	$	30,982	$	(11,246	)	$	21,664	$	(11,196	)

      The change in the gross carrying amounts and accumulated amortization for Canada from August 31, 2003 to February 29, 2004 was due to foreign currency translation. The $9,140 increase in the gross carrying amount for the United States was a result of the Tech Industries acquisition. We have not recognized any impairment losses for the three- and six-month periods ended February 29, 2004 and February 28, 2003.

      The components of our intangible assets are as follows:

			February 29, 2004					August 31, 2003
			Gross Carrying		Accumulated			Gross Carrying		Accumulated
			Amount		Amortization			Amount		Amortization
Intangible assets:
	Patents		$	9,620	$	(7,361	)	$	9,620	$	(7,072	)
	Debt financing costs			10,607		(1,052	)		6,085		(4,500	)
	Trademarks			5,360		(360	)		360		(320	)
	Customer relationships			2,600		(58	)		—		—
	Covenants not-to-compete			829		(322	)		455		(243	)
	Technology			550		(161	)		150		(75	)
	Other			596		(158	)		251		(90	)
		Total consolidated	$	30,162	$	(9,472	)	$	16,921	$	(12,300	)

      Gross carrying amounts and accumulated amortization may fluctuate between periods due to foreign currency translation. In addition, amortization expense for the net carrying amount of intangible assets, including debt financing costs, for the six-month periods ended February 29, 2004 and February 28, 2003 was $2,182 and $805, respectively. Amortization expense is estimated to be $4,036 for the full fiscal year 2004, $2,972 in fiscal 2005, $2,456 in fiscal 2006, $2,287 in fiscal 2007, $1,844 in fiscal 2008, $1,287 in fiscal 2009 and $2,970 in the remaining years thereafter.

F-47

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

10. Debt

Debt

	February 29,			August 31,
	2004			2003
Senior notes	$	180,000		$	110,000
Senior revolving credit facility		11,060			6,561
Capital lease obligations		176			302
Other		73			70
		191,309			116,933
Less: Current portion long-term debt		(199	)		(287	)
	$	191,110		$	116,646

Senior Notes:

      On October 2, 1995, we completed an offering of $110,000 of senior notes were to matured on October 1, 2005 and bore interest at 10.75% per annum. Interest payments of approximately $5,913 were due semi-annually on April 1 and October 1 of each year, which commenced on April 1, 1996. We redeemed all of these senior notes in February 2004.

      On January 23, 2004, we completed an offering of $180,000 of senior notes that mature on February 1, 2012 and bear interest at 8.25% per annum. Interest payments of approximately $7,425 are due semi-annually on February 1 and August 1 of each year. Interest will accrue from January 23, 2004 and the first interest payment date will be August 1, 2004. The senior notes’ indenture contains covenants and provisions that restrict, among other things, the Company’s ability to: (i) incur additional indebtedness or issue preferred stock, (ii) incur liens on its property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, (vi) engage in certain sales of assets and subsidiary stock, (vii) engage in certain transactions with affiliates, (viii) engage in sale/leaseback transactions (ix) engage in any business other than a related business (x) make restricted payments, and (xi) declare or pay dividends.

      The following table sets forth the uses of funds in connection with the $180,000 offering:

Redemption of 10.75% senior notes due 2005			$	110,000
	Payment of accrued interest on 10.75% senior notes due 2005			4,664
	Pay down of senior secured credit facility			36,729
		Warrant redemption and distribution on February 23, 2004		10,659
		Warrant redemption and distribution to be paid on May 4, 2004 (Note 12)		1,453
		Potential stock tender and distribution to be paid on or after June 21, 2004 (Note 12)		7,888
	Total warrant redemption and distribution			20,000
	Transaction fees and expenses for senior notes and credit facility			8,607
			$	180,000

F-48

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Senior Revolving Credit Facility:

      Concurrently with the offering of $110,000 of senior notes, in October 1995, we entered into a five-year senior revolving credit facility of up to $35,000. On September 29, 2000, the Company entered into a new four year amended and restated senior secured credit facility of $50,000 for operating purposes subject to a borrowing base of eligible receivables and inventory, plus property, plant and equipment, net, which serve as collateral for the line. The credit facility, which was due to expire on August 31, 2004, contained covenants and provisions that restricted, among other things, the Company’s ability to: (i) incur additional indebtedness, (ii) incur liens on its property, (iii) make investments, (iv) enter into guarantees and other contingent obligations, (v) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vi) engage in certain transactions with affiliates, (vii) make restricted junior payments, and (viii) declare or pay dividends. An unused fee was payable on the facility based on the total commitment amount less the balance outstanding at the rate of 0.35% per annum. In addition, interest payable was based on either the Bank Prime Loan rate plus 1.00% or the LIBOR Loan rate plus 2.25% determined by a pricing table based on total indebtedness to EBITDA. At August 31, 2003, the Bank Prime Loan rate and the LIBOR Loan rate were 4.00% and 1.12%, respectively.

      On September 19, 2003, we entered into a consent and first amendment to the amended and restated senior secured credit facility, increasing the credit facility to $54,000 in connection with the Company’s stock purchase of Tech Industries, Inc., subject to a borrowing base and covenants similar to those in the amended and restated senior secured credit facility existing at August 31, 2003. An unused fee was payable on the facility based on the total commitment amount less the average daily aggregate amount of outstanding liability, at the rate of 0.50% per annum. Interest payable was based on either the Bank Prime Loan rate plus 1.50% or the LIBOR loan rate plus 2.75%.

      Concurrently with the offering of $180,000 of senior notes, on January 23, 2004, we entered into an amended and restated five-year senior revolving credit facility of up to $50,000, maturing on January 23, 2009. The credit facility contains covenants and provisions that restrict, among other things, our ability to: (i) redeem warrants and repurchase stock, except during the first year, (ii) incur additional indebtedness, (iii) incur liens on our property, (iv) make investments, (v) enter into guarantees and other contingent obligations, (vi) merge or consolidate with or acquire another person or engage in other fundamental changes, or in certain sales of assets, (vii) engage in certain transactions with affiliates, (viii) make restricted junior payments, and (viii) declare or pay dividends. An unused fee is payable on the facility based on the total commitment amount less the average daily aggregate amount of outstanding liability, at the rate of 0.50% per annum. In addition, interest payable is based on either the Bank Prime Loan rate plus 1.25% or the LIBOR loan rate plus 2.75% determined by a pricing tabled based on the outstanding credit facility balance.

F-49

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

     Aggregate Maturities of Long-Term Debt:

      The aggregate maturities of long-term debt as of February 29, 2004 were as follows:

	Fiscal Years
	Ended
	August 31,
2005	$	199
2006		44
2007		6
2008		—
2009		11,060
Thereafter		180,000
	$	191,309

11. Commitments and Contingencies

Legal

      We are currently a defendant in a suit filed by Blackhawk Molding Co., Inc. on August 28, 2003 in the U.S. District Court for the Northern District of Illinois, Eastern Division, in which Blackhawk Molding alleges that a “single-stick” label attached to our five–gallon caps infringes a patent held by it. We have answered the complaint denying all allegations and asserting that the patent is invalid. Discovery is in an early stage. While we believe that we have substantial defenses in the matter, the ultimate outcome of any litigation is uncertain, and an unfavorable result could result in our sustaining material damages. In addition, any litigation concerning intellectual property could be protracted and costly and could have a material adverse effect on our business and results of operations regardless of its outcome.

      In the normal course of business, except for the Blackhawk litigation mentioned above, we are subject to various legal proceedings and claims. Based on the facts currently available, management believes that the ultimate amount of liability beyond reserves provided, if any, for any such pending actions will not have a material adverse effect on our financial position.

     Commitments and Contingencies:

      The Company issued a letter of credit in October 1999, expiring in December 2010, that guarantees $351 of a loan related to the purchase of machinery for Capsnap Europe Packaging GmbH’s (“CSE”) 50% owned Turkish joint venture, Watertek. CSE is an unconsolidated, 50% owned Austrian joint venture that sells five-gallon water bottles and closures that are produced primarily by our United Kingdom subsidiary and our joint venture partner in CSE. We also extended the expiration date of a letter of credit in February 2004, that now expires February 2007, and that guarantees a loan of $435 for the purchase of machinery by CSE. These guarantee agreements are in Eurodollars and were valued using a conversion rate as of February 29, 2004.

      In November 2000, our Mexican consolidated subsidiary entered into a ten-year lease for a building in Guadalajara, Mexico commencing in May 2001. Our Mexican operations relocated to the new building during May 2001. We guaranteed approximately $595 in future lease payments relating to the lease as of February 29, 2004.

      In June 2003, we entered into a fifteen-year lease for a new facility in Tolleson, Arizona, commencing December 1, 2003. The closure manufacturing operations in San Jose and Chino, California were relocated to the new facility during the second quarter of fiscal 2004. We have retained a real estate broker to sell the

F-50

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

manufacturing building in San Jose, and we have entered into a contract to sell the Chino facility, which should close in April 2004 (Note 12). We expect to recover our investments upon the sale of these buildings.

12. Subsequent Events

      We have entered into a contract to sell the manufacturing building located in Chino, California for a purchase price of $3,500, and the transaction is scheduled to close in April 2004. We expect to realize a small gain on this sale during the third quarter of fiscal 2004.

      In addition, in March 2004, we purchased certain machinery and equipment from a competitor in the United Kingdom, which was used for the production of dairy closures. This machinery and equipment is expected to be utilized in our U.K. facility and other Portola facilities outside the U.K. The machinery and equipment purchase was in sterling pounds using a conversion rate as of March 16, 2004.

      During March 2004, we entered into an agreement with a warrant holder to repurchase 440,215 shares of Class A common stock of the Company for a purchase price of $1,453 that will be paid during the third quarter of fiscal 2004. The funds for that purchase are being held in a cash equivalent investment account. We have recognized a loss of $228 during the second quarter of fiscal 2004 relating to this warrant repurchase agreement. This loss is reported in the statement of operations included in this prospectus.

      Pursuant to an Offer to Purchase dated March 5, 2004, we offered to purchase for cash up to 1,319,663 shares of our common stock at $5.80 per share from our stockholders of record as of March 5, 2004. The offer was to expire on April 9, 2004, at which time we would purchase all shares of our common stock that were properly tendered and not withdrawn. On March 31, 2004, we announced that the Company has extended the tender offer to purchase its common stock to at least June 21, 2004. This will defer acceptance of tenders at least through that date when the Company expects to release its third quarter financial results. We have the right to further amend the terms of the tender offer. We have $7,888 being held in a cash investment account for the distribution.

F-51

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

13. Supplemental Condensed Consolidated Financial Statements

      On January 23, 2004, the Company completed the offering of $180,000 principal amount of 8 1/4% Senior Notes due 2012 (the outstanding notes). The majority of the net proceeds of such offering were used to redeem all of the previously outstanding $110,000 of senior notes. The Company anticipates exchanging the outstanding notes for registered exchange notes that have substantially the same terms. The exchange notes have the following guarantors, all of which are subsidiaries of the Company: Portola Allied Tool, Inc.; Portola Limited; Portola Packaging, Inc. Mexico, S.A. de C.V.; Portola Packaging Canada Ltd.; Portola Packaging Limited; and Tech Industries, Inc. In connection with the exchange offer, the Company has supplied the following financial information for the above guarantors:

SUPPLEMENTAL CONDENSED CONSOLIDATED BALANCE SHEET

February 29, 2004

						Combined			Combined
			Parent			Guarantor			Non-Guarantor
			Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
	Cash and cash equivalents			11,331			2,500			1,000			—			14,831
	Accounts receivable, net			14,184			12,922			1,374			(2,616	)		25,864
	Inventories			7,486			9,882			488			—			17,856
	Other current assets			3,533			1,748			512			—			5,793
		Total current assets		36,534			27,052			3,374			(2,616	)		64,344
Property, plant and equipment, net				46,403			31,048			2,402			—			79,853
Goodwill				5,917			13,819			—			—			19,736
Debt financing costs				9,526			29			—			—			9,555
Investment in subsidiaries				18,772			13,202			902			70			32,946
Common stock of subsidiary				(1,267	)		(26,313	)		(4,457	)		—			(32,037	)
Other assets				3,823			8,295			29			—			12,147
		Total assets		119,708			67,132			2,250			(2,546	)		186,544
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
	Current portion of redeemable warrants to purchase Class A Common Stock			1,453			—			—			—			1,453
	Accounts payable			7,429			13,083			629			(2,616	)		18,525
	Intercompany (receivable) payable			(57,084	)		53,685			3,399			—			—
	Other current liabilities			6,041			4,214			842			—			11,097
		Total current liabilities		(42,161	)		70,982			4,870			(2,616	)		31,075
Long-term debt, less current portion				191,073			—			37			—			191,110
Other long-term obligations				1,993			134			(476	)		516			2,167
		Total liabilities		150,905			71,116			4,431			(2,100	)		224,352
	Other equity (deficit)			7,287			(279	)		(873	)		(1,464	)		4,671
	Accumulated deficit			(38,484	)		(3,705	)		(1,308	)		1,018			(42,479	)
		Total shareholders’ equity (deficit)		(31,197	)		(3,984	)		(2,181	)		(446	)		(37,808	)
		Total liabilities and equity (deficit)		119,708			67,132			2,250			(2,546	)		186,544

F-52

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the six-month period ended February 29, 2004

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	58,916		$	56,701		$	4,064		$	(5,634	)	$	114,047
Cost of sales			48,939			48,585			2,488			(4,597	)		95,415
	Gross profit		9,977			8,116			1,576			(1,037	)		18,632
Selling, general and administrative			11,020			4,045			1,635			(1,036	)		15,664
Research and development			2,153			726			47			—			2,926
Amortization of intangibles			492			130			—			—			622
Restructuring costs			1,632			234			—			—			1,866
	Income (loss) from operations		(5,320	)		2,981			(106	)		(1	)		(2,446	)
Interest income			(78	)		(6	)		3			—			(81	)
Interest expense			7,397			12			1			—			7,410
Amortization of debt financing costs			1,550			10			—			—			1,560
Loss on warrant redemption			1,867			—			—			—			1,867
Foreign currency transaction (gain) loss			(2,255	)		(1	)		1			—			(2,255	)
Intercompany interest (income) expense			(1,623	)		1,568			55			—			—
Other (income) expense, net			(93	)		101			7			26			41
	Income (loss) before income taxes		(12,085	)		1,297			(173	)		(27	)		(10,988	)
Income tax (benefit) expense			(695	)		1,437			—			—			742
Net income (loss)			(11,390	)		(140	)		(173	)		(27	)		(11,730	)

F-53

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the six-month period ended February 28, 2003

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	66,356		$	38,968		$	2,429		$	(4,691	)	$	103,062
Cost of sales			51,876			32,280			997			(3,307	)		81,846
	Gross profit		14,480			6,688			1,432			(1,384	)		21,216
Selling, general and administrative			12,641			2,416			1,483			(1,384	)		15,156
Research and development			2,312			103			—			—			2,415
Amortization of intangibles			430			2			—			—			432
Restructuring costs			405			—			—			—			405
	Income (loss) from operations		(1,308	)		4,167			(51	)		—			2,808
Interest income			(80	)		(16	)		(3	)		—			(99	)
Interest expense			6,257			10			1			—			6,268
Amortization of debt financing costs			365			8			—			—			373
Loss on warrant redemption			—			—			—			—			—
Foreign currency transaction (gain) loss			—			251			1			—			252
Intercompany interest (income) expense			(398	)		357			41			—			—
Other (income) expense, net			(9	)		18			(52	)		38			(5	)
	Income (loss) before income taxes		(7,443	)		3,539			(39	)		(38	)		(3,981	)
Income tax (benefit) expense			(2,699	)		1,126			—			—			(1,573	)
Net income (loss)			(4,744	)		2,413			(39	)		(38	)		(2,408	)

F-54

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three-month period ended February 29, 2004

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	27,809		$	26,830		$	2,116		$	(2,546	)	$	54,209
Cost of sales			24,711			23,514			1,302			(2,073	)		47,454
	Gross profit		3,098			3,316			814			(473	)		6,755
Selling, general and administrative			5,398			2,159			839			(473	)		7,923
Research and development			1,100			402			28			—			1,530
Amortization of intangibles			255			72			—			—			327
Restructuring costs			1,289			234			—			—			1,523
	Income (loss) from operations		(4,944	)		449			(53	)		—			(4,548	)
Interest income			(16	)		(4	)		(1	)		—			(21	)
Interest expense			4,000			4			1			—			4,005
Amortization of debt financing costs			1,125			5			—			—			1,130
Loss on warrant redemption			1,867			—			—			—			1,867
Foreign currency transaction (gain) loss			(2,252	)		1,331			1			—			(920	)
Intercompany interest (income) expense			(851	)		810			41			—			—
Other (income) expense, net			(99	)		132			136			11			180
	Income (loss) before income taxes		(8,718	)		(1,829	)		(231	)		(11	)		(10,789	)
Income tax (benefit) expense			(990	)		941			—			—			(49	)
Net income (loss)			(7,728	)		(2,770	)		(231	)		(11	)		(10,740	)

F-55

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three-month period ended February 28, 2003

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Sales		$	33,097		$	18,996		$	1,112		$	(2,097	)	$	51,108
Cost of sales			25,876			15,725			423			(1,425	)		40,599
	Gross profit		7,221			3,271			689			(672	)		10,509
Selling, general and administrative			6,334			1,194			725			(672	)		7,581
Research and development			1,173			53			—			—			1,226
Amortization of intangibles			227			—			—			—			227
Restructuring costs			405			—			—			—			405
	Income (loss) from operations		(918	)		2,024			(36	)		—			1,070
Interest income			(93	)		(7	)		(1	)		—			(101	)
Interest expense			3,108			4			(11	)		—			3,101
Amortization of debt financing costs			189			4			—			—			193
Loss on warrant redemption			—			—			—			—
Foreign currency transaction (gain) loss			—			(142	)		—			—			(142	)
Intercompany interest (income) expense			(204	)		168			36			—			—
Other (income) expense, net			(148	)		(20	)		61			14			(93	)
	Income (loss) before income taxes		(3,770	)		2,017			(121	)		(14	)		(1,888	)
Income tax (benefit) expense			(1,441	)		649			—			—			(792	)
Net income (loss)			(2,329	)		1,368			(121	)		(14	)		(1,096	)

F-56

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six-month period ended February 29, 2004

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow from operations		$	(2,579	)	$	2,417		$	416		$	—		$	254
	Additions to property, plant and equipment		(5,210	)		(3,142	)		(284	)		515			(8,121	)
	Payment for Tech Industries, Inc.		(35,894	)		—			—			—			(35,894	)
	Other		(837	)		48			—			(515	)		(1,304	)
Net cash provided by (used in) investing activities			(41,941	)		(3,094	)		(284	)		—			(45,319	)
	Borrowings under Senior Notes due 2012		180,000			—			—			—			180,000
	Payments of Senior Notes due 2005		(110,000	)		—			—			—			(110,000	)
	Payments for warrant redemption		(10,659	)		—			—			—			(10,659	)
	Payments of debt issuance costs		(8,607	)		—			—			—			(8,607	)
	Borrowings under revolver, net		4,499			—			—			—			4,499
	Other		122			—			(77	)		—			45
Net cash provided by (used in) financing activities			55,355			—			(77	)		—			55,278
Effect of exchange rate changes on cash			—			306			20			—			326
Increase (decrease) in cash and cash equivalents			10,835			(371	)		75			—			10,539
Cash and cash equivalents at beginning of period			496			2,871			925			—			4,292
Cash and cash equivalents at end of period		$	11,331		$	2,500		$	1,000			—		$	14,831

F-57

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six-month period ended February 28, 2003

					Combined			Combined
		Parent			Guarantor			Non-Guarantor
		Company			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash flow from operations		$	4,767		$	2,226		$	(573	)	$	—		$	6,420
	Additions to property, plant and equipment		(4,198	)		(1,609	)		(159	)		967			(4,999	)
	Other		523			113			604			(967	)		273
Net cash provided by (used in) investing activities			(3,675	)		(1,496	)		445			—			(4,726	)
	Repayments under revolver, net		(1,383	)		—			—			—			(1,383	)
	Other		(63	)		(1	)		(152	)		—			(216	)
Net cash provided by (used in) financing activities			(1,446	)		(1	)		(152	)		—			(1,599	)
Effect of exchange rate changes on cash			—			(44	)		—			—			(44	)
Increase (decrease) in cash and cash equivalents			(354	)		685			(280	)		—			51
Cash and cash equivalents at beginning of period			663			2,237			1,666			—			4,566
Cash and cash equivalents at end of period		$	309		$	2,922		$	1,386		$	—		$	4,617

F-58

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Partners of

Tech Industries, Inc. and Affiliates

      We have audited the accompanying combined balance sheets of Tech Industries, Inc. and Affiliates as of December 29, 2002 and December 30, 2001 and the related statements of income (loss), equity and cash flows for the years ended December 29, 2002, December 30, 2001 and December 31, 2000. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

      We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Tech Industries, Inc. and Affiliates as of December 29, 2002 and December 30, 2001 and the results of their operations and their cash flows for the years ended December 29, 2002, December 30, 2001 and December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/ PRESCOTT CHATELLIER FONTAINE & WILKINSON, LLP
__________________________________________________
Prescott Chatellier Fontaine & Wilkinson, LLP

Providence, Rhode Island

December 29, 2003

F-59

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED BALANCE SHEETS

(in thousands)

				December 29,		December 30,
				2002		2001
				(as restated)
ASSETS
Current assets:
	Cash and cash equivalents			$	5,447	$	1,467
	Accounts receivable, less allowance of $212				3,761		5,232
	Inventories				3,268		4,120
	Other current assets				199		195
	Property held for sale				726		211
		Total current assets			13,401		11,225
Property and equipment, net					6,024		6,909
Property held for sale					—		726
Other assets					4		4
		Total assets		$	19,429	$	18,864
LIABILITIES, MINORITY INTEREST AND EQUITY
Current liabilities:
	Accounts payable			$	934	$	1,496
	Accrued expenses and liabilities				1,578		1,399
		Total current liabilities			2,512		2,895
Minority interest					408		—
Equity:
	Common stock				21		21
	Paid-in capital				2,815		2,794
	Partners’ capital				1,617		1,385
	Retained earnings				12,056		11,769
		Total equity			16,509		15,969
			Total liabilities, minority interest and equity	$	19,429	$	18,864

The accompanying notes are an integral part of these combined financial statements.

F-60

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF INCOME (LOSS)

(in thousands)

			Year Ended			Year Ended			Year Ended
			December 29,			December 30,			December 31,
			2002			2001			2000
			(as restated)
Sales			$	31,670		$	37,144		$	39,203
Cost of sales				24,161			30,330			32,519
	Gross profit			7,509			6,814			6,684
Selling, general and administrative				3,872			4,723			5,471
Research and development				412			—			—
Restructuring costs				—			39			1,908
	Income (loss) from operations			3,225			2,052			(695	)
Other (income) expense:
	Interest income			(56	)		(61	)		(21	)
	Interest expense			—			300			111
	(Gain) loss on sale of fixed asset			(626	)		172			400
	Foreign currency exchange (gain) loss			(175	)		2,609			23
	Minority interest expense			148			—			—
	Other, net			(363	)		(136	)		(90	)
		Total other (income) expense		(1,072	)		2,884			423
Net income (loss)			$	4,297		$	(832	)	$	(1,118	)

The accompanying notes are an integral part of these combined financial statements.

F-61

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF EQUITY

(in thousands)

For the Years Ended December 29, 2002, December 30, 2001, and December 31, 2000

											Accumulated
											Other
											Comprehensive
	Common		Paid-in		Partner’s			Retained			Income			Total
	Stock		Capital		Capital			Earnings			(Loss)			Equity
Balance, December 26, 1999	$	21	$	2,607	$	642		$	18,061		$	(1,517	)	$	19,814
Foreign currency translation adjustment		—		—		—			—			(560	)		(560	)
Net income (loss) for the year		—		—		655			(1,773	)		—			(1,118	)
Comprehensive loss		—		—		—			—			—			(1,678	)
Capital contribution		—		37		—			—			—			37
Distribution to stockholders		—		—		(222	)		(957	)		—			(1,179	)
Balance, December 31, 2000		21		2,644		1,075			15,331			(2,077	)		16,994
Foreign currency translation adjustment (Note 6)		—		—		—			—			2,077			2,077
Net income (loss) for the year		—		—		680			(1,512	)		—			(832	)
Comprehensive income		—		—		—			—			—			1,245
Capital contribution		—		150		—			—			—			150
Distribution to stockholders		—		—		(370	)		(2,050	)		—			(2,420	)
Balance, December 30, 2001		21		2,794		1,385			11,769			—			15,969
Net income for the year, as restated		—		—		710			3,587			—			4,297
Comprehensive income, as restated		—		—		—			—			—			4,297
Capital contribution		—		21		—			—			—			21
Distribution to stockholders		—		—		(478	)		(3,300	)		—			(3,778	)
Balance, December 29, 2002, as restated	$	21	$	2,815	$	1,617		$	12,056		$	—		$	16,509

The accompanying notes are an integral part of these combined financial statements.

F-62

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

(in thousands)

					Year Ended			Year Ended			Year Ended
					December 29,			December 30,			December 31,
					2002			2001			2000
					(as restated)
Cash flows from operating activities:
	Net income (loss)				$	4,297		$	(832	)	$	(1,118	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization				1,657			1,799			2,153
		Decrease in provision for doubtful accounts				—			(89	)		(17	)
		Minority interest expense				148			—			—
		Reclassification of currency loss (Note 6)				—			2,529			—
		(Gain) loss on sale of property and equipment				(626	)		172			400
		Gain on sale of stock of subsidiary				(17	)		—			—
		(Increase) decrease in:
			Accounts receivable			1,310			1,018			1,551
			Inventories			851			2,353			(210	)
			Other assets			(82	)		385			654
		Increase (decrease) in:
			Accounts payable			(530	)		(732	)		(704	)
			Accrued expenses and liabilities			130			(827	)		(44	)
				Net cash provided by operating activities		7,138			5,776			2,665
Cash flows from investing activities:
	Proceeds from sale of property and equipment					1,405			336			1,240
	Principal collected on notes receivable					74			84			34
	Capital expenditures					(1,160	)		(1,103	)		(3,971	)
	Decrease (increase) in cash surrender value of life insurance					—			554			(33	)
	Proceeds from sale of stock					363			—			—
				Net cash provided by (used in) investing activities		682			(129	)		(2,730	)
Cash flows from financing activities:
	Decrease in book overdraft					—			—			(245	)
	Payments on long-term debt					(4	)		(2,131	)		1,637
	Distributions to stockholders/partners					(3,778	)		(2,420	)		(1,179	)
	Capital contribution					21			150			37
				Net cash (used in) provided by financing activities		(3,761	)		(4,401	)		250
Effect of exchange rate changes on cash						(79	)		(20	)		56
	Increase in cash and cash equivalents					3,980			1,226			241
Cash and cash equivalents at beginning of period						1,467			241			—
Cash and cash equivalents at end of period					$	5,447		$	1,467		$	241

The accompanying notes are an integral part of these combined financial statements.

F-63

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

(in thousands, except share data)

1. Summary of Significant Accounting Policies

Basis of presentation and restatement

      The combined financial statements include the accounts of Tech Industries, Inc. (“Tech”) and its subsidiaries and affiliated entities Fairmount Realty Associates, 84 Fairmount Street Limited Partnership and Tech Industries U.K. Ltd. (collectively, the “Company”). The affiliated entities are included since the entities have common ownership with Tech. These affiliated entities are collectively referred to as the “Affiliates.”

      The accompanying combined financial statements as of and for the year ended December 29, 2002 have been restated to reflect a change in the recognition of revenues for sales to one customer. The Company previously recognized revenue for goods sold to the customer upon shipment to the customer’s warehouse, where they are held under a consignment arrangement initiated in 2002. Management determined that revenue from such shipments should have been recognized upon consumption of the Company’s product by the customer. The restatement decreased net income for the year ended December 29, 2002 by approximately $100. The table below summarizes the impact on the combined balance sheet and combined statement of operations:

	As Previously
At December 29, 2002:	Reported		As Restated
Accounts Receivable	$	4,241	$	3,761
Inventory	$	2,805	$	3,268
Retained earnings	$	12,156	$	12,056
For the year ended December 29, 2002:
Sales	$	32,234	$	31,670
Cost of sales	$	24,625	$	24,161
Gross profit	$	7,609	$	7,509
Income from operations	$	3,325	$	3,225
Net income	$	4,397	$	4,297

Organization and Nature of Business

      Tech manufactures and sells plastic packaging components from a manufacturing facility located in Woonsocket, Rhode Island.

      The Company had two foreign subsidiaries, Tech Industries Ireland Limited (“Tech Ireland”) and Tech Industries do Brasil Ltda., which ceased operations in 2001. During 2002, the Company sold a 22.86% interest in Tech Ireland for $363 to an officer of the Company. A gain of $17 was realized from the sale.

      Tech Industries U.K. Ltd. (“Tech U.K.”) operates as a sales office in the United Kingdom for products sold to customers in Europe. During 2002, the Company transferred approximately $1,700 of its European sales to Tech U.K., which subcontracted the production to another manufacturer. The Company also transferred approximately $1,800 in European sales to another manufacturer and earned an 8 percent commission totaling $144 on such sales.

      Fairmount Realty Associates owns the manufacturing facility used by Tech and 84 Fairmount Street Limited Partnership owns a warehouse used by Tech.

      Substantially all of the trade accounts receivable are due from companies in the cosmetic industry throughout the world. The Company performs credit evaluations on all new customers and does not require

F-64

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

collateral. Credit losses are provided for in the financial statements and consistently have been within management’s expectations.

Principles of Consolidation

      The combined financial statements of the Company include the financial statements of Tech and its subsidiaries that are controlled by the Company and entities that have common ownership with Tech. All material intercompany accounts and transactions between the combined entities have been eliminated.

Fiscal Year End

      The Company’s fiscal year ends on the last Sunday in December.

Cash Equivalents

      The Company considers all highly liquid and short-term investments with an original maturity of three months or less to be cash equivalents.

Inventories

      Inventories are stated at the lower of first-in, first-out (FIFO) cost or market.

Property and Equipment

      Property and equipment are recorded at cost, except that property under capital leases is recorded at the lower of the present value of future minimum lease payments or the fair value of the property at the beginning of the lease term. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts and any gain or loss is recorded in earnings. Maintenance and repairs are charged to expense when incurred. Depreciation is provided over the estimated useful lives of the assets using the straight-line method as follows:

Assets	Life
Buildings/Leasehold improvements	5-39 years
Machinery and equipment	3-7 years
Molds	3-7 years
Furniture and fixtures	7 years
Transportation equipment	5 years
Computer equipment	5 years

Property Held for Sale

      At December 29, 2002 and December 30, 2001, the property held for sale totaled $726 and $937, respectively, and are classified in the accompanying combined balance sheets as current and noncurrent assets based on the year of sale. Refer to Note 6.

Income Taxes

      Tech and Tech U.K. are S Corporations as defined in the Internal Revenue Code. Accordingly, the Company does not provide for income taxes since the pro rata share of income is included in the stockholders’ individual tax returns.

F-65

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

      84 Fairmount Street Limited Partnership and Fairmount Realty Associates are partnerships. Accordingly, the pro rata share of income is included in the partners’ individual income tax returns.

Concentration of Credit Risk

      The Company has cash deposits at one financial institution, which has a federally insured limit of $100. The cash balance in this institution exceeds the federally insured limit at various times throughout the year.

Translation of Foreign Currencies

      The Company’s foreign subsidiaries use the local currency as their functional currency. Assets and liabilities are translated at year-end exchange rates. Items of income and expense are translated at average exchange rates for the relevant year. Translation gains and losses are not included in determining net income (loss) but are accumulated as a separate component of equity. Gains and losses arising from foreign currency transactions are included in determining net income (loss).

Revenue Recognition

      The Company recognizes revenue when title, ownership and risk of loss pass to the customer and collectibility is probable. For one customer, revenue is recognized when the Company’s consigned inventory is consumed by the customer.

Advertising Expenses

      Advertising costs are expensed as incurred and totaled $168, $211 and $309 for the years ended December 29, 2002, December 30, 2001 and December 31, 2000, respectively.

Research and Development Expenditures

      Research and development expenditures are charged to operations as incurred.

Segment Information

      The Company follows the provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information, Financial Reporting for Segments of a Business.” This statement establishes standards for reporting information about operating segments, products and services, geographic areas and major customers in annual financial statements. The Company manages and operates its business as one segment. International sales were 21% of revenues in 2002, 22% in 2001 and 32% in 2000.

Use of Estimates

      The preparation of the combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

      Certain reclassifications have been made to prior year amounts to conform with the current year presentation. These reclassifications had no effect on reported net earnings.

F-66

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Recent Accounting Pronouncements

      In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 established accounting and reporting standards for business combinations. SFAS No. 142 established accounting and reporting standards for acquired goodwill and other intangible assets, specifically, how they should be treated upon, and subsequent to, their acquisition. Both SFAS No. 141 and SFAS No. 142 are required to be applied in fiscal years beginning after December 15, 2001. Effective December 30, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” and (SFAS) No. 141, “Business Combinations.” The adoption of SFAS No. 141 and 142 had no impact on the Company’s financial statements for the year ended December 29, 2002.

      On August 15, 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligation.” The Company will adopt this statement on December 29, 2003 and is presently evaluating the impact it may have on the Company.

      On August 15, 2001, FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes or amends existing accounting literature related to the impairment and disposal of long-lived assets. SFAS No. 144 requires long-lived assets to be tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable from future cash flows of the particular asset group or there is an expectation that it is more likely than not that a long-lived group will be sold or otherwise disposed of before the end of its previously estimated useful life. The adoption of SFAS No. 144 had no impact on the Company’s financial statements for the year ended December 29, 2002.

      Effective January 1, 2002, the Company adopted SFAS No. 145, “Rescission of Financial Accounting Standards Board’s (“FASB”) Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections.” This statement updates, clarifies and simplifies existing accounting pronouncements. While the technical corrections to existing pronouncements are not substantive in nature, in some instances they may change accounting practice. The provisions of this standard related to SFAS No. 13, Accounting for Leases, are effective for transactions occurring after May 15, 2002. Prospectively, as a result of the adoption of SFAS No. 145, debt extinguishment costs will no longer be treated as extraordinary items. The impact of adopting SFAS No. 145 was not material to the Company’s financial statements for the year ended December 29, 2002.

2. Inventories

      Inventories at December 29, 2002 and December 30, 2001 consisted of the following:

	2002		2001
	(as restated)
Raw materials	$	868	$	1,090
Work in process and finished goods		2,400		3,030
Total	$	3,268	$	4,120

F-67

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

3. Property and Equipment

      Property and equipment and accumulated depreciation at December 29, 2002 and December 30, 2001 consisted of the following:

		2002			2001
Land		$	404		$	404
Buildings			1,424			1,424
Machinery and equipment			15,463			15,498
Molds			6,879			6,255
Transportation equipment			119			185
Furniture and fixtures			314			313
Leasehold improvements			457			457
Computer equipment			1,129			1,044
	Total property and equipment	$	26,189		$	25,580
	Total accumulated depreciation		(20,165	)		(18,671	)
	Net property and equipment	$	6,024		$	6,909

4. Revolving Credit Agreement

      At December 29, 2002, the Company had a Revolving Credit Agreement (the “Agreement”) with Citizens Bank, which provided for maximum borrowings of up to $4,000 through June 30, 2004. The Company could borrow at the Bank’s Prime lending rate (4.25% at December 29, 2002 and 4.75% at December 30, 2001) or at Libor + 135 basis points (2.79% at December 29, 2002 and 3.8% at December 30, 2001). The maximum borrowings under the Agreement were reduced by standby letter of credit (Refer to Note 8). Borrowings under the Agreement were unsecured. The loan agreement contained certain restrictive covenants, the most restrictive of which required minimum tangible net worth and cash flow to debt service ratios. It also limited additional borrowings and investments. Payments of interest only were due until the agreement expired on June 30, 2004. As of December 29, 2002 and December 30, 2001, there were no outstanding borrowings under the revolving line of credit. In connection with the sale of the Company as discussed in Note 11, the Agreement was terminated.

5. Common Stock

      Common stock issued and authorized as of December 29, 2002, December 30, 2001 and December 31, 2000 is as follows:

      Tech Industries, Inc. — Common stock, no par value, authorized 8,392 shares, issued and outstanding 7,840 shares.

      Tech Industries U.K. Ltd. — Common stock, no par value, authorized 4,000 shares, issued and outstanding 200 shares.

6. Restructuring

      In December 2000, the Company announced a restructuring plan involving the closing of its Ireland operation. The Company recorded restructuring charges during fiscal year 2000 totaling approximately $1,908, which consisted principally of employee severance costs. The Ireland facilities ran a minimal operation through April 2001 when it ceased operations completely and placed the facilities for sale. On December 18,

F-68

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

2002, the Company sold two buildings for $1,058 and the remaining two buildings on July 31, 2003 for $1,120. The proceeds on such transactions were used to liquidate the Company’s investment in Tech Ireland, which was distributed to the shareholders of the Company in August 2003.

      In October 2001, the Company announced a restructuring plan involving the closing of its Brazil operation. The decision to cease operation was made due to the heavy competition and a poor economy in Brazil. All of the useful fixed assets, with a net book value of approximately $994, were transferred back to the Company and placed into operation during December 2001. As a result of ceasing operations in Brazil and Ireland, the Company charged $2,529 to operations during the year ended December 30, 2001, which had previously been included in other comprehensive income (loss).

7. Retirement Plans

      The Company maintains a 401(k) and a discretionary profit sharing plan. Annual Company contributions, as determined by the officers of the Company, are made to a trust fund. Contributions to the Plan were $266, $311 and $306 for years ended December 29, 2002, December 30, 2001 and December 31, 2000, respectively.

8. Self-Insurance Plan

Workers’ Compensation

      The Company was self-insured for Workers’ Compensation from 1991 through 1996. In connection with the self-insurance program, the Company was required to maintain a $250 standby letter of credit, which was renewed on May 1, 2003. The letter of credit provided the collateral necessary for the State of Rhode Island until the State was satisfied that all claims have been paid. There was one workers’ compensation case pending. Subsequent to December 29, 2002, the Company lost its’ appeal on the case and had to pay $80 plus legal fees of $16, which was accrued for at December 29, 2002. The employee returned to work during October 2003. Additionally, the Company purchased insurance known as “tail coverage” during August 2003 and is now fully insured for all prior periods that the Company had been self-insured. The State of Rhode Island released the letter of credit as collateral and the Company cancelled the standby letter of credit.

Dental Insurance

      The Company has a self-insurance program to provide dental benefits to its employees. The benefits are administered by Delta Dental of Rhode Island and are in accordance with a standard plan thus providing limited benefits.

Officer’s Life Insurance

      In 2001, the Company surrendered the life insurance policy and distributed the proceeds of approximately $550 to the shareholders.

9. Deferred Compensation

      On November 26, 2001, the Company entered into deferred compensation agreements with the two officers of the Company. The agreements allowed the officers to earn $5 per month for each complete month of service performed. The maximum amount of deferred compensation that could be accrued under this agreement was $350 for each officer, thus $700 was the cumulative maximum accrual. Total compensation accrued was $120 and $10 for years ended December 29, 2002 and December 30, 2001, respectively. On September 18, 2003, the Company paid $700 pursuant to the terms of the agreement due to the sale of the

F-69

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS — (Continued)

(in thousands, except share data)

Company stock to Portola Packaging, Inc., which included the amounts accrued at December 29, 2002 and December 30, 2001.

10. Major Customers, Revenue Concentration and Dependence on Certain Suppliers

      The Company manufactures and sells plastic packaging components. The Company had four major customers which accounted for approximately 26%, 22%, 13% and 12% (2002), and two major customers which accounted for approximately 28% and 25% (2001) and 40% and 20% (2000), respectively, of the Company’s sales. Additionally, sales to seven customers represented approximately 83% (2002), 84% (2001), and 72% (2000) of net sales.

      Revenue by geographic location is as follows:

	United States		United Kingdom		Brazil		Ireland		Total
December 29, 2002, as restated	$	29,946	$	1,725	$	—	$	—	$	31,671
December 30, 2001	$	35,257	$	434	$	758	$	695	$	37,144
December 31, 2000	$	30,982	$	—	$	946	$	7,275	$	39,203

11. Subsequent Events

      In August 2003, Tech Industries, Inc. distributed its stock ownership in Tech Industries Ireland Limited to the shareholders of Tech Industries, Inc.

      On September 19, 2003, all of the outstanding stock of Tech Industries, Inc. and Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates were sold to Portola Packaging, Inc. (“Portola”). Portola is a leading diversified packaging business based in San Jose, California. Portola designs, manufactures and markets a full line of tamper-evident plastic closures primarily for the dairy, fruit juice and bottled water market segments.

F-70

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED BALANCE SHEETS

(in thousands)

				June 29, 2003
				(as restated)
ASSETS
Current assets:
	Cash and cash equivalents			$	5,167
	Accounts receivable, less allowance of $212				4,437
	Inventories				4,043
	Property held for sale				791
	Other current assets				340
		Total current assets			14,778
Property and equipment, net					5,502
Other assets					4
		Total assets		$	20,284
LIABILITIES, MINORITY INTEREST AND EQUITY
Current liabilities:
	Accounts payable			$	895
	Accrued expenses and liabilities				1,450
		Total current liabilities			2,345
Minority interest					407
Equity:
	Common stock				21
	Paid-in capital				2,820
	Partners’ capital				1,576
	Shareholder loan				(1,080	)
	Retained earnings				14,195
		Total equity			17,532
			Total liabilities, minority interest and equity	$	20,284

The accompanying notes are an integral part of these condensed combined financial statements.

F-71

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME

(in thousands)

		For the Six Months Ended
		June 29, 2003			June 30, 2002
		(as restated)			(as restated)
Sales		$	17,391		$	15,683
Cost of sales			12,996			11,906
	Gross profit		4,395			3,777
Selling, general and administrative			2,129			1,972
Research and development			—			168
	Income from operations		2,266			1,637
Other (income) expense:
	Interest income		(38	)		(33	)
	Commission income		(147	)		—
	Other, net		(288	)		65
			(473	)		32
	Net income	$	2,739		$	1,605

The accompanying notes are an integral part of these condensed combined financial statements.

F-72

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(in thousands)

				For the Six Months Ended
				June 29, 2003			June 30, 2002
				(as restated)			(as restated)
Cash flows used in operating activities:
	Net income			$	2,739		$	1,605
	Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization				817			801
		(Gain) loss on foreign currency			(181	)		258
		Minority interest expense			(1	)		—
	(Increase) decrease in:
		Accounts receivable			(491	)		478
		Inventories			(775	)		701
		Other assets			(88	)		3
	Increase (decrease) in:
		Accounts payable			(28	)		(402	)
		Accrued expenses and liabilities			(376	)		403
			Net cash provided by operating activities		1,616			3,847
Cash flows from investing activities:
	Principal collected on notes receivable				—			12
	Capital expenditures				(229	)		(617	)
			Net cash used in investing activities		(229	)		(605	)
Cash flows from financing activities:
	Payments on long-term debt				—			(136	)
	Increase in shareholder loan				(1,080	)		—
	Capital contributions				4			11
	Distributions to stockholders/partners				(640	)		(3,773	)
			Net cash used by financing activities		(1,716	)		(3,898	)
Effect of exchange rate changes on cash					49			(48	)
	Net decrease in cash and cash equivalents				(280	)		(704	)
Cash and cash equivalents at beginning of period					5,447			1,468
Cash and cash equivalents at end of period				$	5,167		$	764

The accompanying notes are an integral part of these condensed combined financial statements.

F-73

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

(in thousands)

1. Basis of Presentation

      The accompanying unaudited condensed combined financial statements include the accounts of Tech Industries, Inc. (Tech) and its subsidiaries and affiliated entities Fairmount Realty Associates, 84 Fairmount Street Limited Partnership and Tech Industries U.K. Ltd. (collectively, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America. The affiliated entities are included since the entities have common ownership with Tech. These affiliated entities are collectively referred to as the “Affiliates.” In the opinion of the Company’s management, the accompanying unaudited condensed combined financial statements contain all adjustments, consisting only of those of a normal, recurring nature necessary for a fair presentation of the results of operations and cash flows of the Company for the periods indicated. While management believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited combined financial statements of the Company for the year ended December 29, 2002 included elsewhere in this document. Operating results for the six-month period ended June 29, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2003.

      The accompanying unaudited condensed combined financial statements as of June 30, 2003 and for the six month periods ended June 30, 2003 and 2002 have been restated to reflect a change in the recognition of revenues for sales to one customer. The Company previously recognized revenue for goods sold to the customer upon shipment to the customer’s warehouse, where they are held under a consignment arrangement initiated in 2002. Management determined that revenue from such shipments should have been recognized upon consumption of the Company’s product by the customer. The restatement decreased net income for the six-month periods ended June 30, 2003 and 2002 by approximately $88 and $17, respectively.

		As Previously		As
		Reported		Restated
At June 30, 2003
	Accounts Receivable	$	5,285	$	4,437
	Inventories		3,171		4,043
	Retained earnings	$	14,383	$	14,195
For the six month period ended June 30, 2003
	Sales	$	17,889	$	17,391
	Cost of sales		13,405		12,996
	Gross profit		4,484		4,395
	Income from operations		2,355		2,266
	Net loss	$	2,827	$	2,739
For the six months ended June 30, 2002
	Sales	$	15,777	$	15,683
	Cost of sales		11,983		11,906
	Gross profit		3,794		3,777
	Income from operations		1,654		1,637
	Net loss	$	1,622	$	1,605

2. Subsequent Event

      In August 2003, Tech Industries, Inc. distributed its stock ownership in Tech Industries Ireland Limited to the shareholders of Tech Industries, Inc.

F-74

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

(in thousands)

      On September 19, 2003, all of the outstanding stock of Tech Industries, Inc., Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates were sold to Portola Packaging, Inc. “Portola.” Portola is a leading diversified packaging business based in San Jose, California, Portola designs, manufactures and markets a full line of tamper-evident plastic closures primarily for the dairy, fruit juice and bottled water market segments.

F-75

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

      Portola Packaging, Inc. (“Portola”) is incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law (“DGCL”) provides that a Delaware corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits and proceedings, whether civil, criminal, administrative or investigative (other than action by or in the right of the corporation — a “derivative action”), if they acted in good faith an in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful.

      A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement, or otherwise.

      The DGCL further authorizes a Delaware corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

      Portola’s Certificate of Incorporation and Bylaws provide for the indemnification of the Company’s directors to the fullest extent permitted under Delaware law. Portola’s Certificate of Incorporation limits the personal liability of a director to the corporation or its stockholders to damages for (1) breach of the director’s duty of loyalty to Portola and its stockholders, (2) acts or omissions not in good faith of law, (3) for unlawful payments of dividends or unlawful stock repurchases or redemptions, or (4) for any transaction for which the director derived an improper personal benefit fiduciary duty. Portola has purchased insurance on behalf of its directors and officers.

Item 21. Exhibits and Financial Statement Schedules

(A) Exhibits

      The following is a list of all the documents filed as part of the Registration Statement.

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	3.01	Certificate of Incorporation of Portola Packaging, Inc. (filed with Secretary of State of Delaware on April 29, 1994, as amended and filed with Secretary of State of Delaware on October 4, 1995)	10-Q		01-16-96		3.01
	3.02	Bylaws of Portola Packaging, Inc.	S-1	33-95318	08-01-95		3.02
	3.03	Certificate of Incorporation of Portola Allied Tool, Inc. (filed with Secretary of State of Delaware on March 26, 1999, as amended and filed with Secretary of State of Delaware on March 29, 1999)	S-4	333-115862	05-25-04		3.03
	3.04	Bylaws of Portola Allied Tool, Inc.	S-4	333-115862	05-25-04		3.04

II-1

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	3.05	Articles of Association of Portola Limited	S-4	333-115862	05-25-04		3.05
	3.06	Articles of Incorporation of Portola Packaging, Inc. Mexico, S.A. de C.V.	S-4	333-115862	05-25-04		3.06
	3.07	Articles of Amalgamation of Portola Packaging Canada Ltd./ Emballages Portola Canada LTEE	S-4	333-115862	05-25-04		3.07
	3.08	By-Law No. 1 of Portola Packaging Canada Ltd./ Emballages Portola Canada LTEE	S-4	333-115862	05-25-04		3.08
	3.09	Articles of Association of Portola Packaging Limited	S-4	333-115862	05-25-04		3.09
	3.10	Articles of Incorporation of Tech Industries, Inc.	S-4	333-115862	05-25-04		3.10
	3.11	Bylaws of Tech Industries, Inc.	S-4	333-115862	05-25-04		3.11
	4.01	Indenture dated as of January 23, 2004, by and among Portola Packaging, Inc., the Subsidiary Guarantors, and U.S. Bank National Association, as trustee, relating to the 8 1/4% Senior Notes due 2012 (including form of Note)							X
	4.02	Registration Rights Agreement dated as of January 23, 2004, by and among Portola Packaging, Inc., the Subsidiary Guarantors, and J.P. Morgan Securities Inc. and the Initial Purchasers listed therein	10-Q		04-09-04		10.02
	4.03	Form of Stock Certificate evidencing ownership of Portola Packaging, Inc.’s Class B Common Stock, Series 1	10-Q		01-13-97		4.02
	5.01	Opinion of Fenwick & West LLP.	S-4	333-115862	05-25-04		5.01
	10.01	Shareholders Agreement, dated as of June 23, 1988, by and among Portola Packaging, Inc., Chase Manhattan Investment Holdings, Inc. and certain shareholders and warrant holders, amended by Amendment to Shareholders Agreement, dated as of May 23, 1989, further amended by Second Amendment to Shareholders Agreement, dated November 29, 1989, and further amended by Amendment to Shareholders Agreement, dated as of June 30, 1994	S-1	33-95318	08-01-95		10.02
	10.02	Shareholders Agreement, dated as of June 30, 1994, by and among Portola Packaging, Inc., Chase Manhattan Capital Corporation, and certain shareholders and warrant holders	S-1	33-95318	08-01-95		10.03

II-2

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.03	First Offer Agreement, dated as of October 17, 1990, by and among Portola Packaging, Inc., Chase Manhattan Investment Holdings, Inc., Chase Manhattan Capital Corporation and Robert Fleming Nominees, Ltd., as amended by Amendment to First Offer Agreement, dated as of June 30, 1994	S-1	33-95318	08-01-95		10.07
	10.04	$250,000 Secured Promissory Note, dated January 17, 1992 made by Jack L. Watts in favor of Portola Packaging, Inc.	S-1	33-95318	08-01-95		10.10
	10.05	Director’s Agreement, dated September 1, 1989, by and between Portola Packaging, Inc. and Larry C. Williams, as amended by Amendment to Director’s Agreement, dated January 16, 1990 and Amendment Number Two to Director’s Agreement, dated August 31, 1991	S-1	33-95318	08-01-95		10.13
	10.06	Stock Purchase Agreement, dated October 17, 1990, by and among Portola Packaging, Inc., Robert Fleming Nominees, Ltd., Jack Watts, John Lemons and LJL Cordovan Partners	S-1	33-95318	08-01-95		10.15
	10.07	Stock Purchase Agreement, dated as of June 30, 1994, by and among Portola Packaging, Inc., Jack L. Watts, LJL Cordovan Partners, Robert Fleming Nominees, Ltd., Chase Manhattan Capital Corporation and certain other selling shareholders	S-1	33-95318	08-01-95		10.16
	10.08	Form of Subscription Agreement by and between Portola Packaging, Inc. and the related director or officer (said form being substantially similar to the form of Subscription Agreement utilized by Portola Packaging, Inc. for certain officers and directors of Portola Packaging, Inc.)	S-1	33-95318	08-01-95		10.20
	10.9	Form of Indemnification Agreement by and between Portola Packaging, Inc. and the related director or officer (said form being substantially similar to the form of Indemnification Agreement utilized by Portola Packaging, Inc. for certain officers and directors of Portola Packaging, Inc.)	S-1	33-95318	08-01-95		10.21

II-3

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.10	Stock Purchase Agreement, dated as of June 9, 1995, by and among Portola Packaging, Inc., Oakley T. Hayden Corp., Lyn Leigers as Executor of the Estate of Oakley T. Hayden, Chase Manhattan Capital Corporation and Heller Financial, Inc.	S-1	33-95318	09-25-95		10.22
	10.11	Stock Purchase Agreement, dated October 10, 1995, by and among Portola Packaging, Inc., Jack L. Watts, John L. Lemons, Mary Ann Lemons, LJL Cordovan Partners, L.P., Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P. and SEI Associates	10-Q		01-16-96		10.25
	10.12	Amendment to Investors’ Rights Agreements, dated as of October 10, 1995, by and among Portola Packaging, Inc., Jack L. Watts, John L. Lemons, Mary Ann Lemons, LJL Cordovan Partners, L.P., Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P., SEI Associates and Chase Manhattan Capital Corporation	10-Q		01-16-96		10.26
	10.13	Third Amended and Restated Registration Rights Agreement, dated as of October 10, 1995, by and among Portola Packaging, Inc., Heller Financial, Inc., Chase Manhattan Capital Corporation, Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P. and SEI Associates	10-Q		01-16-96		10.27
	10.14	1988 Stock Option Plan and related documents	10-Q		01-16-96		10.28
	10.15	1994 Stock Option Plan, as amended, and related documents	S-8	333-82125	07-01-99		4.03
	10.16	Form of Indemnification Agreement by and between Portola Packaging, Inc. and the related director or officer	10-K		11-25-96		10.37
	10.17	Form of Amendment to Indemnification Agreement by and between Portola Packaging, Inc. and certain directors and officers of the Registrant	10-K		11-25-96		10.38
	10.18	Portola Packaging, Inc. 1996 Employee Stock Purchase Plan, together with related documents	S-8	333-17533	12-10-96		4.05
	10.19	Portola Packaging, Inc. Management Deferred Compensation Plan Trust Agreement	10-Q		01-13-97		10.43
	10.20	Portola Packaging, Inc. Management Deferred Compensation Plan	S-1	33-95318	03-11-97		10.44

II-4

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.21	Summary Description of Portola Packaging, Inc. Bonus Plan and Profit Sharing Plan	10-Q		12-21-00		10.30
	10.22	Fourth Amended and Restated Credit Agreement, dated as of January 16, 2004, by and among Portola Packaging, Inc. as Borrower, General Electric Capital Corporation, as Agent, and the other financial institutions that are a party thereto, as Lenders	10-Q		04-09-04		10.03
	10.23	Asset Purchase Agreement, dated as of December 30, 2000, by and among Portola Packaging, Inc., Consumer Cap Corporation and the shareholders of Consumer Cap Corporation	8-K		01-29-01		2.1
	10.24	2002 Stock Option Plan and Related Materials	10-Q		07-03-02		10.34
	10.25	Stock Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc., Tech Industries, Inc. and the shareholders of Tech Industries, Inc.	8-K		10-06-03		2.01
	10.26	Stock Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc., Tech Industries UK Ltd. and the shareholders of Tech Industries UK Ltd.	8-K		10-06-03		2.02
	10.27	Equity Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc. and the partners of Fairmount Realty Associates	8-K		10-06-03		2.03
	10.28	Equity Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc. and the partners of 84 Fairmount Street Limited Partnership	8-K		10-06-03		2.04
	10.29	Closing Agreement, dated as of September 19, 2003, by and among Portola Packaging, Inc., the shareholders of Tech Industries, Inc., the shareholders of Tech Industries UK Ltd. and the partners of Fairmount Realty Associates and 84 Fairmount Street Limited Partnership	8-K		10-06-03		2.05

II-5

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.30	Amendment No. 1 to Fourth Amended and Restated Credit Agreement, dated as of May 21, 2004, by and among Portola Packaging, Inc. as Borrower, General Electric Capital Corporation, as Agent, and the other financial institutions that are a party thereto, as Lenders	S-4	333-115862	05-25-04		10.34
	12.01	Statement re Computation of Ratios	S-4	333-115862	05-25-04		12.01
	21.01	Subsidiaries of Portola Packaging, Inc.	10-K		12-12-03
	23.01	Consent of Fenwick & West LLP (included in Exhibit 5.01)	S-4	333-115862	05-25-04		23.01
	23.02	Consent of Independent Registered Public Accounting Firm							X
	23.03	Consent of Independent Registered Public Accounting Firm							X
	24.01	Power of Attorney	S-4	333-115862	05-25-04		24.01
	25.01	Statement of Eligibility of Trustee relating to Portola Packaging, Inc.’s $180.0 million 8 1/4% Senior Notes Due 2012	S-4	333-115862	05-25-04		25.01
	99.01	Form of Letter of Transmittal	S-4	333-115862	05-25-04		99.01
	99.02	Form of Notice of Guaranteed Delivery	S-4	333-115862	05-25-04		99.02
	99.03	Form of Instructions to Registered Holder and/or Book-Entry Transfer Facility From Beneficial Owners	S-4	333-115862	05-25-04		99.03
	99.04	Form of Letter to Clients	S-4	333-115862	05-25-04		99.04

(B)     Financial Statement Schedule

      Schedule II Valuation and Qualifying Accounts.

Item 22. Undertakings

      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;

      (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. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

II-6

      (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;

      (4) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 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 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;

      (5) to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective; and

      (6) 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 SEC under Section 305(b)(2) of the Act.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-7

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Packaging, Inc. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA PACKAGING, INC.

By:  /s/ DENNIS L. BERG

Dennis L. Berg

Vice President, Finance and

Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ JACK L. WATTS Jack L. Watts	Chief Executive Officer, Chairman of the Board and a Director (Principal Executive Officer)
/s/ JAMES A. TAYLOR James A. Taylor	President and Chief Operating Officer (Principal Executive Officer)
/s/ DENNIS L. BERG Dennis L. Berg	Vice President, Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
/s/ ROBERT EGAN* Robert Egan	Director
/s/ MARTIN IMBLER* Martin Imbler	Director
/s/ LARRY C. WILLIAMS* Larry C. Williams	Director
*By: /s/ DENNIS L. BERG Dennis L. Berg Attorney-in-fact

II-8

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Allied Tool, Inc. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA ALLIED TOOL, INC.

By:  /s/ DENNIS L. BERG

Dennis L. Berg

Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ JACK L. WATTS Jack L. Watts	Chief Executive Officer and Director (Principal Executive Officer)
/s/ JAMES A. TAYLOR James A. Taylor	President and Director (Principal Executive Officer)
/s/ DENNIS L. BERG Dennis L. Berg	Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)

II-9

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Tech Industries, Inc. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

TECH INDUSTRIES, INC.

By:  /s/ DENNIS L. BERG

Dennis L. Berg

Vice President, Finance and

Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ WILLIAM NAST* William Nast	President, Treasurer, Vice President and Secretary (Principal Executive Officer)
/s/ JAMES A. TAYLOR James A. Taylor	Vice President (Principal Executive Officer)
/s/ DENNIS L. BERG Dennis L. Berg	Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
*By: /s/ DENNIS L. BERG Dennis L. Berg Attorney-in-fact

II-10

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Packaging Canada Ltd. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA PACKAGING CANADA LTD.

By:  /s/ DENNIS L. BERG

Dennis L. Berg

Vice President, Finance and

Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ BRUCE GALLOP Bruce Gallop	President and Director (Principal Executive Officer)
/s/ DENNIS L. BERG Dennis L. Berg	Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)
/s/ JAMES A. TAYLOR James A. Taylor	Chairman of the Board
/s/ GLEN HEIGHINGTON Glen Heighington	Director
/s/ ERNESTO GREEN* Ernesto Green	Director
*By: /s/ DENNIS L. BERG Dennis L. Berg Attorney-in-fact

II-11

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Packaging Limited has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA PACKAGING LIMITED

By:  /s/ JACK L. WATTS

Jack L. Watts

Director

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ JACK L. WATTS Jack L. Watts	Director
/s/ FRED JANZ* Fred Janz	Director
/s/ GLEN HEIGHINGTON* Glen Heighington	Director
*By: /s/ JACK L. WATTS Jack L. Watts Attorney-in-fact

II-12

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Limited has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA LIMITED

By:  /s/ JAMES A. TAYLOR

James A. Taylor

Director

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ JAMES A. TAYLOR James A. Taylor	Director
/s/ GLEN HEIGHINGTON* Glen Heighington	Director
/s/ RICHARD KIRKLAND* Richard Kirkland	Director
*By: /s/ JAMES A. TAYLOR James A. Taylor Attorney-in-fact

II-13

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, Portola Packaging, Inc. Mexico, S.A. de C.V. has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California on June 25, 2004.

PORTOLA PACKAGING, INC. MEXICO S.A. DE C.V.

By:  /s/ JAMES A. TAYLOR

James A. Taylor

Director

      Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on June 25, 2004.

Signature	Title
/s/ JACK L. WATTS Jack L. Watts	Chairman
/s/ ERNESTO GREEN* Ernesto Green	General Director
/s/ JAMES A. TAYLOR James A. Taylor	Director and Secretary
/s/ FRED JANZ* Fred Janz	Director
*By: /s/ JAMES A. TAYLOR James A. Taylor Attorney-in-fact

II-14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders of

Portola Packaging, Inc. and Subsidiaries:

      Our audits of the consolidated financial statements referred to in our report dated November 18, 2003, except for Note 19, as to which the date is December 10, 2003, and Note 17, as to which the date is May 21, 2004, appearing elsewhere in this Registration Statement, also included an audit of the financial statement schedule listed in part II, Item 21 of this Registration Statement. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidation financial statements.

/s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania

November 18, 2003, except for Note 19, as to which the date is December 10, 2003, and Note 17, as to which the date is May 21, 2004

S-1

PORTOLA PACKAGING, INC.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

Allowance for	Beginning		Additions/							Ending
Doubtful Accounts	Balance		Expenses		Other (1)			Deductions (2)		Balance
August 31, 2003	$	1,151	$	460	$	(263	)	$	104	$	1,244
August 31, 2002		1,160		567		(119	)		457		1,151
August 31, 2001		1,106		320		(4	)		262		1,160

Allowance for Investment
In/Advances to	Beginning		Additions/						Ending
Unconsolidated Affiliates	Balance		Expenses		Other		Deductions		Balance
August 31, 2003	$	120	$	—	$	—	$	120	$	—
August 31, 2002		3,000		—		—		2,880		120
August 31, 2001		2,975		25		—		—		3,000

Allowance for Obsolete	Beginning		Additions/						Ending
Inventory	Balance		Expenses		Other		Deductions(3)		Balance
August 31, 2003	$	311	$	665	$	—	$	723	$	253
August 31, 2002		355		464		45		553		311
August 31, 2001		416		1,495		33		1,589		355

Deferred Tax	Beginning		Additions/						Ending
Valuation Allowance	Balance		Expenses		Other		Deductions		Balance
August 31, 2003	$	1,058	$	2,931	$	—	$	—	$	3,989
August 31, 2002		981		77		—		—		1,058
August 31, 2001		367		614		—		—		981

(1)	Recoveries
(2)	Write-off of bad debts
(3)	Disposal of obsolete inventory

S-2

EXHIBIT INDEX

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	3.01	Certificate of Incorporation of Portola Packaging, Inc. (filed with Secretary of State of Delaware on April 29, 1994, as amended and filed with Secretary of State of Delaware on October 4, 1995)	10-Q		01-16-96		3.01
	3.02	Bylaws of Portola Packaging, Inc.	S-1	33-95318	08-01-95		3.02
	3.03	Certificate of Incorporation of Portola Allied Tool, Inc. (filed with Secretary of State of Delaware on March 26, 1999, as amended and filed with Secretary of State of Delaware on March 29, 1999)	S-4	333-115862	05-25-04
	3.04	Bylaws of Portola Allied Tool, Inc.
	3.05	Articles of Association of Portola Limited	S-4	333-115862	05-25-04
	3.06	Articles of Incorporation of Portola Packaging, Inc. Mexico, S.A. de C.V.	S-4	333-115862	05-25-04
	3.07	Articles of Amalgamation of Portola Packaging Canada Ltd./Emballages Portola Canada LTEE	S-4	333-115862	05-25-04
	3.08	By-Law No. 1 of Portola Packaging Canada Ltd./Emballages Portola Canada LTEE	S-4	333-115862	05-25-04
	3.09	Articles of Association of Portola Packaging Limited	S-4	333-115862	05-25-04
	3.10	Articles of Incorporation of Tech Industries, Inc.	S-4	333-115862	05-25-04
	3.11	Bylaws of Tech Industries, Inc.	S-4	333-115862	05-25-04
	4.01	Indenture dated as of January 23, 2004, by and among Portola Packaging, Inc., the Subsidiary Guarantors, and U.S. Bank National Association, as trustee, relating to the 8 1/4% Senior Notes due 2012 (including form of Note)							X
	4.02	Registration Rights Agreement dated as of January 23, 2004, by and among Portola Packaging, Inc., the Subsidiary Guarantors, and J.P. Morgan Securities Inc. and the Initial Purchasers listed therein	10-Q		04-09-04		10.02
	4.03	Form of Stock Certificate evidencing ownership of Portola Packaging, Inc. Class B Common Stock, Series 1	10-Q		01-13-97		4.02
	5.01	Opinion of Fenwick & West LLP.	S-4	333-115862	05-25-04

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.01	Shareholders Agreement, dated as of June 23, 1988, by and among Portola Packaging, Inc., Chase Manhattan Investment Holdings, Inc. and certain shareholders and warrant holders, amended by Amendment to Shareholders Agreement, dated as of May 23, 1989, further amended by Second Amendment to Shareholders Agreement, dated November 29, 1989, and further amended by Amendment to Shareholders Agreement, dated as of June 30, 1994	S-1	33-95318	08-01-95		10.02
	10.02	Shareholders Agreement, dated as of June 30, 1994, by and among Portola Packaging, Inc., Chase Manhattan Capital Corporation, and certain shareholders and warrant holders	S-1	33-95318	08-01-95		10.03
	10.03	First Offer Agreement, dated as of October 17, 1990, by and among Portola Packaging, Inc., Chase Manhattan Investment Holdings, Inc., Chase Manhattan Capital Corporation and Robert Fleming Nominees, Ltd., as amended by Amendment to First Offer Agreement, dated as of June 30, 1994	S-1	33-95318	08-01-95		10.07
	10.04	$250,000 Secured Promissory Note, dated January 17, 1992 made by Jack L. Watts in favor of Portola Packaging, Inc.	S-1	33-95318	08-01-95		10.10
	10.05	Director’s Agreement, dated September 1, 1989, by and between Portola Packaging, Inc. and Larry C. Williams, as amended by Amendment to Director’s Agreement, dated January 16, 1990 and Amendment Number Two to Director’s Agreement, dated August 31, 1991	S-1	33-95318	08-01-95		10.13
	10.06	Director’s Agreement, dated as of September 1, 1989, by and between Portola Packaging, Inc. and Timothy Tomlinson, as amended by Amendment to Director’s Agreement, dated January 16, 1990 and Amendment Number Two to Director’s Agreement, dated August 31, 1991	S-1	33-95318	08-01-95		10.14
	10.07	Stock Purchase Agreement, dated October 17, 1990, by and among Portola Packaging, Inc., Robert Fleming Nominees, Ltd., Jack Watts, John Lemons and LJL Cordovan Partners	S-1	33-95318	08-01-95		10.15
	10.08	Stock Purchase Agreement, dated as of June 30, 1994, by and among Portola Packaging, Inc., Jack L. Watts, LJL Cordovan Partners, Robert Fleming Nominees, Ltd., Chase Manhattan Capital Corporation and certain other selling shareholders	S-1	33-95318	08-01-95		10.16

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.09	Form of Subscription Agreement by and between Portola Packaging, Inc. and the related director or officer (said form being substantially similar to the form of Subscription Agreement utilized by the Registrant for certain officers and directors of the Registrant)	S-1	33-95318	08-01-95		10.20
	10.10	Form of Indemnification Agreement by and between Portola Packaging, Inc. and the related director or officer (said form being substantially similar to the form of Indemnification Agreement utilized by Portola Packaging, Inc. for certain officers and directors of Portola Packaging, Inc.)	S-1	33-95318	08-01-95		10.21
	10.11	Stock Purchase Agreement, dated as of June 9, 1995, by and among Portola Packaging, Inc., Oakley T. Hayden Corp., Lyn Leigers as Executor of the Estate of Oakley T. Hayden, Chase Manhattan Capital Corporation and Heller Financial, Inc.	S-1	33-95318	09-25-95		10.22
	10.12	Stock Purchase Agreement, dated October 10, 1995, by and among Portola Packaging, Inc., Jack L. Watts, John L. Lemons, Mary Ann Lemons, LJL Cordovan Partners, L.P., Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P. and SEI Associates	10-Q		01-16-96		10.25
	10.13	Amendment to Investors’ Rights Agreements, dated as of October 10, 1995, by and among Portola Packaging, Inc., Jack L. Watts, John L. Lemons, Mary Ann Lemons, LJL Cordovan Partners, L.P., Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P., SEI Associates and Chase Manhattan Capital Corporation	10-Q		01-16-96		10.26
	10.14	Third Amended and Restated Registration Rights Agreement, dated as of October 10, 1995, by and among Portola Packaging, Inc., Heller Financial, Inc., Chase Manhattan Capital Corporation, Robert Fleming Nominees, Ltd., Suez Equity Investors, L.P. and SEI Associates	10-Q		01-16-96		10.27
	10.15	1988 Stock Option Plan and related documents	10-Q		01-16-96		10.28
	10.16	1994 Stock Option Plan, as amended, and related documents	S-8	333-82125	07-01-99		4.03
	10.17	Form of Indemnification Agreement by and between Portola Packaging, Inc. and the related director or officer	10-K		11-25-96		10.37

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
		Form of Amendment to Indemnification	10-K		11-25-96		10.38
	10.18	Agreement by and between Portola Packaging, Inc. and certain directors and officers of Portola Packaging, Inc.
	10.19	Portola Packaging, Inc.’s 1996 Employee Stock Purchase Plan, together with related documents	S-8	333-17533	12-10-96		4.05
	10.20	Portola Packaging, Inc.’s Management Deferred Compensation Plan Trust Agreement	10-Q		01-13-97		10.43
	10.21	Portola Packaging, Inc.’s Management Deferred Compensation Plan	S-1	33-95318	03-11-97		10.44
	10.22	Summary Description of Portola Packaging, Inc.’s Bonus Plan and Profit Sharing Plan	10-Q		12-21-00		10.30
	10.23	Fourth Amended and Restated Credit Agreement, dated as of January 16, 2004, by and among Portola Packaging, Inc. as Borrower, General Electric Capital Corporation, as Agent, and the other financial institutions that are a party thereto, as Lenders	10-Q		04-09-04		10.03
	10.24	Asset Purchase Agreement, dated as of December 30, 2000, by and among Portola Packaging, Inc., Consumer Cap Corporation and the shareholders of Consumer Cap Corporation	8-K		01-29-01		2.1
	10.25	Warrant No. 6A, dated June 30, 1994, in favor of Chase Manhattan Capital Corporation (now known as JP Morgan Partners, Inc.), to purchase Class A Common Stock of the Company	10-Q		01-10-02		10.31
	10.26	Warrant No. 7A, dated June 30, 1994, in favor of Heller Financial, Inc., to purchase Class A Common Stock of the Company, as amended by Amendments Nos. 1, 2 and 3 thereto	10-Q		01-10-02		10.32
	10.27	Consulting Agreement, dated November 1, 2001, between the Company and Timothy Tomlinson	10-Q		01-10-02		10.33
	10.28	2002 Stock Option Plan and Related Materials	10-Q		07-03-02		10.34
	10.29	Stock Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc., Tech Industries, Inc. and the shareholders of Tech Industries, Inc.	8-K		10-06-03		2.01
	10.30	Stock Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc., Tech Industries UK Ltd. and the shareholders of Tech Industries UK Ltd.	8-K		10-06-03		2.02

				Incorporated By Reference
Exhibit					Filing	Exhibit		Filed
No.		Exhibit	Form	File No.	Date	No.		Herewith
	10.31	Equity Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc. and the partners of Fairmount Realty Associates	8-K		10-06-03		2.03
	10.32	Equity Purchase Agreement, dated as of September 1, 2003, by and among Portola Packaging, Inc. and the partners of 84 Fairmount Street Limited Partnership	8-K		10-06-03		2.04
	10.33	Closing Agreement, dated as of September 19, 2003, by and among Portola Packaging, Inc., the shareholders of Tech Industries, Inc., the shareholders of Tech Industries UK Ltd. and the partners of Fairmount Realty Associates and 84 Fairmount Street Limited Partnership	8-K		10-06-03		2.05
	10.34	Amendment No. 1 to Fourth Amended and Restated Credit Agreement, dated as of May 21, 2004, by and among Portola Packaging, Inc. as Borrower, General Electric Capital Corporation, as Agent, and the other financial institutions that are a party thereto, as Lenders	S-4	333-115862	05-25-04
	12.01	Statement re Computation of Ratios	S-4	333-115862	05-25-04
	21.01	Subsidiaries of Portola Packaging, Inc.	10-K		12-12-03
	23.01	Consent of Fenwick & West LLP (included in Exhibit 5.01)	S-4	333-115862	05-25-04
	23.02	Consent of Independent Registered Public Accounting Firm							X
	23.03	Consent of Independent Registered Public Accounting Firm							X
	24.01	Power of Attorney (included in the signature pages of this Registration Statement)	S-4	333-115862	05-25-04
	25.01	Statement of Eligibility of Trustee relating to Portola Packaging, Inc.’s $180.0 million 8 1/4% Senior Notes Due 2012	S-4	333-115862	05-25-04
	99.01	Form of Letter of Transmittal	S-4	333-115862	05-25-04
	99.02	Form of Notice of Guaranteed Delivery	S-4	333-115862	05-25-04
	99.03	Form of Instructions to Registered Holder and/or Book-Entry Transfer Facility From Beneficial Owners	S-4	333-115862	05-25-04
	99.04	Form of Letter to Clients	S-4	333-115862	05-25-04

EX-4.01

                                                                    EXHIBIT 4.01

                         ==============================

                            PORTOLA PACKAGING, INC.,

                    THE SUBSIDIARY GUARANTORS PARTIES HERETO,

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION,
                                   AS TRUSTEE

                          8 1/4% Senior Notes due 2012

                                ================

                                    INDENTURE

                          Dated as of January 23, 2004

                                ===============

                       ==================================



                                TABLE OF CONTENTS



                                                                                                            PAGE
                                                                                                         
                                                    ARTICLE I
                                    DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1. Definitions...............................................................................        1
SECTION 1.2. Other Definitions.........................................................................       21
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.........................................       23
SECTION 1.4. Rules of Construction.....................................................................       23

                                                    ARTICLE II
                                                  THE SECURITIES

SECTION 2.1. Form, Dating and Terms....................................................................       24
SECTION 2.2. Execution and Authentication..............................................................       32
SECTION 2.3. Registrar and Paying Agent................................................................       33
SECTION 2.4. Paying Agent to Hold Money in Trust.......................................................       34
SECTION 2.5. Securityholder Lists......................................................................       34
SECTION 2.6. Transfer and Exchange.....................................................................       34
SECTION 2.7. Form of Certificate to be Delivered in Connection with Transfers to Institutional
                  Accredited Investors.................................................................       37
SECTION 2.8. Form of Certificate to be Delivered in Connection with Transfers Pursuant to
                  Regulation S.........................................................................       40
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities...........................................       41
SECTION 2.10. Outstanding Securities...................................................................       42
SECTION 2.11. Temporary Securities.....................................................................       42
SECTION 2.12. Cancellation.............................................................................       43
SECTION 2.13. Payment of Interest; Defaulted Interest..................................................       43
SECTION 2.14. Computation of Interest..................................................................       44
SECTION 2.15. CUSIP, Common Code and ISIN Numbers......................................................       44

                                                   ARTICLE III
                                                    COVENANTS

SECTION 3.1. Payment of Securities.....................................................................       45
SECTION 3.2. Limitation on Indebtedness and Issuance of Preferred Stock................................       48
SECTION 3.3. Limitation on Restricted Payments.........................................................       52
SECTION 3.4. Limitation on Restrictions on Distributions from Restricted Subsidiaries..................       57
SECTION 3.5. Limitation on Sales of Assets and Subsidiary Stock........................................       59
SECTION 3.6. Limitation on Liens.......................................................................       62
SECTION 3.7. Limitation on Sale/Leaseback Transactions.................................................       62
SECTION 3.8. Limitation on Affiliate Transactions......................................................       62
SECTION 3.9. Limitation on Sale of Capital Stock of Restricted Subsidiaries............................       63
SECTION 3.10. Change of Control........................................................................       64


                                       ii



                                                                                                           
SECTION 3.11. SEC Reports..............................................................................       66
SECTION 3.12. Future Subsidiary Guarantors.............................................................       66
SECTION 3.13. Maintenance of Office or Agency..........................................................       67
SECTION 3.14. Corporate Existence......................................................................       67
SECTION 3.15. Payment of Taxes and Other Claims........................................................       67
SECTION 3.16. Payments for Consent.....................................................................       68
SECTION 3.17. Compliance Certificate...................................................................       68
SECTION 3.18. Further Instruments and Acts.............................................................       68
SECTION 3.19. Limitation on Lines of Business..........................................................       68
SECTION 3.20. Statement by Officers as to Default......................................................       68

                                                    ARTICLE IV
                                                SUCCESSOR COMPANY

SECTION 4.1. Merger and Consolidation..................................................................       69

                                                    ARTICLE V
                                             REDEMPTION OF SECURITIES

SECTION 5.1. Redemption................................................................................       70
SECTION 5.2. Applicability of Article..................................................................       70
SECTION 5.3. Election to Redeem; Notice to Trustee.....................................................       70
SECTION 5.4. Selection by Trustee of Securities to Be Redeemed.........................................       70
SECTION 5.5. Notice of Redemption......................................................................       71
SECTION 5.6. Deposit of Redemption Price...............................................................       72
SECTION 5.7. Securities Payable on Redemption Date.....................................................       72
SECTION 5.8. Securities Redeemed in Part...............................................................       72

                                                    ARTICLE VI
                                              DEFAULTS AND REMEDIES

SECTION 6.1. Events of Default.........................................................................       73
SECTION 6.2. Acceleration..............................................................................       75
SECTION 6.3. Other Remedies............................................................................       76
SECTION 6.4. Waiver of Past Defaults...................................................................       76
SECTION 6.5. Control by Majority.......................................................................       76
SECTION 6.6. Limitation on Suits.......................................................................       76
SECTION 6.7. Rights of Holders to Receive Payment......................................................       77
SECTION 6.8. Collection Suit by Trustee................................................................       77
SECTION 6.9. Trustee May File Proofs of Claim..........................................................       77
SECTION 6.10. Priorities...............................................................................       77
SECTION 6.11. Undertaking for Costs....................................................................       78

                                                   ARTICLE VII
                                                     TRUSTEE

SECTION 7.1. Duties of Trustee.........................................................................       78



                                      iii



                                                                                                           
SECTION 7.2. Rights of Trustee.........................................................................       79
SECTION 7.3. Individual Rights of Trustee..............................................................       81
SECTION 7.4. Trustee's Disclaimer......................................................................       81
SECTION 7.5. Notice of Defaults........................................................................       81
SECTION 7.6. Reports by Trustee to Holders.............................................................       81
SECTION 7.7. Compensation and Indemnity................................................................       81
SECTION 7.8. Replacement of Trustee....................................................................       82
SECTION 7.9. Successor Trustee by Merger...............................................................       83
SECTION 7.10. Eligibility; Disqualification............................................................       83
SECTION 7.11. Preferential Collection of Claims Against the Company....................................       84
SECTION 7.12. Trustee's Application for Instruction from the Company...................................       84
SECTION 7.13. Paying Agents............................................................................       84

                                                   ARTICLE VIII
                                        DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.1. Discharge of Liability on Securities; Defeasance..........................................       84
SECTION 8.2. Conditions to Defeasance..................................................................       86
SECTION 8.3. Application of Trust Money................................................................       87
SECTION 8.4. Repayment to the Company..................................................................       87
SECTION 8.5. Indemnity for U.S. Government Obligations.................................................       88
SECTION 8.6. Reinstatement.............................................................................       88

                                                    ARTICLE IX
                                                    AMENDMENTS

SECTION 9.1. Without Consent of Holders................................................................       88
SECTION 9.2. With Consent of Holders...................................................................       89
SECTION 9.3. Compliance with Trust Indenture Act.......................................................       90
SECTION 9.4. Revocation and Effect of Consents and Waivers.............................................       90
SECTION 9.5. Notation on or Exchange of Securities.....................................................       91
SECTION 9.6. Trustee To Sign Amendments................................................................       91

                                                    ARTICLE X
                                               SUBSIDIARY GUARANTEE

SECTION 10.1. Subsidiary Guarantee.....................................................................       91
SECTION 10.2. Limitation on Liability; Termination, Release and Discharge..............................       93
SECTION 10.3. Right of Contribution....................................................................       95
SECTION 10.4. No Subrogation...........................................................................       95

                                                    ARTICLE XI
                                                  MISCELLANEOUS

SECTION 11.1. Trust Indenture Act Controls.............................................................       95
SECTION 11.2. Notices..................................................................................       95
SECTION 11.3. Communication by Holders with other Holders..............................................       97



                                       iv



                                                                                                          
SECTION 11.4. Certificate and Opinion as to Conditions Precedent.......................................       97
SECTION 11.5. Statements Required in Certificate or Opinion............................................       97
SECTION 11.6. When Securities Disregarded..............................................................       97
SECTION 11.7. Rules by Trustee, Paying Agent and Registrar.............................................       98
SECTION 11.8. Legal Holidays...........................................................................       98
SECTION 11.9. GOVERNING LAW............................................................................       98
SECTION 11.10. No Recourse Against Others..............................................................       99
SECTION 11.11. Successors..............................................................................       99
SECTION 11.12. Multiple Originals......................................................................       99
SECTION 11.13. Qualification of Indenture..............................................................       99
SECTION 11.14. Table of Contents; Headings.............................................................      100



EXHIBIT A   Form of the Series A Note
EXHIBIT B   Form of the Series B Note
EXHIBIT C   Form of Indenture Supplement to Add Subsidiary Guarantors

                                       v



                             CROSS-REFERENCE TABLE



    TIA                                                                                Indenture
  Section                                                                              Section
                                                                                    
310(a)(1)               .............................................................    7.10
   (a)(2)               .............................................................    7.10
   (a)(3)               .............................................................    N.A.
   (a)(4)               .............................................................    N.A.
   (a)(5)               .............................................................    7.10
   (b)                  .............................................................    7.8; 7.10
   (c)                  .............................................................    N.A.
311(a)                  .............................................................    7.11
   (b)                  .............................................................    7.11
   (c)                  .............................................................    N.A.
312(a)                  .............................................................    2.5
   (b)                  .............................................................    11.3
   (c)                  .............................................................    11.3
313(a)                  .............................................................    7.6
   (b)(1)               .............................................................    N.A.
   (b)(2)               .............................................................    7.6
   (c)                  .............................................................    7.6
   (d)                  .............................................................    7.6
314(a)                  .............................................................    3.11; 3.17; 11.5
   (b)                  .............................................................    N.A.
   (c)(1)               .............................................................    11.4
   (c)(2)               .............................................................    11.4
   (c)(3)               .............................................................    N.A.
   (d)                  .............................................................    N.A.
   (e)                  .............................................................    11.5
315(a)                  .............................................................    7.1
   (b)                  .............................................................    7.5; 11.2
   (c)                  .............................................................    7.1
   (d)                  .............................................................    7.1
   (e)                  .............................................................    6.11
316(a)(last sentence)   .............................................................    11.6
   (a)(1)(A)            .............................................................    6.5
   (a)(1)(B)            .............................................................    6.4
   (a)(2)               .............................................................    N.A.
   (b)                  .............................................................    6.7
   (c)                  .............................................................    6.5
317(a)(1)               .............................................................    6.8
   (a)(2)               .............................................................    6.9
   (b)                  .............................................................    2.4
318(a)                  .............................................................    11.1



         N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.

                                       vi



                  INDENTURE dated as of January 23, 2004, among PORTOLA
PACKAGING, INC., a Delaware corporation (the "Company"), THE SUBSIDIARY
GUARANTORS (as defined herein) and U.S. BANK NATIONAL ASSOCIATION, a banking
corporation chartered in the State of Minnesota (the "Trustee"), as Trustee.

                  For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, each party hereto covenants and agrees as
follows for the benefit of the other parties and for the equal and ratable
benefit of all Holders of (i) the Company's 8 1/4% Senior Notes, Series A, due
2012, issued on the date hereof and the guarantees thereof by certain of the
Company's subsidiaries (the "Initial Securities"), (ii) if and when issued, an
unlimited principal amount of additional 8 1/4% Senior Notes, Series A, due 2012
in a non-registered offering or 8 1/4% Senior Notes, Series B, due 2012 in a
registered offering of the Company, and the guarantees thereof by certain of the
Company's subsidiaries that may be offered from time to time subsequent to the
Issuance Date (the "Additional Securities") and (iii) if and when issued, the
Company's 8 1/4% Senior Notes, Series B, due 2012 and the guarantees thereof by
certain of the Company's subsidiaries that may be issued from time to time in
exchange for Initial Securities or any Additional Securities in an offer
registered under the Securities Act as provided in the Registration Rights
Agreement (as hereinafter defined, the "Exchange Securities," and together with
the Initial Securities and Additional Securities, the "Securities").

                                   ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  SECTION 1.1. Definitions.

                  "10.75% Senior Notes" means the 10 3/4% Senior Notes due
October 1, 2005 issued pursuant to the Indenture dated as of October 2, 1995.

                  "Acquired Debt" means, with respect to any specified Person:
(i) Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person
and (ii) Indebtedness encumbering any asset acquired by such specified Person.
Acquired Debt shall be deemed to have been incurred, with respect to clause (i)
of the preceding sentence, on the date such Person becomes a Restricted
Subsidiary and, with respect to clause (ii) of the preceding sentence, on the
date of consummation of such acquisition of assets.

                  "Additional Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                  "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 Stock, by agreement or otherwise.

                  "Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any property or assets of the Company or any Restricted
Subsidiary (including by way of a sale and leaseback) other than sales of
inventory (including equipment held as inventory) and obsolete equipment or
redundant properties, or equipment that is no longer useful in the conduct of
the business of the Company and its Restricted Subsidiaries, 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 will be
governed by Sections 3.10 and 4.1, and not by Section 3.5) or (ii) the issuance
of Equity Interests by any of its Restricted Subsidiaries, or the sale of Equity
Interests by the Company or any of its Restricted Subsidiaries in any of its
Subsidiaries, in the case of either clause (i) above or this clause (ii),
whether in a single transaction or a series of related transactions, (a) that
have an aggregate fair market value in excess of $1.0 million, or (b) for
aggregate net proceeds in excess of $1.0 million.

                  Notwithstanding the preceding, the following items shall not
be deemed to be Asset Sales:

                  (1)      any issuance of Equity Interests by the Company;

                  (2)      any transfer of assets permitted pursuant to Section
         3.2 or pursuant to clause (4) or (5) of the definition of "Permitted
         Investments;"

                  (3)      a transfer of assets or Equity Interests by the
         Company to a Restricted Subsidiary of the Company or by a Restricted
         Subsidiary of the Company to the Company or to another Restricted
         Subsidiary of the Company;

                  (4)      dispositions in connection with Permitted Liens;

                  (5)      dispositions of receivables in connection with the
         compromise, settlement or collection thereof in the ordinary course of
         business or in bankruptcy or similar proceedings; or

                  (6)      the licensing or sublicensing of intellectual
         property or other general intangibles and licenses, leases or subleases
         of other property in the ordinary course of business which do not
         materially interfere with the business of the Company and its
         Restricted Subsidiaries.

                  "Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded
semi-annually) of the total obligations of the lessee for rental payments during
the remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended).

                  "Bankruptcy Law" means Title 11 of the United States Code or
any similar federal or state law for the relief of debtors.

                                       2


                  "Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of a Person to have been duly adopted by
the Board of Directors of such Person and to be in full force and effect on the
date of such certification, and delivered to the Trustee.

                  "Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.

                  "Borrowing Base" means, as of any date, an amount equal to the
sum, without duplication, of (a) 85% of the net book value of the accounts
receivable owned by the Company and its Restricted Subsidiaries, (b) 60% of the
net book value of inventory owned by the Company and its Restricted Subsidiaries
and (c) 40% of the net book value of property, plant and equipment owned by the
Company and its Restricted Subsidiaries, provided, that the Borrowing Base shall
be adjusted to give pro forma effect to the acquisition of any Person, property
or assets by the Company or by any Restricted Subsidiary of the Company that is
a Subsidiary Guarantor, so long as (i) such acquisition is consummated on or
prior to the date of calculation of the Borrowing Base and (ii) in the case of
an acquisition of a Person, such Person (y) becomes a Restricted Subsidiary of
the Company or a Subsidiary Guarantor or (z) is merged, consolidated or
amalgamated with or into, or transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or a Restricted Subsidiary of
the Company that is a Subsidiary Guarantor.

                  "Business Day" means each day that is not a Saturday, Sunday
or other day on which banking institutions in New York, New York or San Jose,
California are authorized or required by law to close.

                  "Calculation Date" means the date on which the calculation of
the Fixed Charge Coverage Ratio is made.

                  "Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.

                  "Capital Stock" of any Person means any and all shares,
interests, participation, rights or other equivalents (however designated) of
equity of such Person, 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

                  (1)      United States dollars;

                  (2)      securities issued or directly and fully guaranteed or
         insured by the United States government or any agency or
         instrumentality thereof having maturities of not more than six months
         from the date of acquisition;

                                       3


                  (3)      certificates of deposit and eurodollar time deposits
         with maturities of six months or less from the date of acquisition,
         bankers' acceptances with maturities not exceeding six months and
         overnight bank deposits, in each case with any lender party to the
         Senior Secured Credit Agreement or with any domestic commercial bank
         having capital and surplus in excess of $500.0 million;

                  (4)      repurchase obligations with a term of not more than
         seven days for underlying securities of the types described in clauses
         (2) and (3) entered into with any financial institution meeting the
         qualifications specified in clause (3) above; and

                  (5)      commercial paper having the highest rating obtainable
         from Moody's Investors Service, Inc. or Standard & Poor's Corporation
         and in each case maturing within six months after the date of
         acquisition.

                  "Change of Control" means:

                  (1)      any sale, lease, exchange or transfer (in one
         transaction or in a series of related transactions) of all or
         substantially all the assets of the Company to any Person or group of
         related Persons (other than Permitted Investors);

                  (2)      the merger or consolidation of the Company with or
         into another corporation or the merger of another corporation into the
         Company with the effect that immediately after such transaction the
         stockholders of the Company immediately prior to such transaction hold
         less than 50% of the total voting power of all securities generally
         entitled to vote in the election of directors, managers or trustees of
         the Person surviving such merger or consolidation;

                  (3)      the acquisition by any "person" or "group" (as those
         terms are used in Sections 13(d) and 14(d) of the Exchange Act (other
         than the Permitted Investors) of the ultimate "beneficial ownership,"
         as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
         such person or group shall be deemed to have "beneficial ownership" of
         all shares that any such person or group has the right to acquire,
         whether such right is exercisable immediately or only after the passage
         of time) of more than 50% of the voting power of the Voting Stock of
         the Company;

                  (4)      during any period of twenty-four consecutive months,
         individuals who at the beginning of such period constituted the Board
         of Directors of the Company (together with any new directors whose
         election by such Board or whose nomination for election by the
         stockholders of the Company was approved by a vote of a majority of the
         directors then still in office who were either directors at the
         beginning of such period or whose election or nomination for election
         was previously so approved) cease for any reason to constitute a
         majority of the members of the Board of Directors of the Company; or

                  (5)      the stockholders of the Company shall approve any
         plan for the liquidation or dissolution of the Company.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                                       4


                  "Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered into by the
Company or any Subsidiary designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used in
the ordinary course of business of the Company and its Subsidiaries.

                  "Common Stock" means with respect to any Person, any and all
shares, interests or other participations in, and other equivalents (however
designated and whether voting or nonvoting) of such Person's Common Stock
whether or not outstanding on the Issuance Date, and includes, without
limitation, all series and classes of such Common Stock.

                  "Company" means Portola Packaging, Inc. or its successors and
assigns.

                  "Consolidated Cash Flow" means, with respect to any Person for
any period, without duplication, the Consolidated Net Income of such Person for
such period plus the following to the extent deducted in calculating such
Consolidated Net Income: (a) provision for taxes based on income or profits of
such Person for such period, plus (b) consolidated interest expense of such
Person for such period, whether paid or accrued and whether or not capitalized
(including amortization and write-offs of debt discount and debt issuance cost,
non-cash interest payments and the interest component of any payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred with respect to letters of credit and bankers' acceptance
financing and net payments (if any) pursuant to Hedging Obligations), plus (c)
depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person for such period, plus (d) impairment charges recorded in
connection with the application of Financial Accounting Standard No. 142
"Goodwill and Other Intangibles" plus, (e) any charge incurred relating to the
redemption of the Redeemable Warrants.

                  Notwithstanding the preceding sentence, clauses (a), (c), (d)
and (e) relating to amounts of a Restricted Subsidiary of a Person will be added
to Consolidated Net Income to compute Consolidated Cash Flows of such Person
only to the extent (and in the same proportion) that the net income (loss) of
such Restricted Subsidiary was included in calculating the Consolidated Net
Income of such Person and, to the extent the amounts set forth in clauses (a),
(c), (d) and (e) are in excess of those necessary to offset a net loss of such
Restricted Subsidiary or if such Restricted Subsidiary has net income for such
period included in Consolidated Net Income, only if a corresponding amount would
be permitted at the date of determination to be dividended to the Company by
such Restricted Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.

                  "Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, that (i) the Net Income of any Person that is
not a Subsidiary or that is accounted for by the equity method of accounting

                                       5


shall be excluded, whether or not distributed to the Company or one of its
Subsidiaries, (ii) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its Subsidiaries,
(iii) any Net Income (but not loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Restricted Subsidiary, directly
or indirectly, to the Company, except that: (a) subject to the limitations
contained in clause (iv) below, the Company's equity in the Net Income of any
such Restricted Subsidiary for such period will be included in such Consolidated
Net Income up to the aggregate amount of cash that could have been distributed
by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend to
another Restricted Subsidiary, to the limitation contained in this clause), and
(b) the Company's equity in a net loss of any such Restricted Subsidiary for
such period will be included in determining such Consolidated Net Income, 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 Restricted 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 date of this Indenture
in the book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, and (y) all unamortized debt discount and expense and
unamortized deferred charges as of such date, all of the foregoing determined in
accordance with GAAP.

                  "Credit Facility" means, with respect to the Company or a
Subsidiary Guarantor or any Restricted Subsidiary that is a Foreign Subsidiary,
one or more debt facilities (including, without limitation, the Senior Secured
Credit Agreement or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(and whether or not with the original administrative agent and lenders or
another administrative agent or agents or other lenders and whether provided
under the original Senior Secured Credit Agreement or any other credit or other
agreement or indenture).

                  "Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuation in the values
of the currencies of the countries (other than the United States) in which the
Company or its Restricted Subsidiaries conduct business.

                  "Custodian" means any receiver, trustee, assignee, liquidator,
custodian or similar official under any Bankruptcy Law.

                                       6


                  "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 Securities" means certificated Securities.

                  "Disqualified Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is mandatory
redeemable, pursuant to a sinking fund obligation or otherwise, is convertible
or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock
which is convertible or exchangeable solely at the option of the Company or a
Restricted Subsidiary), or is redeemable at the option of the holder thereof, in
whole or in part, on or prior to a date that is one year after the date on which
the Securities mature.

                  "DTC" means The Depository Trust Company, its nominees and
their respective successors and assigns, or such other depository institution
hereinafter appointed by the Company.

                   "Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for Capital Stock).

                  "Equity Offering" means a private placement to institutional
investors or a bona fide public underwritten sale of Common Stock of the Company
for cash pursuant to a registration statement (other than on Form S-4 or Form
S-8 or any other form relating to securities issuable under any benefit plan of
the Company or its Subsidiaries) that is declared effective by the SEC.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

                  "Exchange Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                  "Fiscal Year" means the fiscal year of the Company ending on
August 31 of each year.

                  "Fixed Charges" means, with respect to any Person for any
period, without duplication, the sum of:

                  (1)      consolidated interest expense of such Person and its
         Restricted Subsidiaries for such period, whether paid or accrued, to
         the extent such expense was deducted in computing Consolidated Net
         Income (including amortization of debt discount and debt issuance cost,
         non-cash interest payments, the interest component of any deferred
         payment obligations, the interest component of all payments associated
         with Capital Lease Obligations, the interest portion of rent expense
         associated with Attributable Indebtedness in respect of the relevant
         lease giving rise thereto, determined

                                       7


         as if such lease were a capitalized lease in accordance with GAAP, and
         net payments (if any) pursuant to Hedging Obligations);

                  (2)      commissions, discounts and other fees and charges
         incurred with respect to letters of credit and bankers' acceptances
         financing;

                  (3)      consolidated interest expense of such Person and its
         Restricted Subsidiaries that was capitalized during such period;

                  (4)      any interest expense on Indebtedness of another
         Person that is Guaranteed by such Person or any of its Restricted
         Subsidiaries or secured by a Lien on assets of such Person or any of
         its Restricted Subsidiaries (other than on the Capital Stock of
         Unrestricted Subsidiaries);

                  (5)      preferred stock dividend requirements on any series
         of preferred stock of such Person or any of its Restricted Subsidiaries
         times a fraction, the numerator of which is one and the denominator of
         which is one minus the then current combined federal, state and local
         statutory tax rate of such Person and its Restricted Subsidiaries,
         expressed as a decimal, in each case, on a consolidated basis and in
         accordance with GAAP; and

                  (6)      Receivables Fees.

                  "Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period (exclusive of amounts attributable to
discontinued operations, as determined in accordance with GAAP, or operations
and businesses disposed of prior to the Calculation Date) to the Fixed Charges
of such Person and its Restricted Subsidiaries for such period (exclusive of
amounts attributable to discontinued operations, as determined in accordance
with GAAP or operations and businesses disposed of prior to the Calculation
Date, but only to the extent that the obligations giving rise to such Fixed
Charges would no longer be obligations contributing to such Person's Fixed
Charges subsequent to the Calculation Date).

                  "Foreign Subsidiary" means any Restricted Subsidiary that (x)
is not organized under the laws of the United States of America or any state
thereof or the District of Columbia or (y) is organized under the laws of the
United States of America or any state thereof or the District of Columbia but
has no material asset other than Capital Stock of one or more Persons described
in clause (x) above.

                  "GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.

                  "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.

                                       8


                  "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" or "Securityholder" means the Person in whose name a
Security is registered in the Securities Register.

                  "IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

                  "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 (including reimbursement agreements in respect thereto, except to the
extent such letters of credit relate to trade payables and the obligation to
reimburse the issuer of the trade letter of credit for any payment thereunder is
satisfied within 30 days of incurrence) or representing Capital Lease
Obligations, Attributable Indebtedness or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, the principal component or liquidation
preference of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock, all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.

                  "Indenture" means this Indenture as amended or supplemented
from time to time.

                  "Initial Purchasers" means, collectively, J.P. Morgan
Securities Inc. and UBS Securities LLC, with respect to the Initial Securities.

                  "Initial Securities" has the meaning ascribed to it in the
second introductory paragraph of this Indenture.

                   "Investment" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees), letters of credit (or reimbursement agreements
in respect thereof), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), or 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; provided, however, that none of the following will be deemed to be an
Investment:

                  (1)      Hedging Obligations, Commodity Agreements and
         Currency Agreements entered into in the ordinary course of business and
         in compliance with this Indenture;

                                       9


                  (2)      endorsements of negotiable instruments and documents
         in the ordinary course of business; and

                  (3)      an acquisition of assets, Capital Stock or other
         securities by the Company or a Subsidiary for consideration to the
         extent such consideration consists of Common Stock of the Company.

                  For purposes of Section 3.3, "Investment" will include the
portion (proportionate to the Company's Equity Interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market
value of the net assets of such Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company will be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(a) the Company's "Investment" in such Subsidiary at the time of such
redesignation, less (b) the portion (proportionate to the Company's Equity
Interest in such Subsidiary) of the fair market value of the net assets (as
conclusively determined by the Board of Directors of the Company in good faith)
of such Subsidiary at the time that such Subsidiary is so re-designated a
Restricted Subsidiary.

                  "Issuance Date" means the closing date for the sale and
issuance of the Initial Securities.

                  "JPMorgan Partners 23A" means J.P. Morgan Partners (23A SBIC),
LLC.

                  "JPMorgan Partners 23A Warrant" means the redeemable warrant
entitling JPMorgan Partners 23A to purchase 2,052,526 shares of Class A Common
Stock of the Company as described in the Offering Memorandum.

                  "Legal Holiday" has the meaning ascribed to it in Section
11.8.

                  "Lender Warrant" means the redeemable warrant entitling Heller
Financial, Inc. to purchase 440,215 shares of the Class A Common Stock of the
Company as described in the Offering Memorandum.

                  "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).

                  "Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain or loss, together with any related provision for taxes on such gain or
loss, realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Restricted

                                       10


Subsidiaries, and (ii) all extraordinary items (together with any related tax
provision pertaining to such extraordinary items).

                  "Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale,
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (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 the subject of such Asset Sale and any reserve for adjustment in respect
of the sale price of such asset or assets.

                  "Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender, other than pursuant to loans that
also constitute an Investment permitted to be made pursuant to Section 3.3 or
pursuant to clause (4) or (5) of the definition of "Permitted Investments," (ii)
no default with respect to which (including any rights that the holders thereof
may have to take enforcement action against an Unrestricted Subsidiary) would
permit (upon notice, lapse of time or both) any holder of any other Indebtedness
of the Company or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of the Company or any of its Restricted Subsidiaries (other than the capital
stock of one or more Unrestricted Subsidiaries).

                  "Non-U.S. Person" means a Person who is not a U.S. Person (as
defined in Regulation S).

                  "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 of the
Company relating to the offering of the 8 1/4% Senior Notes due 2012, dated
January 20, 2004.

                  "Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, Chief Financial Officer, any Vice
President, the Treasurer or the Controller and the Secretary or the Assistant
Secretary of the Company.

                  "Opinion of Counsel" means a written opinion from legal
counsel who is not unacceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.

                  "Pari Passu Indebtedness" means Indebtedness of the Company
that ranks equally in right of payment to the Securities.

                                       11


                  "Permitted Investments" means:

                  (1)      any Investments in the Company or in a Restricted
         Subsidiary of the Company;

                  (2)      any Investments in cash or Cash Equivalents;

                  (3)      Investments by the Company or any Restricted
         Subsidiary of the Company in a Person, if as a result of such
         Investments (i) such Person becomes a Restricted Subsidiary of the
         Company or (ii) such Person is merged, consolidated or amalgamated with
         or into, or transfers or conveys all or substantially all of its assets
         to, or is liquidated into, the Company or a Restricted Subsidiary of
         the Company;

                  (4)      any Investments made on or after the Issuance Date in
         Persons engaged in a Related Business not to exceed $10.0 million in
         aggregate amount at any one time outstanding (measured by the fair
         market value of such investments as of the date made);

                  (5)      any Investments made in a Permitted Joint Venture of
         the Company or its Restricted Subsidiaries on or after the Issuance
         Date not to exceed $15.0 million in aggregate amount at any one time
         outstanding (measured by the fair market value of such investments as
         of the date made) so long as such Permitted Joint Venture is engaged
         only in a Related Business;

                  (6)      Receivables owing to the Company or any Restricted
         Subsidiary created or acquired in the ordinary course of business and
         payable or dischargeable in accordance with customary trade terms;
         provided, however, that such trade terms may include such concessionary
         trade terms as the Company or any such Restricted Subsidiary deems
         reasonable under the circumstances;

                  (7)      payroll, travel and similar advances to cover matters
         that are expected at the time of such advances ultimately to be treated
         as expenses for accounting purposes and that are made in the ordinary
         course of business;

                  (8)      loans or advances to employees, directors or
         consultants not exceeding $1.5 million in the aggregate outstanding at
         any one time; provided that such loans comply with the Sarbanes-Oxley
         Act and the related rules and regulations;

                  (9)      Capital Stock, obligations or securities received in
         settlement of debts created in the ordinary course of business and
         owing to the Company or any Restricted Subsidiary or in satisfaction of
         judgments or pursuant to any plan of reorganization or similar
         arrangement upon the bankruptcy or insolvency of a debtor;

                  (10)     Investments made as a result of the receipt of
         non-cash consideration from an Asset Sale that was made pursuant to and
         in compliance with Section 3.5;

                  (11)     deposits, prepayments or other advances to customers
         or suppliers in the ordinary course of business; and

                                       12


                  (12)     Guarantees issued in accordance with Section 3.2.

                  For purposes of calculating the aggregate amount of Permitted
Investments permitted to be outstanding at any one time pursuant to clause (4)
and (5), (i) the aggregate amount of such Investments made by the Company and
its Restricted Subsidiaries on or after the Issuance Date will be decreased (but
not below zero) by an amount equal to the lesser of (y) the cash return of
capital to the Company or a Restricted Subsidiary and (z) the initial amount of
such investment with respect to such Investment that is sold for cash or
otherwise liquidated or repaid for cash (less, in each case, the cost of
disposition, including applicable taxes, if any) and (ii) in the case of
Investments made by issuing letters of credit (or reimbursement agreements in
respect thereof) or making Guarantees, the aggregate amount of such Investments
will be decreased by the amount remaining unpaid in respect of such letters of
credit or under the underlying Indebtedness Guaranteed by the Company or a
Restricted Subsidiary upon termination of the Company's or a Restricted
Subsidiary's obligations thereunder or by the permanent reduction of the amount
guaranteed or secured by the letter of credit.

                  "Permitted Investors" means Jack L. Watts, JPMorgan Partners
23A and Related Parties of any of the foregoing.

                  "Permitted Joint Venture" means, with respect to any Person,
(a) any corporation, association, or other business entity (other than a
partnership) of which at least 30% 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 (or persons
performing similar functions) is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the
Restricted Subsidiaries of that Person or a combination thereof and (b) any
partnership, joint venture, limited liability company or similar entity of which
at least 30% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, are
owned or controlled, directly or indirectly, by such Person or one or more of
the other Restricted Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited partnership
interests or otherwise.

                  "Permitted Liens" means, with respect to any Person:

                  (1)      purchase money Liens securing trade payables;

                  (2)      Liens existing on the date of this Indenture;

                  (3)      Liens on Equity Interests in Unrestricted
                           Subsidiaries;

                  (4)      Liens securing Indebtedness incurred under a Credit
         Facility in an aggregate principal amount at any time outstanding not
         to exceed the amount permitted to be incurred pursuant to Section
         3.2(b)(2), provided that for this purpose a Credit Facility shall not
         be deemed to include Indebtedness issued, created or incurred pursuant
         to a registered offering of securities under the Securities Act or a
         private placement of securities (under Rule 144A or Regulation S under
         the Securities Act) pursuant to an exemption from the registration
         requirements of the Securities Act;

                                       13


                  (5)      Liens securing Capital Lease Obligations or purchase
         money Indebtedness otherwise permitted under this Indenture;

                  (6)      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 conducted; provided that any reserve or other appropriate
         provision as shall be required in conformity with GAAP shall have been
         made therefor;

                  (7)      Liens (including extensions and renewals thereof)
         upon property or assets (including Equity Interests) acquired after the
         Issuance Date; provided that (x) such Lien is created solely for the
         purpose of securing Indebtedness incurred (A) to finance the cost
         (including the cost of improvement or construction) of the item of
         property or assets (including Equity Interests) subject thereto and
         such Lien is created prior to, at the time of or within six months
         after the later of the acquisition, the completion of construction or
         the commencement of full operation of such property or (B) to refinance
         any Indebtedness previously so secured, (y) the principal amount of
         Indebtedness secured by such Lien does not exceed 100% of such cost and
         (z) any such Lien shall not extend to or cover any property or assets
         other than such item of property or assets and any improvements of such
         item (it being expressly understood and acknowledged that any such Lien
         may extend to or cover items of property or assets (and any
         improvements of such items) owned by a Person whose Equity Interests
         are acquired by the Company or a Restricted Subsidiary and which
         becomes a Restricted Subsidiary concurrently with such acquisition);

                  (8)      any Lien securing Acquired Debt created prior to (and
         not created in connection with, or in contemplation of) the incurrence
         of such Indebtedness by the Company or any Restricted Subsidiary, in
         each case which Indebtedness is permitted pursuant to Section 3.2;
         provided that any such Lien only extends to the assets that were
         subject to such Lien securing such Acquired Debt prior to the related
         transaction by the Company or its Restricted Subsidiaries;

                  (9)      statutory Liens of landlords, carriers, warehousemen,
         mechanics, materialmen and other similar Liens imposed by law that are
         incurred in the ordinary course of business for sums not more than 30
         days delinquent or that are being contested in good faith, provided
         that a reserve or other appropriate provision shall have been made
         therefor;

                  (10)     Liens (other than Liens imposed under the Employee
         Retirement Income Security Act of 1974, as amended) incurred or
         deposits made in the ordinary course of business (including workers'
         compensation, unemployment insurance, social security, bonds, leases,
         and other similar obligations) (exclusive of obligations for the
         payment of borrowed money);

                  (11)     deposits, in an aggregate amount not to exceed
         $500,000, made in the ordinary course of business to secure liabilities
         to insurance carriers;

                                       14


                  (12)     easements, rights-of-way, restrictions, and other
         similar charges or encumbrances not interfering in any material respect
         with the ordinary conduct of the business of the Company or any of its
         Restricted Subsidiaries and not lessening in any material respect the
         value of such property being encumbered;

                  (13)     Liens securing Hedging Obligations so long as the
         related Indebtedness, if any, is secured by a Lien on the same property
         securing such Hedging Obligation; and

                  (14)     Liens relating to the defeasance trust established
         pursuant to the indenture relating to the 10.75% senior notes due 2005
         of the Company as described in the Offering Memorandum.

                  "Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that:

                  (1)      (a) if the Stated Maturity of the Indebtedness being
         refinanced is earlier than the Stated Maturity of the Securities, the
         Permitted Refinancing Indebtedness has a Stated Maturity no earlier
         than the Stated Maturity of the Indebtedness being refinanced or (b) if
         the Stated Maturity of the Indebtedness being refinanced is later than
         the Stated Maturity of the Securities, the Permitted Refinancing
         Indebtedness has a Stated Maturity at least 91 days later than the
         Stated Maturity of the Securities;

                  (2)      the principal amount of such Indebtedness does not
         exceed the principal amount of the Indebtedness so extended,
         refinanced, renewed, replaced, defeased or refunded (plus the amount of
         reasonable expenses and premiums incurred in connection therewith);

                  (3)      such 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;

                  (4)      such Indebtedness is subordinated in right of payment
         to the Securities or the Subsidiary Guarantee, as the case may be, on
         terms at least as favorable to the holders of Securities as those, if
         any, contained in the documentation governing the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded; and

                  (5)      such Indebtedness is incurred by the Company or the
         Restricted Subsidiary who is the obligor on the Indebtedness being
         extended, refinanced, renewed, replaced, defeased or refunded.

                  "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
thereof or any other entity.

                  "Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment

                                       15


of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.

                  "Public Equity Offering" means a bona fide public underwritten
sale of Common Stock of the Company for cash pursuant to a registration
statement (other than on Form S-4 or Form S-8 or any other form relating to
securities issuable under any benefit plan of the Company or its Subsidiaries)
that is declared effective by the SEC.

                  "QIB" means any "qualified institutional buyer" as such term
is defined in Rule 144A.

                  "Receivable" means a right to receive payment arising from a
sale or lease of goods or the performance of services by a Person pursuant to an
arrangement with another Person pursuant to which such other Person is obligated
to pay for goods or services under terms that permit the purchase of such goods
and services on credit and shall include, in any event, any items of property
that would be classified as an "account," "chattel paper," "payment intangible"
or "instrument" under the Uniform Commercial Code as in effect in the State of
New York and any "supporting obligations" as so defined.

                  "Receivables Fees" means any fees or interest paid to
purchasers or lenders providing the financing in connection with a Receivable
financing, factoring agreement or other similar agreement, including any such
amounts paid by discounting the face amount of Receivables or participations
therein transferred in connection with a Receivable financing, factoring
agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.

                  "Redeemable Warrants" means, collectively, the JPMorgan
Partners 23A Warrant and the Lender Warrant.

                  "Redemption Date" means, with respect to any redemption of
Securities, the date of redemption with respect thereto.

                  "Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.

                  "Registration Rights Agreement" means that certain
registration rights agreement dated as of the date of this Indenture by and
among the Company, the Subsidiary Guarantors and the initial purchasers set
forth therein and any similar registrations rights agreements executed in
connection with an offering of Additional Securities.

                  "Regulation S" means Regulation S under the Securities Act.

                  "Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Restricted Subsidiaries on the date of this Indenture.

                                       16


                  "Related Party" with respect to any Permitted Investor means
(A) (x) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse
or immediate family member (in the case of an individual) of such Permitted
Investor or (y) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Permitted Investor
and/or such other persons referred to in the immediately preceding clause (x) or
(B) with respect to JPMorgan Partners 23A, any Person controlled by J.P. Morgan
Partners, LLC.

                  "Restricted Investment" means any Investment other than a
Permitted Investment.

                  "Restricted Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (A) the
day on which the Securities are first offered to Persons other than distributors
(as defined in Regulation S), notice of which day shall be promptly given by the
Company to the Trustee, and (B) the issue date with respect to such Securities.

                  "Restricted Securities Legend" means the Private Placement
Legend set forth in clause (1) of Section 2.1(d)(A) or the Regulation S Legend
set forth in clause (2) of Section 2.1(d)(B), as applicable.

                  "Restricted Subsidiary" means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

                  "Rule 144A" means Rule 144A under the Securities Act.

                  "Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.

                  "SEC" means the United States Securities and Exchange
Commission.

                  "Securities" has the meaning ascribed to it in the second
introductory paragraph of this Indenture.

                  "Securities Act" means the Securities Act of 1933 (15 U.S.C.
Sections 77a-77aa), as amended, and the rules and regulations of the SEC
promulgated thereunder.

                  "Securities Custodian" means the custodian with respect to the
Global Securities (as appointed by DTC), or any successor Person thereto and
shall initially be the Trustee.

                  "Securities Register" means the register of Securities,
maintained by the Registrar, pursuant to Section 2.3.

                  "Senior Secured Credit Agreement" means the Amended and
Restated Senior Secured Credit Facility dated as of January 16, 2004 by and
among the Company and General Electric Credit Corporation and any other lenders
parties thereto from time to time.

                                       17


                  "Shelf Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.

                  "Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X
promulgated pursuant to the Securities Act, as such regulation is in effect on
the date hereof.

                  "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, but shall not include any contingent obligations
to repay, redeem or repurchase any such principal prior to the date originally
scheduled for the payment thereof.

                  "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. Unless otherwise specified herein, each reference to a
Subsidiary will refer to a Subsidiary of the Company.

                  "Subsidiary Guarantee" means, individually, any Guarantee of
payment of any Securities by a Subsidiary Guarantor pursuant to the terms of
this Indenture and any supplemental indenture hereto (including pursuant to
Exhibit C), and, collectively, all such Guarantees. Each such Subsidiary
Guarantee will be in the form prescribed by this Indenture.

                  "Subsidiary Guarantor" means each Subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions of this Indenture.

                  "TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this
Indenture.

                  "Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.

                  "Trust Officer" shall mean, when used with respect to the
Trustee, any officer within the corporate trust department of the Trustee,
including any vice president, assistant vice president, assistant secretary,
assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at
the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.

                  "Unrestricted Subsidiary" means:

                  (1)      a Subsidiary of the Company which at the time of
         determination is designated an Unrestricted Subsidiary (as designated
         by the Board of Directors of the Company as provided below); and

                                       18


                  (2)      any Subsidiary of an Unrestricted Subsidiary.

                  The Board of Directors of the Company may designate any
Subsidiary as an Unrestricted Subsidiary so long as:

                  (1)      all the Indebtedness of such Subsidiary and its
         Subsidiaries shall, at the date of designation, and will at all times
         thereafter, consist of Non-Recourse Debt (except as permitted by clause
         (3) below);

                  (2)      no default with respect to any Indebtedness of such
         Subsidiary would permit (upon notice, lapse of time or both) any holder
         of any Indebtedness of the Company or a Restricted Subsidiary to
         declare a default on such Indebtedness of the Company or a Restricted
         Subsidiary or cause the payment thereof to be accelerated or payable
         prior to the Stated Maturity of the Securities, if such declaration of
         default, acceleration or payment would constitute an Event of Default
         under this Indenture;

                  (3)      neither the Company nor any Restricted Subsidiary
         shall have made any loan or advance to or an Investment in such
         Subsidiary in an amount that, at the date of designation, could not
         have been made in another Person pursuant to Section 3.3 or pursuant to
         clause (4) or (5) of the definition of "Permitted Investments" (it
         being understood that any such loan, advance or Investment existing at
         the date of designation shall be deemed to be a Restricted Payment or a
         Permitted Investment under clause (4) or (5) of the definition thereof,
         as the case may be, made as of such date);

                  (4)      such Subsidiary or any of its Subsidiaries does not
         own any Capital Stock or Indebtedness of or have any Investment in, or
         own or hold any Lien on any property of, any other Subsidiary of the
         Company which is not a Subsidiary of the Subsidiary to be so designated
         or otherwise an Unrestricted Subsidiary;

                  (5)      such Subsidiary, either alone or in the aggregate
         with all other Unrestricted Subsidiaries, does not operate, directly or
         indirectly, all or substantially all of the business of the Company and
         its Subsidiaries

                  (6)      such Subsidiary is a Person with respect to which
         neither the Company nor any of its Restricted Subsidiaries has any
         direct or indirect obligation to subscribe for additional Capital Stock
         of such Person or to maintain or preserve such Person's financial
         condition or to cause such Person to achieve any specified levels of
         operating results; and

                  (7)      on the date such Subsidiary is designated an
         Unrestricted Subsidiary, such Subsidiary is not a party to any
         agreement, contract, arrangement or understanding with the Company or
         any Restricted Subsidiary with terms substantially less favorable to
         the Company than those that might have been obtained from Persons who
         are not Affiliates of the Company.

                  Any such designation by the Board of Directors of the Company
shall be evidenced by a Board Resolution filed with the Trustee and an Officers'
Certificate certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall

                                       19


thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture
and any Indebtedness of such Subsidiary shall be deemed to be incurred as of
such date.

                  The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary at any time in the same
manner as it would designate a Subsidiary as an Unrestricted Subsidiary, so long
as immediately after such designation as a Restricted Subsidiary, there would be
no Default or Event of Default under this Indenture and the Company could incur
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 3.2. When an Unrestricted Subsidiary is designated a
Restricted Subsidiary it will be treated for purposes of the covenants similar
to the acquisition of an unrelated entity that becomes a Restricted Subsidiary.

                  "U.S. Government Obligations" means securities that are (a)
direct obligations of the United States of America for the timely payment of
which its full faith and credit is pledged or (b) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation of the United States of
America, which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depositary receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligations or a specific payment of principal of or
interest on any such U.S. Government Obligations held by such custodian for the
account of the holder of such depositary receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government Obligations evidenced
by such depositary receipt.

                  "Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.

                  "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.

                  "Wholly-Owned Subsidiary" means a Restricted Subsidiary, all
of the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or another Wholly-Owned Subsidiary.

                                       20


                  SECTION 1.2. Other Definitions.



                                                                       Defined in
Term                                                                    Section
- ----                                                                    -------
                                                                    
"Additional Amounts"................................................    3.1(b)

"Additional Restricted Securities" .................................    2.1(b)

"Affiliate Transaction".............................................    3.8

"Agent".............................................................    3.13

"Agent Members".....................................................    2.1(e)

"Asset Sale Offer"..................................................    3.5

"Asset Sale Offer Amount"...........................................    3.5

"Asset Sale Offer Period"...........................................    3.5

"Asset Sale Purchase Date"..........................................    3.5

"Authenticating Agent"..............................................    2.2

"Certificate of Destruction"........................................    2.12

"Change of Control Offer"...........................................    3.10

"Change of Control Payment".........................................    3.10

"Change of Control Payment Date"....................................    3.10

"Company Order".....................................................    2.2

"Covenant Defeasance"...............................................    8.1(c)

"Defaulted Interest"................................................    2.13

"Directive" ........................................................    3.1(b)

"Event of Default"..................................................    6.1

"Excess Proceeds" ..................................................    3.5


                                       21


                                                                     
"Exchange Global Note"..............................................    2.1(b)

"Foreign Paying Subsidiary Guarantor" ..............................    3.1(b)

"Guarantor Obligations".............................................    10.1

"Global Securities".................................................    2.1(b)

"incur".............................................................    3.2

"Institutional Accredited Investor Global Note".....................    2.1(b)

"Institutional Accredited Investor Note"............................    2.1(b)

"Judgment Currency" ................................................    11.10

"Legal Defeasance"..................................................    8.1(b)

"Pari Passu Notes"..................................................    3.5

"Payment Default" ..................................................    6.1(5)(a)

"Paying Agent"......................................................    2.3

"Private Placement Legend"..........................................    2.1(d)

"Process Agent".....................................................    11.11

"protected purchaser"...............................................    2.9

"Registrar".........................................................    2.3

"Regulation S Global Note"..........................................    2.1(b)

"Regulation S Legend"...............................................    2.1(d)

"Regulation S Notes"................................................    2.1(b)

"Relevant Tax Jurisdiction".........................................    3.1(b)

"Resale Restriction Termination Date"...............................    2.6(a)

"Restricted Payments"...............................................    3.3

"Restricted Securities".............................................    2.1(a)

"Rule 144A Global Note".............................................    2.1(b)

"Rule 144A Notes"...................................................    2.1(b)



                                       22


                                                                     
"Special Interest Payment Date".....................................    2.13(a)

"Special Record Date"...............................................    2.13(a)

"Successor Company".................................................    4.1



                  SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:

                  "Commission" means the SEC.

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture trustee" or "institutional trustee" means the
Trustee.

                  "obligor" on the indenture securities means the Company, and
any other obligor on the indenture securities.

                  All other TIA terms used in this Indenture that are defined by
the TIA, defined in the TIA by reference to another statute or defined by SEC
rule have the meanings assigned to them by such definitions.

                  SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:

                  (1)      a term has the meaning assigned to it;

                  (2)      an accounting term not otherwise defined has the
         meaning assigned to it in accordance with GAAP;

                  (3)      "or" is not exclusive;

                  (4)      "including" means including without limitation;

                  (5)      words in the singular include the plural and words in
         the plural include the singular;

                  (6)      the principal amount of any noninterest bearing or
         other discount security at any date shall be the principal amount
         thereof that would be shown on a balance sheet of the issuer dated such
         date prepared in accordance with GAAP;

                                       23


                  (7)      the principal amount of any Preferred Stock shall be
         (i) the maximum liquidation value of such Preferred Stock or (ii) the
         maximum mandatory redemption or mandatory repurchase price with respect
         to such Preferred Stock, whichever is greater;

                  (8)      all amounts expressed in this Indenture or in any of
         the Securities in terms of money refer to the lawful currency of the
         United States of America;

                  (9)      the words "herein," "hereof" and "hereunder" and
         other words of similar import refer to this Indenture as a whole and
         not to any particular Article, Section or other subdivision.

                                   ARTICLE II

                                 THE SECURITIES

                  SECTION 2.1. Form, Dating and Terms.

                  (a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The Initial
Securities issued on the date hereof will be in an aggregate principal amount of
$180,000,000. In addition, the Company may issue, from time to time in
accordance with the provisions of this Indenture, Additional Securities and
Exchange Securities. Furthermore, Securities may be authenticated and delivered
upon registration or transfer, or in lieu of, other Securities pursuant to
Section 2.6, 2.9, 2.11 or 9.5 or in connection with a Change of Control Offer
pursuant to Section 3.10.

                  The Initial Securities shall be known and designated as "8
1/4% Senior Notes, Series A, due 2012" of the Company. Additional Securities
issued as securities bearing one of the restrictive legends described in Section
2.1(d) ("Restricted Securities") shall be known and designated as "8 1/4% Senior
Notes, Series A, due 2012" of the Company. Additional Securities issued other
than as Restricted Securities shall be known and designated as "8 1/4% Senior
Notes, Series B, due 2012" of the Company, and Exchange Securities shall be
known and designated as "8 1/4% Senior Notes, Series B, due 2012" of the
Company.

                  With respect to any Additional Securities, the Company shall
set forth in (a) a Board Resolution of the Company and (b) (i) an Officers'
Certificate or (ii) one or more indentures supplemental hereto, the following
information:

                  (1)      the aggregate principal amount of such Additional
         Securities to be authenticated and delivered pursuant to this
         Indenture;

                  (2)      the issue price and the issue date of such Additional
         Securities, including the date from which interest shall accrue; and

                  (3)      whether such Additional Securities shall be
         Restricted Securities issued in the form of Exhibit A hereto and/or
         shall be issued in the form of Exhibit B hereto.

                                       24


                  The Initial Securities, the Additional Securities and the
Exchange Securities shall be considered collectively as a single class for all
purposes of this Indenture. Holders of the Initial Securities, the Additional
Securities and the Exchange Securities will vote and consent together on all
matters to which such Holders are entitled to vote or consent as one class, and
none of the Holders of the Initial Securities, the Additional Securities or the
Exchange Securities shall have the right to vote or consent as a separate class
on any matter to which such Holders are entitled to vote or consent.

                  If any of the terms of any Additional Securities are
established by action taken pursuant to Board Resolutions of the Company, a copy
of an appropriate record of such action shall be certified by the Secretary or
any Assistant Secretary of the Company and delivered to the Trustee at or prior
to the delivery of the Officers' Certificate or the indenture supplemental
hereto setting forth the terms of the Additional Securities.

                  (b) The Initial Securities are being offered and sold by the
Company pursuant to a Purchase Agreement, dated January 20, 2004, among Portola
Packaging, Inc., the Subsidiary Guarantors, J.P. Morgan Securities Inc. and UBS
Securities LLC. The Initial Securities and any Additional Securities (if issued
as Restricted Securities) (the "Additional Restricted Securities") will be
resold initially only to (A) QIBs in reliance on Rule 144A and (B) Non-U.S.
Persons in reliance on Regulation S. Such Initial Securities and Additional
Restricted Securities may thereafter be transferred to, among others, QIBs,
purchasers in reliance on Regulation S and IAIs in accordance with Rule 501 of
the Securities Act, in each case, in accordance with the procedure described
herein. Additional Securities offered after the date hereof may be offered and
sold by the Company from time to time pursuant to one or more purchase
agreements in accordance with applicable law.

                  Initial Securities and Additional Restricted Securities
offered and sold to QIBs in the United States of America in reliance on Rule
144A (the "Rule 144A Notes") shall be issued in the form of a permanent global
Security substantially in the form of Exhibit A, which is hereby incorporated by
reference and made a part of this Indenture, including appropriate legends as
set forth in Section 2.1(d) (the "Rule 144A Global Note"), deposited with the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Rule 144A Global Note may be
represented by more than one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

                  Initial Securities and any Additional Securities offered and
sold outside the United States of America (the "Regulation S Notes") in reliance
on Regulation S shall initially be issued in the form of a permanent global
Security substantially in the form of Exhibit A including appropriate legends as
set forth in Section 2.1(d) (the "Regulation S Global Note"). The Regulation S
Note will be deposited upon issuance with, or on behalf of, the Trustee, as
custodian for DTC, duly executed by the Company and authenticated by the Trustee
as hereinafter provided. During the Restricted Period, interests in the
Regulation S Global Note may be transferred to non-U.S. persons pursuant to
Regulation S to QIBs and IAIs or otherwise in accordance with this Indenture.

                                       25


                  The Regulation S Global Note may be represented by more than
one certificate, if so required by DTC's rules regarding the maximum principal
amount to be represented by a single certificate. The aggregate principal amount
of the Regulation S Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

                  Initial Securities and Additional Securities resold to IAIs
(the "Institutional Accredited Investor Notes") in the United States of America
shall be issued in the form of a permanent global Security substantially in the
form of Exhibit A including appropriate legends as set forth in Section 2.1(d)
(the "Institutional Accredited Investor Global Note") deposited with the
Trustee, as custodian for DTC, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Institutional Accredited Investor
Global Note may be represented by more than one certificate, if so required by
DTC's rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Institutional Accredited
Investor Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

                  Exchange Securities exchanged for interests in the Rule 144A
Notes, the Regulation S Notes and the Institutional Accredited Investor Notes
will be issued in the form of a permanent global Security, substantially in the
form of Exhibit B, which is hereby incorporated by reference and made a part of
this Indenture, deposited with the Trustee as hereinafter provided, including
the appropriate legend set forth in Section 2.1(d) (the "Exchange Global Note").
The Exchange Global Note will be deposited upon issuance with, or on behalf of,
the Trustee as custodian for DTC, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The Exchange Global Note may be
represented by more than one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate.

                  The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Accredited Investor Global Note and the Exchange Global Note are
sometimes collectively herein referred to as the "Global Securities."

                  The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City and State of New York, or at such other office or
agency of the Company as may be maintained for such purpose pursuant to Section
2.3; provided, however, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
thereto as such addresses shall appear on the Securities Register or (ii) wire
transfer to an account located in the United States maintained by the payee.
Payments in respect of Securities represented by a Global Security (including
principal, premium, if any, and interest) will be made by wire transfer of
immediately available funds to the accounts specified by DTC. Payments in
respect of Securities represented by Definitive Securities (including principal,
premium, if any, and interest) held by a Holder of at least $1,000,000 aggregate
principal amount of Securities represented by Definitive Securities will be made
by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect

                                       26


designating such account no later than 15 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).

                  The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage, in addition to those set forth on
Exhibit A and Exhibit B and in Section 2.1(d). The Company and the Trustee shall
approve the forms of the Securities and any notation, endorsement or legend on
them. Each Security shall be dated the date of its authentication. The terms of
the Securities set forth in Exhibit A and Exhibit B are part of the terms of
this Indenture and, to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to be bound by such terms.

                  (c) Denominations. The Securities shall be issuable only in
fully registered form, without coupons, and only in denominations of $1,000 and
an integral multiple thereof.

                  (d) Restrictive Legends. Unless and until (i) an Initial
Security is sold under an effective registration statement or (ii) an Initial
Security is exchanged for an Exchange Security in connection with an effective
registration statement, in each case pursuant to the Registration Rights
Agreement or a similar agreement,

                  (A) the Rule 144A Global Note and the Institutional Accredited
Investor Global Note shall bear the following legend (the "Private Placement
Legend") on the face thereof:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
         OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
         PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
         PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
         REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
         TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE
         HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT
         FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE
         TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
         TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
         ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
         SUBSIDIARY OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
         PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO
         A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
         SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
         RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
         REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
         RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
         OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
         GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,

                                       27


         (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
         WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
         INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
         501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
         INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN
         ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
         INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES
         OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
         OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
         SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
         COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
         TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
         AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION
         SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
         REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

         BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
         HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
         USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
         ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE
         U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
         ("ERISA"), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER
         ARRANGEMENTS THAT ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL
         REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY
         FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE
         SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF
         AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN
         ASSETS" OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE
         AND HOLDING OF THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT
         PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
         THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

                  (B) the Regulation S Global Note shall bear the following
legend (the "Regulation S Legend") on the face thereof:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE
         OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
         PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
         PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
         REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
         TO, SUCH

                                       28


         REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
         AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR
         WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER
         SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
         DATE") THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
         HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY SUBSIDIARY OF THE
         COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
         SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
         STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
         (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
         RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES
         IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
         SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
         A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
         TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS
         AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
         REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
         "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
         (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED
         INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
         OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
         PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
         AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
         DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
         ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
         TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F)
         TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR
         OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
         REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
         TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF
         REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
         ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
         TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

         BY ITS ACQUISITION OF THIS SECURITY THE HOLDER HEREOF WILL BE DEEMED TO
         HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO PORTION OF THE ASSETS
         USED BY SUCH HOLDER TO ACQUIRE AND HOLD THIS SECURITY CONSTITUTES THE
         ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE
         U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
         ("ERISA"), OF PLANS, INDIVIDUAL RETIREMENT ACCOUNTS OR OTHER
         ARRANGEMENTS THAT

                                       29


         ARE SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986,
         AS AMENDED (THE "CODE"), OR PROVISIONS UNDER ANY FEDERAL, STATE, LOCAL,
         NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SIMILAR TO SUCH
         PROVISIONS OF ERISA OR THE CODE ("SIMILAR LAWS"), OR OF AN ENTITY WHOSE
         UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE "PLAN ASSETS" OF SUCH
         PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE PURCHASE AND HOLDING OF
         THIS SECURITY WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION
         UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR
         VIOLATION UNDER ANY APPLICABLE SIMILAR LAWS.

                  (C) Each Global Security, whether or not an Initial Security,
shall bear the following legend on the face thereof:

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK,
         NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
         EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
         NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
         AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
         OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
         OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
         OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
         OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
         WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR
         THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
         GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
         THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE
         HEREOF.

                  (e) Book-Entry Provisions.

                  (i) This Section 2.1(e) shall apply only to Global Securities
deposited with the Trustee, as custodian for DTC.

                  (ii) Each Global Security initially shall (x) be registered in
the name of DTC for such Global Security or the nominee of DTC, (y) be delivered
to the Trustee as custodian for DTC and (z) bear legends as set forth in Section
2.1(d).

                  (iii) Members of, or participants in, DTC ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by DTC or by the Trustee as the custodian of DTC or under
such Global Security, and DTC may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of

                                       30


such Global Security 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 DTC or impair, as between DTC and its Agent
Members, the operation of customary practices of DTC governing the exercise of
the rights of a Holder of a beneficial interest in any Global Security.

                  (iv) In connection with any transfer of a portion of the
beneficial interest in a Global Security pursuant to subsection (f) of this
Section 2.1 to beneficial owners who are required to hold Definitive Securities,
the Securities Custodian shall reflect on its books and records the date and a
decrease in the principal amount of such Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and make available for delivery, one or more Definitive Securities of like tenor
and amount.

                  (v) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to subsection (f) of this Section 2.1,
such Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and make available for delivery, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations.

                  (vi) The registered Holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.

                  (vii) Any Holder of a Global Security shall, by acceptance of
such Global Security, agree that transfers of beneficial interests in such
Global Security may be effected only through a book-entry system maintained by
(a) the Holder of such Global Security (or its agent) or (b) any Holder of a
beneficial interest in such Global Security, and that ownership of a beneficial
interest in such Global Security shall be required to be reflected in a book
entry.

                  (f) Definitive Securities. (i) Except as provided below,
owners of beneficial interests in Global Securities will not be entitled to
receive Definitive Securities. If required to do so pursuant to any applicable
law or regulation, beneficial owners may obtain Definitive Securities in
exchange for their beneficial interests in a Global Security upon written
request in accordance with DTC's and the Registrar's procedures. In addition,
Definitive Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in a Global Security if (A) DTC notifies the
Company that it is unwilling or unable to continue as depositary for such Global
Security or DTC ceases to be a clearing agency registered under the Exchange
Act, at a time when DTC is required to be so registered in order to act as
depositary, and in each case a successor depositary is not appointed by the
Company within 90 days of such notice or, (B) the Company in its sole discretion
executes and delivers to the Trustee and Registrar an Officers' Certificate
stating that such Global Security shall be so exchangeable or (C) an Event of
Default has occurred and is continuing and the Registrar has received a request
from DTC. In the event of the occurrence of any of the events specified in
clause (A), (B) or (C) of the

                                       31


preceding sentence, the Company shall promptly make available to the Trustee a
reasonable supply of Definitive Securities in fully registered form without
interest coupons.

                  (i) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(e)(iv) or (v) shall,
except as otherwise provided by Section 2.6(c), bear the applicable legend
regarding transfer restrictions applicable to the Definitive Security set forth
in Section 2.1(d).

                  (ii) In connection with the exchange of a portion of a
Definitive Security for a beneficial interest in a Global Security, the Trustee
shall cancel such Definitive Security, and the Company shall execute, and the
Trustee shall authenticate and make available for delivery, to the transferring
Holder a new Definitive Security representing the principal amount not so
transferred.

                  SECTION 2.2. Execution and Authentication. One Officer shall
sign the Securities for the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the time
the Trustee authenticates the Security, the Security shall be valid
nevertheless.

                  A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee on
a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture. A Security shall be dated
the date of its authentication.

                  At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery: (1) Initial Securities for original issue on the Issuance Date in
an aggregate principal amount of $180,000,000 (2) subject to the terms of this
Indenture, Additional Securities for original issue in an unlimited principal
amount and (3) Exchange Securities for issue only in a Registered Exchange Offer
pursuant to the Registration Rights Agreement or upon resale under an effective
Shelf Registration Statement, and only in exchange for Initial Securities or
Additional Securities of an equal principal amount, in each case upon a written
order of the Company signed by two Officers of the Company (the "Company
Order"). Such Company Order shall specify whether the Securities will be in the
form of Definitive Securities or Global Securities, the amount of the Securities
to be authenticated and the date on which the original issue of Securities is to
be authenticated and whether the Securities are to be Initial Securities,
Additional Securities or Exchange Securities.

                  The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Any such
instrument shall be evidenced by an instrument signed by a Trust Officer, a copy
of which shall be furnished to the Company. Unless limited by the terms of such
appointment, any such Authenticating Agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by the Authenticating Agent. An Authenticating
Agent has the same rights as any Registrar, Paying Agent or agent for service of
notices and demands.

                                       32


                  In case the Company or any Subsidiary Guarantor, pursuant to
Article IV or Section 10.2, shall be consolidated or merged with or into any
other Person or shall convey, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any Person, and the
successor Person resulting from such consolidation, or surviving such merger, or
into which the Company or any Subsidiary Guarantor shall have been merged, or
the Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article IV, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Order of
the successor Person, shall authenticate and make available for delivery
Securities as specified in such order for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section 2.2 in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time outstanding for Securities authenticated
and delivered in such new name.

                  SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Company shall
cause each of the Registrar and the Paying Agent to maintain an office or agency
in New York, New York. The Registrar shall keep a register of the Securities and
of their transfer and exchange (the "Securities Register"). The Company may have
one or more co-registrars and one or more additional paying agents. The term
"Paying Agent" includes any additional paying agent and the term "Registrar"
includes any co-registrar.

                  The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. Any of
the Company's Wholly-Owned Subsidiaries organized in the United States may act
as Paying Agent, Registrar or transfer agent.

                  The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities. The Company may remove any Registrar or Paying
Agent upon written notice to such Registrar or Paying Agent and to the Trustee;
provided, however, that no such removal shall become effective until (i)
acceptance of any appointment by a successor as evidenced by an appropriate
agreement entered into by the Company and such successor Registrar or Paying
Agent, as the case may be, and delivered to the Trustee or (ii) notification to
the Trustee that the Trustee shall serve as Registrar or Paying Agent until the
appointment of a successor in accordance with clause (i) above. The Registrar or
Paying Agent may resign at any time upon written notice to the Company and the
Trustee.

                                       33


                  SECTION 2.4. Paying Agent to Hold Money in Trust. By no later
than 10:00 a.m. (New York City time) on the date on which any principal of,
premium, if any, or interest on any Security is due and payable, the Company
shall deposit with the Paying Agent a sum sufficient in immediately available
funds to pay such principal, premium, if any, or interest when due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that such Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by such Paying Agent for the payment of principal,
premium, if any, of or interest on the Securities (whether such assets have been
distributed to it by the Company or other obligors on the Securities) and shall
notify the Trustee in writing of any default by the Company or any Subsidiary
Guarantor in making any such payment. If a Subsidiary of the Company acts as
Paying Agent, it shall segregate the money held by them as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
(other than the Trustee) to pay all money held by it to the Trustee and to
account for any funds or assets disbursed by such Paying Agent. Upon complying
with this Section, the Paying Agent (if other than a Subsidiary of the Company)
shall have no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Securities.

                  SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, or to the extent
otherwise required under the TIA, the Company, on its own behalf and on behalf
of each of the Subsidiary Guarantors, shall furnish or cause the Registrar to
furnish to the Trustee, in writing at least five 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 Securityholders and the Company shall
otherwise comply with TIA Section 312(a).

                  SECTION 2.6. Transfer and Exchange.

                  (a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Note or an Institutional Accredited Investor
Note prior to the date which is two years after the later of the date of its
original issue and the last date on which the Company or any Affiliate of the
Company was the owner of such Securities (or any predecessor thereto) (the
"Resale Restriction Termination Date"):

                  (i) a transfer of a Rule 144A Note or an Institutional
         Accredited Investor Note or a beneficial interest therein to a QIB
         shall be made upon the representation of the transferee in the form as
         set forth on the reverse of the Security that it is purchasing for its
         own account or an account with respect to which it exercises sole
         investment discretion and that it and any such account is a "qualified
         institutional buyer" within the meaning of Rule 144A, and is aware that
         the sale to it is being made in reliance on Rule 144A and acknowledges
         that it has received such information regarding the Company as the
         undersigned has requested pursuant to Rule 144A or has determined not
         to request such information and that it is aware that the transferor is
         relying upon its foregoing representations in order to claim the
         exemption from registration provided by Rule 144A;

                                       34


                  (ii) a transfer of a Rule 144A Note or an Institutional
         Accredited Investor Note or a beneficial interest therein to an IAI
         shall be made upon receipt by the Trustee or its agent of a certificate
         substantially in the form set forth in Section 2.7 from the proposed
         transferee and, if requested by the Company or the Trustee, the
         delivery of an opinion of counsel, certification and/or other
         information satisfactory to each of them; and

                  (iii) a transfer of a Rule 144A Note or an Institutional
         Accredited Investor Note or a beneficial interest therein to a Non-U.S.
         Person shall be made upon receipt by the Trustee or its agent of a
         certificate substantially in the form set forth in Section 2.8 from the
         proposed transferee and, if requested by the Company or the Trustee,
         the delivery of an opinion of counsel, certification and/or other
         information satisfactory to each of them.

                  (b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:

                  (i) a transfer of a Regulation S Note or a beneficial interest
         therein to a QIB shall be made upon the representation of the
         transferee, in the form of assignment on the reverse of the
         certificate, that it is purchasing the Security for its own account or
         an account with respect to which it exercises sole investment
         discretion and that it and any such account is a "qualified
         institutional buyer" within the meaning of Rule 144A, and is aware that
         the sale to it is being made in reliance on Rule 144A and acknowledges
         that it has received such information regarding the Company as the
         undersigned has requested pursuant to Rule 144A or has determined not
         to request such information and that it is aware that the transferor is
         relying upon its foregoing representations in order to claim the
         exemption from registration provided by Rule 144A;

                  (ii) a transfer of a Regulation S Note or a beneficial
         interest therein to an IAI shall be made upon receipt by the Trustee or
         its agent of a certificate substantially in the form set forth in
         Section 2.7 from the proposed transferee and, if requested by the
         Company or the Trustee, the delivery of an opinion of counsel,
         certification and/or other information satisfactory to each of them;
         and

                  (iii) a transfer of a Regulation S Note or a beneficial
         interest therein to a Non-U.S. Person shall be made upon receipt by the
         Trustee or its agent of a certificate substantially in the form set
         forth in Section 2.8 hereof from the proposed transferee and, if
         requested by the Company or the Trustee, receipt by the Trustee or its
         agent of an opinion of counsel, certification and/or other information
         satisfactory to each of them.

                  Prior to the expiration of the Restricted Period, a
registration of transfer of a Regulation S Note or a beneficial interest therein
shall only be made to a Non-U.S. Person and shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set forth in
Section 2.8 hereof from the proposed transferee and, if requested by the
Company, receipt by the Trustee or its agent of an opinion of counsel,
certification and/or other information satisfactory to the Company.

                                       35


                  After the expiration of the Restricted Period, interests in
the Regulation S Note may be transferred in accordance with applicable law
without requiring the certification set forth in Section 2.8 or any additional
certification.

                  (c) Restricted Securities Legend. Upon the transfer, exchange
or replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing a
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear a Restricted Securities Legend unless (i) Initial Securities are being
exchanged for Exchange Securities in a Registered Exchange Offer in which case
the Exchange Securities shall not bear a Restricted Securities Legend, (ii) an
Initial Security is being transferred pursuant to the Shelf Registration
Statement or other effective registration statement or (iii) there is delivered
to the Registrar an Opinion of Counsel reasonably satisfactory to the Company
and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act. Any Additional Securities sold in a registered
offering shall not be required to bear the Restricted Securities Legend.

                  (d) The Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 2.1 or this
Section 2.6. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable prior written notice to the Registrar.

                  (e) Obligations with Respect to Transfers and Exchanges of
Securities.

                  (i) To permit registrations of transfers and exchanges, the
         Company shall, subject to the other terms and conditions of this
         Article II, execute and the Trustee shall authenticate Definitive
         Securities and Global Securities 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 the
         Holder to pay a sum sufficient to cover any transfer tax, assessments,
         or similar governmental charge payable in connection therewith (other
         than any such transfer taxes, assessments or similar governmental
         charges payable upon exchange or transfer pursuant to Sections 2.6 or
         9.5).

                  (iii) The Company (and the Registrar) shall not be required to
         register the transfer of or exchange of any Security for a period
         beginning (1) 15 days before the mailing of a notice of an offer to
         repurchase or redeem Securities and ending at the close of business on
         the day of such mailing or (2) 15 days before an interest payment date
         and ending on such interest payment date.

                  (iv) Prior to the due presentation for registration of
         transfer of any Security, the Company, the Trustee, the Paying Agent or
         the Registrar may deem and treat the person in whose name a Security is
         registered as the absolute owner of such Security for the purpose of
         receiving payment of principal of , premium, if any, and interest on
         such Security and for all other purposes whatsoever, including without
         limitation the transfer or exchange of such Security, whether or not
         such Security is overdue, and none of the

                                       36


         Company, the Trustee, the Paying Agent or the Registrar shall be
         affected by notice to the contrary.

                  (v) Any Definitive Security delivered in exchange for an
         interest in a Global Security pursuant to Section 2.1(e) shall, except
         as otherwise provided by Section 2.6(c), bear the applicable legend
         regarding transfer restrictions applicable to the Definitive Security
         set forth in Section 2.1(d).

                  (vi) All Securities issued upon any transfer or exchange
         pursuant to the terms of this Indenture shall evidence the same debt
         and shall be entitled to the same benefits under this Indenture as the
         Securities surrendered upon such transfer or exchange.

                  (f) No Obligation of the Trustee.

                  (i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a participant in, DTC
or other Person with respect to the accuracy of the records of DTC or its
nominee or of any participant or member thereof, with respect to any ownership
interest in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than DTC) of any notice
(including any notice of redemption) or the payment of any amount or delivery of
any Securities (or other security or property) under or with respect to such
Securities. All notices and communications to be given to the Holders and all
payments to be made to Holders in respect of the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be DTC or
its nominee in the case of a Global Security). The rights of beneficial owners
in any Global Security shall be exercised only through DTC subject to the
applicable rules and procedures of DTC. The Trustee may rely and shall be fully
protected in relying upon information furnished by DTC with respect to its
members, participants and any beneficial owners.

                  (ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among DTC
participants, members or beneficial owners in any Global Security) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the terms
of this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

                  SECTION 2.7. Form of Certificate to be Delivered in Connection
with Transfers to Institutional Accredited Investors.

                                     [Date]

Portola Packaging, Inc.
c/o U.S. Bank National Association
U.S. Bank National Association
60 Livingston Avenue,
St. Paul, MN 55107-2292
Mail Code: EP-MN-WS3C

                                       37


Attention: Corporate Trust Department
Mail Code:

Dear Sirs:

                  This certificate is delivered to request a transfer of
$[_________] principal amount of the 8 1/4% Senior Notes due 2012 (the
"Securities") of Portola Packaging, Inc. (the "Company").

                  Upon transfer, the Securities would be registered in the name
of the new beneficial owner as follows:

                  Name: ___________________________________

                  Address: ________________________________

                  Taxpayer ID Number: _____________________

                  The undersigned represents and warrants to you that:

                  1.       We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "Securities Act")) purchasing for our own account or for the
account of such an institutional "accredited investor" at least $250,000
principal amount of the Securities, and we are acquiring the Securities not with
a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risk of our investment in the Securities and we invest in or purchase securities
similar to the Securities in the normal course of our business. We and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.

                  2.       We understand that the Securities have not been
registered under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing Securities to offer,
sell or otherwise transfer such Securities prior to the date that is two years
after the later of the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a "qualified institutional buyer" under Rule 144A of the Securities
Act (a "QIB") that is purchasing for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made in reliance on Rule
144A, (d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is purchasing for its own account or
for the account of such an institutional "accredited investor," in each case in
a minimum principal amount of Securities of

                                       38


$250,000 for investment purposes and not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act or (f)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Securities is proposed to be made
pursuant to clause (e) above prior to the Resale Restriction Termination Date,
the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Company and the Trustee, which shall provide, among
other things, that the transferee is an institutional "accredited investor"
(within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act)
and that it is acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. Each purchaser acknowledges
that the Company and the Trustee reserve the right prior to any offer, sale or
other transfer prior to the Resale Termination Date of the Securities pursuant
to clauses (d), (e) or (f) above to require the delivery of an opinion of
counsel, certifications and/or other information satisfactory to the Company and
the Trustee.

                                   TRANSFEREE:______________________

                                   BY:________________________________

                                       39


                  SECTION 2.8. Form of Certificate to be Delivered in Connection
with Transfers Pursuant to Regulation S.

                                     [Date]

Portola Packaging, Inc.
c/o U.S. Bank National Association
U.S. Bank National Association
60 Livingston Avenue,
St. Paul, MN 55107-2292
Mail Code: EP-MN-WS3C

Attention: Corporate Trust Department
Mail Code:

                  Re:   Portola Packaging, Inc.
                        8 1/4% Senior Notes due 2012 (the "Securities")

Ladies and Gentlemen:

                  In connection with our proposed sale of $[________] aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:

                  (a)      the offer of the Securities was not made to a person
         in the United States;

                  (b)      either (i) at the time the buy order was originated,
         the transferee was outside the United States or we and any person
         acting on our behalf reasonably believed that the transferee was
         outside the United States or (ii) the transaction was executed in, on
         or through the facilities of a designated off-shore securities market
         and neither we nor any person acting on our behalf knows that the
         transaction has been pre-arranged with a buyer in the United States;

                  (c)      no directed selling efforts have been made in the
         United States in contravention of the requirements of Rule 903(a)(2) or
         Rule 904(a)(2) of Regulation S, as applicable; and

                  (d)      the transaction is not part of a plan or scheme to
         evade the registration requirements of the Securities Act.

                  In addition, if the sale is made during a restricted period
and the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may
be.

                                       40


                  You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.

                  Very truly yours,

                  [Name of Transferor]

                  By:____________________________

                  _______________________________
                           Authorized Signature

                  SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met, such that the Securityholder (a) satisfies the Company or the Trustee
within a reasonable time after such Securityholder has notice of such loss,
destruction or wrongful taking and the Registrar has not registered a transfer
prior to receiving such notification, (b) makes such request to the Company or
Trustee prior to the Security being acquired by a protected purchaser as defined
in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and
(c) satisfies any other reasonable requirements of the Trustee. If required by
the Trustee or the Company, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee, the Paying Agent and the Registrar from any loss which any
of them may suffer if a Security is replaced, and, in the absence of notice to
the Company, any Subsidiary Guarantor or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon receipt of
a Company Order the Trustee shall authenticate and make available for delivery,
in exchange for any such mutilated Security or in lieu of any such destroyed,
lost or stolen Security, a new Security of like tenor and principal amount,
bearing a number not contemporaneously outstanding.

                  In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.

                  Upon the issuance of any new Security under this Section, the
Company may require that such Holder pay a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel and of the Trustee) in
connection therewith.

                  Every new Security issued pursuant to this Section in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time

                                       41


enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.

                  The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.

                  SECTION 2.10. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding in
the event either of the Company or an Affiliate of the Company holds the
Security, provided, however, that (i) for purposes of determining which are
outstanding for consent or voting purposes hereunder, the provisions of Section
11.6 shall apply and (ii) in determining whether the Trustee shall be protected
in making a determination whether the Holders of the requisite principal amount
of outstanding Securities are present at a meeting of Holders of Securities for
quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, or relying upon any such quorum, consent or vote, only Securities
which a Trust Officer of the Trustee actually knows to be held by the Company or
an Affiliate of the Company shall not be considered outstanding.

                  If a Security is replaced pursuant to Section 2.9 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee and the Company receive proof satisfactory to them that the
replaced Security is held by a protected purchaser. A mutilated Security ceases
to be outstanding upon surrender of such Security and replacement pursuant to
Section 2.9.

                  If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a Redemption Date or maturity date money
sufficient to pay all principal, premium, if any, and accrued interest payable
on that date with respect to the Securities (or portions thereof) to be redeemed
or maturing, as the case may be, and the Paying Agent is not prohibited from
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.

                  SECTION 2.11. Temporary Securities. In the event that
Definitive Securities are to be issued under the terms of this Indenture, until
such Definitive Securities are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Securities. Temporary Securities shall
be substantially in the form, and shall carry all rights, of Definitive
Securities but may have variations that the Company consider appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at any office
or agency maintained by the Company for that purpose and such exchange shall be
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute, and the Trustee shall
authenticate and make available for delivery in exchange therefor, one or more
Definitive Securities representing

                                       42


an equal principal amount of Securities. Until so exchanged, the Holder of
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as a Holder of Definitive Securities.

                  SECTION 2.12. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel all Securities surrendered for registration of transfer, exchange,
payment or cancellation and destroy such Securities in accordance with its
internal policies and customary procedures including delivery of a certificate
(a "Certificate of Destruction") describing such Securities disposed (subject to
the record retention requirements of the Exchange Act) or deliver canceled
Securities to the Company pursuant to written direction by an Officer of the
Company. If the Company or any Subsidiary Guarantor acquires any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.12. The
Company may not issue new Securities to replace Securities it has paid or
delivered to the Trustee for cancellation for any reason other than in
connection with a transfer or exchange.

                  At such time as all beneficial interests in a Global Security
have either been exchanged for Definitive Securities, transferred, redeemed,
repurchased or canceled, such Global Security shall be returned by DTC to the
Trustee for cancellation or retained and canceled by the Trustee. At any time
prior to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, transferred in exchange for an interest in
another Global Security, redeemed, repurchased or canceled, the principal amount
of Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.

                  SECTION 2.13. Payment of Interest; Defaulted Interest.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any interest payment date shall be paid to the Person in whose
name such Security (or one or more predecessor Securities) is registered at the
close of business on the regular record date for such payment at the office or
agency of the Company maintained for such purpose pursuant to Section 2.3.

                  Any interest on any Security which is payable, but is not paid
when the same becomes due and payable and such nonpayment continues for a period
of 30 days shall forthwith cease to be payable to the Holder on the regular
record date, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Securities (such defaulted
interest and interest thereon herein collectively called "Defaulted Interest")
shall be paid by the Company, at its election in each case, as provided in
clause (a) or (b) below:

                  (a) The Company may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Securities (or their
         respective predecessor Securities) are registered at the close of
         business on a Special Record Date (as defined below) for the payment of
         such Defaulted Interest, which shall be fixed in the following manner.
         The Company shall notify the Trustee in writing of the amount of
         Defaulted Interest proposed

                                       43


         to be paid on each Security and the date (not less than 30 days after
         such notice) of the proposed payment (the "Special Interest Payment
         Date"), and at the same time the Company shall deposit with the Trustee
         an amount of money equal to the aggregate amount proposed to be paid in
         respect of such Defaulted Interest or shall make arrangements
         satisfactory to the Trustee for such deposit prior to the date of the
         proposed payment, such money when deposited to be held in trust for the
         benefit of the Persons entitled to such Defaulted Interest as in this
         clause provided. Thereupon the Trustee shall fix a record date (the
         "Special Record Date") for the payment of such Defaulted Interest,
         which date shall be not more than 15 days and not less than 10 days
         prior to the Special Interest Payment Date and not less than 10 days
         after the receipt by the Trustee of the notice of the proposed payment.
         The Trustee shall promptly notify the Company of such Special Record
         Date, and in the name and at the expense of the Company, shall cause
         notice of the proposed payment of such Defaulted Interest and the
         Special Record Date and Special Interest Payment Date therefor to be
         given in the manner provided for in Section 11.2, not less than 10 days
         prior to such Special Record Date. Notice of the proposed payment of
         such Defaulted Interest and the Special Record Date and Special
         Interest Payment Date therefor having been so given, such Defaulted
         Interest shall be paid on the Special Interest Payment Date to the
         Persons in whose names the Securities (or their respective predecessor
         Securities) are registered at the close of business on such Special
         Record Date and shall no longer be payable pursuant to the following
         clause (b).

                  (b) The Company may make payment of any Defaulted Interest in
         any other lawful manner not inconsistent with the requirements of any
         securities exchange on which the Securities may be listed, and upon
         such notice as may be required by such exchange, if, after notice given
         by the Company to the Trustee of the proposed payment pursuant to this
         clause, such manner of payment shall be deemed practicable by the
         Trustee.

                  Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of, transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.

                  SECTION 2.14. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.

                  SECTION 2.15. CUSIP, Common Code and ISIN Numbers. The Company
in issuing the Securities may use "CUSIP", "Common Code" and "ISIN" numbers and,
if so, the Trustee shall use "CUSIP", "Common Code" and "ISIN" numbers in
notices of redemption or purchase as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption or purchase and that reliance may be placed only
on the other identification numbers printed on the Securities, and any such
redemption or purchase shall not be affected by any defect in or omission of
such CUSIP, Common Code and ISIN numbers. The Company shall promptly notify the
Trustee in writing of any change in the CUSIP, Common Code and ISIN numbers.

                                       44


                                  ARTICLE III

                                    COVENANTS

                  SECTION 3.1. Payment of Securities. (a) The Company shall
promptly pay the principal of, premium, if any, and interest on the Securities
on the dates and in the manner provided in the Securities and in this Indenture.
Principal, premium, if any, and interest shall be considered paid on the date
due if on such date the Trustee or the Paying Agent holds in accordance with
this Indenture immediately available funds sufficient to pay all principal ,
premium, if any, and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the Securityholders
on that date pursuant to the terms of this Indenture.

                  The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

                  (b) All payments actually made by or on behalf of a Subsidiary
Guarantor not organized in the United States (a "Foreign Paying Subsidiary
Guarantor") in respect of the Subsidiary Guarantees, must be made free and clear
of, and without withholding or deduction for, or on account of, any present or
future tax, duty, levy, impost, assessment or other governmental charge imposed
by (1) the jurisdiction where such Foreign Paying Subsidiary Guarantor is
organized or otherwise considered to be a resident for tax purposes, (2) any
jurisdiction from or through which the Foreign Paying Subsidiary Guarantor makes
a payment on the Subsidiary Guarantee, or (3) any political organization or
governmental authority of any of the foregoing having the power to tax (the
"Relevant Tax Jurisdiction") (including penalties, interest and other
liabilities related thereto), unless the withholding or deducting of such taxes
is required by law or by the interpretation or administration thereof by the
Relevant Tax Jurisdiction. If any withholding or deduction for, or on account
of, any taxes of any Relevant Tax Jurisdiction will at any time be required in
respect of any payments under the Guarantee, the Foreign Paying Subsidiary
Guarantor will be required to pay such additional amounts ("Additional Amounts")
as may be necessary so that the net amount received by each Holder (including
Additional Amounts) after such withholding or deduction will not be less than
the amount the Holder would have received if such taxes had not been withheld or
deducted; provided, however, that the Foreign Paying Subsidiary Guarantor will
not be required to make any payment of Additional Amounts for or on account of:

                  (1)      a payment made to a Holder in respect of a beneficial
         owner with which the Foreign Paying Subsidiary Guarantors do not deal
         at arm's length (for the purposes of the Income Tax Act (Canada)) at
         the time of the making of such payment;

                  (2)      any tax, fee, duty, assessment or other governmental
         charge which would not have been imposed but for (i) the existence of
         any present or former connection


                                       45


         between such Holder or beneficial owner (or between a fiduciary,
         settlor, beneficiary, member or shareholder of such Holder or
         beneficial owner, if such Holder or beneficial owner is an estate,
         trust, partnership or corporation) and the Relevant Tax Jurisdiction,
         including, without limitation, such Holder or beneficial owner (or such
         fiduciary, settlor, beneficiary, member or shareholder) being or having
         been a citizen or resident thereof or being or having been present or
         engaged in trade or business therein or having or having had a
         permanent establishment therein, or (ii) the presentation of a Security
         for payment on a date more than 15 days after the date on which such
         payment became due and payable or the date on which payment thereof is
         duly provided for, whichever occurs later;

                  (3)      any estate, inheritance, gift, sales, transfer,
         personal property or similar tax, assessment or other governmental
         charge;

                  (4)      any tax, fee, duty, assessment or other governmental
         charge imposed by reason of such Holder or beneficial owner's past or
         present status as a personal holding company, foreign personal holding
         company or controlled foreign corporation with respect to the United
         States or as a corporation which accumulates earnings to avoid United
         States federal income tax;

                  (5)      any tax, fee, duty, assessment or other governmental
         charge which is payable otherwise than by withholding from payments of
         principal or interest with respect to the Securities;

                  (6)      any tax, fee, duty, assessment or other governmental
         charge imposed on interest received by anyone who owns (actually or
         constructively) 10% or more of the total combined voting power of all
         classes of stock of the Company;

                  (7)      any tax, fee, duty, assessment or other governmental
         charge imposed on interest received by a bank on an extension of credit
         made pursuant to a loan agreement entered into in the ordinary course
         of its trade or business;

                  (8)      any tax, assessment or other governmental charge that
         is imposed or withheld by reason of the failure by the Holder or
         beneficial owner of the Security to comply with a request of the
         Foreign Paying Subsidiary Guarantor addressed to the Holder to provide
         certification, information, documents or other evidence concerning the
         nationality, residence or identity of the Holder or beneficial owner or
         to make any declaration or similar claim or satisfy any other reporting
         requirement relating to such matters, which is required by a statute,
         treaty, regulation or administrative practice of the Relevant Taxing
         Jurisdiction as a precondition to exemption from all or part of such
         tax, assessment or other governmental;

                  (9)      any tax, assessment or other governmental charge
         which would not have been imposed but for the presentation of a
         Security (where presentation is required) for payment on a date more
         than 30 days after (i) the date on which such payment became due and
         payable or (ii) the date on which payment thereof is duly provided for,
         whichever occurs later;

                                       46


                  (10)     except in the case of the winding-up of the Foreign
         Paying Subsidiary Guarantor, any tax, assessment or other governmental
         charge which would not have been imposed but for the presentation of a
         Security for payment (where presentation is required) in the Relevant
         Tax Jurisdiction (unless by reason of the Foreign Paying Subsidiary
         Guarantor's actions, presentment could not have been made elsewhere);

                  (11)     any tax, assessment or other governmental charge
         imposed on a payment to an individual and required to be made pursuant
         to the European Union Directive on the taxation of savings income (the
         "Directive") which was adopted by the ECOFIN Council of the European
         Union on June 3, 2003, or any law implementing or complying with, or
         introduced to conform to, the Directive;

                  (12)     any tax, assessment or other governmental charge
         which could have been avoided by the presentation (where presentation
         is required) of the relevant Security to another Paying Agent in a
         member state of the European Union; or

                  (13)     any combination of the above; nor shall Additional
         Amounts be paid to any Holder of a Security on behalf of any Holder or
         beneficial owner who is a fiduciary or partnership or member of a
         partnership or other than the sole Holder or beneficial owner to the
         extent a beneficiary or settlor with respect to such fiduciary or a
         partnership or member of a partnership or Holder or beneficial owner
         would not have been entitled to payment of the Additional Amounts had
         such beneficiary, settlor, member or Holder or beneficial owner been
         the sole Holder or beneficial owner of the Security.

                  Notwithstanding anything to the contrary, with respect to any
taxes of a country other than the United States or any tax related to a
province, municipality or local taxing authority of such country, the Foreign
Paying Subsidiary Guarantor will also make such withholding or deduction and
remit the full amount deducted or withheld to the relevant authority as and when
required in accordance with applicable law. The Foreign Paying Subsidiary
Guarantor will furnish to the Holders, within 30 days after the date the later
of payment of any taxes due pursuant to applicable law or receipt of the
following, certified copies of tax receipts evidencing such payment by the
Foreign Paying Subsidiary Guarantor. The Foreign Paying Subsidiary Guarantor
will upon written request of each Holder (other than Holders whose payments are
subject to (1) and (2) above), reimburse each such Holder for the amount of

                  (i) any Non-United States taxes so levied or imposed and paid
by such Holder (and not withheld or deducted by any Foreign Paying Subsidiary
Guarantor) as a result of payments made under or with respect to the Subsidiary
Guarantees by any Foreign Paying Subsidiary Guarantor; and

                  (ii) any Non-United States taxes so levied or imposed and paid
by such Holder (and not withheld or deducted by any Foreign Paying Subsidiary
Guarantor) with respect to any reimbursement under the foregoing clause (i),
this clause (ii) or so that the net amount received by such Holder after such
reimbursement will not be less than the net amount the Holder would have
received if taxes on such reimbursement had not been imposed.

                                       47


                  (c) Any reference in this Indenture, in any context, to the
payment of the principal of, or premium, if any, or interest on or in respect of
a Security, or any other amount payable on or in respect of a Security, such
mention shall be deemed to include mention of the payment of Additional Amounts
as described in this Section 3.1 to the extent that, in such context, Additional
Amounts are or were payable in respect thereof pursuant to the provisions of
such Security and express mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not
made.

                  (d) The Foreign Paying Subsidiary Guarantor will pay any
present or future stamp, court or documentary taxes or any other excise or
property taxes, charges or similar levies that arise in any jurisdiction from
the execution, delivery, enforcement or registration of the Guarantees, the
Indenture or any other document or instrument in relation thereof, or the
receipt of any payments with respect to the Guarantees, excluding such taxes,
charges or similar levies imposed by any jurisdiction outside of the Relevant
Taxing Jurisdiction, the jurisdiction of incorporation of any successor of the
Foreign Paying Subsidiary Guarantor or any jurisdiction in which a paying agent
is located, and will agree to indemnify the Holders for any such taxes paid by
such Holders.

                  The foregoing obligations will survive any termination,
defeasance or discharge of the Indenture and will apply mutatis mutandis to any
jurisdiction in which any successor Person to the Foreign Paying Subsidiary
Guarantor is organized or any political subdivision or taxing authority or
agency thereof or therein.

                  Notwithstanding anything to the contrary contained in this
Indenture, the Foreign Paying Subsidiary Guarantor may, to the extent it is
required to do so by law, deduct or withhold income or other similar taxes
imposed by the United States of America from principal or interest payments
hereunder.

                  SECTION 3.2. Limitation on Indebtedness and Issuance of
Preferred Stock. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and that the Company will
not issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of Preferred Stock; provided, however, that the
Company or any Subsidiary Guarantor may incur Indebtedness or the Company may
issue shares of Disqualified Stock, if:

                  (1)      the Fixed Charge Coverage Ratio for the Company's
         most recently ended four full fiscal quarters for which internal
         financial statements are available immediately preceding the date on
         which such additional Indebtedness is incurred or such Disqualified
         Stock is issued would have been at least 2.00 to 1.00 if such
         Indebtedness is incurred or such Disqualified Stock is issued, after
         giving pro forma effect to the incurrence or issuance thereof; and

                  (2)      if such Indebtedness is subordinated in right of
         payment to the Securities, the final Stated Maturity of such
         Indebtedness is later than the final Stated Maturity of the

                                       48


         Securities and the Weighted Average Life to Maturity of such
         Indebtedness is greater than the remaining Weighted Average Life to
         Maturity of the Securities.

The foregoing limitations will not apply to the incurrence by the Company or its
Subsidiaries of Permitted Indebtedness, which means:

                  (1)      The Securities and the Subsidiary Guarantees issued
         on the Issuance Date and the Exchange Securities and Exchange
         Guarantees relating thereto issued in a Registered Exchange Offer
         pursuant to the Registration Rights Agreement;

                  (2)      the incurrence by the Company, any Subsidiary
         Guarantor or any Restricted Subsidiary that is a Foreign Subsidiary of
         Indebtedness under a Credit Facility (and guarantees thereof by the
         Company's Restricted Subsidiaries) in an aggregate principal amount at
         any one time outstanding not to exceed the greater of (i) $50.0 million
         or (ii) the Borrowing Base, less the aggregate amount of all Net
         Proceeds of Asset Sales applied to reduce permanently the commitment
         with respect to such Indebtedness pursuant to Section 3.5;

                  (3)      any Indebtedness of the Company and its Restricted
         Subsidiaries (other than under the Credit Facility and the Securities)
         in existence on the date of original issuance of the Securities (after
         giving effect to the application of the net proceeds of the sale of the
         Securities); provided that the 10.75% Senior Notes on the Issuance Date
         shall have been called for redemption in accordance with the applicable
         indenture;

                  (4)      the incurrence of Indebtedness by the Company or its
         Restricted Subsidiaries pursuant to letters of credit in an aggregate
         principal amount not to exceed $1.0 million (such letters of credit
         being deemed to have a principal amount equal to the maximum potential
         liability thereunder);

                  (5)      the incurrence by the Company or its Restricted
         Subsidiaries of Indebtedness pursuant to letters of credit or
         Guarantees for the benefit of Persons in which the Company or a
         Restricted Subsidiary may make Permitted Investments pursuant to clause
         (4) or (5) of the definition thereof, provided that for purposes of
         calculating the amount permitted to be invested pursuant to such clause
         (4) or (5), any such letter of credit or Guarantee shall be deemed to
         represent an Investment in such Person by the Company or Restricted
         Subsidiary in the amount of the maximum potential liability thereunder;

                  (6)      Guarantees by the Subsidiary Guarantors of
         Indebtedness incurred in accordance with the provisions of this
         Indenture; provided that in the event such Indebtedness that is being
         guaranteed is subordinated to the Securities or the Subsidiary
         Guarantees, then the related Guarantee shall be subordinated in right
         of payment to the Subsidiary Guarantee;

                  (7)      the incurrence by the Company or its Restricted
         Subsidiaries of Indebtedness represented by Capital Lease Obligations,
         mortgage financings, or purchase money obligations (including Acquired
         Debt which constitutes Capital Lease Obligations, mortgage financings
         or purchase money obligations), in each case incurred

                                       49


         for the purpose of financing all or any part of the purchase price or
         cost of construction or improvement of property used in the business of
         the Company or such Restricted Subsidiary in an aggregate principal
         amount not to exceed $5.0 million at any one time outstanding;

                  (8)      intercompany Indebtedness between or among the
         Company and any of its Restricted Subsidiaries; provided, however, that
         (i) any subsequent issuance or transfer of Capital Stock or any other
         event which results in any such Indebtedness being beneficially held by
         a Person other than the Company or a Restricted Subsidiary of the
         Company and (ii) any sale or other transfer of any such Indebtedness to
         a Person other than the Company or a Restricted Subsidiary of the
         Company shall be deemed, in each case, to constitute an incurrence of
         such Indebtedness by the Company or such Restricted Subsidiary, as the
         case may be;

                  (9)      the incurrence by the Company or its Restricted
         Subsidiaries of (i) 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, (ii) Currency Agreements and (iii)
         Commodity Agreements; provided, however that such Hedging Obligations,
         Currency Agreements and Commodity Agreements are entered into for bona
         fide purposes and not for speculative purposes;

                  (10)     the incurrence of Permitted Refinancing Indebtedness
         by the Company or its Restricted Subsidiaries in exchange for, or the
         net proceeds of which are used to extend, refinance, renew, replace,
         defease or refund, Indebtedness (other than the Redeemable Warrants and
         the 10.75% Senior Notes) described in clause (1) or (3) of this
         paragraph or described in the first paragraph of this covenant; and

                  (11)     the incurrence of Indebtedness by the Company or
         Subsidiary Guarantors (in addition to Indebtedness permitted by any
         other clause of this paragraph) in an aggregate principal amount at any
         time outstanding not to exceed $5.0 million.

For purposes of the foregoing provision, the cash flow generated by any Person,
business, property or asset acquired during the immediately preceding four
fiscal quarter period (or subsequent to the end thereof and on or prior to the
Calculation Date) shall be determined on the same basis provided in the
definition of Consolidated Cash Flow. Whenever pro forma effect is to be given
to any calculation under this covenant, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of the
Company (including pro forma expense and cost reductions calculated in
accordance with Regulation S-X under the Securities Act). In addition, for
purposes of the Fixed

                                       50


Charge Coverage Ratio test set forth in the first paragraph of this covenant,
Consolidated Cash Flow and Fixed Charges shall be calculated after giving effect
on a pro forma basis for the period of such calculation to the incurrence of any
Indebtedness at any time during the period commencing on the first day of the
four full fiscal quarter period that precedes the Calculation Date and ending on
and including the Calculation Date (and that is outstanding or available to be
borrowed on the Calculation Date), including without limitation the incurrence
of the Indebtedness giving rise to the need to make such calculation, in each
case as if such incurrence occurred and the proceeds therefrom had been applied
on the first day of such four full fiscal quarter period. Further, for purposes
of the Fixed Charge Coverage Ratio test set forth in the first paragraph of this
covenant, consolidated interest expense attributable to any Indebtedness
(whether existing or being incurred) bearing a floating interest rate shall be
computed on a pro forma basis at an assumed rate equal to the higher of (i) the
actual rate in effect on the date of computation under the instrument governing
such Indebtedness, or (ii) the average of the floating rate for such
Indebtedness for the one-year period immediately prior to the date of
computation, as if such assumed rate had been the applicable rate for the entire
period.

                  For purposes of determining compliance with, and the
outstanding principal amount of any particular Indebtedness incurred pursuant to
and in compliance with, this covenant:

                  (1)      in the event that Indebtedness meets the criteria of
         more than one of the types of Indebtedness described in this covenant,
         the Company, in its sole discretion, will classify such item of
         Indebtedness on the date of incurrence and only be required to include
         the amount and type of such Indebtedness in the chosen clause or
         clauses, and the Company may reclassify any such Indebtedness between
         clauses (b) and (k) of the second paragraph of this covenant, between
         clauses (d) and (k) of the second paragraph of this covenant, and
         between clauses (g) and (k) of this covenant to the extent such
         Indebtedness could be incurred pursuant to such clause at the time of
         such reclassification;

                  (2)      all Indebtedness outstanding on the date of this
         Indenture under the Senior Secured Credit Agreement shall be deemed
         initially incurred on the Issuance Date under clause (b) of the second
         paragraph of this covenant (and not pursuant to the first paragraph or
         any other clause under the second paragraph of this Section 3.2;

                  (3)      Guarantees of, or obligations in respect of letters
         of credit relating to, Indebtedness which is otherwise included in the
         determination of a particular amount of Indebtedness shall not be
         included;

                  (4)      if obligations in respect of letters of credit are
         incurred pursuant to a Credit Facility and are being treated as
         incurred pursuant to clause (b) of the second paragraph of this
         covenant and the letters of credit relate to other Indebtedness, then
         such other Indebtedness shall not be included;

                  (5)      the principal amount of any Disqualified Stock of the
         Company or a Restricted Subsidiary will be equal to the greater of the
         maximum mandatory redemption or repurchase price (not including, in
         either case, any redemption or repurchase premium) or the liquidation
         preference thereof, in each case at the time of determination;

                  (6)      Indebtedness permitted pursuant to this covenant need
         not be permitted solely by reference to one provision permitting such
         Indebtedness but may be permitted in part by one such provision and in
         part by one or more other provisions of this covenant permitting such
         Indebtedness; and

                                       51


                  (7)      the amount of Indebtedness issued at a price that is
         less than the principal amount thereof will be equal to the amount of
         the liability in respect thereof determined in accordance with GAAP.

                  Accrual of interest, accrual of dividends, the accretion of
accreted value, the payment of interest in the form of additional Indebtedness
and the payment of dividends in the form of additional shares of Preferred Stock
or Disqualified Stock will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant. The amount of any Indebtedness outstanding as of any
date shall be (i) the accreted value thereof in the case of any Indebtedness
issued with original issue discount and (ii) the principal amount or liquidation
preference thereof, together with any interest thereon that is more than 30 days
past due, in the case of any other Indebtedness.

                  In addition, the Company will not permit any of its
Unrestricted Subsidiaries to incur any Indebtedness or issue any shares of
Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted
Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary as of such date (and,
if such Indebtedness is not permitted to be incurred as of such date under this
Section 3.2, the Company shall be in Default of this covenant).

                  For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case of term
Indebtedness, or first committed, in the case of revolving credit Indebtedness;
provided that if such Indebtedness is incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-dominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such
U.S. dollar-dominated restriction shall be deemed not to have been exceeded so
long as the principal amount of such refinancing Indebtedness does not exceed
the principal amount of such Indebtedness being refinanced. Notwithstanding any
other provision of this covenant, the maximum amount of Indebtedness that the
Company may incur pursuant to this covenant shall not be deemed to be exceeded
solely as a result of fluctuations in the exchange rate of currencies. The
principal amount of any Indebtedness incurred to refinance other Indebtedness,
if incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such Refinancing Indebtedness is denominated that is in
effect on the date of such refinancing.

                  SECTION 3.3. Limitation on Restricted Payments. The Company
will not, and will not permit any of its Restricted Subsidiaries, directly or
indirectly, to:

                  (1)      declare or pay any dividend or make any distribution
         on account of the Company's or any of its Restricted Subsidiaries'
         Equity Interests (other than dividends or distributions payable in
         Equity Interests (other than Disqualified Stock) of the Person making
         such dividend or distribution, or dividends or distributions payable to
         the Company or any Restricted Subsidiary (and if such Subsidiary is not
         a Wholly-Owned Subsidiary, to its other holders of Common Stock on a
         pro rata basis);

                                       52


                  (2)      purchase, redeem or otherwise acquire or retire for
         value any Equity Interests of the Company or any direct or indirect
         parent of the Company;

                  (3)      purchase, redeem, repay, defease, pay any amount of
         principal of or otherwise acquire or retire for value any Indebtedness
         that is subordinated to the Securities or subordinated to the
         Subsidiary Guarantees prior to the scheduled principal payment, sinking
         fund payment or maturity thereof;

                  (4)      make any Investment in any Person (other than
         Permitted Investments); or

                  (5)      guarantee any Indebtedness of any Affiliate of the
         Company other than a Restricted Subsidiary of the Company or pursuant
         to a Guarantee that constitutes a Permitted Investment pursuant to
         clause (4) or (5) of the definition thereof

(all such payments and other actions set forth in clauses (1) through (5) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment 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 and its Restricted Subsidiaries 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 3.2; and

                  (c)      such Restricted Payment, together with the aggregate
                           of all other Restricted Payments made by the Company
                           and its Restricted Subsidiaries after the date of
                           this Indenture (including Restricted Payments
                           permitted by the next succeeding paragraph), is less
                           than the sum, without duplication, of:

                           (i) 50% of the cumulative Consolidated Net Income of
                           the Company for the period (taken as one accounting
                           period) from the first day of the fiscal quarter in
                           which the Issuance Date occurs to the end of the
                           Company's most recently ended fiscal quarter for
                           which internal financial statements are available at
                           the time of such Restricted Payment (or, if such
                           Consolidated Net Income for such period is a loss,
                           100% of such loss), plus

                           (ii) 100% of the aggregate net cash proceeds received
                           by the Company from the issue or sale since the date
                           of this Indenture of Equity Interests of the Company
                           or of debt securities of the Company that have been
                           converted into such Equity Interests (other than
                           Equity Interests (or convertible debt securities)
                           sold to a Subsidiary of the Company and other

                                       53


                           than Disqualified Stock or debt securities that have
                           been converted into Disqualified Stock), plus

                           (iii) 100% of any dividends or interest actually
                           received in cash by the Company or a Restricted
                           Subsidiary after the date of this Indenture from an
                           Unrestricted Subsidiary, a Person that is not a
                           Subsidiary or a Person that is accounted for on the
                           equity method of accounting; provided, however, that
                           no amount will be included under this clause (iii) to
                           the extent it is already included in Consolidated Net
                           Income, plus

                           (iv) the amount equal to the net reduction in
                           Restricted Investments made by the Company or any of
                           its Restricted Subsidiaries in any Person (including
                           Investments in Unrestricted Subsidiaries) resulting
                           from:

                           (A)      repurchases or redemptions of such
                                    Restricted Investments by such Person
                                    (including Unrestricted Subsidiaries),
                                    proceeds realized upon the sale of such
                                    Restricted Investment (including Investments
                                    in Unrestricted Subsidiaries) to an
                                    unaffiliated purchaser or repayments of
                                    loans or advances by such Person (including
                                    Unrestricted Subsidiaries) to the Company or
                                    any Restricted Subsidiary of the Company, or

                           (B)      the redesignation of Unrestricted
                                    Subsidiaries as Restricted Subsidiaries
                                    (valued in each case as provided in the
                                    definition of "Investment") not to exceed,
                                    in the case of any Unrestricted Subsidiary,
                                    the amount of Investments previously made by
                                    the Company or any Restricted Subsidiary in
                                    such Unrestricted Subsidiary,

                           which amount in each case under this clause (iv) was
                           included in the calculation of the amount of
                           Restricted Payments; provided, however, that no
                           amount will be included under this clause (iv) to the
                           extent it is already included in Consolidated Net
                           Income, plus

                           (v) $10.0 million.

         The foregoing provisions do will not prohibit:

                  (1)      the payment of up to an aggregate of $20.0 million
         (A) to the holders of the Company's Common Stock as a dividend or to
         repurchase outstanding shares of Common Stock of the Company which
         dividend or repurchase shall occur on or before March 31, 2005 and (B)
         to redeem the Redeemable Warrants, in each case in the manner described
         in the Offering Memorandum, which redemption shall occur on or before
         September 30, 2004 with respect to the JPMorgan Partners 23A Warrant
         and on or before December 31, 2004 with respect to the Lender Warrant;
         provided, however, that (x) the aggregate dividend on or repurchase of
         Common Stock permitted by this clause (1) shall not exceed $10.0
         million and (y) such dividend, repurchase and redemption will be
         excluded in subsequent calculations of the amount of Restricted
         Payments;

                                       54


                  (2)      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; provided,
         however, that such dividends will be included in subsequent
         calculations of the amount of Restricted Payments;

                  (3)      the redemption, repurchase, retirement or other
         acquisition of any Equity Interests of the Company in exchange for, or
         out of the proceeds of, the substantially concurrent sale (other than
         to a Subsidiary of the Company) of other Equity Interests of the
         Company (other than any Disqualified Stock); provided, however, that
         (a) such repurchase, redemption, retirement or other acquisition will
         be excluded in subsequent calculations of the amount of Restricted
         Payments and (b) the amount of any such net cash proceeds used therefor
         shall be excluded from clause (c)(ii) of the preceding paragraph to the
         extent otherwise included therein;

                  (4)      the defeasance, redemption or repurchase of
         subordinated Indebtedness of the Company or Indebtedness of a
         Subsidiary Guarantor that is subordinated to the Subsidiary Guarantees
         with the net proceeds from an incurrence of Permitted Refinancing
         Indebtedness or in exchange for or out of the proceeds of a
         substantially concurrent sale (other than to a Subsidiary of the
         Company) of Equity Interests of the Company (other than Disqualified
         Stock) or upon the conversion of subordinated Indebtedness into Equity
         Interests of the Company (other than Disqualified Stock); provided,
         however, in each case that (a) such defeasance, redemption or
         repurchase will be excluded in subsequent calculations of the amount of
         Restricted Payments and (b) the amount of any such net cash proceeds
         used therefor shall be excluded from clause (c)(ii) of the preceding
         paragraph to the extent otherwise included therein;

                  (5)      the repurchase, redemption or other acquisition or
         retirement for value of any Equity Interests of the Company or any
         Restricted Subsidiary of the Company held by any member of the
         Company's or any of its Subsidiaries' management or any director or
         employee pursuant to any management equity subscription agreement,
         stock option agreement or stock plan in effect as of the date of this
         Indenture or entered into thereafter in the ordinary course of
         business; provided, however, that the aggregate price paid for all such
         repurchased, redeemed, acquired or retired Equity Interests shall not
         exceed $2.5 million, plus the aggregate cash proceeds received by the
         Company from any reissuance of Equity Interests by the Company to
         members of management of the Company and its Subsidiaries; provided
         that such repurchase, redemption, acquisition or retirement will be
         included in subsequent calculations of the amount of Restricted
         Payments; and no Default or Event of Default shall have occurred and be
         continuing immediately after such transaction;

                  (6)      the payment of dividends on the Company's Common
         Stock following the first Public Equity Offering of the Company's
         Common Stock after the Issuance Date of up to 6% per annum of the net
         proceeds received by the Company in such Public Equity Offering, other
         than public offerings of the Company's Common Stock registered on Form
         S-4 or S-8; provided, however, that such payment will be included in
         subsequent calculations of the amount of Restricted Payments and no
         Default or Event of Default shall have occurred and be continuing
         immediately after such transaction;

                                       55


                  (7)      the purchase, repurchase, redemption, defeasance or
         other acquisition or retirement for value of any subordinated
         Indebtedness of the Company:

                  (a)      at a purchase price not greater than 101% of the
                           principal amount of such subordinated Indebtedness of
                           the Company in the event of a Change of Control in
                           accordance with provisions substantially consistent
                           with Section 3.10; or

                  (b)      at a purchase price not greater than 100% of the
                           principal amount thereof in the event of an Asset
                           Sale in accordance with provisions substantially
                           consistent with Section 3.5;

                           provided that, prior to or simultaneously with such
                           purchase, repurchase,

                           redemption, defeasance or other acquisition or
                           retirement, the Company has made the Change of
                           Control Offer or Asset Sale Offer, as applicable, as
                           provided in Section 3.10 or Section 3.5, as
                           applicable, with respect to the Securities and has
                           completed the repurchase or redemption of all
                           Securities validly tendered for payment in connection
                           with such Change of Control Offer or Asset Sale
                           Offer; and

                  (8)      so long as no Default or Event of Default has
         occurred and is continuing, the declaration and payment of dividends to
         holders of any class or series of Disqualified Stock of the Company
         issued in accordance with the terms of this Indenture to the extent
         such dividends are included in the definition of "Fixed Charges;"
         provided that the payment of such dividends will be excluded in
         subsequent calculations of the amount of Restricted Payments. For
         purposes of the preceding sentence, payment of the option exercise
         price of stock options held by members of management, employees or
         directors by the tender of shares of the Company's Common Stock shall
         not be deemed to constitute a repurchase, redemption, acquisition or
         retirement of Equity Interests held by such members of management,
         employees or directors. A tender of the Company's Common Stock by
         members of management in payment of withholding taxes shall be a
         repurchase, redemption, acquisition or retirement of Equity Interests
         held by members of management only to the extent that the amount of
         withholding taxes the Company pays on behalf of such member of
         management exceeds the reduction in the Company's state and federal
         taxes caused by the exercise of the stock option to which the
         withholding payment relates.

                  The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
Such designation will reduce the amount available for Restricted Payments under
the first paragraph of this Section 3.3 as determined in accordance with the
definition of Investment and will only be permitted if such Restricted Payment
would be permitted at such time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.

                  The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of such Restricted Payment of the asset(s)
or securities proposed to be paid,

                                       56


transferred or issued by the Company or such Restricted Subsidiary, as the case
may be, pursuant to such Restricted Payment. The fair market value of any cash
Restricted Payment shall be its face amount and any non-cash Restricted Payment
shall be determined conclusively by the Board of Directors of the Company acting
in good faith whose Board Resolution with respect thereto shall be delivered to
the Trustee, such determination to be based upon an opinion or appraisal issued
by an accounting, appraisal or investment banking firm of national standing if
such fair market value is estimated in good faith by the Board of Directors of
the Company to exceed $10.0 million.

                  Not later than the date of making any Restricted Payment with
a fair market value equal to or in excess of $500,000, 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 3.3 were computed, which calculations may be based upon the
Company's latest available financial statements.

                  SECTION 3.4. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any of its
Restricted 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 Restricted Subsidiary to:

                  (1)      (i) pay dividends or make any other distributions to
         the Company or any of its Restricted Subsidiaries (A) on its Capital
         Stock or (B) with respect to any other interest or participation in, or
         measured by, its profits, or (ii) pay any Indebtedness owed to the
         Company or any of its Restricted Subsidiaries;

                  (2)      make loans or advances to the Company or any of its
         Restricted Subsidiaries; or

                  (3)      transfer any of its properties or assets to the
         Company or any of its Restricted Subsidiaries, except for such
         encumbrances or restrictions existing under or by reason of

                           (i) Indebtedness as in effect on the date of this
                           Indenture;

                           (ii) the Credit Facility as in effect as of the date
                           of this Indenture, and any amendments, modifications,
                           restatements, renewals, increases, supplements,
                           refundings, replacements or refinancings thereof,
                           provided that such amendments, modifications,
                           restatements, renewals, increases, supplements,
                           refundings, replacements or refinancings are not
                           materially more restrictive, taken as a whole, with
                           respect to such dividend and other payment
                           restrictions than those contained in the Credit
                           Facility as in effect on the date of this Indenture;

                           (iii) this Indenture and the Securities;

                           (iv) applicable law;

                                       57


                           (v) any instrument governing Indebtedness or Capital
                           Stock of a Person acquired by the Company or any of
                           its Restricted Subsidiaries as in effect at the time
                           of such acquisition (except to the extent such
                           Indebtedness was incurred in connection with or in
                           contemplation of such acquisition), which encumbrance
                           or restriction is not applicable to any Person, or
                           the properties or assets of any Person, other than
                           the Person, or the property or assets of the Person,
                           so acquired, provided that the Consolidated Cash Flow
                           of such Person is not taken into account in
                           determining whether such acquisition was permitted by
                           the terms of this Indenture;

                           (vi) in the case of clause (3), customary
                           non-assignment provisions in leases, licenses or
                           similar contracts entered into in the ordinary course
                           of business and consistent with past practices or any
                           encumbrance or restriction contained in mortgages,
                           pledges or other security agreements permitted under
                           this Indenture securing Indebtedness of the Company
                           or a Restricted Subsidiary to the extent such
                           encumbrances or restrictions restrict the transfer of
                           the property subject to such mortgages, pledges or
                           other security agreements;

                           (vii) purchase money obligations for property
                           acquired in the ordinary course of business that
                           impose restrictions of the nature described in clause
                           (3) above on the property so acquired;

                           (viii) Permitted Refinancing Indebtedness, provided
                           that the restrictions contained in the agreements
                           governing such Permitted Refinancing Indebtedness are
                           not materially more restrictive, taken as a whole,
                           than those contained in the agreements governing the
                           Indebtedness being refinanced;

                           (ix) encumbrances or restrictions arising under Liens
                           created pursuant to clause (7) of the definition of
                           Permitted Liens;

                           (x) the Subsidiary Guarantees;

                           (xi) encumbrances or restrictions (x) contained in
                           indentures or other debt instruments or debt
                           arrangements incurred by any Subsidiary Guarantor in
                           accordance with Section 3.2 that are not more
                           materially restrictive, taken as a whole, than those
                           applicable to the Company in either this Indenture
                           governing the Securities or the Senior Secured Credit
                           Agreement on the date of this Indenture (which may
                           result in encumbrances or restrictions comparable to
                           those applicable to the Company at a Restricted
                           Subsidiary level) or (y) with respect to Restricted
                           Subsidiaries that are not Subsidiary Guarantors, that
                           are incurred subsequent to the Issuance Date pursuant
                           clause (2) of the second paragraph of Section 3.2; or

                                       58


                           (xii) any restriction with respect to a Restricted
                           Subsidiary (or any of its property or assets) imposed
                           pursuant to an agreement entered into for the direct
                           or indirect sale or disposition of all or
                           substantially all the Capital Stock or assets of such
                           Restricted Subsidiary, or any property or assets that
                           are subject to such restriction, pending the closing
                           of such sale or disposition.

                  SECTION 3.5. Limitation on Sales of Assets and Subsidiary
Stock. The Company will not conduct, and will not permit any of its Restricted
Subsidiaries to conduct, an Asset Sale unless:

                  (1)      the Company (or the Restricted Subsidiary, as the
         case may be) receives consideration at the time of such Asset Sale at
         least equal to the fair market value (evidenced by a Board Resolution
         set forth in an Officers' Certificate delivered to the Trustee prior
         to, or contemporaneously with, the consummation of the Asset Sale) of
         the assets sold or otherwise disposed of; and

                  (2)      at least 75% of the consideration therefor received
         by the Company or such Restricted Subsidiary is in the form of cash or
         Cash Equivalents; provided, however, that the amount of (A) any
         liabilities (as shown on the Company's or such Restricted Subsidiary's
         most recent balance sheet or in the notes thereto), of the Company or
         any Restricted Subsidiary (other than Disqualified Stock and
         liabilities that are by their terms subordinated to the Securities or
         the Subsidiary Guarantees that are assumed by the transferee of any
         such assets), and (B) any securities, Securities or other obligations
         received by the Company or any such Restricted Subsidiary from such
         transferee that are converted by the Company or such Restricted
         Subsidiary in a reasonable and prompt manner 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 at its option (a) to permanently reduce
debt outstanding under secured Indebtedness (other than Disqualified Stock) of
the Company and/or its Restricted Subsidiaries (and to make corresponding
reductions to the commitments in respect thereof) or (b) to make an investment
in a business or capital expenditure or other long-term assets of the Company or
its Restricted Subsidiaries. Pending the final application of any such Net
Proceeds, the Company may 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."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
shall make an offer to all holders of notes (an "Asset Sale Offer") and, to the
extent required by any Pari Passu Indebtedness, to all holders of Pari Passu
Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Pari Passu Indebtedness with the proceeds from any
Asset Sale ("Pari Passu Notes") to purchase the maximum principal amount of
Securities and Pari Passu Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in this Indenture. To the extent that
the aggregate amount of Securities and Pari Passu Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the

                                       59


Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Securities and Pari Passu Notes surrendered by
holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Securities and the Pari Passu Notes to be purchased on a pro rata basis.
Upon completion of such offer to purchase, even if Securities less than the
Excess Proceeds are tendered for purchase, the amount of Excess Proceeds shall
be reset to zero.

                  The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement, except to the extent that a longer
period is required by applicable law (the "Asset Sale Offer Period"). No later
than five Business Days after the termination of the Asset Sale Offer Period
(the "Asset Sale Purchase Date"), the Company will purchase the principal amount
of Securities and Pari Passu Notes required to be purchased pursuant to this
covenant (the "Asset Sale Offer Amount") or, if less than the Asset Sale Offer
Amount has been tendered, all Securities and Pari Passu Notes tendered in
response to the Asset Sale Offer. Payment for any Securities so purchased shall
be made in the same manner as interest payments are made.

                  If the Asset Sale 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 Security is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Securities or holders or lenders
who tender Pari Passu 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
of the Securities, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender Securities
pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall
state:

         (a)      that the Asset Sale Offer is being made pursuant to this
                  Section 3.5 and the length of time the Asset Sale Offer shall
                  remain open;

         (b)      the Asset Sale Offer Amount, the purchase price and the Asset
                  Sale Purchase

                  Date;

         (c)      that any Security not tendered or accepted for payment shall
                  continue to accrete or accrue interest;

         (d)      that, unless the Company defaults in making such payment, any
                  Security accepted for payment pursuant to the Asset Sale Offer
                  shall cease to accrue interest after the Asset Sale Purchase
                  Date;

         (e)      that Holders electing to have a Security purchased pursuant to
                  any Asset Sale Offer shall be required to surrender the
                  Security with the form entitled "Option of Holder to Elect
                  Purchase" on the reverse of the Security, to the Company, a
                  depositary, if appointed by the Company, or the Paying Agent
                  at the address specified in the notice at least three days
                  before the Asset Sale Purchase Date;

                                       60


         (f)      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 Asset
                  Sale Offer Period, a telegram, telex, facsimile transmission
                  or letter setting forth the name of the Holder, the principal
                  amount of the Security, the Holder delivered for purchase and
                  a statement that such Holder is withdrawing his election to
                  have such Security purchased;

         (g)      that, if the aggregate principal amount of Securities and Pari
                  Passu Notes surrendered by holders and lenders, as the case
                  may be, exceeds the Asset Sale Offer Amount, the Company shall
                  select the Securities and Pari Passu Notes to be purchased on
                  a pro rata basis (with such adjustments as may be deemed
                  appropriate by the Company so that only Securities and Pari
                  Passu Notes in denominations of $1,000, or integral multiples
                  thereof, shall be purchased); and

         (h)      that Holders whose Securities were purchased only in part
                  shall be issued new Securities equal in principal amount to
                  the unpurchased portion of the Securities surrendered.

                  On or before the Asset Sale Purchase Date, the Company shall,
to the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Sale Offer Amount of Securities and Pari Passu Notes or
portions of Securities and Pari Passu Notes so validly tendered and not properly
withdrawn pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer
Amount has been validly tendered and not properly withdrawn, all Securities and
Pari Passu Notes so validly tendered and not properly withdrawn, in each case in
integral multiples of $1,000, and shall deliver to the Trustee an Officers'
Certificate stating that such Securities and Pari Passu Notes or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.5. The Company, the depositary or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the Asset
Sale Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Securities or Pari Passu Notes so validly tendered and
not properly withdrawn by such holder or lender, as the case may be, and
accepted by the Company for purchase, and the Company shall promptly issue a new
Security, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Security to such Holder, in a
principal amount equal to any unpurchased portion of the Security surrendered;
provided that each such new Security will be in a principal amount of $1,000 or
an integral multiple of $1,000. In addition, the Company will take any and all
other actions required by the agreements governing the Pari Passu Notes. Any
Security or Pari Passu Note, as the case may be, 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 Asset Sale
Purchase Date.

                  The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Securities pursuant to the Asset Sale Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described in the Indenture by virtue of the conflict.

                                       61


                  SECTION 3.6. Limitation on Liens. The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien, other than Permitted Liens,
on any asset now owned or hereafter acquired, or any income or profits therefrom
or assign or convey any right to receive income therefrom, unless all payments
due under this Indenture and the Securities (including the Subsidiary
Guarantees) are secured by a Lien on such property that is (i) equal and ratable
with such Lien or (ii) in the case of Indebtedness which is subordinated in
right of payment to the Securities (or such Subsidiary Guarantees), the
Securities (or such Subsidiary Guarantees) are secured by a Lien on such asset
that is senior to such Lien.

                  SECTION 3.7. Limitation on Sale/Leaseback Transactions. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
enter into any Sale/Leaseback Transaction unless:

                  (1)      the Company or such Restricted Subsidiary, as the
         case may be, receives consideration at the time of such Sale/Leaseback
         Transaction at least equal to the fair market value (as evidenced by a
         Board Resolution of the Company) of the property subject to such
         transaction;

                  (2)      the Company or such Restricted Subsidiary could have
         incurred Indebtedness in an amount equal to the Attributable
         Indebtedness in respect of such Sale/Leaseback Transaction pursuant to
         Section 3.2;

                  (3)      the Company or such Restricted Subsidiary would be
         permitted to create a Lien on the property subject to such
         Sale/Leaseback Transaction without securing the Securities pursuant to
         Section 3.6; and

                  (4)      the Sale/Leaseback Transaction is treated as an Asset
         Sale and all of the conditions of this Indenture described in Section
         3.5 (including the provisions concerning the application of Net
         Proceeds) are satisfied with respect to such Sale/Leaseback
         Transaction, treating all of the consideration received in such
         Sale/Leaseback Transaction as Net Proceeds for purposes of such
         covenant.

                  SECTION 3.8. Limitation on Affiliate Transactions. The Company
will not, and will not permit any of its Restricted Subsidiaries to, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:

                  (1)      such Affiliate Transaction is on terms that are no
         less favorable to the Company or the relevant Restricted Subsidiary
         than those that would have been obtained in a comparable transaction by
         the Company or such Restricted Subsidiary with an unrelated Person; and

                  (2)      the Company delivers to the Trustee (i) with respect
         to any Affiliate Transaction involving aggregate payments in excess of
         $2.0 million, a Board Resolution set forth in an Officers' Certificate
         certifying that such Affiliate Transaction complies with clause (1)
         above and such Affiliate Transaction is approved by a majority of the
         members of the Board of Directors and by a majority of the

                                       62


         members of such Board having no personal stake in such transaction and
         (ii) with respect to any Affiliate Transaction involving aggregate
         payments in excess of $10.0 million, an opinion as to the fairness to
         the Company or such Restricted Subsidiary from a financial point of
         view issued by an investment banking firm of national standing;

                  provided, however, that each of the following shall not be
deemed Affiliate Transactions:

                  (1)      any employment, stock option, stock purchase or stock
         grant agreement entered into by the Company or any of its Restricted
         Subsidiaries with directors, officers and employees in the ordinary
         course of business and consistent with the past practice of the Company
         or such Restricted Subsidiary;

                  (2)      transactions between or among the Company and/or its
         Restricted Subsidiaries;

                  (3)      transactions permitted by the provisions of this
         Indenture described in Section 3.3 or pursuant to clause (4) or (5) of
         the definition of "Permitted Investments;"

                  (4)      the payment of compensation, and indemnity provided
         on behalf of, directors or employees of the Company or any Restricted
         Subsidiary in the ordinary course of business;

                  (5)      loans and advances to officers and employees of the
         Company or any of its Restricted Subsidiaries in the ordinary course of
         business in an amount not to exceed $1.5 million at any one time
         outstanding; provided that the Company and its Restricted Subsidiaries
         will comply in all material respects with all applicable provisions of
         the Sarbanes-Oxley Act and the rules and regulations promulgated in
         connection therewith in connection with such loans or advances;

                  (6)      the issuance of Capital Stock (other than
         Disqualified Stock) of the Company to any Affiliate; and

                  (7)      the provision by Persons who may be deemed Affiliates
         or stockholders of the Company (other than such provision by JPMorgan
         Partners 23A and Persons directly or indirectly controlled by JPMorgan
         Partners 23A) of investment banking, commercial banking, trust, lending
         or financing, investment, underwriting, placement agent, financial
         advisory or similar services to the Company or its Restricted
         Subsidiaries performed after the Issuance Date.

                  SECTION 3.9. Limitation on Sale of Capital Stock of Restricted
Subsidiaries(a) . The Company will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of any Voting Stock of any Restricted Subsidiary or, with respect to a
Restricted Subsidiary, to issue any of its Voting Stock (other than, if
necessary, shares of its Voting Stock constituting directors' qualifying shares)
to any Person except:

                  (1)      to the Company or a Wholly-Owned Subsidiary; or

                                       63



                  (2)      in compliance with the conditions described in
         Section 3.5 and immediately after giving effect to such issuance or
         sale, such Restricted Subsidiary either continues to be a Restricted
         Subsidiary or if such Restricted Subsidiary would no longer be a
         Restricted Subsidiary, then the remaining Investment of the Company or
         a Restricted Subsidiary in such Person (after giving effect to such
         issuance or sale), if any, would have been permitted to be made under
         Section 3.3 (excluding clause (1) of the definition of "Permitted
         Investments") as if made on the date of such issuance or sale.

                  SECTION 3.10. Change of Control. Upon the occurrence of a
Change of Control, each Holder of Securities will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Securities pursuant to the offer described below (the
"Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest to the date
of purchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) (the "Change
of Control Payment").

                  Within 30 days following any Change of Control, unless the
Company has exercised its right to redeem all outstanding Securities pursuant to
Section 5.1, the Company will mail a notice to each Holder, with a copy to the
Trustee, stating:

                  (1)      that the Change of Control Offer is being made
         pursuant to this Section 3.10 and that all Securities tendered will be
         accepted for payment;

                  (2)      the purchase price and the purchase date, which will
         be no earlier than 30 days nor later than 60 days from the date such
         notice is mailed (the "Change of Control Payment Date");

                  (3)      that any Security not tendered will continue to
         accrue interest;

                  (4)      that, unless the Company defaults in the payment of
         the Change of Control Payment, all Securities accepted for payment
         pursuant to the Change of Control Offer will cease to accrue interest
         after the Change of Control Payment Date;

                  (5)      that holders electing to have any Securities
         purchased pursuant to a Change of Control Offer will be required to
         surrender the Securities, with the form entitled "Option of Holder to
         Elect Purchase" on the reverse of the Securities 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 will be entitled to withdraw their
         election if the Paying Agent receives, not later than the close of
         business on the second Business Day preceding the Change of Control
         Payment Date, a telegram, telex, facsimile transmission or letter
         setting forth the name of the holder, the principal amount of
         Securities delivered for purchase, and a statement that such holder is
         withdrawing his election to have such Securities purchased; and

                  (7)      that holders whose Securities are being purchased
         only in part will be issued new Securities equal in principal amount to
         the unpurchased portion of the

                                       64


         Securities surrendered, which unpurchased portion must be equal to
         $1,000 in principal amount or an integral multiple thereof.

                  If the Change of Control Payment Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest, if any, will be paid to the Person in whose name a
Security is registered at the close of business on such record date, and no
additional interest will be payable to Holders who tender pursuant to the Change
of Control Offer.

                  The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Securities in connection with a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described in the Indenture by virtue of the conflict.

                  On the Change of Control Payment Date, the Company will, to
the extent lawful:

                  (1)      accept for payment Securities or portions thereof
         tendered pursuant to the Change of Control Offer,

                  (2)      deposit with the Paying Agent an amount equal to the
         Change of Control Payment in respect of all Securities or portions
         thereof so tendered, and

                  (3)      deliver or cause to be delivered to the Trustee the
         Securities so accepted together with an Officers' Certificate stating
         the aggregate principal amount of the Securities or portions thereof
         being purchased by the Company.

                  The Paying Agent will promptly mail to each holder of
Securities so accepted the Change of Control Payment for such Securities, and
the Trustee will promptly authenticate and mail to each holder a new Security
equal in principal amount to any unpurchased portion of the Securities
surrendered, if any; provided that each such new Security will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will send to the
Trustee and the holders on or as soon as practicable after the Change of Control
Payment Date a notice setting forth the results of the Change of Control Offer.

                  Prior to mailing a Change of Control Offer, and as a condition
to such mailing (i) the requisite holders of each issue of Indebtedness issued
under an indenture or other agreement that may be violated by such payment shall
have consented to such Change of Control Offer being made and waived the event
of default, if any, caused under such indenture or other agreement by the Change
of Control or (ii) the Company will repay all outstanding Indebtedness issued
under an indenture or other agreement that may be violated by a payment to the
Holders of Securities under a Change of Control Offer or (iii) the Company must
offer to repay all such Indebtedness, and make payment to the holders of such
Indebtedness that accept such offer, and obtain waivers of any event of default
from the remaining holders of such Indebtedness. The Company covenant to effect
such repayment or obtain such consent and/or waiver within 30 days

                                       65


following any Change of Control, it being a default of the Change of Control
provisions of this Indenture if the Company fails to comply with such covenant.

                  The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.

                  SECTION 3.11. SEC Reports. Whether or not required by the
rules and regulations of the SEC, so long as any Securities are outstanding, the
Company (and the Subsidiary Guarantors, if applicable) will furnish to the
Trustee and to the Holders of Securities (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" that describes the financial condition and results of operations of
the Company and its Subsidiaries on a consolidated basis and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all reports that would be required to be filed
with the SEC on Form 8-K if the Company (and the Subsidiary Guarantors, if
applicable) were required to file such reports, in each case within the time
periods specified therein. In addition, whether or not required by the rules and
regulations of the SEC, the Company will file a copy of all such information and
reports, and any other information required by Section 13 or 15(d) of the
Exchange Act, with the SEC for public availability (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request.

                  If the Company has designated any of its Subsidiaries to be
Unrestricted Subsidiaries that, alone or taken together, represent 10% or more
of the Consolidated Cash Flow of the Company for the most recent consecutive
four-quarter period, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
to the financial statements or in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of the financial condition and
results of operations of the Company and its Restricted Subsidiaries.

                  Concurrently with the delivery of the reports required to be
delivered pursuant to the preceding paragraph, the Company shall deliver to the
Trustee and to each Holder annual and quarterly financial statements with
appropriate footnotes of the Company and its Restricted Subsidiaries, all
prepared and presented in a manner substantially consistent with those of the
Company and its Subsidiaries on a consolidated basis required by the preceding
paragraph.

                  SECTION 3.12. Future Subsidiary Guarantors. The Company will
cause each Restricted Subsidiary that is not at that time a Subsidiary Guarantor
and that is required to Guarantee any Indebtedness of the Company, including,
without limitation, a Credit Facility, to execute and deliver to the Trustee a
Subsidiary Guarantee pursuant to which such Restricted Subsidiary will
unconditionally Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any, and interest on the Securities on
a senior basis and

                                       66


all other obligations under this Indenture. Notwithstanding the foregoing, in
the event the Subsidiary Guarantor is released and discharged in full from all
of its obligations under Guarantees of (1) any Credit Facility and (2) all other
Indebtedness of the Company, then the Subsidiary Guarantee of such Subsidiary
Guarantor shall be automatically and unconditionally released or discharged;
provided, that such Restricted Subsidiary has not incurred any Indebtedness in
reliance on its status as a Subsidiary Guarantor pursuant to Section 3.2 unless
such Indebtedness so incurred is similarly released or discharged.

                  SECTION 3.13. Maintenance of Office or Agency. The Company
will maintain an office or agency where the Securities may be presented or
surrendered for payment, where, if applicable, the Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The agency of U.S. Bank National Association (the "Agent") currently located at
U.S. Bank National Association, 60 Livingston Avenue, St. Paul, MN 55107-2292,
Mail Code: EP-MN-WS3C shall be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company will give prompt written notice to the Trustee of
any change in the location of any 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 Agent of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.

                  The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind any such
designation. The Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location of any such other
office or agency.

                  SECTION 3.14. Corporate Existence. Except as otherwise
provided in this Article III, Article IV and Section 10.2(b), the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence and the corporate, partnership, limited
liability company or other existence of each Subsidiary Guarantor in accordance
with their respective organizational documents (as the same may be amended from
time to time) and the rights (charter and statutory) licenses and franchises of
the Company and each such Subsidiary Guarantor; provided, however, that the
Company shall not be required to preserve any such right, license or franchise
or the corporate, partnership, limited liability company or other existence of
any Subsidiary Guarantor if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and each of its Restricted Subsidiaries, taken as a
whole, and that the loss thereof is not, and will not be, disadvantageous in any
material respect to the Holders; provided, further, that the foregoing shall not
prohibit a sale, transfer, or conveyance of a Restricted Subsidiary or any of
its assets in compliance with the terms of this Indenture.

                  SECTION 3.15. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
levied or imposed upon the Company or

                                       67


any Subsidiary or upon the income, profits or property of the Company or any
Subsidiary and (ii) all lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a material liability or lien upon the property of
the Company or any Subsidiary; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings and for which
appropriate reserves, if necessary (in the good faith judgment of management of
the Company), are being maintained in accordance with GAAP or where the failure
to effect such payment will not be disadvantageous to the Holders.

                  SECTION 3.16. Payments for Consent. Neither the Company nor
any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fees or otherwise, to any
Holder of any Securities for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid or is paid to all Holders of the
Securities that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or amendment.

                  SECTION 3.17. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each Fiscal Year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default or Event of Default and whether or not the signers
know of any Default or Event of Default that occurred during the previous Fiscal
Year. If they do, the certificate shall describe the Default or Event of
Default, its status and the action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).

                  SECTION 3.18. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

                  SECTION 3.19. Limitation on Lines of Business. The Company
will not, and will not permit any Restricted Subsidiary to, engage in any
business other than a Related Business.

                  SECTION 3.20. Statement by Officers as to Default. The Company
shall deliver to the Trustee, as soon as possible and in any event within 10
days after the Company becomes aware of the occurrence of any Event of Default
or an event which, with notice or the lapse of time or both, would constitute an
Event of Default, an Officers' Certificate setting forth the details of such
Event of Default or Default, its status and the actions which the Company are
taking or propose to take with respect thereto.

                                       68


                                   ARTICLE IV

                                SUCCESSOR COMPANY

                  SECTION 4.1. Merger and Consolidation. The Company will not
consolidate with or merge with or into (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another Person unless:

                  (1)      the Company is the surviving corporation or the
         Person formed by or surviving any such consolidation or merger (if
         other than the Company, the "Successor Company") or to which such sale,
         assignment, transfer, lease, conveyance or other disposition shall have
         been made is a Person organized or existing under the laws of the
         United States, any state thereof or the District of Columbia;

                  (2)      the Successor Company or the Person to which such
         sale, assignment, transfer, lease, conveyance or other disposition
         shall have been made assumes all the obligations of the Company
         pursuant to a supplemental Indenture in a form reasonably satisfactory
         to the Trustee;

                  (3)      immediately before and, on a pro forma basis,
         immediately after giving effect to such transaction no Default or Event
         of Default exists;

                  (4)      the Company or Person formed by or surviving any such
         consolidation or merger, or to which such sale, assignment, transfer,
         lease, conveyance or other disposition shall have been made (A) will
         have Consolidated Net Worth (immediately after the transaction but
         prior to any purchase accounting adjustments resulting from the
         transaction) equal to or greater than the Consolidated Net Worth of the
         Company 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 Section 3.2;

                  (5)      each Subsidiary Guarantor (unless it is the other
         party to the transactions above, in which case clause (1) shall apply)
         shall have by supplemental indenture confirmed that its Subsidiary
         Guarantee shall apply to such Person's obligations in respect of this
         Indenture and the Securities and its obligations under the Registration
         Rights Agreement shall continue to be in effect; and

                  (6)      the Company shall have delivered to the Trustee an
         Officers' Certificate that items (1) to (5) have been satisfied and a
         legal opinion as to certain legal matters.

                  For purposes of this Section 4.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the

                                       69


Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.

                  The Successor Company will succeed to, and be substituted for
(with a release of the predecessor Company), and may exercise every right and
power of, the Company under this Indenture, but, in the case of a lease of all
or substantially all its assets, the predecessor Company will not be released
from the obligation to pay the principal of and interest on the Securities.

                  Notwithstanding the preceding clause (4), (x) any Restricted
Subsidiary may consolidate with, or merge into, the Company and (y) the Company
may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction to realize tax benefits;
provided that, in the case of a Restricted Subsidiary that merges into the
Company, the Company will not be required to comply with the preceding clause
(6).

                                    ARTICLE V

                            REDEMPTION OF SECURITIES

                  SECTION 5.1. Redemption. The Securities may be redeemed, as a
whole or from time to time in part, subject to the conditions and at the
redemption prices specified in paragraph 5 of the form of Securities set forth
in Exhibit A and Exhibit B hereto, which are hereby incorporated by reference
and made a part of this Indenture, together with accrued and unpaid interest to
the Redemption Date.

                  SECTION 5.2. Applicability of Article. Redemption of
Securities at the election of the Company or otherwise, as permitted or required
by any provision of this Indenture, shall be made in accordance with such
provision and this Article.

                  SECTION 5.3. Election to Redeem; Notice to Trustee. The
election of the Company to redeem any Securities pursuant to Section 5.1 shall
be evidenced by a Board Resolution of the Company. In case of any redemption at
the election of the Company, the Company shall, upon not later than the earlier
of the date that is 35 days prior to the Redemption Date fixed by the Company or
the date on which notice is given to the Holders (except as provided in Section
5.5 or unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed and shall deliver to the Trustee such documentation and records as
shall enable the Trustee to select the Securities to be redeemed pursuant to
Section 5.4. Any such notice may be cancelled at any time prior to notice of
such redemption being mailed to any Holder and shall thereby be void and of no
effect.

                  SECTION 5.4. Selection by Trustee of Securities to Be
Redeemed. If less than all the Securities are to be redeemed at any time
pursuant to an optional redemption, the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the outstanding Securities not previously called for redemption,
in compliance with the requirements of the principal securities exchange, if
any, on which such Securities are listed, or, if such Securities are not so
listed, on a pro rata basis among

                                       70


the classes of Securities, by lot or by such other method as the Trustee shall
deem fair and appropriate (and in such manner as complies with applicable legal
requirements) and which may provide for the selection for redemption of portions
of the principal of the Securities; provided, however, that no such partial
redemption shall reduce the portion of the principal amount of a Security not
redeemed to less than $1,000.

                  The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Securities
selected for partial redemption, the method it has chosen for the selection of
Securities and the principal amount thereof to be redeemed.

                  For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.

                  SECTION 5.5. Notice of Redemption. Notice of redemption shall
be given in the manner provided for in Section 11.2 not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed. At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at the Company's expense; provided, however, that the
Company shall deliver to the Trustee, at least 35 days prior to the Redemption
Date, an Officers' Certificate requesting that the Trustee give such notice at
the Company's expense and setting forth the information to be stated in such
notice as provided in the following items.

                  All notices of redemption shall state:

                  (1)      the Redemption Date,

                  (2)      the redemption price and the amount of accrued
         interest to the Redemption Date payable as provided in Section 5.7, if
         any,

                  (3)      if less than all outstanding Securities are to be
         redeemed, the identification of the particular Securities (or portion
         thereof) to be redeemed, as well as the aggregate principal amount of
         Securities to be redeemed and the aggregate principal amount of
         Securities to be outstanding after such partial redemption,

                  (4)      in case any Security is to be redeemed in part only,
         the notice which relates to such Security shall state that on and after
         the Redemption Date, upon surrender of such Security, the Holder will
         receive, without charge, a new Security or Securities of authorized
         denominations for the principal amount thereof remaining unredeemed,

                  (5)      that on the Redemption Date the redemption price (and
         accrued interest, if any, to the Redemption Date payable as provided in
         Section 5.7) will become due and payable upon each such Security, or
         the portion thereof, to be redeemed, and, unless the Company defaults
         in making the redemption payment, that interest on Securities called
         for redemption (or the portion thereof) will cease to accrue on and
         after said date,

                                       71


                  (6)      the place or places where such Securities are to be
         surrendered for payment of the redemption price and accrued interest,
         if any,

                  (7)      the name and address of the Paying Agent,

                  (8)      that Securities called for redemption must be
         surrendered to the Paying Agent to collect the redemption price,

                  (9)      the CUSIP, Common Code and ISIN numbers, if
         applicable, and that no representation is made as to the accuracy or
         correctness of the CUSIP, Common Code and ISIN numbers, if applicable,
         if any, listed in such notice or printed on the Securities, and

                  (10)     the paragraph of the Securities pursuant to which the
         Securities are to be redeemed.

                  SECTION 5.6. Deposit of Redemption Price. Prior to 10:00 a.m.,
New York City time, on any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company or any of the Company's
Subsidiaries is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 2.4) an amount of money sufficient to pay the redemption
price of, and accrued interest on, all the Securities which are to be redeemed
on that date, other than Securities or portions of Securities called for
redemption that are beneficially owned by the Company and have been delivered by
the Company to the Trustee for cancellation.

                  SECTION 5.7. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities or portions of
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the redemption price therein specified (together with accrued
interest, if any, to the Redemption Date), and on and after such date (unless
the Company shall default in the payment of the redemption price and accrued
interest) such Securities shall cease to bear interest and the only right of the
Holders thereof will be to receive payment of the redemption price and, subject
to the next sentence, unpaid interest on such Securities to the Redemption Date.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the redemption price,
together with accrued interest, if any, to the Redemption Date (subject to the
rights of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date).

                  If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the unpaid principal (and premium, if
any) shall, until paid, bear interest from the Redemption Date at the rate borne
by the Securities.

                  SECTION 5.8. Securities Redeemed in Part. Any Security which
is to be redeemed only in part (pursuant to the provisions of this Article)
shall be surrendered at the office or agency of the Company maintained for such
purpose pursuant to Section 3.13 (with, if the Company or the Trustee so
require, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or such Holder's attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security at the expense

                                       72


of the Company, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered, provided, that each such new Security will be in a principal amount
of $1,000 or integral multiple thereof.

                                   ARTICLE VI

                              DEFAULTS AND REMEDIES

                  SECTION 6.1. Events of Default. Each of the following
constitutes an "Event of Default":

                  (1)      default in any payment of interest or additional
         interest, if any, (as required by the Registration Rights Agreement) on
         any Security when the same becomes due and payable, and such default
         continues for a period of 30 days;

                  (2)      default in the payment of principal of or premium, if
         any, on any Security when the same becomes due and payable at its
         Stated Maturity, upon optional redemption, upon required repurchase,
         upon declaration or otherwise;;

                  (3)      failure by the Company to make or consummate a Change
         of Control Offer or an Asset Sale Offer or to comply with the
         provisions described in Section 3.2, 3.3 or 4.1;

                  (4)      failure by the Company or any Restricted Subsidiary
         for 60 days after notice from the Trustee or the Holders of at least
         25% in principal amount of the Securities then outstanding to comply
         with any of its other agreements in this Indenture or the Securities or
         of any Subsidiary Guarantor to perform any of its other covenants under
         its Subsidiary Guarantee;

                  (5)      default under any mortgage, indenture or instrument
         under which there may be issued or by which there may be secured or
         evidenced any Indebtedness for money borrowed by the Company or any of
         its Restricted Subsidiaries (or the payment of which is guaranteed by
         the Company or any Restricted Subsidiary) whether such Indebtedness or
         guarantee now exists, or is created after the date of this Indenture,
         which default (a) is caused by 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 $5.0 million or more;

                  (6)      failure by the Company or any of its Restricted
         Subsidiaries to pay final judgments aggregating in excess of $5.0
         million, which judgments are not paid, discharged, bonded or stayed for
         a period of 60 days;

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                  (7)      any Subsidiary Guarantee of a Significant Subsidiary
         (or group of Subsidiaries that, taken together, constitutes a
         Significant Subsidiary) shall be held in any judicial proceeding to be
         unenforceable or invalid or shall cease for any reason to be in full
         force and effect or any Subsidiary Guarantor that is a Significant
         Subsidiary (or group of Subsidiary Guarantors that, taken together,
         constitutes a Significant Subsidiary), or any Person acting on behalf
         of any such Subsidiary Guarantor or Subsidiary Guarantors, shall deny
         or disaffirm its obligations under its Subsidiary Guarantee; or

                  (8)      the Company, or a Significant Subsidiary or group of
         Restricted Subsidiaries that, taken together (as of the latest audited
         consolidated financial statements for the Company and its Restricted
         Subsidiaries), would constitute a Significant Subsidiary pursuant to or
         within the meaning of any Bankruptcy Law:

                  (a)      commences a voluntary case or proceeding;

                  (b)      consents to the entry of judgment, decree or order
                           for relief against it in an involuntary case or
                           proceeding;

                  (c)      consents to the appointment of a Custodian of it or
                           for any substantial part of its property;

                  (d)      makes a general assignment for the benefit of its
                           creditors;

                  (e)      consents to or acquiesces in the institution of a
                           bankruptcy or an insolvency proceeding against it;

                  (f)      takes any corporate action to authorize or effect any
                           of the foregoing; or

                  (g)      takes any comparable action under any foreign laws
                           relating to insolvency; or

                  (9)      a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:

                  (a)      is for relief in an involuntary case against the
                           Company or a Significant Subsidiary or group of
                           Restricted Subsidiaries that, taken together (as of
                           the latest audited consolidated financial statements
                           for the Company and its Restricted Subsidiaries),
                           would constitute a Significant Subsidiary pursuant to
                           or within the meaning of any Bankruptcy Law;

                  (b)      appoints a Custodian for all or substantially all of
                           the property of the Company or a Significant
                           Subsidiary or group of Restricted Subsidiaries that,
                           taken together (as of the latest audited consolidated
                           financial statements for the Company and its
                           Restricted Subsidiaries), would constitute a
                           Significant Subsidiary pursuant to or within the
                           meaning of any Bankruptcy Law; or

                                       74


                  (c)      orders the winding up or liquidation of the Company
                           or a Significant Subsidiary or group of Restricted
                           Subsidiaries that, taken together (as of the latest
                           audited consolidated financial statements for the
                           Company and its Restricted Subsidiaries), would
                           constitute a Significant Subsidiary pursuant to or
                           within the meaning of any Bankruptcy Law; and

                  (d)      in each case the order, decree or relief remains
                           unstayed and in effect for 90 days.

                  The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.

                  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 Securities
pursuant to the optional redemption provisions of the Indenture or was required
to repurchase the Securities, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the Securities. If an Event of Default occurs prior to February 1, 2007 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 Securities prior to February 1, 2007, the premium specified in this
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Securities.

                  SECTION 6.2. 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 Securities may declare all the Securities to be due and
payable immediately; provided, that so long as any Indebtedness permitted to be
incurred pursuant to the Senior Secured Credit Agreement shall be outstanding,
such acceleration shall not be effective until the earlier of (i) an
acceleration of any such Indebtedness under the Senior Secured Credit Agreement
or (ii) five business days after receipt by the Company of written notice of
such acceleration under this Indenture. Notwithstanding the foregoing, in the
case of an Event of Default described in clause (8) or (9) of Section 6.1, all
outstanding Securities will become due and payable without further action or
notice.

                  In the event of a declaration of acceleration of the
Securities because an Event of Default described in clause (5) of Section 6.1
has occurred and is continuing, the declaration of acceleration of the
Securities shall be automatically annulled if the event of default or Payment
Default triggering such Event of Default pursuant to clause (5) shall be
remedied or cured by the Company or a Restricted Subsidiary or waived by the
Holders of the relevant Indebtedness within 20 days after the declaration of
acceleration with respect thereto and if (a) the annulment of the acceleration
of the Securities would not conflict with any judgment or decree of a court of
competent jurisdiction and (b) all existing Events of Default, except nonpayment
of principal, premium or interest on the Securities that became due solely
because of the acceleration of the Securities, have been cured or waived.

                                       75


                  SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at law
or in equity to collect the payment of principal of (or premium, if any) or
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.

                  The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.

                  SECTION 6.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the outstanding Securities by notice to the
Trustee may (a) waive, by their consent (including, without limitation consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Securities), an existing Default or Event of Default and its consequences
except a Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on a Security and (b) rescind any such acceleration
with respect to the Securities and its consequences if (1) rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest on the Securities that have become due solely
by such declaration of acceleration, have been cured or waived. When a Default
or Event of Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
consequent right.

                  SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Sections 7.1 and 7.2, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.

                  SECTION 6.6. Limitation on Suits. Subject to the provisions of
this Indenture relating to the duties of the Trustee, if an Event of Default
occurs and is continuing, the Trustee will be under no obligation to exercise
any of the rights or powers under this Indenture at the request or direction of
any of the Holders unless such Holders have offered to the Trustee reasonable
indemnity or security against any loss, liability or expense. Except to enforce
the right to receive payment of principal, premium, if any, or interest when
due, no Holder may pursue any remedy with respect to the Indenture or the
Securities unless:

                  (1)      such Holder has previously given the Trustee notice
         that an Event of Default is continuing;

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                  (2)      Holders of at least 25% in principal amount of the
         outstanding Securities have requested the Trustee to pursue the remedy;

                  (3)      such Holders have offered the Trustee reasonable
         security or indemnity against any loss, liability or expense;

                  (4)      the Trustee has not complied with such request within
         60 days after the receipt of the request and the offer of security or
         indemnity; and

                  (5)      the Holders of a majority in principal amount of the
         outstanding Securities have not given the Trustee a direction that, in
         the opinion of the Trustee, is inconsistent with such request within
         such 60-day period.

                  A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.

                  SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture (including, without
limitation, Section 6.6), the right of any Holder to receive payment of
principal of, premium, if any, or interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, 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 6.8. Collection Suit by Trustee. If an Event of
Default specified in clauses (1) or (2) of Section 6.1 occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.7.

                  SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may
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 Securityholders allowed in any judicial
proceedings relative to the Company, its Subsidiaries or its or their respective
creditors or properties and, unless prohibited by law or applicable regulations,
may be entitled and empowered to participate as a member of any official
committee of creditors appointed in such matter and may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make 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 it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.7.

                  SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:

                  FIRST: to the Trustee for amounts due under Section 7.7;

                                       77


                  SECOND: to Securityholders for amounts due and unpaid on the
         Securities for principal, premium, if any, and interest, ratably,
         without preference or priority of any kind, according to the amounts
         due and payable on the Securities for principal and interest,
         respectively; and

                  THIRD: to the Company or, to the extent the Trustee collects
         any amount for any Subsidiary Guarantor, to such Subsidiary Guarantor.

                  The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.

                  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 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 the Company, a suit by a Holder pursuant to
Section 6.7 or a suit by Holders of more than 10% in outstanding principal
amount of the Securities.

                                   ARTICLE VII

                                     TRUSTEE

                  SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered the Trustee
reasonable indemnity or security against loss, liability or expense.

                  (b) Except during the continuance of an Event of Default:

                  (1) the Trustee undertakes to perform such duties and only
         such duties as are specifically set forth in this Indenture and no
         implied covenants or obligations shall be read into this Indenture
         against the Trustee; and

                  (2) 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,
         opinions or orders furnished to the Trustee and conforming to the
         requirements of this Indenture. However, in the case of any such
         certificates or opinions

                                       78

         which by any provisions hereof are specifically required to be
         furnished to the Trustee, the Trustee shall examine such certificates
         and opinions to determine whether or not they conform to the
         requirements of this Indenture (but need not confirm or investigate the
         accuracy of mathematical calculations or other facts stated therein).

                  (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:

                  (1) this paragraph does not limit the effect of paragraph (b)
         of this Section;

                  (2) the Trustee shall not be liable for any error of judgment
         made in good faith by a Trust Officer unless it is proved that the
         Trustee was negligent in ascertaining the pertinent facts; and

                  (3) 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 6.5.

                  (d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

                  (e) 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.

                  (f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.

                  (g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.

                  (h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

                  (i) 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.

                  (j) 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 satisfactory to it against the costs,
expenses (including reasonable attorneys' fees and expenses) and liabilities
that might be incurred by it in compliance with such request or direction.

                  SECTION 7.2. Rights of Trustee. Subject to Section 7.1:


                                       79

                  (a) The Trustee may conclusively rely on any document (whether
in its original or facsimile form) reasonably 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. The Trustee shall receive
and retain financial reports and statements of the Company as provided herein,
but shall have no duty to review or analyze such reports or statements to
determine compliance under covenants or other obligations of the Company.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on an Officers' Certificate or Opinion of Counsel.

                  (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 which it believes to be authorized or within its
rights or powers, unless the Trustee's conduct constitutes willful misconduct or
negligence.

                  (e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect of any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.

                  (f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the corporate trust office of the Trustee
specified in Section 11.2, and such notice references the Securities and this
Indenture.

                  (g) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.

                  (h) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.

                  (i) The Trustee shall not be deemed to have knowledge of any
fact or matter unless such fact or matter is known to a Trust Officer of the
Trustee.

                  (j) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may request, and in the absence of
bad faith or willful misconduct on its part, rely upon an Officers' Certificate.

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                  SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company, Subsidiary Guarantors or their
Affiliates with the same rights it would have if it were not Trustee. Any Paying
Agent, Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11. In
addition, the Trustee shall be permitted to engage in transactions with the
Company; provided, however, that if the Trustee acquires any conflicting
interest the Trustee must (i) eliminate such conflict within 90 days of
acquiring such conflicting interest, (ii) apply to the SEC for permission to
continue acting as Trustee or (iii) resign.

                  SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, shall not be accountable for the Company's use
of the proceeds from the sale of the Securities, shall not be responsible for
the use or application of any money received by any Paying Agent other than the
Trustee or any money paid to the Company pursuant to the terms of this Indenture
and shall not be responsible for any statement of the Company in this Indenture
or in any document issued in connection with the sale of the Securities or in
the Securities other than the Trustee's certificate of authentication.

                  SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail by first class mail to each Securityholder at
the address set forth in the Securities Register notice of the Default or Event
of Default within the earlier of 90 days after it occurs or 30 days after it is
actually known to a Trust Officer or written notice of it is received by the
Trustee. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Security (including payments
pursuant to the optional redemption or required repurchase provisions of such
Security, if any), the Trustee may withhold the notice if and so long as its
board of directors, a committee of its board of directors or a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Securityholders.

                  SECTION 7.6. Reports by Trustee to Holders As promptly as
practicable after each May 15 beginning May 15, 2004 following the date of this
Indenture, and in any event prior to July 15 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of such July 15 that
complies with TIA Section 313(a) if and to the extent required thereby. The
Trustee also shall comply with TIA Section 313(b) and TIA Section 313(c).

                  A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof and the Trustee shall comply with TIA Section 313(d).

                  SECTION 7.7. 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 as the Company and the Trustee shall from
time to time agree in writing. 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 upon request for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, costs of preparing and

                                       81


reviewing reports, certificates and other documents, costs of preparation and
mailing of notices to Securityholders and reasonable costs of counsel retained
by the Trustee in connection with the delivery of an Opinion of Counsel or
otherwise, in addition to the compensation for its services. Such expenses shall
include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company shall
indemnify the Trustee against any and all loss, liability, damages, claims or
expense (including reasonable attorneys' fees and expenses) incurred by it
without negligence or bad faith on its part in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by any
Securityholder, the Company or otherwise). 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 provide
reasonable cooperation at the Company's expense in the defense. The Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel, provided that the Company shall not be required to pay such fees and
expenses if they assume the Trustee's defense, and, in the reasonable judgment
of outside counsel to the Trustee, there is no conflict of interest between the
Company and the Trustee in connection with such defense. Notwithstanding the
foregoing, the Company and the Subsidiary Guarantors need not reimburse any
expense or indemnify against any loss, liability or expense which is finally
determined by a court of competent jurisdiction to have been incurred by the
Trustee through the Trustee's own willful misconduct, negligence or bad faith.

                  To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. Such lien shall survive
the satisfaction and discharge of this Indenture. The Trustee's right to receive
payment of any amounts due under this Section 7.7 shall not be subordinate to
any other liability or Indebtedness of the Company.

                  The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in clause (7) or clause (8) of
Section 6.1 with respect to the Company, the expenses are intended to constitute
expenses of administration under any Bankruptcy Law.

                  SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company in writing. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
removed Trustee in writing and may appoint a successor Trustee with the
Company's written consent, which consent will not be unreasonably withheld. The
Company shall remove the Trustee if:

                  (1) the Trustee fails to comply with Section 7.10 hereof;

                  (2) the Trustee is adjudged bankrupt or insolvent;

                  (3) a receiver or other public officer takes charge of the
         Trustee or its property; or

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                  (4) the Trustee otherwise becomes incapable of acting.

                  If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee as described in the
preceding paragraph, or if a vacancy exists in the office of the Trustee for any
reason (the Trustee in such event being referred to herein as the retiring
Trustee), the Company shall promptly appoint a successor Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.

                  If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of at least 10% in principal amount of the Securities may petition, at
the Company's expense, any court of competent jurisdiction for the appointment
of a successor Trustee.

                  If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any
Securityholder, who has been a bona fide holder of a Security for at least six
months, may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

                  Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.

                  SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.

                  In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities in the name
of any predecessor Trustee shall only apply to its successor or successors by
merger, consolidation or conversion.

                  SECTION 7.10. Eligibility; Disqualification. This Indenture
shall always have a Trustee that satisfies the requirements of TIA Section
310(a)(1), (2) and (5) in every respect. The Trustee shall have a combined
capital and surplus of at least $50 million as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b);

                                       83


provided, however, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.

                  SECTION 7.11. Preferential Collection of Claims Against the
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.

                  SECTION 7.12. Trustee's Application for Instruction from the
Company. Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.

                  SECTION 7.13. Paying Agents. The Company shall cause each
Paying Agent other than the Trustee to execute and deliver to it and the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section 7.13:

                  (1) that it will hold all sums held by it as agent for the
         payment of principal of, or premium, if any, or interest on, the
         Securities (whether such sums have been paid to it by the Company or by
         any obligor on the Securities) in trust for the benefit of Holders of
         the Securities or the Trustee;

                  (2) that it will at any time during the continuance of any
         Event of Default, upon written request from the Trustee, deliver to the
         Trustee all sums so held in trust by it together with a full accounting
         thereof; and

                  (3) that it will give the Trustee written notice within three
         Business Days of any failure of the Company (or by any obligor on the
         Securities) in the payment of any installment of the principal of,
         premium, if any, or interest on, the Securities when the same shall be
         due and payable.

                                  ARTICLE VIII

                       DISCHARGE OF INDENTURE; DEFEASANCE

                  SECTION 8.1. Discharge of Liability on Securities;
Defeasance(a) Subject to Section 8.1(c), when (i)(x) the Company delivers to the
Trustee all outstanding Securities (other


                                       84

than Securities replaced pursuant to Section 2.9) for cancellation or (y) all
outstanding Securities not theretofore delivered for cancellation have become
due and payable, whether at maturity or upon redemption or will become due and
payable within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
pursuant to Article V hereof and the Company or any Subsidiary Guarantor
irrevocably deposit or cause to be deposited with the Trustee as trust funds in
trust solely for the benefit of the Holders money in U.S. dollars, non-callable
U.S. Government Obligations, or a combination thereof, in such amounts as will
be sufficient without consideration of any reinvestment of interest to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation for principal, premium, if any, and accrued
interest to the date of maturity or redemption; (ii) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit and such deposit will not result in a
breach or violation of, or constitute a default under, any other instrument to
which the Company or any Subsidiary Guarantor is a party or by which the Company
or any Subsidiary Guarantor is bound; (iii) the Company or any Subsidiary
Guarantor have paid or caused to be paid all sums payable under this Indenture
and the Securities; and (iv) the Company has delivered irrevocable instructions
to the Trustee under this Indenture to apply the deposited money toward the
payment of such Securities at maturity or the Redemption Date, as the case may
be, then upon demand of the Company (accompanied by an Officers' Certificate and
an Opinion of Counsel stating that all conditions precedent specified herein
relating to the satisfaction and discharge of this Indenture have been complied
with) this Indenture shall cease to be of further effect with respect to the
Securities and the Trustee shall acknowledge satisfaction and discharge of this
Indenture, at the cost and expense of the Company.

                  (b) Subject to Section 8.1(c) and Section 8.2, the Company and
the Subsidiary Guarantors at any time may be deemed to have been discharged from
their respective obligations with respect to all outstanding Securities 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 Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.3 hereof and the other Sections of this
Indenture referred to in clauses (i) through (iv) below, and to have satisfied
all its other obligations under such Securities and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of Holders of outstanding Securities to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due, (ii) the Company's and the Subsidiary Guarantors' obligations
with respect to such Securities under Article II and Section 3.13 hereof, (iii)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's and the Subsidiary Guarantors' obligations in connection therewith
and (iv) this Article VIII. Subject to compliance with this Article VIII, the
Company may exercise its option under this Section 8.1(b) notwithstanding the
prior exercise of its option under Section 8.1(c) hereof.

                  (c) The Company shall, subject to the satisfaction of the
conditions set forth in Section 8.2 hereof, be released from its obligations
under the covenants contained in Section 3.2, Section 3.3, Section 3.4, Section
3.5, Section 3.6, Section 3.7, Section 3.8, Section 3.9,


                                       85

Section 3.10, Section 3.11, Section 3.12, Section 3.16, Section 3.19 and clause
(4) of Section 4.1, hereof with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance") and the Securities 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. For this purpose, Covenant Defeasance means that, with respect to the
outstanding Securities, 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 6.1
hereof, but, except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Company's exercise
of the option applicable to this Section 8.1(c), subject to the satisfaction of
the conditions set forth in Section 8.2 hereof, Sections 6.1(5) through 6.1(7)
hereof shall not constitute Events of Default.

                  (d) Notwithstanding the provisions of Sections 8.1(b) and (c),
the Company's obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.9, 2.10, 2.11,
2.12, 3.1, 3.13, 3.14, 3.15, 3.17, 3.18, 3.20, 6.7, 7.7 and 7.8 and in this
Article VIII shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.

                  SECTION 8.2. Conditions to Defeasance. In order to exercise
either Legal Defeasance or Covenant Defeasance:

                  (1)      the Company must irrevocably deposit with the
         Trustee, in trust, for the benefit of the Holders, cash in United
         States dollars, non-callable U.S. Government Obligations, or a
         combination thereof, in such amounts as will be sufficient, in the
         opinion of a nationally recognized firm of independent public
         accountants, to pay the principal of, premium, if any, and interest on
         the outstanding Securities on the stated date for payment thereof or on
         the applicable redemption date, as the case may be;

                  (2)      in the case of an election under Section 8.1(b)
         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 Securities will not recognize income, gain or loss for
         federal income tax purposes as a result of such Legal Defeasance and
         will be subject to federal income tax on the same amounts, in the same
         manner and at the same times as would have been the case if such Legal
         Defeasance had not occurred;

                  (3)      in the case of an election under Section 8.1(c)
         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 Securities will not
         recognize income, gain or loss for federal income tax purposes as a
         result of such


                                       86


         Covenant Defeasance and will be subject to federal income tax on the
         same amounts, in the same manner and at the same times as would have
         been the case if such Covenant Defeasance had not occurred;

                  (4)      no Default or Event of Default shall have occurred
         and be continuing on the date of such deposit (other than a Default or
         Event of Default resulting from the incurrence of Indebtedness all or a
         portion of the proceeds of which will be used to defease the Securities
         pursuant to this Article VIII concurrently with such incurrence) or
         insofar as Sections 6.1(8) or 6.1(9) hereof is concerned, at any time
         in the period ending on the 91st day after the date of deposit;

                  (5)      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;

                  (6)      the Company shall have delivered to the Trustee an
         opinion of counsel to the effect that after the later of (x) the 91st
         day following the deposit or (y) the day ending on the day following
         the expiration of the longest preference period under any bankruptcy
         law applicable to the Company in respect of such deposit, the trust
         funds will not be subject to the effect of any applicable bankruptcy,
         insolvency, reorganization or similar laws affecting creditors' rights
         generally;

                  (7)      the Company shall have delivered to the Trustee an
         Officers' Certificate stating that the deposit was not made by the
         Company with the intent of preferring the Holders over any other
         creditors of the Company or the Subsidiary Guarantors (if any) or with
         the intent of defeating, hindering, delaying or defrauding any other
         creditors of the Company or any such Subsidiary Guarantors;

                  (8)      the Company deliver to the Trustee an Opinion of
         Counsel (subject to customary assumptions and exclusions) to the effect
         that the trust resulting from the deposit does not constitute, or is
         qualified as, a regulated investment company under the Investment
         Company Act of 1940;

                  (9)      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 8.3. Application of Trust Money. The Trustee shall
hold in trust all money or U.S. Government Obligations (including proceeds
thereof) deposited with it pursuant to this Article VIII. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture and the Securities to the
Holders of the Securities of all sums due in respect of the payment of principal
of, premium, if any, and accrued interest on the Securities.

                  SECTION 8.4. Repayment to the Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money, U.S. Government Obligations or securities held by them upon payment of
all the obligations under this Indenture.

                                       87


                  Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal of or premium, if any, or interest on the
Securities that remains unclaimed by the Holders thereof for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as unsecured general creditors.

                  SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.

                  SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and each
Subsidiary Guarantor under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article VIII;
provided, however, that, if the Company or the Subsidiary Guarantors have made
any payment of principal, premium, if any, interest on or principal of any
Securities because of the reinstatement of its obligations, the Company or
Subsidiary Guarantors, as the case may be, shall be subrogated to the rights of
the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.

                  The Trustee's rights under this Article VIII shall survive
termination of this Indenture.

                                   ARTICLE IX

                                   AMENDMENTS

                  SECTION 9.1. Without Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:

                  (1)      to cure any ambiguity, omission, defect or
         inconsistency;

                  (2)      to provide for uncertificated Securities in addition
         to or in place of certificated Securities; provided, however, that the
         uncertificated Securities are issued in registered form for purposes of
         Section 163(f) of the Code or in a manner such that the uncertificated
         Securities are described in Section 163(f)(2)(B) of the Code;

                  (3)      to provide for any supplemental indenture required
         pursuant to Section 3.12;

                                       88


                  (4)      to comply with Article IV or Article X in respect of
         the assumption by a Successor Company of an obligation of the Company
         or any Subsidiary Guarantor under this Indenture;

                  (5)      to add Guarantees with respect to the Securities or
         release a Subsidiary Guarantor upon its designation as an Unrestricted
         Subsidiary or otherwise in accordance with this Indenture;

                  (6)      to secure the Securities;

                  (7)      to make any change that would provide any additional
         rights or benefits to the holders of the Securities or that does not
         materially adversely affect the legal rights under the Indenture of any
         such Holder;

                  (8)      to comply with any requirement of the SEC in order to
         effect or maintain the qualification of this Indenture under the TIA;
         or

                  (9)      to provide for the issuance of the Exchange
         Securities, which will have terms substantially identical in all
         respects to the Initial Securities or the Additional Securities, as the
         case may be (except that the transfer restrictions contained in the
         Initial Securities or the Additional Securities, if any, will be
         modified or eliminated, as appropriate), and which will be treated,
         together with any outstanding Initial Securities or Additional
         Securities, as a single class of securities.

                  After an amendment or supplement under this Section becomes
effective, the Company shall mail to Securityholders a notice briefly describing
such amendment or supplement. The failure to give such notice to all
Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment or supplement under this Section.

                  SECTION 9.2. With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture or
the Securities without notice to any Securityholder but with the written consent
of the Holders of at least a majority in principal amount of the Securities then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Securities). Any past
default or compliance with any provision of this Indenture or the Securities may
be waived with the written consent of the Holders of a majority in principal
amount of the Securities then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Securities). However, without the consent of each Securityholder
affected, an amendment, supplement or waiver may not (with respect to any
Securities held by a non-consenting holder of Securities):

                  (1)      reduce the principal amount of Securities whose
         Holders must consent to an amendment, supplement or waiver;

                  (2)      reduce the principal of or change the Stated Maturity
         of any Security or alter the provisions with respect to the redemption
         to the Securities (other than provisions relating to the covenants in
         Section 3.5 or 3.10);

                                       89


                  (3)      reduce the rate of or change the time for payment of
         interest or additional interest on any Note;

                  (4)      waive a Default or Event of Default in the payment of
         principal of or premium, if any, or interest on the Securities (except
         a rescission of acceleration of the Securities by the Holders of at
         least a majority in aggregate principal amount of the Securities and a
         waiver of the payment default that resulted from such acceleration);

                  (5)      make any Security payable in money other than that
         stated in the Securities;

                  (6)      make any change in the provisions of the Indenture
         relating to waivers of past Defaults, waiver of certain covenants,
         supplemental indentures requiring the consent of Holders, or the rights
         of Holders of Securities to receive payments of principal of or
         premium, if any, or interest on the Securities;

                  (7)      waive a redemption or purchase payment with respect
         to any Security (other than a payment required pursuant to Section 3.5
         or 3.10);

                  (8)      impair the right of any holder to institute suit for
         the enforcement of any payment under any Security after the maturity
         thereof;

                  (9)      release any Subsidiary Guarantor other than in
         accordance with this Indenture, or change any Subsidiary Guarantee in
         any manner that would adversely affect the Holders; or

                  (10)     make any change in the foregoing amendment and waiver
         provisions.

                  It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof. A consent to any amendment, supplement or waiver under this
Indenture by any Holder of the Securities given in connection with a tender or
exchange of such Holder's Securities will not be rendered invalid by such tender
or exchange.

                  After an amendment or supplement under this Section becomes
effective, the Company shall mail to Securityholders a notice briefly describing
such amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.

                  SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment or supplement to this Indenture or the Securities shall comply with
the TIA as then in effect.

                  SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment, supplement or a waiver by a Holder of a Security shall
bind the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent or waiver is not made on the Security. Any such
Holder or subsequent Holder may revoke the consent or waiver as to such

                                       90


Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective or otherwise in accordance with any related solicitation documents.
After an amendment, supplement or waiver becomes effective, it shall bind every
Securityholder unless it makes a change described in any of clauses (1) through
(8) of Section 9.2, in that case the amendment, supplement, waiver or other
action shall bind each Securityholder who has consented to it and every
subsequent Securityholder that evidences the same debt as the consenting
Holder's Securities. An amendment, supplement or waiver shall become effective
upon receipt by the Trustee of the requisite number of written consents under
Section 9.1 or 9.2 as applicable.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall become
valid or effective more than 120 days after such record date.

                  SECTION 9.5. Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. The Trustee may
place an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determine, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Failure to
make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.

                  SECTION 9.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment, supplement or waiver authorized pursuant to this Article IX
if the amendment, supplement or waiver does not adversely affect the rights,
duties, liabilities or immunities of the Trustee. If it does, the Trustee may
but need not sign it. In signing such amendment, supplement or waiver the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating that
such amendment, supplement or waiver is authorized or permitted by this
Indenture and that such amendment, supplement or waiver is the legal, valid and
binding obligation of the Company and any Subsidiary Guarantors, enforceable
against them in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 9.3).

                                    ARTICLE X

                              SUBSIDIARY GUARANTEE

                  SECTION 10.1. Subsidiary Guarantee. Subject to the provisions
of this Article X, each Subsidiary Guarantor hereby fully, unconditionally and
irrevocably guarantees,


                                       91


as primary obligor and not merely as surety, jointly and severally with each
other Subsidiary Guarantor, to each Holder of the Securities, to the extent
lawful, and the Trustee the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the principal of,
premium, if any, and interest on the Securities and all other obligations and
liabilities of the Company under this Indenture (including without limitation
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Company or any Subsidiary Guarantor whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding and the obligations
under Section 7.7) (all the foregoing being hereinafter collectively called the
"Guarantor Obligations"). Each Subsidiary Guarantor agrees that the Guarantor
Obligations will rank equally in right of payment with other Indebtedness of
such Subsidiary Guarantor, except to the extent such other Indebtedness is
subordinate to the Guarantor Obligations. Each Subsidiary Guarantor further
agrees (to the extent permitted by law) that the Guarantor Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
it, and that it will remain bound under this Article X notwithstanding any
extension or renewal of any Guarantor Obligation.

                  Each Subsidiary Guarantor waives presentation to, demand of
payment from and protest to the Company of any of the Guarantor Obligations and
also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives
notice of any default under the Securities or the Guarantor Obligations.

                  Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment when due (and not a
Guarantee of collection) and waives any right to require that any resort be had
by any Holder to any security held for payment of the Guarantor Obligations.

                  Except as set forth in Section 10.2, the obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than payment of the
Guarantor Obligations in full), including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Guarantor Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Subsidiary Guarantor herein shall not be discharged or impaired or
otherwise affected by (a) the failure of any Holder to assert any claim or
demand or to enforce any right or remedy against the Company or any other person
under this Indenture, the Securities or any other agreement or otherwise; (b)
any extension or renewal of any thereof; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Indenture, the
Securities or any other agreement; (d) the release of any security held by any
Holder or the Trustee for the Guarantor Obligations or any of them; (e) the
failure of any Holder to exercise any right or remedy against any other
Subsidiary Guarantor, or (f) any change in the ownership of the Company; (g) by
any default, failure or delay, willful or otherwise, in the performance of the
Guarantor Obligations, or (h) by any other act or thing or omission or delay to
do any other act or thing which may or might in any manner or to any extent vary
the risk of any Subsidiary Guarantor or would otherwise operate as a discharge
of such Subsidiary Guarantor as a matter of law or equity.

                                       92


                  Subject to the provisions of Section 3.12, each Subsidiary
Guarantor agrees that its Subsidiary Guarantee herein shall remain in full force
and effect until payment in full of all the Guarantor Obligations or such
Subsidiary Guarantor is released from its Subsidiary Guarantee upon the merger
or the sale of all the Capital Stock or assets of the Subsidiary Guarantor in
compliance with Section 10.2. Each Subsidiary Guarantor further agrees that its
Subsidiary Guarantee herein shall continue to be effective or be reinstated, as
the case may be, if at any time payment, or any part thereof, of principal of or
interest on any of the Guarantor Obligations is rescinded or must otherwise be
restored by any Holder upon the bankruptcy or reorganization of the Company or
otherwise.

                  In furtherance of the foregoing and not in limitation of any
other right which any Holder has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay any of the
Guarantor Obligations when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, each Subsidiary Guarantor
hereby promises to and will, upon receipt of written demand by the Trustee,
forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to
the sum of (i) the unpaid amount of such Guarantor Obligations then due and
owing and (ii) accrued and unpaid interest on such Guarantor Obligations then
due and owing (but only to the extent not prohibited by law).

                  Each Subsidiary Guarantor further agrees that, as between such
Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x)
the maturity of the Guarantor Obligations guaranteed hereby may be accelerated
as provided in this Indenture for the purposes of its Subsidiary Guarantee
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Guarantor Obligations guaranteed hereby and
(y) in the event of any such declaration of acceleration of such Guarantor
Obligations, such Guarantor Obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantor for the purposes of
this Subsidiary Guarantee.

                  Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or the Holders in enforcing any rights under this Section.

                  SECTION 10.2. Limitation on Liability; Termination, Release
and Discharge.

                  (a)      Any term or provision of this Indenture to the
contrary notwithstanding, the obligations of each Subsidiary Guarantor hereunder
will be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor (including,
without limitation, any guarantees under the Senior Secured Credit Agreement)
and after giving effect to any collections from or payments made by or on behalf
of any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law and not
otherwise being void or voidable under any similar laws affecting the rights of
creditors generally.

                                       93


                  (b)      In addition, the Company will not permit any
Subsidiary Guarantor to consolidate or merge with or into (other than another
Subsidiary Guarantor) and will not permit the sale, assignment, transfer, lease,
conveyance or other disposal of all or substantially all of the properties or
assets of any Subsidiary Guarantor unless:

                  (1)      (a) the Subsidiary Guarantor is the surviving
         corporation or the Person formed by or surviving any such consolidation
         or merger (if other than the Subsidiary Guarantor) or to which such
         sale, assignment, transfer, lease, conveyance or other disposition
         shall have been made is a Person organized or existing under the laws
         of the United States, any state thereof or the District of Columbia;
         (b) the Person formed by or surviving any such consolidation or merger
         (if other than the Subsidiary Guarantor) or Person to which such sale,
         assignment, transfer, lease, conveyance or other disposition shall have
         been made assumes all the obligations of the Subsidiary Guarantor
         pursuant to a supplemental indenture in a form reasonably satisfactory
         to the Trustee; (c) immediately before and, on a pro forma basis,
         immediately after giving effect to such transaction no Default or Event
         of Default exists; and (d) the Company shall have delivered to the
         Trustee an Officers' Certificate that items (a) to (c) have been
         satisfied and, in the event such Subsidiary Guarantor or the Person
         formed by or surviving any such consolidation or merger has assets with
         a book value in excess of $250,000, a legal opinion with respect to the
         matters set forth in clauses (a) and (b) above; or

                  (2) the transaction is made in compliance with the conditions
         described in Section 3.5.

                  Upon the sale or disposition of a Subsidiary Guarantor (by
merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets) and whether or not the Subsidiary Guarantor is
the surviving corporation in such transaction, to a Person which is not the
Company or a Subsidiary Guarantor, which sale or disposition is otherwise in
compliance with this Indenture, such Subsidiary Guarantor will be automatically
released from all its obligations under this Indenture and its Subsidiary
Guarantee and the Registration Rights Agreement and such Subsidiary Guarantee
will terminate; provided, however, that any such termination will occur only to
the extent that each such Subsidiary Guarantor will be released from obligations
under its Subsidiary Guarantee if all the obligations of such Subsidiary
Guarantor under the Senior Secured Credit Agreement and related documentation
terminate upon consummation of such transaction.

                  (c)      Each Subsidiary Guarantor will be deemed released
from all its obligations under this Indenture, its Subsidiary Guarantee and the
Registration Rights Agreement and such Subsidiary Guarantee will terminate upon
the legal defeasance or covenant defeasance of the Securities pursuant to the
provisions of Article VIII hereof.

                  (d)      Each Subsidiary Guarantor will be released from its
obligations under this Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement if the Company designates such Subsidiary Guarantor as an
Unrestricted Subsidiary and such designation complies with the other applicable
provisions of this Indenture.

                                       94


                  SECTION 10.3. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that any Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek
and receive contribution from and against the Company, or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. The
provisions of this Section 10.3 shall in no respect limit the obligations and
liabilities of each Subsidiary Guarantor to the Trustee and the Holders and each
Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the
full amount guaranteed by such Subsidiary Guarantor hereunder.

                  SECTION 10.4. No Subrogation. Notwithstanding any payment or
payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor
shall be entitled to be subrogated to any of the rights of the Trustee or any
Holder against the Company or any other Subsidiary Guarantor or any collateral
security or guarantee or right of offset held by the Trustee or any Holder for
the payment of the Guarantor Obligations, nor shall any Subsidiary Guarantor
seek or be entitled to seek any contribution or reimbursement from the Company
or any other Subsidiary Guarantor in respect of payments made by such Subsidiary
Guarantor hereunder, until all amounts owing to the Trustee and the Holders by
the Company on account of the Guarantor Obligations are paid in full. If any
amount shall be paid to any Subsidiary Guarantor on account of such subrogation
rights at any time when all of the Guarantor Obligations shall not have been
paid in full, such amount shall be held by such Subsidiary Guarantor in trust
for the Trustee and the Holders, segregated from other funds of such Subsidiary
Guarantor, and shall, forthwith upon receipt by such Subsidiary Guarantor, be
turned over to the Trustee in the exact form received by such Subsidiary
Guarantor (duly indorsed by such Subsidiary Guarantor to the Trustee, if
required), to be applied against the Guarantor Obligations.

                                   ARTICLE XI

                                  MISCELLANEOUS

                  SECTION 11.1. Trust Indenture Act Controls. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the provision required by the TIA shall control. Each Subsidiary Guarantor in
addition to performing its obligations under its Subsidiary Guarantee shall
perform such other obligations as may be imposed upon it with respect to this
Indenture under the TIA.

                  SECTION 11.2. Notices. Any notice or communication shall be in
writing and delivered in person, sent by facsimile, delivered by commercial
courier service or mailed by first-class mail, postage prepaid, addressed as
follows:

                                       95


                          if to the Company:

                          Portola Packaging, Inc.
                          890 Faulstich Court
                          San Jose, CA 95112

                          Attention: Chief Financial Officer

                          with copies to:

                          Themistocles G. Michos
                          Vice President, Secretary and General Counsel
                          Portola Packaging, Inc.
                          720 York Street, #103
                          San Francisco, CA 94110

                          Fenwick & West LLP
                          Embarcadero Center West
                          275 Battery Street
                          San Francisco, CA 94111

                          Attention: David K. Michaels, Esq.

                          if to the Trustee:

                          U.S. Bank National Association
                          60 Livingston Avenue,
                          St. Paul, MN 55107-2292
                          Phone (651) 495-3913
                          Fax (651) 495-8097
                          Mail Code: EP-MN-WS3C

                  The Company or the Trustee by written notice to the other may
designate additional or different addresses for subsequent notices or
communications.

                  Any notice or communication to the Company or the Subsidiary
Guarantors shall be deemed to have been given or made as of the date so
delivered if personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five calendar days after mailing if sent by
registered or certified mail, postage prepaid (except that a notice of change of
address shall not be deemed to have been given until actually received by the
addressee).

                  Any notice or communication mailed to a registered
Securityholder shall be mailed to the Securityholder at the Securityholder's
address as it appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or

                                       96


communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it, except that notices to the Trustee shall be
effective only upon receipt.

                  SECTION 11.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).

                  SECTION 11.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:

                  (1) an Officers' Certificate in form and substance reasonably
         satisfactory to the Trustee stating that, in the opinion of the
         signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been complied with; and

                  (2) an Opinion of Counsel in form and substance reasonably
         satisfactory to the Trustee stating that, in the opinion of such
         counsel, all such conditions precedent have been complied with.

                  SECTION 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:

                  (1)      a statement that the individual making such
         certificate or opinion has read such covenant or condition;

                  (2)      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;

                  (3)      a statement that, in the opinion of such individual,
         he 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 complied with; and

                  (4)      a statement as to whether or not, in the opinion of
         such individual, such covenant or condition has been complied with.

                  In giving such Opinion of Counsel, counsel may rely as to
factual matters on an Officers' Certificate or on certificates of public
officials.

                  SECTION 11.6. When Securities Disregarded. In determining
whether the Holders of the required aggregate principal amount of Securities
have concurred in any direction, waiver or consent, Securities owned by the
Company, any Subsidiary Guarantor or any Affiliate of them shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee actually knows are so owned shall
be so disregarded.
                                       97


Also, subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.

                  SECTION 11.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by, or at meetings of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.

                  SECTION 11.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York, New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.

                  SECTION 11.9. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE, THE SECURITIES OR THE SUBSIDIARY GUARANTEES.

                  SECTION 11.10. Judgment Currency. The Company and the
Subsidiary Guarantors agree to fully indemnify the Trustee and each Holder
against any loss incurred by any of them as a result of any judgment or order
being given or made for any amount due under this Indenture or the Securities
and such judgment or order being expressed and paid in a currency (the "Judgment
Currency") other than U.S. dollars and as result of any variation as between (i)
the rate of exchange at which the U.S. dollar amount is converted into the
Judgment Currency for the purpose of such judgment or order and (ii) the spot
rate of exchange in The City of New York at which any such person on the date of
payment of such judgment or order is able to purchase U.S. dollars with the
amount of the Judgment Currency actually received by such Person. The foregoing
indemnity shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid. The term "spot rate of exchange" shall include
any premiums and costs of exchange payable in connection with the purchase of,
or conversion into, U.S. dollars.

                  SECTION 11.11. Agent for Service; Submission to Jurisdiction;
Waiver of Immunities. Each Subsidiary Guarantor that is not organized in the
United States hereby agrees to maintain a Significant Subsidiary, or to appoint
the Company, as its authorized agent (the "Process Agent") upon which process
may be served in any suit, action or proceeding arising out of or relating to
this Indenture or the Securities that may be instituted in any Federal or State
court in the State of New York, The City of New York, the Borough of Manhattan,
or brought under Federal or State securities laws or brought by the Trustee
(whether in its individual capacity or in its capacity as Trustee hereunder),
and (i) acknowledges that the Process Agent has accepted such designation, (ii)
submits to the jurisdiction of any such court in any such suit, action or
proceeding and (iii) agrees that service of process upon the Process Agent and
written notice of said service to it (mailed or delivered to or care of the
Company at its principal office as specified in Section 11.2), shall be deemed
in every respect effective service of process upon it in any such suit or
proceeding. Each Subsidiary Guarantor that is not organized in the United

                                       98


States initially appoints the Company to act as the Process Agent. So long as
the Company maintains its principal executive offices in the United States,
process may be served upon the Process Agent c/o the Company at the address set
forth in Section 11.2. In the event that the Company no longer has a Significant
Subsidiary organized in the United States which may act as Process Agent, the
Company shall designate such additional or alternative agents for service of
process under this Section 11.11 that (i) maintains an office located in the
Borough of Manhattan, The City of New York in the State of New York, (ii) are
either (x) counsel for the Company or (y) a corporate service company which acts
as agent for service of process for other Persons in the ordinary course of its
business and (iii) agrees to act as agent for service of process in accordance
with this Section 11.11.

                  SECTION 11.12. Enforceability of Judgments Each Subsidiary
Guarantor not organized in the United States agrees, to the fullest extent that
it lawfully may do so, that final judgment in any such suit, action or
proceeding brought in a court in the United States shall be conclusive and
binding upon it and may be enforced in the courts of its domicile or
jurisdiction of organization (or any other courts to the jurisdiction of which
the Guarantor is subject) by a suit upon such judgment, provided that service of
process is effected upon such Subsidiary Guarantor, as applicable, in the manner
specified in the foregoing paragraph or as otherwise permitted by law; provided,
however, that such Subsidiary Guarantors do not waive, and the foregoing
provisions of this sentence shall not constitute or be deemed to constitute a
waiver of, (i) any right to appeal any such judgment, to seek any stay or
otherwise to seek reconsideration or review of any such judgment, (ii) any stay
of execution or levy pending an appeal from, or a suit, action or proceeding for
reconsideration of, any such judgment, or (iii) any other right or remedy of any
such Guarantor to the extent not expressly waived in accordance with this
Section 11.12.

                  SECTION 11.13. No Recourse Against Others. No director,
officer, employee, incorporator or stockholder of the Company or a Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or such Subsidiary Guarantor under the Securities, this Indenture or a
Subsidiary Guarantee or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each holder of Securities by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the Securities. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.

                  SECTION 11.14. Successors. All agreements of the Company and
each Subsidiary Guarantor in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.

                  SECTION 11.15. Multiple 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. One signed copy is enough to
prove this Indenture.

                  SECTION 11.16. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and conditions
of the Registration Rights Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees and expenses for the Company, the Trustee
and the Holders) incurred in connection therewith,

                                       99


including, but not limited to, costs and expenses of qualification of this
Indenture and the Securities and printing this Indenture and the Securities. The
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.

                  SECTION 11.17. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

                                      100


                  IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.

                                             PORTOLA PACKAGING, INC.

                                             By /s/ Jack L. Watts
                                               ---------------------------------
                                               Name: Jack L. Watts
                                               Title: Chief Executive Officer

                                             PORTOLA ALLIED TOOL, INC.

                                              By /s/ Jack L. Watts
                                               ---------------------------------
                                               Name: Jack L. Watts
                                               Title: Chief Executive Officer

                                             PORTOLA LIMITED

                                             Executed and delivered as a deed
                                             (on the date first appearing above)
                                             by Portola Limited acting by


                                             /s/ Richard Kirkland   , a director
                                             -----------------------
                                               Name: Richard Kirkland

                                             /s/ Glen Heighington   , a director
                                             -----------------------
                                               Name: Glen Heighington

                                             PORTOLA PACKAGING, INC. MEXICO,
                                             S.A. DE C.V.

                                             By /s/ Jack L. Watts
                                               ---------------------------------
                                               Name: Jack L. Watts
                                               Title: Chairman

                       [additional signature page follows]



                                             PORTOLA PACKAGING CANADA LTD.

                                             By /s/ Dennis L. Berg
                                               ---------------------------------
                                               Name: Dennis L. Berg
                                               Title: Chief Financial Officer

                                             PORTOLA PACKAGING LIMITED

                                             Executed and delivered as a deed
                                             (on the date first appearing
                                             above) by Portola Packaging Limited
                                             acting by

                                             /s/ Glen Heighington   , a director
                                             -----------------------
                                               Name: Glen Heighington

                                             /s/ Dennis Berg        , a director
                                             -----------------------
                                               Name: Dennis Berg

                                             TECH INDUSTRIES, INC.

                                             By /s/ Dennis L. Berg
                                               ---------------------------------
                                               Name: Dennis L. Berg
                                               Title: Chairman

                                             U.S. BANK NATIONAL ASSOCIATION,
                                             as Trustee

                                             By /s/ Richard H. Prokosch, V.P.
                                               ---------------------------------
                                               Name: Richard H. Prokosch
                                               Title: Vice President



                                                                       EXHIBIT A

                         [FORM OF FACE OF SERIES A NOTE]

                    [Applicable Restricted Securities Legend]
                       [Depository Legend, if applicable]

No.[___]
                                               Principal Amount $[___________],
                                               as revised by the Schedule of
                                               Increases and Decreases in Global
                                               Security attached hereto
                                               CUSIP NO. _______________________
                                               ISIN: ___________________________

                          PORTOLA PACKAGING CORP, INC.

                     8 1/4% Senior Note, Series A, due 2012

                  Portola Packaging, Inc., a Delaware corporation, promises to
pay to Cede & Co., or its registered assigns, the principal sum of
[_______________] Dollars, as revised by the Schedule of Increases and Decreases
in Global Security attached hereto, on February 1, 2012.

                  Interest Payment Dates: February 1 and August 1, commencing on
                  August 1, 2004 Record Dates: January 15 and July 15

                  Additional provisions of this Security are set forth on the
other side of this Security.

                                               PORTOLA PACKAGING, INC.

                                               By:______________________________

TRUSTEE'S CERTIFICATE OF
 AUTHENTICATION

U.S. BANK NATIONAL ASSOCIATION
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.

By_____________________________
  Authorized Signatory                                    Date: _______ __, 20__

                                      A-1


                     [FORM OF REVERSE SIDE OF SERIES A NOTE]

                             PORTOLA PACKAGING, INC.

                     8 1/4% Senior Note, Series A, due 2012

1. Interest

         Portola Packaging, Inc., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above.

         The Company will pay interest semi-annually on February 1 and August 1,
commencing on August 1, 2004. Interest on the Securities will accrue from the
most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from January 23, 2004. The Company shall pay interest on
overdue principal, and on overdue premium, if any (plus interest on such
interest to the extent lawful), at the rate borne by the Securities to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

         If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated or a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Securities is not declared effective by the SEC on or before the date that is
210 days after the Issuance Date (the "Target Registration Date") in accordance
with the terms of the Registration Rights Agreement dated January 23, 2004 among
the Company, the Subsidiary Guarantors and the Initial Purchasers, the annual
interest rate borne by the Securities shall be increased from the rate shown
above by (i) 0.25% per annum for the first 90-day period immediately following
the Target Registration Date and (ii) an additional 0.25% per annum with respect
to each subsequent 90-day period, in each case until the Exchange Offer is
completed or the Shelf Registration Statement, if required hereby, is declared
effective by the Securities and Exchange Commission or the Securities become
freely tradable under the Securities Act, up to a maximum of 1.00% per annum of
additional interest. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.

2. Method of Payment

         By no later than 10:00 a.m. (New York City time) on the date on which
any principal of , premium, if any, or interest on any Security is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company will pay interest (except Defaulted Interest) to the Persons who are
registered Holders of Securities at the close of business on the January 15 or
July 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment

                                      A-2


is legal tender for payment of public and private debts. Payments in respect of
Securities represented by a Global Security (including principal, premium, if
any, and interest) will be made by the transfer of immediately available funds
to the accounts specified by The Depository Trust Company or any successor
depository. The Company will make all payments in respect of a Definitive
Security (including principal, premium, if any, and interest) by mailing a check
to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 15
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).

3. Paying Agent and Registrar

         Initially, U.S. Bank National Association (the "Trustee") will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.

4. Indenture

         The Company issued the Securities under an Indenture dated as of
January 23, 2004 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on
the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all terms and provisions of the Indenture, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.

         The Securities are general unsecured, senior obligations of the
Company. The aggregate principal amount of securities that may be authenticated
and delivered under the Indenture is unlimited. This Security is one of the
8 1/4% Senior Notes, Series A, due 2012 referred to in the Indenture. The
Securities include (i) $180,000,000 aggregate principal amount of the Company's
8 1/4% Senior Notes, Series A, due 2012 issued under the Indenture on January
23, 2004 (herein called "Initial Securities"), (ii) if and when issued,
additional 8 1/4% Senior Notes, Series A, due 2012 or 8 1/4% Senior Notes,
Series B, due 2012 of the Company that may be issued from time to time under the
Indenture subsequent to January 23, 2004 (herein called "Additional Securities")
and (iii) if and when issued, the Company's 8 1/4% Senior Notes, Series B, due
2012 that may be issued from time to time under the Indenture in exchange for
Initial Securities or Additional Securities in an offer registered under the
Securities Act as provided in the Registration Rights Agreement (herein called
"Exchange Securities"). The Initial Securities, Additional Securities and
Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on the incurrence of
indebtedness, the making of restricted payments, the sale of assets and
subsidiary stock, the incurrence of certain


                                      A-3

liens, sale-leaseback transactions, the sale of capital stock of restricted
subsidiaries, the making of payments for consents, the entering into of
agreements that restrict distribution from restricted subsidiaries and the
consummation of mergers and consolidations. The Indenture also imposes
requirements with respect to the provision of financial information and the
provision of guarantees of the Securities by certain subsidiaries.

         To guarantee the due and punctual payment of the principal, premium, if
any, and interest (including post-filing or post-petition interest) on the
Securities and all other amounts payable by the Company under the Indenture and
the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture, the Subsidiary Guarantors have unconditionally guaranteed
(and future guarantors, together with the Subsidiary Guarantors, will
unconditionally Guarantee), jointly and severally, such obligations on a senior
basis pursuant to the terms of the Indenture.

5. Redemption

         Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to February 1, 2007. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

         If redeemed during the 12-month period commencing on February 1 of the
years set forth below:



                                             REDEMPTION
PERIOD                                         PRICE
- ------                                         -----
                                          
2007                                         106.188%
2008                                         104.125%
2009                                         102.063%
2010 and thereafter                          100.000%


         In addition, at any time and from time to time prior to February 1,
2007, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the proceeds of one or more Equity
Offerings at a redemption price (expressed as a percentage of principal amount)
of 108.250% plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities (after
giving effect to any future issuance of Additional Securities) must remain
outstanding after each such redemption; provided further, that each such
redemption occurs within 60 days of the date of closing of such Equity Offering.


                                      A-4

         If the optional redemption date is on or after an interest record date
and on or before the related interest payment date, the accrued and unpaid
interest, if any, will be paid to the Person in whose name the Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders whose Securities will be subject to
redemption by the Company.

         In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed, then on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Securities of $1,000 in original principal amount
or less will be redeemed in part. Any such notice to the Trustee may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect. If any Security is to be
redeemed in part only, the notice of redemption relating to such Security shall
state the portion of the principal amount thereof to be redeemed. A new Security
in principal amount equal to the unredeemed portion thereof will be issued in
the name of the Holder thereof upon cancellation of the original Security. On
and after the redemption date, interest will cease to accrue on Securities or
portions thereof called for redemption as long as the Company has deposited with
the Paying Agent funds in satisfaction of the applicable redemption price
pursuant to the Indenture.

6. Repurchase Provisions

         If a Change of Control occurs, unless the Company has exercised its
right to redeem all of the Securities as described under paragraph 5 of the
Securities, then such Change of Control shall constitute a triggering event
which shall trigger the obligation of the Company to offer to repurchase from
each Holder all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) as provided
in, and subject to the terms of, the Indenture.

7. Denominations; Transfer; Exchange

         The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay a sum sufficient to cover any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange (i) any Securities selected for redemption (except,
in the case of a Security to be redeemed in part, the portion of the Security
not to be redeemed) for a period beginning 15 days before the mailing of a
notice of Securities to be redeemed and ending on the date of such mailing or
(ii) any Securities for a period beginning 15 days before an interest payment
date and ending on such interest payment date.


                                      A-5

8. Persons Deemed Owners

         The registered Holder of this Security may be treated as the owner of
it for all purposes.

9. Unclaimed Money

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
for payment as general creditors unless an abandoned property law designates
another person and not to the Trustee for payment.

10. Defeasance

         Subject to certain exceptions and conditions set forth in the
Indenture, the Company at any time may terminate some or all of its obligations
under the Securities and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of principal, premium, if
any, and interest on the Securities to redemption or maturity, as the case may
be.

11. Amendment, Supplement, Waiver

         Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended or supplemented by the Company,
Subsidiary Guarantors and Trustee with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment or in respect of a provision
that cannot be amended without the written consent of each Securityholder
affected) or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, Subsidiary Guarantors and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to provide for
any supplemental indenture required pursuant to Section 3.12, to comply with
Article IV or Article X in respect of the assumption by a Successor Company of
an obligation of the Company or any Subsidiary Guarantor under this Indenture,
to add Guarantees with respect to the Securities or release a Subsidiary
Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in
accordance with the Indenture, to secure the Securities, to make any change that
would provide any additional rights or benefits to the holders of the Securities
or that does not materially adversely affect the legal rights under the
Indenture of any such holder; to comply with any requirement of the SEC in order
to effect or maintain the qualification of this Indenture under the TIA, or to
provide for the issuance of the Exchange Securities.

12. Defaults and Remedies

         Under the Indenture, Events of Default include (each of which are more
specially described in the Indenture) (i) default in payment of interest or
additional interest when due on


                                      A-6

the Securities, and such default continues for 30 days; (ii) default in payment
of principal or premium, if any, on the Securities at Stated Maturity , upon
required repurchase or upon optional redemption pursuant to paragraph 5 of the
Securities, upon declaration or otherwise; (iii) the failure by the Company to
make or consummate a Change of Control Offer or an Asset Sale Offer or to comply
with the provisions described under Section 3.2, 3.3 or 4.1; (iv) failure by the
Company or a Restricted Subsidiary for 60 days after notice from the Trustee or
the Holders of at least 25% in principal amount of the Securities then
outstanding to comply with any of its other agreements in this Indenture or the
Securities or of any Subsidiary Guarantor to perform any of its other covenants
under its Subsidiary Guarantee; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any Restricted Subsidiary) whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (a) is caused by
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 $5.0 million or more; (vi) failure
by the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged,
bonded or stayed for a period of 60 days; (vii) any Subsidiary Guarantee of a
Significant Subsidiary (or group of Subsidiaries that, taken together,
constitutes a Significant Subsidiary) shall be held in any judicial proceeding
to be unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Subsidiary Guarantor that is a Significant Subsidiary (or
group of Subsidiary Guarantors that, taken together, constitutes a Significant
Subsidiary), or any Person acting on behalf of any such Subsidiary Guarantor or
Subsidiary Guarantors, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; (viii) certain events of bankruptcy, insolvency or
reorganization of the Company, or a Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law.

         If an Event of Default (other than an Event of Default described in
(viii) hereof) occurs and is continuing, the Trustee by notice to the Company or
the Holders of at least 25% in principal amount of the outstanding Securities
may declare all the Securities to be due and payable immediately. If an Event of
Default described in (viii) hereof occurs and is continuing, the principal of,
premium, if any, and accrued and unpaid interest on all the Securities will
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders.

         Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or


                                      A-7


Event of Default (except a Default or Event of Default in payment of principal
or interest) if it determines that withholding notice is in their interest.

13. Trustee Dealings with the Company

         Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

14. No Recourse Against Others

         No director, officer, employee, incorporator or stockholder of the
Company or a Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company or such Subsidiary Guarantor under the Securities,
this Indenture or a Subsidiary Guarantee or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each holder of
Securities by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Securities.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.

15. Authentication

         This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16. Abbreviations

         Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors
Act).

17. CUSIP, Common Code and ISIN Numbers

         The Company has caused CUSIP, Common Code and ISIN numbers, if
applicable, to be printed on the Securities and have directed the Trustee to use
CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption as
a convenience to Securityholders. No representation is made as to the accuracy
of such numbers either as printed on the Securities or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

18. Governing Law

         This Security shall be governed by, and construed in accordance with,
the laws of the State of New York.

                                      A-8


         The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture, which has in it
the text of this Security in larger type. Requests may be made to:

                                             Portola Packaging, Inc.
                                             890 Faulstich Court
                                             San Jose, CA 95112

                                             Attention: Dennis L. Berg


                                      A-9


                                 ASSIGNMENT FORM

                To assign this Security, fill in the form below:

                I or we assign and transfer this Security to:

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

________________________________________________________________________________
               (Insert assignee's social security or tax I.D. No.)

         and irrevocably appoint ___________ agent to transfer this Security on
         the books of the Company. The agent may substitute another to act for
         him.

Date:____________________                    Your Signature:___________________

Signature Guarantee:____________________________________________________________
                         (Signature must be guaranteed)

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

         In connection with any transfer or exchange of any of the Securities
evidenced by this certificate occurring prior to the date that is two years
after the later of the date of original issuance of such Securities and the last
date, if any, on which such Securities were owned by the Company, or any
Affiliate of the Company, the undersigned confirms that such Securities are
being:

CHECK ONE BOX BELOW:

         1[ ]     acquired for the undersigned's own account, without transfer;
                  or

         2[ ]     transferred to the Company; or

         3[ ]     transferred pursuant to and in compliance with Rule 144A under
                  the Securities Act of 1933, as amended (the "Securities Act");
                  or

         4[ ]     transferred pursuant to an effective registration statement
                  under the Securities Act; or

         5[ ]     transferred pursuant to and in compliance with Regulation S
                  under the Securities Act; or

                                      A-10


         6[ ]     transferred to an institutional "accredited investor" (as
                  defined in Rule 501(a)(1), (2), (3) or (7) under the
                  Securities Act), that has furnished to the Trustee a signed
                  letter containing certain representations and agreements (the
                  form of which letter appears as Section 2.7 of the Indenture);
                  or

         7[ ]     transferred pursuant to another available exemption from the
                  registration requirements of the Securities Act of 1933, as
                  amended.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in its sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended, such as the exemption
provided by Rule 144 under such Act.

                                               ---------------------------------
                                               Signature

Signature Guarantee:

- ------------------------------                 ---------------------------------
(Signature must be guaranteed)                 Signature


The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.


                                               --------------------------------
                                               Dated:

                                      A-11


                     [TO BE ATTACHED TO GLOBAL SECURITIES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

  The following increases or decreases in this Global Security have been made:



                                                                            Principal Amount of this Global  Signature of authorized
Date of   Amount of decrease in Principal  Amount of increase in Principal      Security following such      signatory of Trustee or
Exchange  Amount of this Global Security   Amount of this Global Security        decrease or increase         Securities Custodian
- --------  ------------------------------   ------------------------------   -------------------------------  -----------------------
                                                                                                 


                                      A-12


                       OPTION OF HOLDER TO ELECT PURCHASE

         If you elect to have this Security purchased by the Company Pursuant to
Section 3.5 or 3.10 of the Indenture, check either box:

                         [ ]            [ ]
                         3.5           3.10

         If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000):
$____________________________________________

Date: __________ Your Signature ________________________________________________
                                (Sign exactly as your name appears on the other
                                 side of the Security)

Signature Guarantee:____________________________________________________________
                                (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      A-13


                                                                       EXHIBIT B

                         [FORM OF FACE OF SERIES B NOTE]

                       [Depository Legend, if applicable]

No. [__]                                       Principal Amount $[___________],
                                               as revised by the Schedule of
                                               Increases and Decreases in Global
                                               Security attached hereto
                                               CUSIP NO.________________________
                                               ISIN:____________________________

                             PORTOLA PACKAGING, INC.

                     8 1/4% Senior Note, Series B, due 2012

         Portola Packaging, Inc., a Delaware corporation, promises to pay to
Cede & Co., or its registered assigns, the principal sum of [_______________]
Dollars, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto, on February 1, 2012.

         Interest Payment Dates: February 1 and August 1, commencing on August
         1, 2004 Record Dates: January 15 and July 15

         Additional provisions of this Security are set forth on the other side
of this Security.

                                               PORTOLA PACKAGING, INC.

                                               By:______________________________

TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

U.S. BANK NATIONAL ASSOCIATION
as Trustee, certifies
that this is one of the
Securities referred
to in the Indenture.

By_____________________________
  Authorized Signatory                                     Date:_______ __, 20__

                                      B-1


                     [FORM OF REVERSE SIDE OF SERIES B NOTE]

                             PORTOLA PACKAGING, INC.

                     8 1/4% Senior Note, Series B, due 2012

1. Interest

         Portola Packaging, Inc., a corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above.

         The Company will pay interest semi-annually on February 1 and August 1,
commencing on August 1, 2004. Interest on the Securities will accrue from the
most recent date to which interest has been paid on the Securities or, if no
interest has been paid, from January 23, 2004. The Company shall pay interest on
overdue principal, and on overdue premium, if any (plus interest on such
interest to the extent lawful), at the rate borne by the Securities to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

2. Method of Payment

         By no later than 10:00 a.m. (New York City time) on the date on which
any principal of, premium, if any, or interest on any Security is due and
payable, the Company shall irrevocably deposit with the Trustee or the Paying
Agent money sufficient to pay such principal, premium, if any, and/or interest.
The Company will pay interest (except Defaulted Interest) to the Persons who are
registered Holders of Securities at the close of business on the January 15 or
July 15 next preceding the interest payment date even if Securities are
cancelled, repurchased or redeemed after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. Payments in respect of
Securities represented by a Global Security (including principal, premium, if
any, and interest) will be made by the transfer of immediately available funds
to the accounts specified by The Depository Trust Company or any successor
depository. The Company will make all payments in respect of a Definitive
Security (including principal, premium, if any, and interest) by mailing a check
to the registered address of each Holder thereof; provided, however, that
payments on the Securities may also be made, in the case of a Holder of at least
$1,000,000 aggregate principal amount of Securities, by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 15
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).

                                       B-2


3. Paying Agent and Registrar

         Initially, U.S. Bank National Association (the "Trustee") will act as
Trustee, Paying Agent and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice to any Securityholder.
Any of the domestically organized Wholly-Owned Subsidiaries may act as Paying
Agent, Registrar or co-registrar.

4. Indenture

         The Company issued the Securities under an Indenture dated as of
January 23, 2004 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on
the date of the Indenture (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all terms and provisions of the Indenture, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.

         The Securities are general unsecured senior obligations of the Company.
The aggregate principal amount of securities that may be authenticated and
delivered under the Indenture is unlimited. This Security is one of the 8 1/4%
Senior Notes, Series B, due 2012 referred to in the Indenture. The Securities
include (i) $180,000,000 aggregate principal amount of the Company's 8 1/4%
Senior Notes, Series A, due 2012 issued under the Indenture on January 23, 2004
(herein called "Initial Securities"), (ii) if and when issued, additional 8 1/4%
Senior Notes, Series A, due 2012 or 8 1/4% Senior Notes, Series B, due 2012 of
the Company that may be issued from time to time under the Indenture subsequent
to January 23, 2004 (herein called "Additional Securities") and (iii) if and
when issued, the Company's 8 1/4% Senior Notes, Series B, due 2012 that may be
issued from time to time under the Indenture in exchange for Initial Securities
or Additional Securities in an offer registered under the Securities Act as
provided in the Registration Rights Agreement (herein called "Exchange
Securities"). The Initial Securities, Additional Securities and Exchange
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the incurrence of indebtedness, the
making of restricted payments, the sale of assets and subsidiary stock, the
incurrence of certain liens, sale-leaseback transactions, the sale of capital
stock of restricted subsidiaries, the making of payments for consents, the
entering into of agreements that restrict distribution from restricted
subsidiaries and the consummation of mergers and consolidations. The Indenture
also imposes requirements with respect to the provision of financial information
and the provision of guarantees of the Securities by certain subsidiaries.

         To guarantee the due and punctual payment of the principal, premium, if
any, and interest (including post-filing or post-petition interest) on the
Securities and all other amounts payable by the Company under the Indenture and
the Securities when and as the same shall be due and payable, whether at
maturity, by acceleration or otherwise, according to the terms of the Securities
and the Indenture, the Subsidiary Guarantors have unconditionally guaranteed
(and future guarantors, together with the Subsidiary Guarantors, will
unconditionally Guarantee), jointly and severally, such obligations on a senior
basis pursuant to the terms of the Indenture.

                                      B-3


5. Redemption

         Except as set forth below, the Securities will not be redeemable at the
option of the Company prior to February 1, 2007. On and after such date, the
Securities will be redeemable, at the Company's option, in whole or in part, at
any time upon not less than 30 nor more than 60 days prior notice mailed by
first class mail to each Holder's registered address, at the following
redemption prices (expressed in percentages of principal amount), plus accrued
and unpaid interest to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

         If redeemed during the 12-month period commencing on February 1 of the
years set forth below:



                              REDEMPTION
PERIOD                          PRICE
- ------                          -----
                           
2007                          106.188%
2008                          104.125%
2009                          102.063%
2010 and thereafter           100.000%


         In addition, at any time and from time to time prior to February 1,
2007, the Company may redeem in the aggregate up to 35% of the original
principal amount of the Securities with the proceeds of one or more Equity
Offerings at a redemption price (expressed as a percentage of principal amount)
of 108.250% plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original principal amount of the Securities (after
giving effect to any future issuance of Additional Securities) must remain
outstanding after each such redemption; provided further, that each such
redemption occurs within 60 days of the date of closing of such Equity Offering.

         If the optional redemption date is on or after an interest record date
and on or before the related interest payment date, the accrued and unpaid
interest, if any, will be paid to the Person in whose name the Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders whose Securities will be subject to
redemption by the Company.

         In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed, then on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Securities of $1,000 in original principal amount
or less will be redeemed in part. Any such notice to the Trustee may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect. If any Security is to be
redeemed in part only, the notice of redemption relating to such

                                      B-4


Security shall state the portion of the principal amount thereof to be redeemed.
A new Security in principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof upon cancellation of the original
Security. On and after the redemption date, interest will cease to accrue on
Securities or portions thereof called for redemption as long as the Company has
deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.

6. Repurchase Provisions

         If a Change of Control occurs, unless the Company has exercised its
right to redeem all of the Securities as described under paragraph 5 of the
Securities, then such Change of Control shall constitute a triggering event
which shall trigger the obligation of the Company to offer to repurchase from
each Holder all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) as provided
in, and subject to the terms of, the Indenture.

7. Denominations; Transfer; Exchange

         The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay a sum sufficient to cover any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange (i) any Securities selected for redemption (except,
in the case of a Security to be redeemed in part, the portion of the Security
not to be redeemed) for a period beginning 15 days before the mailing of a
notice of Securities to be redeemed and ending on the date of such mailing or
(ii) any Securities for a period beginning 15 days before an interest payment
date and ending on such interest payment date.

8. Persons Deemed Owners

         The registered Holder of this Security may be treated as the owner of
it for all purposes.

9. Unclaimed Money

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
for payment as general creditors unless an abandoned property law designates
another person and not to the Trustee for payment.

10. Defeasance

         Subject to certain exceptions and conditions set forth in the
Indenture, the Company at any time may terminate some or all of its obligations
under the Securities and the

                                      B-5


Indenture if the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal, premium, if any, and interest on the
Securities to redemption or maturity, as the case may be.

11. Amendment, Supplement, Waiver

         Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended or supplemented by the Company,
Subsidiary Guarantors and Trustee with the written consent of the Holders of at
least a majority in principal amount of the then outstanding Securities and (ii)
any default (other than with respect to nonpayment or in respect of a provision
that cannot be amended without the written consent of each Securityholder
affected) or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount of the then outstanding
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company, Subsidiary Guarantors and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency, to provide for uncertificated
Securities in addition to or in place of certificated Securities, to provide for
any supplemental indenture required pursuant to Section 3.12, to comply with
Article IV or Article X in respect of the assumption by a Successor Company of
an obligation of the Company or any Subsidiary Guarantor under this Indenture,
to add Guarantees with respect to the Securities or release a Subsidiary
Guarantor upon its designation as an Unrestricted Subsidiary or otherwise in
accordance with the Indenture, to secure the Securities, to make any change that
would provide any additional rights or benefits to the holders of the Securities
or that does not materially adversely affect the legal rights under the
Indenture of any such holder; to comply with any requirement of the SEC in order
to effect or maintain the qualification of this Indenture under the TIA, or to
provide for the issuance of the Exchange Securities.

12. Defaults and Remedies

         Under the Indenture, Events of Default include (each of which are more
specially described in the Indenture) (i) default in payment of interest or
additional interest when due on the Securities, and such default continues for
30 days; (ii) default in payment of principal or premium, if any, on the
Securities at Stated Maturity , upon required repurchase or upon optional
redemption pursuant to paragraph 5 of the Securities, upon declaration or
otherwise; (iii) the failure by the Company to make or consummate a Change of
Control Offer or an Asset Sale Offer or to comply with the provisions described
under Section 3.2, 3.3 or 4.1; (iv) failure by the Company or a Restricted
Subsidiary for 60 days after notice from the Trustee or the Holders of at least
25% in principal amount of the Securities then outstanding to comply with any of
its other agreements in this Indenture or the Securities or of any Subsidiary
Guarantor to perform any of its other covenants under its Subsidiary Guarantee;
(v) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary) whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, which default (a) is caused by 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

                                      B-6


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 $5.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $5.0 million, which judgments are not paid, discharged, bonded or stayed for
a period of 60 days; (vii) any Subsidiary Guarantee of a Significant Subsidiary
(or group of Subsidiaries that, taken together, constitutes a Significant
Subsidiary) shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor that is a Significant Subsidiary (or group of Subsidiary
Guarantors that, taken together, constitutes a Significant Subsidiary), or any
Person acting on behalf of any such Subsidiary Guarantor or Subsidiary
Guarantors, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; (viii) certain events of bankruptcy, insolvency or reorganization of
the Company, or a Significant Subsidiary or group of Restricted Subsidiaries
that, taken together (as of the latest audited consolidated financial statements
for the Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law.

         If an Event of Default (other than an Event of Default described in
(viii) hereof) occurs and is continuing, the Trustee by notice to the Company or
the Holders of at least 25% in principal amount of the outstanding Securities
may declare all the Securities to be due and payable immediately. If an Event of
Default described in (viii) hereof occurs and is continuing, the principal of,
premium, if any, and accrued and unpaid interest on all the Securities will
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders.

         Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

13. Trustee Dealings with the Company

         Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.

14. No Recourse Against Others

         An incorporator, director, officer, employee, Affiliate or stockholder,
of the Company, or any Subsidiary Guarantor, solely by reason of this status,
shall not have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Securities, the Indenture or any Subsidiary
Guarantees or for any claim based on, in respect of or by reason

                                      B-7


of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

15. Authentication

         This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16. Abbreviations

         Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entirety), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors
Act).

17. CUSIP, Common Code and ISIN Numbers

         The Company has caused CUSIP, Common Code and ISIN numbers, if
applicable, to be printed on the Securities and have directed the Trustee to use
CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption as
a convenience to Securityholders. No representation is made as to the accuracy
of such numbers either as printed on the Securities or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.

18. Governing Law

         This Security shall be governed by, and construed in accordance with,
the laws of the State of New York.

         The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the

Indenture which has in it the text of this Security in larger type. Requests may
be made to:

                                             Portola Packaging, Inc.
                                             890 Faulstich Court
                                             San Jose, CA 95112

                                             Attention: Dennis L. Berg

                                      B-8


                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

________________________________________________________________________________
               (Insert assignee's social security or tax I.D. No.)

and irrevocably appoint ____________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.


Date: _______________  Your Signature __________________________________________

Signature Guarantee: ___________________________________________________________
                         (Signature must be guaranteed)

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      B-9


                     [TO BE ATTACHED TO GLOBAL SECURITIES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

  The following increases or decreases in this Global Security have been made:



                                                                            Principal Amount of this Global  Signature of authorized
Date of   Amount of decrease in Principal  Amount of increase in Principal      Security following such      signatory of Trustee or
Exchange  Amount of this Global Security   Amount of this Global Security        decrease or increase         Securities Custodian
- --------  ------------------------------   ------------------------------   -------------------------------  -----------------------
                                                                                                 


                                      B-10


                       OPTION OF HOLDER TO ELECT PURCHASE

         If you elect to have this Security purchased by the Company Pursuant to
Section 3.5 or 3.10 of the Indenture, check either box:

                      [ ]               [ ]
                      3.5              3.10

         If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 3.5 or Section 3.10 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000):
$____________________________________________

Date: _______________  Your Signature: ________________________________________
                                      (Sign exactly as your name appears on the
                                       other side of the Security)

Signature Guarantee: ___________________________________________________________
                         (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                      B-11


                                                                       EXHIBIT C

            FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS

         This Supplemental Indenture, dated as of [_______ __], 20__ (this
"Supplemental Indenture" or "Guarantee"), among [name of future Subsidiary
Guarantor] (the "Guarantor"), Portola Packaging, Inc. (together with its
successors and assigns, the "Company"), each other then existing Subsidiary
Guarantor under the Indenture referred to below, and U.S. Bank National
Association, as Trustee under the Indenture referred to below.

                              W I T N E S S E T H:

         WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
heretofore executed and delivered an Indenture, dated as of January 23, 2004 (as
amended, supplemented, waived or otherwise modified, the "Indenture"), providing
for the issuance of an aggregate principal amount of $180,000,000 of 8 1/4%
Senior Notes due 2012 of the Company (the "Securities");

         WHEREAS, Section 3.12 of the Indenture provides that the Company is
required to cause each Restricted Subsidiary (other than a Subsidiary that does
not Guarantee obligations under the Senior Secured Credit Agreement) created or
acquired by the Company and any Subsidiary that is required to Guarantee either
any Indebtedness of the Company or Indebtedness under a Credit Facility to
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary will unconditionally Guarantee, on a joint and several basis
with the other Subsidiary Guarantors, the full and prompt payment of the
principal of, premium, if any, and interest on the Securities on a senior basis;
and

         WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the
Company are authorized to execute and deliver this Supplemental Indenture to
amend or supplement the Indenture, without the consent of any Securityholder;

         NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor, the Company, the other Subsidiary Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the Holders of the
Securities as follows:

                                   ARTICLE I

                                   Definitions

         SECTION 1.1 Defined Terms. As used in this Supplemental Indenture,
terms defined in the Indenture or in the preamble or recital hereto are used
herein as therein defined, except that the term "Holders" in this Guarantee
shall refer to the term "Holders" as defined in


the Indenture and the Trustee acting on behalf or for the benefit of such
Holders. The words "herein," "hereof" and "hereby" and other words of similar
import used in this Supplemental Indenture refer to this Supplemental Indenture
as a whole and not to any particular section hereof.

                                   ARTICLE II

                        Agreement to be Bound; Guarantee

         SECTION 2.1 Agreement to be Bound. The Guarantor hereby becomes a party
to the Indenture as a Subsidiary Guarantor and as such will have all of the
rights and be subject to all of the obligations and agreements of a Subsidiary
Guarantor under the Indenture. The Guarantor agrees to be bound by all of the
provisions of the Indenture applicable to a Subsidiary Guarantor and to perform
all of the obligations and agreements of a Subsidiary Guarantor under the
Indenture.

         SECTION 2.2 Guarantee. The Guarantor agrees, on a joint and several
basis with all the existing Subsidiary Guarantors, to fully, unconditionally and
irrevocably Guarantee to each Holder of the Securities and the Trustee the
Guarantor Obligations pursuant to Article X of the Indenture on a senior basis.

                                   ARTICLE III

                                  Miscellaneous

         SECTION 3.1 Notices. All notices and other communications to the
Guarantor shall be given as provided in the Indenture to the Guarantor, at its
address set forth below, with a copy to the Company as provided in the Indenture
for notices to the Company.

         SECTION 3.2 Parties. Nothing expressed or mentioned herein is intended
or shall be construed to give any Person, firm or corporation, other than the
Holders and the Trustee, any legal or equitable right, remedy or claim under or
in respect of this Supplemental Indenture or the Indenture or any provision
herein contained.

         SECTION 3.3 Governing Law. This Supplemental Indenture shall be
governed by, and construed in accordance with, the laws of the State of New
York.

         SECTION 3.4 Severability Clause. In case any provision in this
Supplemental Indenture 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 and such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.

         SECTION 3.5 Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and


                                       C-2

confirmed and all the terms, conditions and provisions thereof shall remain in
full force and effect. This Supplemental Indenture shall form a part of the
Indenture for all purposes, and every Holder of Securities heretofore or
hereafter authenticated and delivered shall be bound hereby. The Trustee makes
no representation or warranty as to the validity or sufficiency of this
Supplemental Indenture.

         SECTION 3.6 Counterparts. The parties hereto may sign one or more
copies of this Supplemental Indenture in counterparts, all of which together
shall constitute one and the same agreement.

         SECTION 3.7 Headings. The headings of the Articles and the sections in
this Guarantee are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.

                                      C-3


         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first above written.

                                               [SUBSIDIARY GUARANTOR],
                                               as a Guarantor

                                               By:______________________________
                                                  Name:
                                                  Title:
                                                  [Address]

                                               U.S. BANK NATIONAL ASSOCIATION,
                                               as Trustee

                                               By:______________________________
                                                  Name:
                                                  Title:

                                               PORTOLA PACKAGING, INC.

                                               By_______________________
                                                  Name:
                                                  Title:

                                               PORTOLA ALLIED TOOL, INC.

                                               By_______________________
                                                  Name:
                                                  Title:

                       [additional signature page follows]



                                             PORTOLA LIMITED

                                             Executed and delivered as a deed
                                             (on the date first appearing above)
                                             by Portola Limited acting by

                                             _______________________, a director
                                               Name:

                                             _______________________, a director
                                               Name:

                                             PORTOLA PACKAGING, INC. MEXICO,
                                             S.A. DE C.V.

                                             By_________________________________
                                               Name:
                                               Title:

                                             PORTOLA PACKAGING CANADA LTD.

                                             By_________________________________
                                               Name:
                                               Title:

                       [additional signature page follows]

                                       C-2


                                             PORTOLA PACKAGING LIMITED

                                             Executed and delivered as a deed
                                             (on the date first appearing
                                             above) by Portola Packaging Limited
                                             acting by

                                             ______________________, as director
                                               Name:

                                             ______________________, as director
                                               Name:

                                             TECH INDUSTRIES, INC.

                                             By_________________________________
                                               Name: Dennis L. Berg
                                               Title: Chairman

                                       C-3

EX-23.02

                                                                   EXHIBIT 23.02




            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Portola Packaging, Inc. of our reports dated November
18, 2003, except for Note 19, as to which the date is December 10, 2003, and
Note 17, as to which the date is May 21, 2004 relating to the financial
statements and financial statement schedule, which appear in such Registration
Statement. We also consent to the references to us under the headings "Experts"
and "Selected Consolidated Financial Data" in such Registration Statement.




PricewaterhouseCoopers LLP
Pittsburgh, PA
June 25, 2004

EX-23.03

Exhibit 23.03

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Amendment No. 1 to Form S-4 of Portola Packaging, Inc. of our report dated December 29, 2003 relating to the financial statements of Tech Industries, Inc. and Affiliates, which appears in Portola Packaging, Inc. 8-K/A dated February 9, 2004. We also consent to the references to us under the headings “experts” in such Registration Statement.

Prescott Chatellier Fontaine & Wilkinson LLP

Providence, Rhode Island

June 25, 2004