-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TQ6v1Czo9ktY0ML5MjpE5bQGYCVrgfz1b8Vz/Xt3K22fULHyz3Lp5FhSGO3L/Rzr amLp4Kx1AScc1dy3ywSCnQ== 0000919463-02-000003.txt : 20020415 0000919463-02-000003.hdr.sgml : 20020415 ACCESSION NUMBER: 0000919463-02-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20011229 FILED AS OF DATE: 20020321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BPC HOLDING CORP CENTRAL INDEX KEY: 0000919465 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351814673 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-75706-01 FILM NUMBER: 02580321 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERRY PLASTICS CORP CENTRAL INDEX KEY: 0000919463 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351813706 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-75706 FILM NUMBER: 02580320 BUSINESS ADDRESS: STREET 1: 101 OAKLEY ST STREET 2: P O BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47710 BUSINESS PHONE: 8124242904 MAIL ADDRESS: STREET 1: PO BOX 959 CITY: EVANSVILLE STATE: IN ZIP: 47706-0959 10-K 1 plask01.txt 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended DECEMBER 29, 2001 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number 33-75706 BPC HOLDING CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 35-1813706 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) BERRY PLASTICS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware 35-1814673 (State or other jurisdiction (IRS employer of incorporation or organization) identification number) 101 Oakley Street 47710 Evansville, Indiana (Address of principal executive offices) (Zip code)
Registrants' telephone number, including area code: (812) 424-2904 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: Not applicable. None of the voting stock of either registrant is held by a non-affiliate of such registrant. There is no public trading market for any class of voting stock of BPC Holding Corporation or Berry Plastics Corporation. As of March 15, 2002, the following shares of capital stock of BPC Holding Corporation were outstanding: 91,000 shares of Class A Voting Common Stock; 259,000 shares of Class A Nonvoting Common Stock; 144,546 shares of Class B Voting Common Stock; 59,222 shares of Class B Nonvoting Common Stock; and 16,833 shares of Class C Nonvoting Common Stock. As of March 15, 2002, there were outstanding 100 shares of the Common Stock, $.01 par value, of Berry Plastics Corporation. DOCUMENTS INCORPORATED BY REFERENCE None -1- DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS THIS FORM 10-K CONTAINS STATEMENTS THAT CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). THOSE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS FORM 10-K AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF THE COMPANY. WITHOUT LIMITING THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND MAY INVOLVE RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. VARIOUS ECONOMIC AND COMPETITIVE FACTORS COULD CAUSE ACTUAL RESULTS OR EVENTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS. THE ACCOMPANYING INFORMATION CONTAINED IN THIS FORM 10-K, INCLUDING, WITHOUT LIMITATION, THE INFORMATION SET FORTH UNDER "BUSINESS" AND "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," IDENTIFIES IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES, INCLUDING THE COMPANY'S ABILITY TO PASS THROUGH RAW MATERIAL PRICE INCREASES TO ITS CUSTOMERS, ITS ABILITY TO SERVICE DEBT, THE AVAILABILITY OF PLASTIC RESIN, THE IMPACT OF CHANGING ENVIRONMENTAL LAWS AND CHANGES IN THE LEVEL OF THE COMPANY'S CAPITAL INVESTMENT. ALTHOUGH MANAGEMENT BELIEVES IT HAS THE BUSINESS STRATEGY AND RESOURCES NEEDED FOR IMPROVED OPERATIONS, FUTURE REVENUE AND MARGIN TRENDS CANNOT BE RELIABLY PREDICTED. -2- BPC HOLDING CORPORATION BERRY PLASTICS CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 29, 2001 TABLE OF CONTENTS PAGE PART I Item 1. Business.................................................... 4 Item 2. Properties.................................................. 11 Item 3. Legal Proceedings.......................................... 12 Item 4. Submission of Matters to a Vote of Security Holders........ 12 PART II Item 5. Market for Registrants' Common Equity and Related Stockholder Matters................................................... 13 Item 6. Selected Financial Data................................... 14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 20 Item 8. Financial Statements and Supplementary Data............... 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....................... 21 PART III Item 10. Directors and Executive Officers of the Registrants....... 22 Item 11. Executive Compensation.................................... 24 Item 12. Security Ownership of Certain Beneficial Owners and Management 27 Item 13. Certain Relationships and Related Transactions............ 28 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................................... 31 -3- PART I ITEM 1. BUSINESS GENERAL BPC Holding Corporation ("Holding"), is the parent of Berry Plastics Corporation ("Berry" or the "Company"), a leading manufacturer and supplier of rigid plastic packaging products focused on five markets: open(top containers, aerosol overcaps, closures, drink cups and housewares. In order to support these five markets, the Company is organized into three divisions: containers, closures, and consumer products. Within each of its markets, the Company concentrates on manufacturing higher quality value-added products sold to marketers of image-conscious industrial and consumer products that utilize the Company's proprietary molds, superior color matching capabilities and sophisticated multi-color printing capabilities. The Company supplies overcaps and closures to a wide variety of customers and for a wide variety of commercial and consumer products. Similarly, the Company's open-top containers are used for packaging a broad spectrum of commercial and consumer products. The Company's drink cups are sold to fast food and family-dining restaurants, convenience stores, stadiums, and retail stores. The Company also sells primarily seasonal, semi-disposable housewares and lawn and garden products such as plates, bowls, pitchers and flower pots, to major retail marketers. Berry's customer base is comprised of over 12,000 customers with operations in a widely diversified range of markets. The Company's top ten customers accounted for approximately 20% of fiscal 2001 net sales, with no customer accounting for more than 5% of the Company's net sales in fiscal 2001. The historical allocation of the Company's total net sales among its product categories is as follows:
FISCAL --------------------------------------- 2001 2000 1999 --------- --------- ---------- Containers 51% 57% 57% Closures 28 27 25 Consumer 21 16 18 Products
The Company believes that it derives a strong competitive position from its state-of-the-art production capabilities, extensive array of proprietary molds in a wide variety of sizes and styles and dedication to service and quality. In the closure division, the Company distinguishes itself with superior color matching capabilities, which is of extreme importance to its base of image-conscious consumer products customers, and proprietary packing equipment, which enables the Company to deliver a higher quality product while lowering warehousing and shipping costs. In the container and drink cup markets, an in-house graphic arts department and sophisticated printing and decorating capabilities permit the Company to offer extensive value-added decorating options. The Company believes that it is an industry innovator, particularly in the area of decoration. These market-related strengths, combined with the Company's modern proprietary mold technology, high speed molding capabilities and multiple-plant locations, all contribute to the Company's strong market position. In addition to these marketing and manufacturing strengths, the Company believes that its close working relationships with customers are crucial to maintaining market positions and developing future growth opportunities. The Company employs a direct sales force that is focused on working with customers and the Company's production and product design personnel to develop customized packaging that enhances customer product differentiation and improves product performance. The Company works to develop innovative new products and identify and pursue non-traditional markets that can use existing Company products. -4- HISTORY Imperial Plastics, the Company's predecessor, was established in 1967 in Evansville, Indiana. Berry Plastics, Inc. ("Old Berry") was formed in 1983 to purchase substantially all of the assets of Imperial Plastics. In 1988, Old Berry acquired Gilbert Plastics of New Brunswick, New Jersey, a leading manufacturer of aerosol overcaps, and subsequently relocated Gilbert Plastics' production to Old Berry's Evansville, Indiana facility. In 1990, the Company and Holding, the holder of 100% of the outstanding capital stock of the Company, were formed to purchase the assets of Old Berry. In February 1992, the Company acquired substantially all of the assets of the Mammoth Containers division of Genpak Corporation. In March 1995, Berry Sterling Corporation ("Berry Sterling"), a newly formed wholly owned subsidiary of the Company, acquired substantially all of the assets of Sterling Products, Inc., a producer of injection molded plastic drink cups and lids. Management believes that the acquisition gave the Company immediate penetration into a rapidly expanding plastic drink cup market. In December 1995, Berry Tri-Plas Corporation ("Berry Tri- Plas"), a wholly owned subsidiary of the Company, acquired substantially all of the assets of Tri-Plas, Inc., a manufacturer of injection molded containers and lids. Management believes that the acquisition gave the Company an immediate presence in the polypropylene container product line, which is mainly used for food and "hot fill" applications. In January 1997, the Company acquired certain assets of Container Industries, Inc. ("Container Industries"), a manufacturer and marketer of injection molded industrial and pry-off containers for building products and other industrial markets. Also, in January 1997, the Company acquired PackerWare Corporation ("PackerWare"), a manufacturer and marketer of plastic containers, drink cups, housewares, and lawn and garden products (the "PackerWare Acquisition"). Management believes that the PackerWare Acquisition significantly diversified and expanded the Company's position in the drink cup business and gave the Company immediate penetration into the housewares market. In May 1997, Berry Plastics Design Corporation ("Berry Design"), a newly formed wholly owned subsidiary of the Company, acquired substantially all of the assets of Virginia Design Packaging Corp. ("Virginia Design"), a manufacturer and marketer of injection-molded containers used primarily for food packaging. Management believes that the acquisition of these assets has enhanced the Company's position in the food packaging and food service markets. In August 1997, the Company acquired Venture Packaging, Inc. ("Venture Packaging"), a manufacturer and marketer of injection-molded containers used in the food, dairy and various other markets. Management believes that the acquisition strategically assisted the Company in marketing its product line of open-top containers and lids. In July 1998, NIM Holdings ("NIM Holdings"), a newly formed wholly owned subsidiary of the Company, acquired all of the capital stock of Norwich Injection Moulders Limited ("Norwich Moulders"), a manufacturer and marketer of injection-molded overcaps and closures for the European market (the "Berry UK Acquisition"). In fiscal 1999, the Company changed the name from Norwich Injection Moulders Limited to Berry Plastics UK Limited ("Berry UK"). Management believes that the Berry UK Acquisition provided the Company with a production platform that allows it to better serve its global customers and introduce its other product lines in Europe. In October 1998, Knight Plastics, Inc. ("Knight") acquired substantially all of the assets of the Knight Engineering and Plastics Division of Courtaulds Packaging Inc. (the "Knight Acquisition"), a manufacturer of aerosol overcaps. Management believes that the Knight Acquisition enhanced the Company's overcap business and better positioned the Company to meet the needs of its domestic and multi-national customers. In July 1999, the Company acquired all of the outstanding capital stock of CPI Holding Corporation ("CPI Holding"), the parent company of Cardinal Packaging, Inc. ("Cardinal"), a manufacturer and marketer of open-top containers (the "Cardinal Acquisition"). Management believes that the Cardinal Acquisition enhanced the Company's open-top container product selection and provided many of its customers with a single packaging supplier. -5- In May 2000, Berry acquired all of the outstanding capital stock of Poly- Seal Corporation ("Poly-Seal"), a manufacturer and marketer of closures (the "Poly-Seal Acquisition"). Management believes that the Poly-Seal Acquisition was a major step in expanding the Company's participation in the closures business and provided a U.S. closure production platform in Baltimore, Maryland. In October 2000, Berry, through its Italian subsidiary, CBP Holdings S.r.l., acquired all of the outstanding capital stock of Capsol S.p.a. ("Capsol") and the whole quota capital of a related company, Ociesse S.r.l. (the "Capsol Acquisition"). Capsol is a manufacturer and marketer of aerosol overcaps and closures. Management believes that the Capsol Acquisition EXPANDED THE COMPANY'S PARTICIPATION IN THE EUROPEAN MARKET FOR OVERCAPS AND CLOSURES. On May 14, 2001, Berry acquired all of the outstanding capital stock of Pescor Plastics, Inc. ("Pescor") for aggregate consideration of approximately $24.8 million. The purchase was financed through the issuance by Holding of $9.8 million of 14% preferred stock and additional borrowings under the senior credit facility. Management believes that the acquisition enhanced the Company's position in the drink cup business. As the Company previously announced, in January 2002, the Board of Directors of Berry retained certain investment banking firms to assist it in considering certain strategic transactions designed to realize shareholders values, including the possibility of a combination with a company in the industry or a sale of the company in a negotiated transaction. As part of this effort, these firms have initiated the process of soliciting offers for the company. There can be no assurance that a strategic transaction involving Berry will be completed and, if completed, there can be no assurance as to the timing or terms thereof. OPEN-TOP CONTAINER MARKET The Company classifies its containers into six product lines: thinwall, pry-off, dairy, polypropylene, industrial, and specialty. Management believes that the Company is the leading manufacturer in the thinwall, pry- off and frozen dessert (component of dairy) container markets. The following table describes each of the Company's container product lines.
MAJOR END PRODUCT LINE DESCRIPTION SIZES MARKETS - ------------- ------------------------------------ ------------- ---------------------- Thinwall Thinwalled, multi-purpose containers 8 oz. to 2 Food, promotional with or without handles and lids gallons products, toys and a wide variety of other uses Pry-off Containers having a tight lid-fit and 4 oz. to 2 Building products, requiring an opening device and also gallons adhesives, pool and meet the Consumer Product Safety other chemicals, Commission standards for child safety and other industrial uses Dairy Thinwall containers in traditional 4 oz. to 5 Cultured dairy products dairy market sizes and styles lbs., including yogurt, Multi-pack cottage cheese, sour cream and dips, and frozen desserts Polypropylene Usually clear containers in round, 6 oz. to 5 Food, deli, sauces oblong or rectangular shapes lbs. and salads Industrial Thick-walled, larger pails designed to 2.5 to 5 Building products, accommodate heavy loads gallons chemicals, paints and other industrial uses Specialty Customer specific Various Premium consumer items, such as tobacco and drink mixes
The largest end-uses for the Company's containers are food products, building products, chemicals and dairy products. The Company has a diverse customer base for its container lines, and no single container customer exceeded 3% of the Company's total net sales in fiscal 2001. -6- Management believes that the Company offers the broadest product line among U.S.-based injection-molded plastic container manufacturers. The Company's container capacities range from 4 ounces to 5 gallons and are offered in various styles with accompanying lids, bails and handles, as well as a wide array of decorating options. In addition to a complete product line, the Company has sophisticated printing capabilities, an in-house graphic arts department, low cost manufacturing capability with eleven plants strategically located throughout the United States and a dedication to high quality products and customer service. Product engineers work with customers to design and commercialize new containers. In addition, as part of the Company's dedication to customer service, the Company provides filling machine equipment to many of the its customers, primarily in the dairy market, and also provides the services necessary to operate such equipment. The Company believes providing such equipment and services increases customer retention by increasing the customer's production efficiency. The Company seeks to develop niche container products and new applications by taking advantage of the Company's state-of-the-art decorating and graphic arts capabilities and dedication to service and quality. Management believes that these capabilities have given the Company a significant competitive advantage in certain high-margin niche container applications for specialized products. Examples include popcorn containers for new movie promotions and professional and college sporting and entertainment events, where the ability to produce sophisticated and colorful graphics is crucial to the product's success. In order to identify new applications for existing products, the Company relies extensively on its national sales force. Once these opportunities are identified, the Company's sales force interfaces with the Company's product design engineers to satisfy customers' needs. In non-industrial containers, the Company's strongest competitors include Airlite, Sweetheart, Landis, and Polytainers. The Company also produces commodity industrial pails for a market that is dominated by large volume competitors such as Letica, Plastican, NAMPAC and Ropak. The Company does not participate heavily in this large market. AEROSOL OVERCAP MARKET Based on discussions with our customers, sales representatives and external sales brokers, the Company believes it is the worldwide leader in the production of aerosol overcaps. Approximately 19% of the U.S. market consists of marketers who produce overcaps in-house for their own needs. Management believes that a portion of these in-house producers will increase the outsourcing of their production to high technology, low cost manufacturers, such as the Company, as a means of reducing manufacturing assets and focusing on their core marketing objectives. The Company's aerosol overcaps are used in a wide variety of consumer goods markets including spray paints, household and personal care products, insecticides and numerous other commercial and consumer products. Most U.S. manufacturers and contract fillers of aerosol products are customers of the Company for some portion of their needs. Management believes that, over the years, the Company has developed several significant competitive advantages, including a reputation for outstanding quality, short lead-time requirements to fill customer orders, long-standing relationships with major customers, the ability to accurately reproduce over 3,500 colors, proprietary packing technology that minimizes freight cost and warehouse space, high-speed, low-cost molding and decorating capability and a broad product line of proprietary molds. The Company continues to develop new products in the overcap market, including the "spray-thru" line of aerosol overcaps. In fiscal 2001, no single aerosol overcap customer accounted for over 2% of the Company's total net sales. Competitors in this market include Dubuque Plastics, Cobra and Plasticum. In addition, a number of companies, including several of the Company's customers currently produce aerosol overcaps for their own use. -7- CLOSURE MARKET The Company initiated an acquisition strategy to establish itself as a global provider in the closures market with the Berry UK Acquisition. The Company continued executing the strategy in 2000 with the Poly-Seal Corporation Acquisition and the Capsol Acquisition. Management believes the combined product line offerings to the closures market establish the Company as a leading provider of closure systems globally. The product line offerings include continuous thread, dispensing, tamper evident, and child resistant closures. In addition, the Company is a leading provider of fitments and plugs for medical applications, cups and spouts for liquid laundry detergent, dropper bulb assemblies for medical and personal care applications, and jiggers for mouthwash products. The Company's closures are used in a wide variety of consumer goods markets including health and beauty aids, pharmaceutical, household chemicals, commercial chemicals, and food and dairy. The Company is a major provider of closures to many of the leading companies in these markets. Management believes the capabilities and expertise the Company has established as a closure provider create significant competitive advantages, including the latest in single and bi-injection technology, molding of thermoplastic and thermoset resins, compression molding of thermoplastic resins, and lining and assembly applications applying the latest in vision inspection technology. In addition, the Company has an in-house package development and design group focused on developing new closure systems to meet both customers proprietary needs and stock systems for the changing closure needs of the markets served. The Company has an outstanding reputation for quality and has received numerous "Supplier Quality Achievement Awards" from customers in different markets. In fiscal 2001, no single closure customer accounted for over 2% of the Company's total net sales. Major competitors in this market include Owens- Illinois, Kerr/Suncoast, Phoenix Closures, Portola, Rexam Closures, and Seaquist Closures. DRINK CUP MARKET Based on discussions with our customers, sales representatives and external sales brokers, the Company believes that it is the leading provider of injection molded plastic drink cups in the U.S. As beverage producers, convenience stores and fast food restaurants increase their marketing efforts for larger sized drinks, the Company believes that the plastic drink cup market will expand because of plastic's desirability over paper for larger drink cups. The Company produces injection-molded plastic cups that range in size from 12 to 64 ounces. Primary markets are fast food and family dining restaurants, convenience stores, stadiums, and retail stores. Virtually all cups are decorated, often as promotional items, and Berry is known in the industry for innovative, state-of-the-art graphics capability. Berry launched its thermoformed drink cup line in fiscal 2001. The Company's thermoformed product line offers sizes ranging from 22 to 44 ounces. The Company's thermoform process is unique in the industry and offers material competitive advantages both in terms of relative price and structural features versus competitive thermoformed drink cups. In fiscal 2001, no single drink cup customer accounted for more than 5% of the Company's total net sales. Major drink cup competitors include Huhtamaki (formerly Packaging Resources Incorporated) and WNA (formerly Cups Illustrated). HOUSEWARES MARKET The housewares market is a multi-billion dollar market. The Company's participation is focused on producing seasonal (spring and summer) semi- disposable plastic housewares and plastic lawn and garden products. Examples of our products include plates, bowls, pitchers, tumblers and outdoor flowerpots. Berry sells virtually all of its products in this market through major national retail marketers and national chain stores, including Wal-Mart and Target. PackerWare is a recognized brand name in these markets and PackerWare branded products are often co-branded by the Company's customers. The Company's position in this market has been to provide a high value to consumers at a relatively modest price, consistent with the key price points of the retail marketers. Berry believes outstanding service and ability to deliver products with timely combination of color and design further enhance its position in this market. This focus allowed PackerWare to be named 1998 Vendor of the Year by Wal-Mart in its Housewares division. -8- In fiscal 2001, no single housewares customer accounted for more than 5% of the Company's total net sales. Major housewares competitors include imported products from China, Arrow Plastics, and United Plastics. MARKETING AND SALES The Company reaches its large and diversified base of over 12,000 customers primarily through its direct field sales force. These field sales representatives are focused on individual product lines, but are encouraged to sell all Company products to serve the needs of the Company's customers. The Company believes that a direct field sales force is able to better focus on target markets and customers, with the added benefit of permitting the Company to control pricing decisions centrally. The Company also utilizes the services of manufacturing representatives to assist its direct sales force. The Company believes that it produces a high level of customer satisfaction. Highly skilled customer service representatives are located in each of the Company's facilities to support the national field sales force. In addition, telemarketing representatives, marketing managers and sales/marketing executives oversee the marketing and sales efforts. Manufacturing and engineering personnel work closely with field sales personnel to satisfy customers' needs through the production of high quality, value-added products and on-time deliveries. Additional marketing and sales techniques include a Graphic Arts department with computer-assisted graphic design capabilities and in-house production of photopolymer printing plates. Berry also has a centralized Color Matching and Materials Blending department that utilizes a computerized spectrophotometer to insure that colors match those requested by customers. MANUFACTURING GENERAL The Company primarily manufactures its products using the plastic injection molding process. The process begins when plastic resin, in the form of small pellets, is fed into an injection molding machine. The injection molding machine then melts the plastic resin and injects it into a multi-cavity steel mold, forcing the plastic resin to take the final shape of the product. At the end of each molding cycle (generally five to 25 seconds), the plastic parts are ejected from the mold into automated handling systems from which they are packed in corrugated containers for further processing or shipment. After molding, the product may be either decorated (printing, silk-screening, labeling) or assembled (e.g., bail handles fitted to containers). The Company believes that its molding and decorating capabilities are among the best in the industry. The Company's overall manufacturing philosophy is to be a low-cost producer by using high speed molding machines, modern multi-cavity hot runner, cold runner and insulated runner molds, extensive material handling automation and sophisticated printing technology. The Company utilizes state-of-the-art robotic packaging processes for large volume products, which enables the Company to deliver a higher quality product (due to reduced breakage) while lowering warehousing and shipping costs (due to more efficient use of space). Each plant has complete tooling maintenance capability to support molding and decorating operations. The Company has historically made, and intends to continue to make, significant capital investments in plant and equipment because of the Company's objectives to grow, improve productivity, and maintain competitive advantages. PRODUCT DEVELOPMENT The Company utilizes full-time product engineers who use three-dimensional computer-aided-design (CAD) technology to design and modify new products and prepare mold drawings. Engineers use an in-house model shop, which includes a thermoforming machine, to produce prototypes and sample parts. The Company can simulate the molding environment by running unit-cavity prototype molds in a small injection molding machine dedicated to research and development of new products. Production molds are then designed and outsourced for production by various companies with whom the Company has extensive experience and established relationships. The Company's engineers oversee the mold-building process from start to finish. -9- QUALITY ASSURANCE Each plant extensively utilizes Total Quality Management philosophies, including the use of statistical process control and extensive involvement of employees to increase productivity. This teamwork approach to problem-solving increases employee participation and provides necessary training at all levels. The Evansville, Henderson, Iowa Falls, Charlotte, Lawrence, Suffolk, Monroeville, Woodstock, Streetsboro, Baltimore, and Milan, plants have been approved for ISO certification, which certifies compliance by a company with a set of shipping, trading and technology standards promulgated by the International Standardization Organization ("ISO"). The Company is actively pursuing ISO certification in all of the remaining facilities. Extensive testing of parts for size, color, strength and material quality using statistical process control (SPC) techniques and sophisticated technology is also an ongoing part of the Company's traditional quality assurance activities. SYSTEMS Berry utilizes a fully integrated computer software system at its plants capable of producing complete financial and operational reports. This accounting and control system is easily expandable to add new features and/or locations as the Company grows. In addition, the Company has in place a sophisticated quality assurance system, a bar code based material management system and an integrated manufacturing system. SOURCES AND AVAILABILITY OF RAW MATERIALS The most important raw material purchased by the Company is plastic resin. The Company purchased approximately $110.5 million of resin in fiscal 2001. Approximately 50% of the resin pounds purchased were high density polyethylene ("HDPE"), 13% linear low density polyethylene and 37% polypropylene. The Company's purchasing strategy is to deal with only high-quality, dependable suppliers, such as Dow, Chevron, Nova, Equistar, and ExxonMobil. Although the Company does not have any supply requirements contracts with its key suppliers, management believes that the Company has maintained outstanding relationships with these key suppliers over the past several years and expects that such relationships will continue into the foreseeable future. Based on its experience, the Company believes that adequate quantities of plastic resins will be available, but no assurances can be given. EMPLOYEES At the end of fiscal 2001, the Company had approximately 3,100 employees. Poly-Seal Corporation, a wholly owned subsidiary, and the United Steelworkers of America are parties to a collective bargaining agreement which expires on April 24, 2005. As of the end of fiscal 2001, 330 employees of Poly-Seal Corporation were covered by this agreement. PATENTS AND TRADEMARKS The Company has numerous patents and trademarks with respect to its products. None of the patents or trademarks are considered by management to be material to the business of the Company. ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION The past and present operations of the Company and the past and present ownership and operations of real property by the Company are subject to extensive and changing federal, state and local environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposition of wastes or otherwise relating to the protection of the environment. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. However, the Company cannot predict with any certainty that it will not in the future incur liability under environmental statutes and regulations with respect to non-compliance with environmental laws, contamination of sites formerly or currently owned or operated by the Company (including contamination caused by prior owners and operators of such sites) or the off-site disposal of hazardous substances. Like any manufacturer, the Company is subject to the possibility that it may receive notices of potential liability, pursuant to CERCLA or analogous state laws, for cleanup costs associated with offsite waste recycling or disposal facilities at which wastes associated with its operations have allegedly come to be located. Liability under CERCLA is strict, retroactive and joint and several. No such notices are currently pending. -10- The Food and Drug Administration (the "FDA") regulates the material content of direct-contact food containers and packages, including certain thinwall containers manufactured by the Company. The Company uses approved resins and pigments in its direct contact food products and believes it is in material compliance with all such applicable FDA regulations. The plastics industry, including the Company, is subject to existing and potential Federal, state, local and foreign legislation designed to reduce solid wastes by requiring, among other things, plastics to be degradable in landfills, minimum levels of recycled content, various recycling requirements, disposal fees and limits on the use of plastic products. In addition, various consumer and special interest groups have lobbied from time to time for the implementation of these and other similar measures. The principal resin used in the Company's products, HDPE, is recyclable, and, accordingly, the Company believes that the legislation promulgated to date and such initiatives to date have not had a material adverse effect on the Company. There can be no assurance that any such future legislative or regulatory efforts or future initiatives would not have a material adverse effect on the Company. On January 1, 1995, legislation in Oregon, California and Wisconsin went into effect requiring products packaged in rigid plastic containers to comply with standards intended to encourage recycling and increased use of recycled materials. Although the regulations vary by state, the principal requirement is the use of post consumer regrind ("PCR") as an ingredient in containers sold for non-food uses. Additionally, Oregon and California allow lightweighting of the container or concentrating the product sold in the container as options for compliance. Oregon and California provide for an exemption from all such regulations if statewide recycling reaches or exceeds 25% of rigid plastic containers. In September 1996, California passed a new bill exempting food and cosmetics containers from the foregoing requirement. However, non-food containers are still required to comply. The Company assists its customers with their compliance of these regulations. In December 1996, the Department of Environmental Quality estimated that Oregon had met its recycling goal of 25% for 1997 (based on 1996 data), and accordingly, was in compliance for the 1997 calendar year. However, in January 1998, California formally approved a 23.2% recycling rate for the state during 1996, and since this falls below the required 25% rate for exemption of non-food containers, the state can now begin enforcing its recycled content mandate on any non-food plastic containers from 8 oz. to 5 gallons. The Company, in order to facilitate individual customer compliance with these regulations, is providing customers the option of purchasing containers with reduced weight. -11- ITEM 2. PROPERTIES The following table sets forth the Company's principal manufacturing facilities:
LOCATION ACRES SQUARE FOOTAGE USE OWNED/LEASED - ----------------- ------ -------------- ------------------ ------------ Evansville, IN 18.7 420,000 Headquarters Owned and manufacturing Evansville, IN 2.8 123,000 Manufacturing Leased Henderson, NV 12.3 175,000 Manufacturing Owned Iowa Falls, IA 14.0 100,000 Manufacturing Owned Charlotte, NC 37.3 150,000 Manufacturing Owned Lawrence, KS 19.3 500,000 Manufacturing Owned Suffolk, VA 14.0 110,000 Manufacturing Owned Monroeville, OH 34.7 220,000 Manufacturing Owned Norwich, England 5.0 88,000 Manufacturing Owned Woodstock, IL 11.7 170,000 Manufacturing Owned Streetsboro, OH 12.0 140,000 Manufacturing Owned Baltimore, MD 9.9 225,000 Manufacturing Owned Milan, Italy 11.6 125,000 Manufacturing Leased Fort Worth, TX 9.8 160,000 Manufacturing Leased
The Company believes that its property and equipment are well-maintained, in good operating condition and adequate for its present needs. ITEM 3. LEGAL PROCEEDINGS The Company is party to various legal proceedings involving routine claims which are incidental to its business. Although the Company's legal and financial liability with respect to such proceedings cannot be estimated with certainty, the Company believes that any ultimate liability would not be material to its financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS By Written Consent in Lieu of a Meeting of the Stockholders of BPC Holding Corporation dated May 9, 2001, stockholders that hold 95% of the stock entitled to vote approved an amendment to the Company's Restated Certificate of Incorporation to increase the number of authorized shares of Preferred Stock from 2,200,000 to 2,314,000, consisting of 600,000 shares of Series A Cumulative Preferred Stock, 200,000 shares of Series B Cumulative Preferred Stock, 1,400,000 shares of Series A-1 Preferred Stock, 3,063 shares of Series C-1 Preferred Stock, 1,910 shares of Series C-2 Preferred Stock, 2,135 shares of Series C-3 Preferred Stock, 3,033 shares of Series C-4 Preferred Stock, 3,027 shares of Series C-5 Preferred Stock, and 100,000 shares of Series D Preferred Stock. By Written Consent in Lieu of a Meeting of the Stockholders of BPC Holding Corporation dated May 31, 2001, stockholders that hold 95% of the stock entitled to vote (i) re-elected the following members to the Board of Directors: Roberto Buaron, David M. Clarke, Lawrence G. Graev, Donald J. Hofmann, Jr., Joseph S. Levy and Mathew J. Lori, who were all board members prior to the election, and (ii) accepted the resignation of Martin R. Imbler as a Director of BPC Holding Corporation and elected Ira G. Boots as a member of the Board of Directors to replace Mr. Imbler. Mr. Boots, together with those members of the Board of Directors who were re-elected, comprise the entire board. -12- PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no public trading market for any class of common stock of Holding or the Company. With respect to the capital stock of Holding, as of March 15, 2002, there were three holders of the Class A Voting Common Stock, three holders of the Class A Nonvoting Common Stock, 40 holders of the Class B Voting Common Stock, 106 holders of the Class B Nonvoting Common Stock and 39 holders of the Class C Nonvoting Common Stock. All of the issued and outstanding common stock of the Company is held by Holding. On April 21, 1994, the Company paid a $50.0 million dividend, which was financed through the issuance of $100.0 million aggregate principal amount of 12.25% Berry Plastics Corporation Senior Subordinated Notes, due 2004, to Holding, the holder of all of its common stock. Holding utilized the $50.0 million dividend to make a distribution to the holders of its common stock and holders of certain other equity interests. Other than the payment of the $50.0 million distribution described above, Holding has not paid cash dividends on its capital stock. Because Holding intends to retain any earnings to provide funds for the operation and expansion of the Company's business and to repay outstanding indebtedness, Holding does not intend to pay cash dividends on its common stock in the foreseeable future. Furthermore, as a holding company with no independent operations, the ability of Holding to pay cash dividends will be dependent on the receipt of dividends or other payments from the Company. Under the terms of the Indenture dated as of April 21, 1994 (the "1994 Indenture"), among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas and The Bank of New York, as successor to the United States Trust Company of New York, as Trustee ("U.S. Trust"), the Indenture dated June 18, 1996 (the "1996 Indenture"), between Holding and First Trust of New York, National Association, as Trustee, and also the Indenture dated August 24, 1998 (the "1998 Indenture") and the Indenture dated July 6, 1999 (the "1999 Indenture"), among Holding, all of its direct and indirect subsidiaries and The Bank of New York, Holding and the Company are not permitted to pay any dividends on their common stock for the foreseeable future. In addition, the Company's senior credit facility contains covenants that, among other things, restricts the payment of dividends by the Company. In addition, Delaware law limits Holding's ability to pay dividends from current or historical earnings or profits or capital surplus. Any determination to pay cash dividends on common stock of the Company or Holding in the future will be at the discretion of the Board of Directors of the Company and Holding, respectively. -13- ITEM 6. SELECTED FINANCIAL DATA The following selected financial data are derived from the consolidated financial statements of Holding which have been audited by Ernst & Young LLP, independent auditors. The data should be read in connection with the consolidated financial statements, related notes and other financial information included herein. Holding's fiscal year is a 52/53 week period ending generally on the Saturday closest to December 31. All references herein to "2001," "2000," "1999," "1998," and "1997," relate to the fiscal years ended December 29, 2001, December 30, 2000, January 1, 2000, January 2, 1999, and December 27, 1997, respectively.
BPC HOLDING CORPORATION FISCAL ----------------------------------------------------------- 2001 2000 1999 1998 1997 -------- -------- -------- -------- -------- (IN THOUSANDS OF DOLLARS) Statement of Operations Data: Net sales $461,659 $408,088 $328,834 $271,830 $226,953 Cost of goods sold 338,000 312,119 241,067 199,227 180,249 --------- --------- --------- --------- --------- Gross margin 123,659 95,969 87,767 72,603 46,704 Operating expenses (a) 70,192 65,862 54,118 44,001 30,505 --------- --------- --------- --------- --------- Operating income 53,467 30,107 33,649 28,602 16,199 Other expenses (b) 473 877 1,416 1,865 226 Interest expense, net (c) 54,355 51,457 40,817 34,556 30,246 --------- --------- --------- --------- --------- Loss before income taxes and extraordinary item (1,361) (22,227) (8,584) (7,819) (14,273) Income taxes (benefit) 734 (142) 554 (249) 138 --------- --------- --------- --------- --------- Loss before extraordinary item (2,095) (22,085) (9,138) (7,570) (14,411) Extraordinary item net of tax (d) - 1,022 - - - --------- --------- --------- --------- --------- Net loss (2,095) (23,107) (9,138) (7,570) (14,411) Preferred stock dividends 9,790 6,655 3,776 3,551 2,558 Amortization of preferred stock discount 1,024 768 292 292 74 --------- --------- --------- --------- --------- Net loss attributable to common shareholders $(12,909) $ (30,530) $ (13,206) $ (11,413) $(17,043) ========= ========= ========= ========= ========= Balance Sheet Data (at end of year): Working capital $ 19,327 $ 20,470 $ 10,527 $ 4,762 $ 20,863 Fixed assets 203,217 179,804 146,792 120,005 108,218 Total assets 446,876 413,122 340,807 255,317 239,444 Total debt 485,881 468,806 403,989 323,298 306,335 Stockholders' equity (deficit) (139,601) (137,997) (133,471) (120,357) (108,975) Other Data: Depreciation and amortization (e) $ 50,907 $ 42,148 $ 31,795 $ 24,830 $ 19,026 Capital expenditures 32,834 31,530 30,738 22,595 16,774
(a) Operating expenses include business startup and machine integration expenses of $2,690 related to recent acquisitions, and plant consolidation expenses of $2,221 related to the shutdown and reorganization of facilities during fiscal 2001; business start-up and machine integration expenses of $2,237 related to recent acquisitions, litigation expenses of $700 related to a drink cup patent, and plant consolidation expenses of $3,702 related to the shutdown and reorganization of facilities during fiscal 2000; business start-up and machine integration expenses of $3,647 related to recent acquisitions and plant consolidation expenses of $1,501 related to the shutdown and reorganization of facilities during fiscal 1999; business start-up and machine integration expenses of $1,272 related to the businesses acquired in 1997, plant consolidation expenses of $2,370 and $191 related to the shutdown of the Anderson, South Carolina and Reno, Nevada facilities, and start-up expenses of $109 and $142 related to the Norwich and Knight Acquisitions, respectively, during fiscal 1998; and business start-up and machine integration expenses of $3,255 related to the businesses acquired in 1997, plant consolidation expenses of $480 and $368 related to the shutdown of the Winchester, Virginia and Reno, Nevada facilities, respectively, during fiscal 1997. (b) Other expenses consist of net losses on disposal of property and equipment for the respective years. (c) Includes non-cash interest expense of $11,268, $18,047, $15,567, $14,824, and $13,065, in fiscal 2001, 2000, 1999, 1998, and 1997, respectively. (d) Extraordinary item relates to deferred financing fees written off as a result of amending the senior credit facility. (e) Depreciation and amortization excludes non-cash amortization of deferred financing fees and debt premium/discount amortization which are included in interest expense. -14- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context discloses otherwise, the "Company" as used in this Management's Discussion and Analysis of Financial Condition and Results of Operations shall include Holding and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the consolidated financial statements of Holding and its subsidiaries and the accompanying notes thereto, which information is included elsewhere herein. The Company is highly leveraged. The high degree of leverage could have important consequences, including, but not limited to, the following: (i) a substantial portion of Berry's cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness, thereby reducing the funds available to Berry for other purposes; (ii) Berry's ability to obtain additional debt financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired; (iii) certain of Berry's borrowings will be at variable rates of interest, which will expose Berry to the risk of higher interest rates; (iv) the indebtedness outstanding under the senior credit facility is secured by substantially all of the assets of Berry; (v) Berry is substantially more leveraged than certain of its competitors, which may place Berry at a competitive disadvantage, particularly in light of its acquisition strategy; and (vi) Berry's degree of leverage may hinder its ability to adjust rapidly to changing market conditions and could make it more vulnerable in the event of a downturn in general economic conditions or its business. Consolidated earnings have been insufficient to cover fixed charges by $0.8 million, $20.5 million, and $7.1 million for fiscal years 2001, 2000, and 1999, respectively. In addition, Holding has experienced consolidated net losses during each of such periods principally as a result of expenses and charges incurred in connection with acquisitions by Berry. These net losses were $2.1 million, $23.1 million, and $9.1 million for fiscal 2001, 2000, and 1999, respectively. CRITICAL ACCOUNTING POLICIES The Company has disclosed those accounting policies that it considers to be significant in determining the amounts to be utilized for communicating its consolidated financial position, results of operations and cash flows in the second note to its consolidated financial statements included elsewhere herein. Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with these principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results are likely to differ from these estimates, but management does not believe such differences will materially affect the Company's financial position or results of operations. Based on a critical assessment of its accounting policies and the underlying judgements and uncertainties affecting the application of those policies, management believes that the Company's consolidated financial statements provide a meaningful and fair perspective of the Company. This is not to suggest that other risk factors such as changes in economic conditions, changes in material costs, and others could not adversely impact the Company's consolidated financial position, results of operations and cash flows in future periods. YEAR ENDED DECEMBER 29, 2001 COMPARED TO YEAR ENDED DECEMBER 30, 2000 NET SALES. Net sales increased 13% to $461.7 million in 2001, up $53.6 million from $408.1 million in 2000, including an approximate 1% increase in net selling price. Container net sales increased $3.2 million, primarily due to a large promotion in 2001. Closure net sales increased $20.2 million with the Poly-Seal Acquisition and Capsol Acquisition representing $25.4 million of the increase, partially offset by a general slowdown in the market. Consumer products net sales increased $30.2 million in 2001 primarily as a result of the Pescor Acquisition which contributed 2001 net sales of approximately $19.9 million, continued strong demand in the retail housewares market, and the introduction of a thermoformed drink cup line. -15- GROSS MARGIN. Gross margin increased $27.7 million from $96.0 million (24% of net sales) in 2000 to $123.7 million (27% of net sales) in 2001. This increase of 29% includes the combined impact of the added Poly-Seal, Capsol, and Pescor sales volume, the effect of net selling prices and raw material costs, acquisition integration, and productivity improvement initiatives. The 1% increase in net selling price was primarily the result of partially recovering raw material costs increases incurred in 2000. In addition, the Company has continued to consolidate the products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed its York, Pennsylvania facility and removed remaining production from its Minneapolis, Minnesota facility (acquired in the Cardinal Acquisition) in the fourth quarter of 2000. Also, in the fourth quarter of 2001, the Company removed molding operations from its Fort Worth, Texas facility (acquired in the Pescor Acquisition). The business from these locations was distributed throughout Berry's facilities. Also, significant productivity improvements were made during the year, including the addition of state-of-the-art injection molding equipment, molds and decorating equipment at several of the Company's facilities. Additional cost reductions have been achieved through the Company's realignment in the third quarter of 2000 from a functional based organization to a divisional structure. This realignment has enabled the Company to reduce personnel costs and improve employee productivity. OPERATING EXPENSES. Selling expenses increased $0.4 million as a result of acquired businesses partially offset by savings from the organizational realignment in the third quarter of 2000. General and administrative expenses increased $4.1 million in 2001 primarily as a result of acquired businesses and increased accrued bonus expenses partially offset by savings from the organizational realignment in the third quarter of 2000. Research and development costs decreased $0.7 million to $1.9 million in 2001 primarily as a result of savings from the organizational realignment in the third quarter of 2000. Intangible asset amortization increased from $10.6 million in 2000 to $12.8 million for 2001, primarily as a result of the amortization of goodwill ascribed to acquired companies in 2000 and 2001. Other expenses were $4.9 million for 2001 compared to $6.6 million for 2000. Other expenses in 2001 include one-time transition expenses of $2.7 related to recently acquired businesses and $2.2 related to the shutdown and reorganization of facilities. Other expenses in 2000 include one-time transition expenses of $2.2 million related to recent acquisitions, $3.7 million related to the shutdown and reorganization of facilities, and $0.7 million of litigation expenses related to a drink cup patent. INTEREST EXPENSE, NET. Net interest expense, including amortization of deferred financing costs for 2001, was $54.4 million (12% of net sales) compared to $51.5 million (13% of net sales) in 2000, an increase of $2.9 million. This increase is attributed to interest on borrowings related to the acquired businesses in 2000 and 2001 but was offset partially by principal reductions. Cash interest paid in 2001 was $44.2 million as compared to $32.8 million for 2000. INCOME TAXES. During fiscal 2001, the Company recorded an expense of $0.7 million for income taxes compared to a benefit of $0.1 million for fiscal 2000. The Company continues to operate in a net operating loss carryforward position for federal income tax purposes. EXTRAORDINARY ITEM. As a result of amending the Company's senior credit facility, $1.0 million of deferred financing fees related to the facility was charged to expense in 2000 as an extraordinary item. NET LOSS. The Company recorded a net loss of $2.1 million in 2001 compared to a $23.1 million net loss in 2000 for the reasons stated above. YEAR ENDED DECEMBER 30, 2000 COMPARED TO YEAR ENDED JANUARY 1, 2000 NET SALES. Net sales increased 24% to $408.1 million in 2000, up $79.3 million from $328.8 million in 1999, including an approximate 5% increase in net selling price due to increased raw material costs. Overcap and closure net sales increased $31.2 million, primarily due to the Poly-Seal Acquisition and Capsol Acquisition which provided combined 2000 net sales of $32.3 million. Container sales increased $42.5 million, primarily due to the Cardinal Acquisition and increased selling prices, despite a large specialty program in 1999 that did not reoccur in 2000. Net sales in the drink cup and housewares segment increased $5.6 million in 2000 primarily as a result of a significant new product and strong retail demand in housewares. -16- GROSS MARGIN. Gross margin increased $8.2 million or 9% from $87.8 million (27% of net sales) in 1999 to $96.0 million (24% of net sales) in 2000. This increase of 9% includes the combined impact of the added Poly- Seal, Capsol, and Cardinal sales volume, acquisition integration, and productivity improvement initiatives offset partially by the cyclical impact of higher raw material costs. The cost of the Company's primary raw material, resin, increased approximately 36% in 2000 when compared to 1999. A major focus continues to be the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, the Company closed its York, Pennsylvania facility and removed remaining production from its Minneapolis, Minnesota facility (acquired in the Cardinal Acquisition) in the fourth quarter of 2000. Additionally, the Company closed its Arlington Heights, Illinois facility (acquired in the Knight Acquisition) in the first quarter of 1999 and its Ontario, California facility (acquired in the Cardinal Acquisition) in the third quarter of 1999. In addition, the Company made two configuration changes that were completed in the fourth quarter of 1999 with the Minneapolis, Minnesota and Iowa Falls, Iowa locations closing their molding operations. The business from these locations are distributed throughout Berry's facilities. Also, significant productivity improvements were made during the year, including the addition of state-of-the-art injection molding equipment, molds and printing equipment at several of the Company's facilities. OPERATING EXPENSES. Operating expenses during 2000 were $65.9 million (16% of net sales), compared with $54.1 million (16% of net sales) for 1999. Selling expenses increased $4.2 million, almost all as a result of acquired businesses. General and administrative expenses increased $2.4 million in 2000 primarily as a result of recent acquisitions, but was partially offset by decreased accrued bonus expenses. Research and development costs increased $0.3 million to $2.6 million in 2000 primarily as a result of increased new product requests from customers and productivity improvement initiatives. Intangible asset amortization increased from $7.2 million in 1999 to $10.6 million for 2000, primarily a result of the amortization of goodwill ascribed to acquired companies in 1999 and 2000. Other expenses were $6.6 million for 2000 compared to $5.1 million for 1999. Other expenses in 2000 include business start-up and machine integration expenses of $2.2 million related to recent acquisitions, plant consolidation expenses of $3.7 million related to the shutdown and reorganization of facilities, and $0.7 million of litigation expenses related to a drink cup patent. Other expenses in 1999 include business start-up and machine integration expenses of $3.6 million related to recent acquisitions and plant consolidation expenses of $1.5 million related to the shutdown and reorganization of facilities. INTEREST EXPENSE, NET. Net interest expense, including amortization of deferred financing costs for 2000, was $51.5 million (13% of net sales) compared to $40.8 million (12% of net sales) in 1999, an increase of $10.7 million. This increase is attributed to interest on borrowings related to the acquired businesses in 1999 and 2000, but was offset partially by principal reductions. Cash interest paid in 2000 was $32.8 million as compared to $29.8 million for 1999. INCOME TAXES. During fiscal 2000, the Company recorded a benefit of $0.1 million for income taxes compared to an expense of $0.6 million for fiscal 1999. The Company continues to operate in a net operating loss carryforward position for federal income tax purposes. EXTRAORDINARY ITEM. As a result of amending the Company's senior credit facility, $1.0 million of deferred financing and origination fees related to the facility have been charged to expense in 2000 as an extraordinary item. NET LOSS. The Company recorded a net loss of $23.1 million in 2000 compared to a $9.1 million net loss in 1999 for the reasons stated above. INCOME TAX MATTERS Holding has unused operating loss carryforwards of $37.7 million for federal income tax purposes which begin to expire in 2010. Alternative minimum tax credit carryforwards of approximately $3.1 million are available to Holding indefinitely to reduce future years' federal income taxes. -17- LIQUIDITY AND CAPITAL RESOURCES The Company has a financing and security agreement (the "Financing Agreement") with a syndicate of lenders led by Bank of America for a senior secured credit facility (the "Credit Facility"). As of December 29, 2001, the Credit Facility provides the Company with (i) a $80.0 million revolving line of credit ("US Revolver"), subject to a borrowing base formula, (ii) a $2.2 million (using the December 29, 2001 exchange rate) revolving line of credit denominated in British Sterling in the U.K. ("UK Revolver"), subject to a separate borrowing base formula, (iii) a $52.6 million term loan facility, (iv) a $2.0 million (using the December 29, 2001 exchange rate) term loan facility denominated in British Sterling in the U.K. ("UK Term Loan") and (v) a $3.2 million standby letter of credit facility to support the Company's and its subsidiaries' obligations under the Nevada Bonds. At December 29, 2001, the Company had unused borrowing capacity under the Credit Facility's revolving line of credit of approximately $17.7 million. The indebtedness under the Credit Facility is guaranteed by Holding and all of its subsidiaries (other than its subsidiaries in the United Kingdom and Italy). The obligations of the Company and the subsidiaries under the Credit Facility and the guarantees thereof are secured by substantially all of the assets of such entities. CBP Holdings, S.r.l. has a revolving credit facility (the "Italy Revolver") from Bank of America for $12.0 million (using the December 29, 2001 exchange rate) denominated in Euros. Bank of America also extends working capital financing (the "Italy Working Capital Line") of up to $1.5 million (using the December 29, 2001 exchange rate) denominated in Euros. The full amount available under the Italy Revolver and the Italy Working Capital Line are applied to reduce amounts available under the US Revolver, as does the outstanding balance under the UK Revolver. The Credit Facility requires the Company to comply with specified financial ratios and tests, including a maximum leverage ratio and a fixed charge coverage ratio. The requirements of these tests may change on a quarterly basis. At December 29, 2001, the Credit Facility required the Company to have a maximum leverage ratio of 3.75 to 1 and a minimum fixed charge coverage ratio of 1.0 to 1. In addition it required that certain investments by the Company in its non-U.S. subsidiaries not be greater that $10.4 million. At December 29, 2001, the last quarterly test date, the Company was in compliance with all of the financial covenants tested on such date. The Credit Facility matures on January 21, 2004 unless previously terminated by the Company or by the lenders upon an Event of Default as defined in the Financing Agreement. The term loan facility requires periodic payments, varying in amount, through the maturity of the facility. Interest on borrowings under the Credit Facility is based on either (i) the lender's base rate (which is the higher of the lender's prime rate and the federal funds rate plus 0.5%) plus an applicable margin of 0.25% to 1.0% or (ii) eurodollar LIBOR (adjusted for reserves) plus an applicable margin of 2.25% to 3.00%, at the Company's option (4.4% at December 29, 2001 and 8.9% at December 30, 2000). Following receipt of the quarterly financial statements, the agent under the Credit Facility shall change the applicable interest rate margin on loans (other than under the UK Revolver and UK Term Loan) once per quarter to a specified margin determined by the ratio of funded debt to EBITDA of the Company and its subsidiaries. Notwithstanding the foregoing, interest on borrowings under the UK Revolver and the UK Term Loan is based on sterling LIBOR (adjusted for reserves) plus 2.25% and 2.75%, respectively. Interest on borrowings under the Italy Revolver and the Italy Working Capital Line is based on EURIBOR plus 2.0%. On July 17, 2000, Berry obtained a second lien senior credit facility from General Electric Capital Corporation for an aggregate principal amount of $25.0 million (the "Second Lien Senior Facility"), resulting in net proceeds of $24.3 million after fees and expenses. The proceeds were utilized to reduce amounts then outstanding under the US Revolver. The indebtedness is guaranteed by Holding and all of its subsidiaries (other than its subsidiaries in the United Kingdom and Italy). The Second Lien Senior Facility is secured by a second priority lien on substantially the same collateral as the collateral for the Credit Facility. The $25.0 million principal amount is due upon the Second Lien Senior Facility's maturity on January 21, 2004. Interest is based on either (i) the lender's base rate (which is the higher of the prime rate and the federal funds rate plus 0.5%) plus an applicable margin of 3.25% or (ii) eurodollar LIBOR (adjusted for reserves) plus an applicable margin of 4.75%, at the Company's option (6.8% at December 29, 2001 and 11.1% at December 30, 2000). The covenants under the Second Lien Senior Facility are substantially the same as those in the Credit Facility. The 1994 Indenture, 1996 Indenture, 1998 Indenture, and 1999 Indenture restrict the Company's ability to incur additional debt and contain other provisions which could limit the liquidity of the Company. At December 29, 2001, the Company had unused borrowing capacity under the Credit Facility's borrowing base of $17.7 million, which is not considered additional -18- indebtedness under the 1994 Indenture, 1996 Indenture, 1998 Indenture or 1999 Indenture. Any additional indebtedness above the borrowing base requires approval from the Credit Facility's lenders. The 1994 Indenture, 1998 Indenture, and 1999 Indenture restrict, and the Credit Facility prohibits, Berry's ability to pay any dividend or make any distribution of funds to Holding to satisfy interest and other obligations on Holding's 12.50% Series B Senior Secured Notes due 2006 (the "1996 Notes"). Interest on the 1996 Notes is payable semi-annually on June 15 and December 15 of each year. However, from December 15, 1999 until June 15, 2001, Holding paid interest, at an increased rate of 0.75% per annum, in additional 1996 Notes valued at 100% of the principal amount thereof. Holding issued an additional approximately $30.7 million aggregate principal amount of 1996 Notes in satisfaction of its interest obligation. Holding's ability to pay principal and interest in cash on the 1996 Notes and Berry's ability to pay principal and interest on the notes issued under the 1994 Indenture, 1998 Indenture, and 1999 Indenture will depend on Berry's financial and operating performance, which in turn are subject to prevailing economic conditions and to certain financial, business and other factors beyond its control. Based on historical operating results, management believes that sufficient monies are available from Berry under the tax sharing agreement to enable Holding to make the June 2002 cash interest payment on the 1996 Notes, subject to Berry's ability to generate sufficient operating results to comply with the financial covenants in the Credit Facility. However, if Berry cannot generate sufficient cash flow from operations to meet its obligations, then the Company may be forced to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing its indebtedness, or seeking additional equity capital. There is no assurance that any of these actions could be effected on satisfactory terms, if at all. Holding's contractual cash obligations as of December 29, 2001 are summarized in the following table.
PAYMENTS DUE BY PERIOD AT DECEMBER 29, 2001 ------------------------------------------------- < 1 1-3 4-5 > 5 TOTAL YEARS YEARS YEARS YEARS Long-term debt, excluding capital leases $467,363 $19,169 $235,980 $136,714 $75,500 Capital leases 18,131 3,123 3,911 3,315 7,782 Operating leases 24,065 7,594 10,521 5,219 731 Other long-term obligations 31,261 2,554 1,261 - 27,446 --------- --------- --------- --------- --------- Total contractual cash obligations $540,820 $32,440 $251,673 $145,248 $111,459 ========= ========= ========= ========= =========
Net cash provided by operating activities was $54.3 million in 2001 as compared to $36.1 million in 2000. Net cash provided by operating activities was $36.0 million in 1999. The increase in 2001 was primarily the result of improved operating performance as the Company's net loss plus non-cash expenses improved $21.8 million. Net cash used by investing activities decreased from $108.7 million in 2000 to $56.3 million in 2001 primarily as a result of the Poly-Seal Acquisition in 2000. Capital expenditures in 2001 were $32.8 million, an increase of $1.3 million from $31.5 million in 2000. Capital expenditures totaled $30.7 million in 1999. Capital expenditures in 2001 included investments of $2.6 million for facility renovations, production systems and offices necessary to support production operating levels throughout the Company, $16.3 million for molds, $8.2 million for molding and printing machines, and $5.7 million for accessory equipment and systems. The capital expenditure budget for 2002 is expected to be $33.6 million. Net cash provided by financing activities was $0.6 million in 2001 as compared to $72.0 million in 2000. The decrease of $71.4 million can be primarily attributed to reduced acquisition related activities as noted above. Net cash provided by financing activities was $72.0 million in 2000 as compared to $71.1 million in 1999. Increased working capital needs occur whenever the Company experiences strong incremental demand or a significant rise in the cost of raw material, particularly plastic resin. However, the Company anticipates that its cash interest, working capital and capital expenditure requirements for 2002 will be satisfied through a combination of funds generated from operating activities and cash on hand, together with funds available under the Credit Facility. Management bases such belief on historical experience and the substantial funds available under the Credit Facility. However, the Company cannot predict its future results of operations. At December 29, 2001, the Company's cash balance was $1.2 million, and Berry had unused borrowing capacity under the Credit Facility's borrowing base of $17.7 million. -19- GENERAL ECONOMIC CONDITIONS AND INFLATION The Company faces various economic risks ranging from an economic downturn adversely impacting the Company's primary markets to market fluctuations in plastic resin prices. In the short-term, rapid increases in resin cost may not be fully recovered through price increases to customers. Also, shortages of raw materials may occur from time to time. In the long-term, however, raw material availability and price changes generally do not have a material adverse effect on gross margin. Cost changes generally are passed through to customers. In addition, the Company believes that its sensitivity to economic downturns in its primary markets is less significant due to its diverse customer base and its ability to provide a wide array of products to numerous end markets. The Company believes that it is not affected by inflation except to the extent that the economy in general is thereby affected. Should inflationary pressures drive costs higher, the Company believes that general industry competitive price increases would sustain operating results, although there can be no assurance that this will be the case. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. -20- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS Report of Independent Auditors F- 1 Consolidated Balance Sheets at December 29, 2001 And December 30, 2000 F- 2 Consolidated Statements of Operations for the years ended December 29, 2001, December 30, 2000, and January 1, 2000 F- 4 Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 29, 2001, December 30, 2000, and January 1, 2000 F- 5 Consolidated Statements of Cash Flows for the years ended December 29, 2001, December 30, 2000, and January 1, 2000 F- 6 Notes to Consolidated Financial Statements F- 7 INDEX TO FINANCIAL STATEMENT SCHEDULES II. Valuation and Qualifying Accounts S-1 All other schedules have been omitted because they are not applicable or not required or because the required information is included in the consolidated financial statements or notes thereto. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
-21- PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information with respect to the executive officers, directors and certain key personnel of Holding and its subsidiaries:
NAME AGE TITLE ENTITY - --------------------------------- ----- ------------------------------------------ ------------------- Roberto Buaron(1)(4) 55 Chairman and Director Company and Holding Ira G. Boots(1)(4) 48 President, Chief Executive Officer, Company and Director President and Director Holding James M. Kratochvil 44 Executive Vice President, Chief Financial Company and Holding Officer, Treasurer and Secretary R. Brent Beeler 48 Executive Vice President and Company General Manager-Containers William J. Herdrich 52 Executive Vice President and Company General Manager-Closures Bruce J. Sims 52 Executive Vice President and Company General Manager-Consumer Products Joseph S. Levy(2)(3) 34 Vice President, Assistant Secretary Company and Holding and Director Lawrence G. Graev(2)(3) 57 Director Company and Holding Donald J. Hofmann, Jr.(1)(2)(3)(4) 44 Director Company and Holding Mathew J. Lori 38 Director Company and Holding David M. Clarke 51 Director Company and Holding
(1) Member of the Stock Option Committee of Holding. (2) Member of the Audit Committee of Holding. (3) Member of the Audit Committee of the Company. (4) Member of the Compensation Committee of the Company. -22- ROBERTO BUARON has been Chairman and a Director of the Company since it was organized in December 1990. He has also served as Chairman and a Director of Holding since 1990. He is the Chairman and Chief Executive Officer of First Atlantic Capital, Ltd. ("First Atlantic"), which he founded in 1989. From 1987 to 1989, he was an Executive Vice President with Overseas Partners, Inc., an investment management firm. From 1983 to 1986 he was First Vice President of Smith Barney, Inc., and a General Partner of First Century Partnership, its venture capital affiliate. Prior to 1983, he was a Principal at McKinsey & Company. IRA G. BOOTS has been President and Chief Executive Officer since June 2001, and a Director of the Company since April 1992. Prior to that, Mr. Boots served as Chief Operating Officer since August 2000 and Vice President of Operations, Engineering and Product Development of the Company since April 1992. Mr. Boots was employed by Old Berry from 1984 to December 1990 as Vice President, Operations. JAMES M. KRATOCHVIL has been Executive Vice President, Chief Financial Officer, Secretary and Treasurer of the Company since December 1997. He formerly served as Vice President, Chief Financial Officer and Secretary of the Company since 1991, and as Treasurer of the Company since May 1996. He was also promoted to Executive Vice President, Chief Financial Officer and Secretary of Holding in December 1997. He formerly served as Vice President, Chief Financial Officer and Secretary of Holding since 1991. Mr. Kratochvil was employed by Old Berry from 1985 to 1991 as Controller. R. BRENT BEELER has been Executive Vice President and General Manager - Containers of the Company since August 2000. Prior to that, Mr. Beeler was Executive Vice President, Sales and Marketing of the Company since February 1996 and Vice President, Sales and Marketing of the Company since December 1990. Mr. Beeler was employed by Old Berry from October 1988 to December 1990 as Vice President, Sales and Marketing. WILLIAM J. HERDRICH has been Executive Vice President and General Manager - - Closures of the Company since August 2000. From May 2000 to August 2000, Mr. Herdrich was a consultant to the Company. From April 1994 to May 2000, Mr. Herdrich was President, Executive Vice President and General Manager of Poly-Seal Corporation. Mr. Herdrich was employed by Seaquist Closures from 1990 to April 1994 as Executive Vice President. BRUCE J. SIMS has been Executive Vice President and General Manager - Consumer Products of the Company since August 2000. He formerly served as Executive Vice President, Sales and Marketing, Housewares of the Company since January 1997. Prior to the PackerWare Acquisition, Mr. Sims served as President of PackerWare from March 1996 to January 1997 and as Vice President from October 1994 to March 1996. From January 1990 to October 1994 he was Vice President of the Miner Container Corporation, a national injection molder. JOSEPH S. LEVY has been Vice President and Assistant Secretary of the Company and Holding since April 1995. Mr. Levy has been a Director of Holding and the Company since April 1998. Mr. Levy has been Principal of First Atlantic since December 1999, and prior to that Mr. Levy had been a Vice President. LAWRENCE G. GRAEV has been a Director of the Company and Holding since August 1995. Mr. Graev is President and Chief Executive Officer of the GlenRock Group, LLC, a merchant banking firm, and Of Counsel to King & Spalding in its New York office. Prior to that, Mr. Graev was a Partner in the law firm O'Sullivan LLP of New York from 1974 until June 2001. DONALD J. HOFMANN, JR. has been a Director of Holding and the Company since June 1996. Mr. Hofmann has been a Partner of J.P. Morgan Partners, LLC (formerly Chase Capital Partners), a global private equity organization with over $20 billion under management, since September 1992. J.P. Morgan Partners provides equity and mezzanine debt financing for management buyouts and recapitalizations, growth equity and venture capital. Mr. Hofmann is also a director of Advanced Accessory Systems, LLC and Pliant Corporation. MATHEW J. LORI has been a Director of Holding and the Company since October 1996. Mr. Lori has been a Principal with J.P. Morgan Partners, LLC (formerly Chase Capital Partners) since January 1998, and prior to that, Mr. Lori had been an Associate since April 1996. From September 1993 to March 1996, he was an Associate in the Merchant Banking Group of The Chase Manhattan Bank, N.A. -23- DAVID M. CLARKE has been a Director of Holding and the Company since June 1996. Mr. Clarke is a Managing Director with Aetna Life Insurance Company, Private Equity and, prior to that, he had been a Vice President in the Investment Group of Aetna Life Insurance Company from 1988 to 1996. The Stockholders Agreement (as defined herein) contains provisions regarding the election of directors. See "Certain Relationships and Related Transactions - Stockholders Agreements." BOARD COMMITTEES The Board of Directors of Holding has an Audit Committee and a Stock Option Committee, and the Board of Directors of the Company has an Audit Committee and a Compensation Committee. The Audit Committees oversee the activities of the independent auditors and internal controls. The Stock Option Committee administers the BPC Holding Corporation 1996 Stock Option Plan. The Compensation Committee makes recommendations to the Board of Directors of the Company concerning salaries and incentive compensation for officers and employees of the Company. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth a summary of the compensation paid by the Company to its Chief Executive Officer and the four other most highly compensated executive officers of the Company (collectively, the "Named Executive Officers") for services rendered in all capacities to the Company during fiscal 2001, 2000, and 1999. SUMMARY COMPENSATION TABLE
Long Term ANNUAL COMPENSATION COMPENSATION ------------------- ------------ Securities Fiscal Underlying Other NAME AND PRINCIPAL YEAR SALARY BONUS OPTIONS COMPENSATION(1) POSITION (#) - ------------------------ -------- --------- -------- -------------- ---------------- Martin R. Imbler 2001 $208,522 $ 99,300 $ - $ 1,670 Former President and 2000 390,122 137,235 - 1,670 Chief Executive Officer 1999 362,940 121,201 - 1,620 (Retired) Ira G. Boots 2001 $316,461 $ 87,500 $ - $ 1,670 President and Chief 2000 289,328 150,000 - 1,670 Executive Officer 1999 251,163 95,486 - 1,620 James M. Kratochvil 2001 $ 231,919 $ 64,166 $ - $ 1,670 Executive Vice 2000 212,049 120,000 - 1,604 President, Chief 1999 200,894 80,083 - 1,620 Financial Officer, Treasurer and Secretary R. Brent Beeler 2001 $ 284,251 $ 78,750 $ - $ 1,670 Executive Vice 2000 257,236 135,000 - 1,670 President and General 1999 226,504 79,350 - 1,620 Manager - Containers William J. Herdrich 2001 $ 258,690 $ 62,800 $ - $ 1,670 Executive Vice 2000 99,003 18,986 - - President and General 1999 - - - - Manager - Closures
(1) Amounts shown reflect contributions by the Company under the Company's 401(k) plan. -24- FISCAL YEAR-END OPTION HOLDINGS The following table provides information on the number of exercisable and unexercisable management stock options held by the Named Executive Officers at December 29, 2001. FISCAL YEAR-END OPTION VALUES(1)
Number of Unexercised Value of Unexercised Options at In-the-Money Options Fiscal Year-End at Fiscal Year-End NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ------- --------------------------- --------------------------- (#)(2) (2) Martin R. Imbler 6,778/0 $1,958,726/$0 Ira G. Boots 4,171/0 1,205,477/0 James M. Kratochvil 2,607/0 753,481/0 R. Brent Beeler 2,607/0 753,481/0 William J. Herdrich 667/1,333 108,721/217,279
(1) None of Holding's capital stock is currently publicly traded. The values reflect management's estimate of the fair market value of the Class B Nonvoting Common Stock at December 29, 2001. (2) All options granted to management of the Company are exercisable for shares of Class B Nonvoting Common Stock, par value $.01 per share, of Holding. DIRECTOR COMPENSATION Directors receive no cash consideration for serving on the Board of Directors of Holding or the Company, but directors are reimbursed for out- of-pocket expenses incurred in connection with their duties as directors. EMPLOYMENT AGREEMENTS The Company has a separation agreement with Mr. Imbler (the "Imbler Separation Agreement") that expires on December 31, 2003. Compensation under the Imbler Separation Agreement provides for monthly payments ranging from $17,212 to $34,424 plus a one-time payment of $158,695 on March 15, 2002. The Imbler Separation Agreement contains customary noncompetion, nondisclosure, and nonsolicitation provisions and provides for the use of his consulting services though May 31, 2002. The Company has employment agreements with each of Messrs. Boots, Kratochvil, Beeler, and Herdrich (each, an "Employment Agreement" and, collectively, the "Employment Agreements"). The agreements for Boots, Kratochvil and Beeler expire on January 1, 2007, and the agreement for Herdrich expires on December 31, 2003. The Employment Agreements provided for fiscal 2001 base compensation of $316,461, $231,919, $284,251 and $258,690, respectively. Salaries are subject in each case to annual adjustment at the discretion of the Compensation Committee of the Board of Directors of the Company. The Employment Agreements entitle each executive to participate in all other incentive compensation plans established for executive officers of the Company. The Company may terminate each Employment Agreement for "cause" or a "disability" (as such terms are defined in the Employment Agreements). If the Company terminates an executive's employment without "cause" or resignation for good cause following a change in control resulting in the executive's reassignment to an office greater than 25 miles from his or her current office location (as defined in the Employment Agreements, other than Mr. Herdrich for which the following compensation only applies upon termination without "cause"), the Employment Agreements require the Company to pay certain amounts to the terminated executive, including (i) the greater of (A) one year's salary or (B) 1/12 of one year's salary for each year (not to exceed 30 years in the aggregate) of employment with the Company (other than Mr. Herdrich, who would receive his salary for one year), and (ii) certain benefits under applicable incentive compensation plans. Each Employment Agreement also includes customary noncompetition, nondisclosure and nonsolicitation provisions. -25- COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company established the Compensation Committee comprised of Messrs. Buaron, Boots, and Hofmann, in October 1996. The annual salary and bonus paid to Messrs. Boots, Kratochvil, Beeler, and Herdrich for fiscal 2001 were determined by the Compensation Committee in accordance with their respective employment agreements. All other compensation decisions with respect to officers of the Company are made by Mr. Boots pursuant to policies established in consultation with the Compensation Committee. The Company is party to an Amended and Restated Management Agreement (the "FACL Management Agreement") with First Atlantic pursuant to which First Atlantic provides the Company with financial advisory and management consulting services in exchange for an annual fee of $750,000 and reimbursement for out-of-pocket costs and expenses. In consideration of such services, the Company paid First Atlantic fees and expenses of $756,000 for fiscal 2001, $821,000 for fiscal 2000, and $792,000 for fiscal 1999. Under the FACL Management Agreement, the Company pays a fee for services rendered in connection with certain transactions equal to the lesser of (i) 1% of the total transaction value and (ii) $1,250,000 for any such transaction consummated plus out-of-pocket expenses in respect of such transaction, whether or not consummated. First Atlantic received advisory fees of approximately $690,000 in July 1999 for originating, structuring and negotiating the Cardinal Acquisition. First Atlantic received advisory fees of approximately $580,000 in May 2000 for originating, structuring and negotiating the Poly-Seal Acquisition. First Atlantic received advisory fees of $139,000 in March 2001 and $250,000 in June 2001 for originating, structuring and negotiating the Capsol and Pescor acquisitions, respectively. See "Certain Relationships and Related Transactions." Mr. Buaron, the Chairman and a director of Holding and the Company, is the Chairman and Chief Executive Officer of First Atlantic. Mr. Graev is a director of First Atlantic. As an officer and the sole stockholder of First Atlantic, Mr. Buaron is entitled to receive any bonuses paid and any dividends declared by First Atlantic on its capital stock, including any bonuses paid as a result of, and any dividends paid out of any of the fees paid with respect to the acquisitions described above. First Atlantic is engaged by Atlantic Equity Partners International II, L.P. ("International") to provide certain financial and management consulting services for which it receives annual fees. First Atlantic and International have completely distinct ownership and equity structures. See "Certain Relationships and Related Transactions." Atlantic Equity Partners, L.P. (the "Fund"), a prior stockholder of Holding, received in June 1996 approximately $67.6 million from the sale of its common stock in Holding and warrants to purchase common stock. First Atlantic is engaged by the Fund to provide certain financial and management consulting services for which it receives annual fees. First Atlantic and the Fund have completely distinct ownership and equity structures. Atlantic Equity Associates, L.P., a Delaware limited partnership ("AEA"), is the sole general partner of the Fund. Mr. Buaron is the sole shareholder of Buaron Capital Corporation ("Buaron Capital"). Buaron Capital is the managing and sole general partner of AEA. See "Certain Relationships and Related Transactions." STOCK OPTION PLAN Employees, directors and certain independent consultants of the Company and its subsidiaries are entitled to participate in the BPC Holding Corporation 1996 Stock Option Plan (the "Option Plan"), which provides for the grant of both "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and stock options that are non-qualified under the Code. The total number of shares of Class B Nonvoting Common Stock of Holding for which options may be granted pursuant to the Option Plan is 76,620. The Option Plan will terminate on October 3, 2003 or such earlier date on which the Board of Directors of Holding, in its sole discretion, determines. The Stock Option Committee of the Board of Directors of Holding administers all aspects of the Option Plan, including selecting which of the Company's directors, employees and independent consultants will receive options, the time when options are granted, whether the options are incentive stock options or non-qualified stock options, the manner and timing for vesting of such options, the terms of such options, the exercise date of any options and the number of shares subject to such options. Directors who are also employees are eligible to receive options under the Option Plan. -26- The exercise price of incentive stock options granted by Holding under the Option Plan may not be less than 100% of the fair market value of the Class B Nonvoting Common Stock at the time of grant and the term of any option may not exceed seven years. With respect to any employee who owns stock representing more than 10% of the voting power of the outstanding capital stock of Holding, the exercise price of any incentive stock option may not be less than 110% of the fair market value of such shares at the time of grant and the term of such option may not exceed five years. The exercise price of a non-qualified stock option is determined by the Stock Option Committee on the date the option is granted. However, the exercise price of a non-qualified stock option may not be less than 100% of the fair market value of Class B Nonvoting Common Stock if the option is granted at any time after the initial public offering of such stock. Options granted under the Option Plan are nontransferable except by will and the laws of descent and distribution. Options granted under the Option Plan typically expire after seven years and vest over a five-year period based on timing as well as achieving financial performance targets. Under the Option Plan, as of December 29, 2001, there were outstanding options to purchase an aggregate of 60,420 shares of Class B Nonvoting Common Stock to 102 current and former employees of the Company, at an exercise price between $100 and $226 per share. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT STOCK OWNERSHIP All of the outstanding capital stock of the Company is owned by Holding. The following table sets forth certain information regarding the ownership of the capital stock of Holding with respect to (i) each person known by Holding to own beneficially more than 5% of the outstanding shares of any class of its voting capital stock, (ii) each of Holding's directors, (iii) the Named Executive Officers and (iv) all directors and executive officers of Holding as a group. Except as otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the address for each stockholder is c/o Berry Plastics Corporation, 101 Oakley Street, Evansville, Indiana 47710.
SHARES OF SHARES OF VOTING NONVOTING COMMON STOCK(1) COMMON STOCK(1) ------------------- ------------------------- PERCENTAGE OF ALL CLASSES OF NAME AND ADDRESS PERCENTAGE OF COMMON STOCK OF CLASS CLASS VOTING CLASS A CLASS B CLASS C (FULLY-DILUTED) BENEFICIAL OWNER A B COMMON STOCK - ----------------------------------------------------------------------------------------------------- Atlantic Equity Partners International II, L.P.(2) 7,800 128,142 55.5% 2,200 3,385 11,470 21.3% J.P. Morgan Partners (SBIC),LLC(3) 52,000 5,623(4) 23.5 168,000 33,436(4) - 36.1 BPC Equity, LLC(5) 31,200 - 12.7 88,800 - - 16.7 Roberto Buaron(6) 7,800 128,142 55.5 2,200 3,385 11,470 21.3 Martin R. Imbler - 3,629 1.5 - 15,915(7) 664 2.2 Joseph S. Levy(8) - 42 * - 118 14 * Lawrence G. Graev(9) - - - - - - - Donald J. Hofmann, Jr.(10) 52,000 5,623(4) 23.5 168,000 33,436(4) - 36.1 Mathew J. Lori(11) 52,000 5,623(4) 23.5 168,000 33,436(4) - 36.1 David M. Clarke(12) 31,200 - 12.7 88,800 - - 16.7 Ira G. Boots - 1,718 * - 5,889(13) - * James M. Kratochvil - 1,196 * - 6,011(14) 391 * R. Brent Beeler - 1,196 * - 6,011(15) 391 * William J. Herdrich - - * - 767(16) - * All executive officers and 91,000 137,917 93.5 259,000 73,227 12,930 80.0 directors as a group (11 persons)
* Less than one percent. -27- (1) The authorized capital stock of Holding consists of 4,814,000 shares of capital stock, including 2,500,000 shares of Common Stock, $.01 par value (the "Holding Common Stock"), and 2,314,000 shares of Preferred Stock, $.01 par value (the "Preferred Stock"). Of the 2,500,000 shares of Holding Common Stock, 500,000 shares are designated Class A Voting Common Stock, 500,000 shares are designated Class A Nonvoting Common Stock, 500,000 shares are designated Class B Voting Common Stock, 500,000 shares are designated Class B Nonvoting Common Stock, and 500,000 shares are designated Class C Nonvoting Common Stock. Of the 2,314,000 shares of Preferred Stock, 600,000 shares are designated Series A Senior Cumulative Exchangeable Preferred Stock, 1,400,000 shares are designated Series A-1 Preferred Stock, 200,000 shares are designated Series B Cumulative Preferred Stock, 3,063 shares are designated Series C-1 Preferred Stock, 1,910 shares are designated Series C-2 Preferred Stock, 2,135 shares are designated Series C-3 Preferred Stock, 3,033 shares are designated Series C-4 Preferred Stock, 3,027 shares are designated Series C-5 Preferred Stock, and 100,000 shares are designated Series D Preferred Stock. (2) Address is P. O. Box 847, One Capital Place, Fourth Floor, Grand Cayman, Cayman Islands, British West Indies. Atlantic Equity Associates International II, L.P., a Delaware limited partnership ("AEA II"), is the sole general partner of International and as such exercises voting and/or investment power over shares of capital stock owned by International, including the shares of Holding Common Stock held by International (the "International Shares"). Mr. Buaron is the sole shareholder of Buaron Holdings Ltd. ("BHL"). BHL is the sole general partner of AEA II. As the general partner of AEA II, BHL may be deemed to beneficially own the International Shares. BHL disclaims any beneficial ownership of any shares of capital stock owned by International, including the International Shares. Through his affiliation with BHL and AEA II, Mr. Buaron controls the sole general partner of International and therefore has the authority to control voting and/or investment power over, and may be deemed to beneficially own, the International Shares. Mr. Buaron disclaims any beneficial ownership of any of the International Shares. (3) Address is 1221 Avenue of the Americas, New York, New York 10020. (4) Represents warrants to purchase such shares of common stock held by J.P. Morgan Partners (SBIC), LLC (formerly Chase Venture Capital Associates, LLC) ("JPMP(SBIC)") which are currently exercisable. (5) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U, 151 Farmington Avenue, Hartford, Connecticut 06156. Aetna Life Insurance Company exercises voting and/or investment power over shares of capital stock owned by BPC Equity, LLC ("BPC Equity"), including shares of Holding Common Stock held by BPC Equity. (6) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022. Represents shares of Holding Common Stock owned by International. Mr. Buaron is the sole shareholder of BHL. BHL is the sole general partner of AEA II. AEA II is the sole general partner of International and as such, exercises voting and/or investment power over shares of capital stock owned by International, including the International Shares. Mr. Buaron, as the sole shareholder and Chief Executive Officer of BHL, controls the sole general partner of International and therefore has voting and/or investment power over, and may be deemed to beneficially own, the International Shares. Mr. Buaron disclaims any beneficial ownership of the International Shares. (7) Includes 6,778 options granted to Mr. Imbler, which are presently exercisable. (8) Address is c/o First Atlantic Capital, Ltd., 135 East 57th Street, New York, New York 10022. (9) Address is c/o King & Spalding, 1185 Avenue of the Americas, New York, New York 10036. (10) Address is c/o J.P. Morgan Partners, 1221 Avenue of the Americas, New York, New York 10020. Represents shares owned by JPMP(SBIC). Mr. Hofmann is a General Partner of J.P. Morgan Partners, LLC, which is the private equity investment arm of J.P. Morgan Chase & Co., which is an affiliate of JPMP(SBIC). Mr. Hofmann disclaims any beneficial ownership of the shares of Holding Common Stock held by JPMP(SBIC). (11) Address is c/o J.P. Morgan Partners, LLC, 1221 Avenue of the Americas, New York, New York 10020. Represents shares owned by JPMP(SBIC). Mr. Lori is a Principal with of J.P. Morgan Partners, which is the private equity investment arm of J.P. Morgan Chase & Co., which is an affiliate of JPMP(SBIC). Mr. Lori disclaims any beneficial ownership of the shares of Holding Common Stock held by JPMP(SBIC). (12) Address is c/o Aetna Life Insurance Company, Private Equity Group, IG6U, 151 Farmington Avenue, Hartford, Connecticut 06156. Represents shares owned by BPC Equity. Mr. Clarke is a Managing Director of Aetna, Inc., an affiliate of Aetna Life Insurance Company, which is a member of BPC Equity. Mr. Clarke disclaims any beneficial ownership of the shares of Holding Common Stock held by BPC Equity. (13) Includes 4,171 options granted to Mr. Boots, which are currently exercisable. (14) Includes 2,607 options granted to Mr. Kratochvil, which are currently exercisable. (15) Includes 2,607 options granted to Mr. Beeler, which are currently exercisable. (16) Includes 667 options granted to Mr. Herdrich, which are currently exercisable. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS FIRST ATLANTIC Pursuant to the FACL Management Agreement, First Atlantic provides the Company with financial advisory and management consulting services in exchange for an annual fee of $750,000 and reimbursement for out-of-pocket costs and expenses. In consideration of such services, the Company paid First Atlantic fees and expenses of approximately $756,000 for fiscal 2001, $821,000 for fiscal 2000, and $792,000 for fiscal 1999. Under the FACL Management Agreement, the Company pays a fee for services rendered in connection with certain transactions equal to the lesser of (i) 1% of the total transaction value and (ii) $1,250,000 for any such transaction consummated plus out-of-pocket expenses in respect of such transaction, whether or not consummated. First Atlantic received advisory fees of approximately $690,000 in July 1999 for originating, structuring and negotiating the Cardinal Acquisition. First Atlantic received advisory fees of approximately $580,000 in May 2000 for originating, structuring and negotiating the Poly-Seal Acquisition. First Atlantic received advisory fees of approximately $139,000 in March 2001 and $250,000 in June 2001 for originating, structuring and negotiating the Capsol and Pescor acquisitions, respectively. Mr. Buaron, the Chairman and a director of Holding and the Company, is the Chairman and Chief Executive Officer of First Atlantic. As an officer and the sole stockholder of First Atlantic, Mr. Buaron is entitled to receive any bonuses paid and any dividends declared by First Atlantic on its capital stock, including any bonuses paid as a result of, and any dividends paid out of the fees paid with respect to the acquisitions described above. Mr. Graev is also a director of First Atlantic, and Mr. Levy is an officer of First Atlantic. First Atlantic is engaged by International to provide certain financial and management consulting services for which it receives annual fees. First Atlantic and International have completely distinct ownership and equity structures. -28- Atlantic Equity Partners, L.P. (the "Fund"), a prior stockholder of Holding, received in June 1996 approximately $67.6 million from the sale of its common stock in Holding and warrants to purchase common stock. First Atlantic is engaged by the Fund to provide certain financial and management consulting services for which it receives annual fees. First Atlantic and the Fund have completely distinct ownership and equity structures. AEA is the sole general partner of the Fund. Mr. Buaron is the sole shareholder of Buaron Capital, and Buaron Capital is the managing and sole general partner of AEA. STOCKHOLDERS AGREEMENTS Holding entered into a Stockholders Agreement dated as of June 18, 1996, as amended (the "Stockholders Agreement"), with certain common equity investors ("Common Stock Purchasers"), certain Management Stockholders (as defined herein) and, for limited purposes thereunder, the Northwestern Mutual Life Insurance Company ("Northwestern") and JPMP(SBIC) ("Preferred Stock Purchasers"). The Stockholders Agreement grants the Common Stock Purchasers certain rights and obligations, including the following: (i) until the occurrence of certain events specified in the Stockholders Agreement, to designate the members of a seven person Board of Directors as follows: (A) one director will be Roberto Buaron or his designee; (B) International will have the right to designate three directors (who are currently Messrs. Graev, Imbler and Levy); (C) JPMP(SBIC) will have the right to designate two directors (who are currently Messrs. Hofmann and Lori); and (D) the institutional holders (excluding International and JPMP(SBIC)) will have the right to designate one director (who is currently Mr. Clarke); (ii) in the case of certain Common Stock Purchasers, to subscribe for a proportional share of future equity issuances by Holding; (iii) under certain circumstances and in the case of International or JPMP(SBIC), to cause the initial public offering of equity securities of Holding or a sale of Holding subsequent to June 18, 2001 and (iv) under certain circumstances and in the case of a majority in interest of the institutional holders, to cause the initial public offering of equity securities of Holding or a sale of Holding subsequent to June 18, 2002. Provisions under the Stockholders Agreement also (i) prohibit Holding from taking certain actions without the consent of holders of a majority of voting stock held by JPMP(SBIC) and the institutional holders other than International (or, following the occurrence of certain events, International's consent), including certain transactions between Holding and any subsidiary, on the one hand, and First Atlantic or any of its affiliates, on the other hand; (ii) obligate Holding to provide certain Common Stock Purchasers with financial and other information regarding Holding and to provide access and inspection rights to all Common Stock Purchasers; and (iii) restrict transfers of equity by the Common Stock Purchasers, subject to certain exceptions (including for transfers of up to 10% of the equity (including warrants to purchase equity) held by each Common Stock Purchaser on the date of the Stockholders Agreement). Pursuant to the Stockholders Agreement, under certain circumstances the Preferred Stock Purchasers (and their transferees) have tag-along rights with respect to the warrants issued by Holding in 1996 and the Holding Common Stock issuable upon exercise thereof. Under specified circumstances and subject to certain exceptions, the Preferred Stock Purchasers (and their transferees) are entitled to include a pro rata share of their Preferred Stock in a transaction (or series of related transactions) involving the transfer by International, JPMP(SBIC) and the Institutional Holders (as defined in the Stockholders Agreement) of more than 50% of the aggregate amount of securities held by them on June 19, 1996. The Stockholders Agreement grants registration rights, under certain circumstances and subject to specified conditions, to the Common Stock Purchasers. International and JPMP(SBIC) each have the right, on three occasions, to demand registration, at Holding's expense, of their shares of Holding Common Stock. Under certain circumstances, a majority in interest of the institutional holders (excluding International and JPMP(SBIC)) have the right, on one occasion, to demand registration, at Holding's expense, of their shares of Holding Common Stock. The Stockholders Agreement provides that if Holding proposes to register any of its securities, either for its own account or for the account of other stockholders, Holding will be required to notify all Common Stock Purchasers and to include in such registration the shares of Holding Common Stock requested to be included by them. All shares of Holding Common Stock owned by the Common Stock Purchasers requested to be included in a registration will be subject to cutbacks under certain circumstances in connection with an underwritten public offering. -29- The provisions of the Stockholders Agreement regarding voting rights, negative covenants, information/inspection rights, the right to force a sale of Holding, preemptive rights and transfer restrictions generally will expire on the earlier to occur of (i) the later of (A) June 18, 2001 if an underwritten public offering of equity securities of Holding resulting in gross proceeds of at least $20.0 million occurs prior to June 18, 2001 and (B) the occurrence of such underwritten public offering that occurs subsequent to June 18, 2001; (ii) June 18, 2016; and (iii) a sale of Holding. In addition, the Stockholders Agreement provides that certain rights of a Common Stock Purchaser (to the extent such rights apply to such Common Stock Purchaser) to designate members of the Board of Directors of Holding and/or to approve certain actions by Holding will terminate if certain circumstances occur. Holding is also party to the Amended and Restated Stockholders Agreement dated June 18, 1996 (the "Management Stockholders Agreement"), with International and all management shareholders including, among others, Messrs. Imbler, Boots, Kratochvil, Beeler, and Herdrich (collectively, the "Management Stockholders"). The Management Stockholders Agreement contains provisions (i) limiting transfers of equity by the Management Stockholders; (ii) requiring the Management Stockholders to sell their shares as designated by Holding or International upon the consummation of certain transactions; (iii) granting the Management Stockholders certain rights of co-sale in connection with sales by International; (iv) granting Holding rights to repurchase capital stock from the Management Stockholders upon the occurrence of certain events; and (v) requiring the Management Stockholders to offer shares to Holding prior to any permitted transfer. In order to finance a portion of the consideration delivered in connection with the acquisition of Poly-Seal Corporation, Holding issued, pursuant to a Preferred Stock and Warrant Purchase Agreement dated as of May 9, 2000 (the "Preferred Agreement") by and among Holding, JPMP(SBIC), and Northwestern, 1,000,000 shares of Series A-1 Preferred Stock in a private placement (the "Preferred Placement") for an aggregate purchase price of $25 million. The Series A-1 Preferred Stock has a stated value of $25 per share, and dividends accrue at a rate of 14% per annum and will accumulate until declared and paid. The Series A-1 Preferred Stock ranks pari-passu with the Series A Preferred Stock and prior to all other capital stock of Holding. In connection with the Preferred Placement, Holding issued warrants to purchase 25,997 shares of its Series B Non-Voting Common Stock at $0.01 per share. Holding also extended the expiration period of currently outstanding warrants to purchase Series B Non-Voting Common Stock and Series B Voting Common Stock held by JPMP(SBIC) and Northwestern to May 9, 2010. The Series A-1 Preferred Stock and Warrants were issued in transactions exempt from registration in reliance on the exemption provided by Section 4 (2) of the Securities Act of 1933. TAX SHARING AGREEMENT For federal income tax purposes, Berry and its domestic subsidiaries are included in the affiliated group of which Holding is the common parent and as a result, the federal taxable income and loss of Berry and its subsidiaries is included in the group consolidated tax return filed by Holding. In April 1994, Holding, Berry and certain of its subsidiaries entered into a tax sharing agreement, which was amended and restated in March 2001 (the "Tax Sharing Agreement"). Under the Tax Sharing Agreement, for fiscal 1994 and all taxable years thereafter for which the Tax Sharing Agreement remains in effect, Berry and its subsidiaries as a consolidated group are required to pay at the request of Holding an amount equal to the taxes (plus any accrued interest) that they would otherwise have to pay if they were to file separate federal, state or local income tax returns (including any amounts determined to be due as a result of a redetermination arising from an audit or otherwise of a tax liability which is attributable to them). If Berry and its subsidiaries would have been entitled to a tax refund for taxes paid previously on the basis computed as if they were to file separate returns, then under the Tax Sharing Agreement, Holding is required to pay at the request of Berry and its subsidiaries an amount equal to such tax refund. If, however, Berry and its subsidiaries would have reported a tax loss if they were to file separate returns, then Holdings intends, but is not obligated under the Tax Sharing Agreement, to pay to Berry and its subsidiaries an amount equal to the tax benefit that is realized by Holding as a result of such separate loss. Under the Tax Sharing Agreement any such payments to be made by Holding to Berry or any of its subsidiaries on account of a tax loss are within the sole discretion of Holding. Berry and its subsidiaries made a $8.5 million payment to Holding in December 2001 under this tax sharing agreement. -30- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents Filed as Part of the Report 1. FINANCIAL STATEMENTS The financial statements listed under Item 8 are filed as part of this report. 2. FINANCIAL STATEMENT SCHEDULES The financial statement schedule listed under Item 8 is filed as part of this report. Schedules other than the above have been omitted because they are either not applicable or the required information has been disclosed in the financial statements or notes thereto. 3. EXHIBITS The exhibits listed on the accompanying Exhibit Index are filed as part of this report. (b) Reports on Form 8-K None. -31- REPORT OF INDEPENDENT AUDITORS The Stockholders and Board of Directors BPC Holding Corporation We have audited the accompanying consolidated balance sheets of BPC Holding Corporation ("Holding") as of December 29, 2001, and December 30, 2000, and the related consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 29, 2001. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of Holding's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of BPC Holding Corporation at December 29, 2001 and December 30, 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 29, 2001, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. /S/ ERNST & YOUNG LLP Indianapolis, Indiana February 15, 2002 F-1 BPC HOLDING CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS)
DECEMBER 29, DECEMBER 30, 2001 2000 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 1,232 $ 2,054 Accounts receivable (less allowance for doubtful accounts of $2,070 at December 29, 2001 and $1,724 at December 30, 2000) 48,623 48,397 Inventories: Finished goods 43,048 38,157 Raw materials and supplies 13,009 10,822 ------------- ------------ 56,057 48,979 Prepaid expenses and other receivables 5,280 5,272 ------------- ------------ Total current assets 111,192 104,702 Property and equipment: Land 9,443 8,894 Buildings and improvements 72,722 60,572 Machinery, equipment and tooling 201,357 203,569 Construction in progress 22,647 16,901 ------------- ------------ 306,169 289,936 Less accumulated depreciation 102,952 110,132 ------------- ------------ 203,217 179,804 Intangible assets: Deferred financing fees, net 8,475 10,422 Covenants not to compete, net 1,955 3,388 Excess of cost over net assets acquired, net 119,923 114,680 ------------- ------------ 130,353 128,490 Other 2,114 126 ------------- ------------ Total assets $ 446,876 $ 413,122 ============= ============
F-2 CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 29, DECEMBER 30, 2001 2000 ------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 34,862 $ 26,779 Accrued expenses and other liabilities 8,955 10,430 Accrued interest 7,964 9,006 Employee compensation and payroll taxes 17,792 14,785 Current portion of long-term debt 22,292 23,232 ------------- ------------ Total current liabilities 91,865 84,232 Long-term debt, less current portion 463,589 445,574 Accrued dividends on preferred stock 27,446 17,656 Deferred income taxes 489 491 Other liabilities 3,088 3,166 ------------- ------------ Total liabilities 586,477 551,119 Stockholders' equity (deficit): Series A Preferred Stock; 600,000 shares authorized, issued and outstanding (net of discount of $1,893 at December 29, 2001 and $2,185 at December 30, 2000) 12,678 12,386 Series A-1 Preferred Stock; 1,400,000 shares authorized; 1,000,000 shares issued and outstanding (net of discount of $4,668 at December 29, 2001 and $5,400 at December 30, 2000) 20,332 19,600 Series B Preferred Stock; 200,000 shares authorized, issued and outstanding 5,000 5,000 Series C Preferred Stock; 13,168 shares authorized, issued and outstanding 9,779 - Class A Common Stock; $.01 par value: Voting; 500,000 shares authorized; 91,000 shares issued and outstanding 1 1 Nonvoting; 500,000 shares authorized; 259,000 shares issued and outstanding 3 3 Class B Common Stock; $.01 par value: Voting; 500,000 shares authorized; 145,058 shares issued and 144,546 shares outstanding 1 1 Nonvoting; 500,000 shares authorized; 61,325 shares issued and 59,222 shares outstanding 1 1 Class C Common Stock; $.01 par value: Nonvoting; 500,000 shares authorized; 17,000 shares issued and 16,833 shares outstanding - - Treasury stock: 512 shares Class B Voting Common Stock; 2,103 shares Class B Nonvoting Common Stock; and 167 shares Class C Nonvoting Common Stock (405) (405) Additional paid-in capital 25,315 35,041 Warrants 9,386 9,386 Retained earnings (deficit) (220,263) (218,168) Accumulated other comprehensive income (loss) (1,429) (843) ------------- ------------ Total stockholders' equity (deficit) (139,601) (137,997) ------------- ------------ Total liabilities and stockholders' equity (deficit) $ 446,876 $ 413,122 ============= ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-3 BPC HOLDING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF DOLLARS)
YEAR ENDED --------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 ------------- ------------ ------------ Net sales $ 461,659 $ 408,088 $ 328,834 Cost of goods sold 338,000 312,119 241,067 ------------- ------------ ------------ Gross margin 123,659 95,969 87,767 Operating expenses: Selling 21,996 21,630 17,383 General and administrative 28,535 24,408 22,034 Research and development 1,948 2,606 2,338 Amortization of intangibles 12,802 10,579 7,215 Other expenses 4,911 6,639 5,148 ------------- ------------ ------------ Operating income 53,467 30,107 33,649 Other expenses: Loss on disposal of property and equipment 473 877 1,416 ------------- ------------ ------------ Income before interest and taxes 52,994 29,230 32,233 Interest: Expense (54,397) (51,553) (41,040) Income 42 96 223 ------------- ------------ ------------ Loss before income taxes and extraordinary item (1,361) (22,227) (8,584) Income taxes (benefit) 734 (142) 554 ------------- ------------ ------------ Loss before extraordinary item (2,095) (22,085) (9,138) Extraordinary item (less applicable income taxes of $0) - (1,022) - ------------- ------------ ------------ Net loss (2,095) (23,107) (9,138) Preferred stock dividends (9,790) (6,655) (3,776) Amortization of preferred stock discount (1,024) (768) (292) ------------- ------------ ------------ Net loss attributable to common shareholders $ (12,909) $ (30,530) $ (13,206) ============= ============ ============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-4 BPC HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS OF DOLLARS) COMMON STOCK PREFERRED STOCK ------------------------ ----------------------------- CLASS CLASS CLASS CLASS CLASS CLASS CLASS TREASURY A B C A A-1 B C STOCK -------------------------------------------------------------------------- Balance at January 2, 1999 $ 4 $ 2 $ - $ 11,801 $ - $ 5,000 $ - $ (280) -------- -------- -------- -------- -------- -------- --------- --------- Net loss - - - - - - - - Sale of treasury stock - - - - - - - 40 to management Purchase treasury stock - - - - - - - (16) from management Translation loss - - - - - - - - Accrued dividends - - - - - - - - on preferred stock Amortization of - - - 292 - - - - preferred stock discount -------- -------- -------- -------- -------- -------- --------- --------- Balance at January 1, 2000 4 2 - 12,093 - 5,000 - (256) -------- -------- -------- -------- -------- -------- --------- --------- Net loss - - - - - - - - Purchase treasury - - - - - - - (149) stock from management Translation loss - - - - - - - - Stock-based - - - - - - - - compensation Issuance of - - - - 25,000 - - - preferred stock Issuance of - - - - (5,875) - - - private warrants Accrued dividends - - - - - - - - on preferred stock Amortization - - - 293 475 - - - of preferred stock discount -------- -------- -------- -------- -------- -------- --------- --------- Balance at December 30, 2000 4 2 - 12,386 19,600 5,000 - (405) -------- -------- -------- -------- -------- -------- --------- --------- Net loss - - - - - - - - Translation loss - - - - - - - - Stock-based - - - - - - - - compensation Issuance of - - - - - - 9,779 - preferred stock Issuance of - - - - - - - - common stock Accrued dividends - - - - - - - - on preferred stock Amortization - - - 292 732 - - - of preferred stock discount -------- -------- -------- -------- -------- -------- --------- --------- Balance at December 29, 2001 $ 4 $ 2 $ - $12,678 $20,332 $5,000 $9,779 $(405) ======== ======== ======== ======== ======== ======== ======== ========= ACCUMULATED ADDITIONAL RETAINED OTHER COMPREHENSIVE PAID-IN EARNINGS COMPREHENSIVE TOTAL INCOME CAPITAL WARRANTS (DEFICIT) LOSS (LOSS) -------------------------------------------------------------------------- Balance at January 2, 1999 $ 45,611 $ 3,511 $ (185,923) $ (83) $ (120,357) --------- ----------- ---------- ----------- ------------- --------- Net loss - - (9,138) - (9,138) (9,138) Sale of treasury stock 16 - - - 56 - to management Purchase treasury stock - - - - (16) - from management Translation loss - - - (240) (240) (240) Accrued dividends (3,776) - - - (3,776) - on preferred stock Amortization of (292) - - - - - preferred stock discount ---------- ---------- ---------- ----------- ----------- --------- Balance at January 1, 2000 41,559 3,511 (195,061) (323) (133,471) (9,378) ---------- ---------- ---------- ----------- ----------- ========= Net loss - - (23,107) - (23,107) $(23,107) Purchase treasury - - - - (149) - stock from management Translation loss - - - (520) (520) (520) Stock-based 905 - - - 905 - compensation Issuance of - - - - 25,000 - preferred stock Issuance of - 5,875 - - - - private warrants Accrued dividends (6,655) - - - (6,655) - on preferred stock Amortization (768) - - - - - of preferred stock discount ---------- ---------- ---------- ----------- ----------- --------- Balance at December 30, 2000 35,041 9,386 (218,168) (843) (137,997) (23,627) ---------- ---------- ---------- ----------- ----------- ========= Net loss - - (2,095) - (2,095) (2,095) Translation loss - - - (586) (586) (586) Stock-based 796 - - - 796 - compensation Issuance of - - - - 9,779 - preferred stock Issuance of 292 - - - 292 - common stock Accrued dividends (9,790) - - - (9,790) - on preferred stock Amortization (1,024) - - - - - of preferred stock discount ---------- --------- ---------- ----------- ----------- --------- Balance at December 29, 2001 $25,315 $ 9,386 $(220,263) $(1,429) $(139,601) $(2,681) ========== ========== ========== =========== =========== =========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
YEAR ENDED ---------------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 --------------- --------------- -------------- OPERATING ACTIVITIES Net loss $(2,095) $ (23,107) $(9,138) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 38,105 31,569 24,580 Non-cash interest expense 11,268 18,047 15,567 Amortization 12,802 10,579 7,215 Non-cash compensation 796 905 - Write-off of financing fees - 1,022 - Loss on sale of property and equipment 473 877 1,416 Deferred income taxes - (349) 6 Changes in operating assets and liabilities: Accounts receivable, net 2,869 (1,475) (723) Inventories (4,017) 7,383 (7,746) Prepaid expenses and other receivables (50) (1,163) (529) Other assets (2,000) - 493 Accounts payable and accrued expenses (3,803) (8,182) 4,860 --------------- --------------- -------------- Net cash provided by operating activities 54,348 36,106 36,001 INVESTING ACTIVITIES Additions to property and equipment (32,834) (31,530) (30,738) Proceeds from disposal of property and 93 1,666 529 equipment Acquisitions of businesses (23,549) (78,851) (76,769) --------------- --------------- -------------- Net cash used for investing activities (56,290) (108,715) (106,978) FINANCING ACTIVITIES Proceeds from long-term borrowings 15,606 80,032 90,435 Payments on long-term borrowings (24,088) (31,543) (16,340) Purchase of treasury stock from management - (149) (16) Proceeds from issuance of preferred stock 9,779 25,000 - and warrants Proceeds from issuance of treasury stock - - 56 Proceeds from issuance of common stock 292 - - Debt issuance costs (1,009) (1,303) (3,000) --------------- --------------- -------------- Net cash provided by financing activities 580 72,037 71,135 Effect of exchange rate changes on cash 540 80 70 --------------- --------------- -------------- Net increase (decrease) in cash and cash (822) (492) 228 equivalents Cash and cash equivalents at beginning of 2,054 2,546 2,318 year --------------- --------------- -------------- Cash and cash equivalents at end of year $ 1,232 $ 2,054 $2,546 =============== =============== ============== SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6 BPC HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF DOLLARS, EXCEPT AS OTHERWISE NOTED) NOTE 1. ORGANIZATION BPC Holding Corporation ("Holding"), through its subsidiary Berry Plastics Corporation ("Berry" or the "Company") and its subsidiaries Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, Aerocon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc. and its subsidiaries Venture Packaging Midwest, Inc. and Berry Plastics Technical Services, Inc., NIM Holdings Limited and its subsidiary Berry Plastics U.K. Limited and its subsidiary Norwich Acquisition Limited, Knight Plastics, Inc., CPI Holding Corporation and its subsidiary Cardinal Packaging, Inc., Berry Plastics Acquisition Corporation II, Poly-Seal Corporation, Berry Plastics Acquisition Corporation III, CBP Holdings, S.r.l. and its subsidiaries Capsol S.p.a. and Ociesse S.r.l., and Pescor, Inc. manufactures and markets plastic packaging products through its facilities located in Evansville, Indiana; Henderson, Nevada; Iowa Falls, Iowa; Charlotte, North Carolina; Suffolk, Virginia; Lawrence, Kansas; Monroeville, Ohio; Norwich, England; Woodstock, Illinois; Streetsboro, Ohio; Baltimore, Maryland; Milan, Italy, and Fort Worth, Texas. In connection with the acquisition of CPI Holding Corporation in July 1999, the Company acquired manufacturing facilities in Ontario, California and Minneapolis, Minnesota. The Ontario facility was closed in 1999, and all production was removed from the Minneapolis facility in 2000. Also in 2000, the Company closed its manufacturing facility in York, Pennsylvania. The business from these closed locations has been distributed throughout Berry's facilities. Holding's fiscal year is a 52/53 week period ending generally on the Saturday closest to December 31. All references herein to "2001," "2000," and "1999," relate to the fiscal years ended December 29, 2001, December 30, 2000, and January 1, 2000, respectively. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION AND BUSINESS The consolidated financial statements include the accounts of Holding and its subsidiaries, all of which are wholly owned. Intercompany accounts and transactions have been eliminated in consolidation. Holding, through its wholly owned subsidiaries, operates in three primary segments: containers, closures, and consumer products. The Company's customers are located principally throughout the United States, without significant concentration in any one region or with any one customer. The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral. Purchases of various densities of plastic resin used in the manufacture of the Company's products aggregated approximately $110.5 million in 2001. Dow Chemical Corporation is the largest supplier (approximately 31%) of the Company's total resin material requirements. The Company also uses other suppliers such as Chevron, ExxonMobil, Nova and Equistar to meet its resin requirements. The Company does not anticipate any material difficulty in obtaining an uninterrupted supply of raw materials at competitive prices in the near future. However, should a significant shortage of the supply of resin occur, changes in both the price and availability of the principal raw material used in the manufacture of the Company's products could occur and result in financial disruption to the Company. The Company is subject to existing and potential federal, state, local and foreign legislation designed to reduce solid waste in landfills. While the principal resins used by the Company are recyclable and, therefore, reduce the Company's exposure to legislation promulgated to date, there can be no assurance that future legislation or regulatory initiatives would not have a material adverse effect on the Company. Legislation, if promulgated, requiring plastics to be degradable in landfills or to have minimum levels of recycled content would have a significant impact on the Company's business as would legislation providing for disposal fees or limiting the use of plastic products. F-7 CASH AND CASH EQUIVALENTS All highly liquid investments with a maturity of three months or less at the date of purchase are considered to be cash equivalents. INVENTORIES Inventories are valued at the lower of cost (first in, first out method) or market. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the assets ranging from three to 25 years. INTANGIBLE ASSETS Origination fees and deferred financing fees are being amortized using the straight-line method over the lives of the respective debt agreements. Covenants not to compete are being amortized using the straight-line method over the respective lives of the agreements ranging from one to five years. The costs in excess of net assets acquired represent the excess purchase price over the fair value of the net assets acquired in the original acquisition of Berry Plastics and subsequent acquisitions. These costs are being amortized using the straight-line method over a range of 15 to 20 years. LONG-LIVED ASSETS Holding evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable based on expected undiscounted cash flows attributed to that asset. The amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Holding does not have any long-lived assets it considers to be impaired. Revenue Recognition Revenue from sales of products is recognized at the time product is shipped to the customer. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. F-8 IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS No. 133"), which the Company adopted at the beginning of fiscal 2001. This pronouncement establishes accounting and reporting standards for derivative financial instruments and hedging activities. SFAS No. 133 requires, among other things, the Company to recognize all derivatives as either assets or liabilities on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in its fair value will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through income or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The adoption of SFAS No. 133 did not have a material effect on the earnings and financial position of the Company. In June 2001, the FASB issued SFAS No. 141, BUSINESS COMBINATIONS and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. These pronouncements significantly change the accounting for business combinations, goodwill, and intangible assets. SFAS No. 141 eliminates the pooling-of-interests method of accounting for business combinations and further clarifies the criteria to recognize intangible assets separately from goodwill. The requirements of SFAS No. 141 are effective for any business combination that is completed after June 30, 2001. SFAS No. 142 states goodwill and indefinite lived intangible assets are no longer amortized but are reviewed for impairment annually (or more frequently if impairment indicators arise). Separable intangible assets that are deemed to have an indefinite life will continue to be amortized over their useful lives. The Company will adopt the provisions of SFAS Nos. 141 and 142 as of the beginning of fiscal 2002. Application of the nonamortization provisions of SFAS No. 142 is expected to result in an increase in net income (or decrease in net loss) of approximately $10.5 million per year based on goodwill related to acquisitions prior to the new rules. Further, during fiscal year 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets and has not yet determined the impact of the results of these tests on the earnings and financial position of the Company. Any goodwill or other intangible asset impairment losses recognized from the initial impairment test are required to be reported as a cumulative effect of a change in accounting principle in the Company's financial statements. In October 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS. This statement addresses the financial accounting and reporting for the impairment and disposal of long- lived assets. It supercedes and addresses significant issues relating to the implementation of SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG- LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 144 retains many of the fundamental provisions of SFAS No. 121 and establishes a single accounting model, based on the framework established in SFAS No. 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The Company will adopt this standard as of the beginning of fiscal 2002. The application of SFAS No. 144 is not expected to have a material impact on the Company's results of operations and financial position. NOTE 3. ACQUISITIONS On May 9, 2000, Berry acquired all of the outstanding capital stock of Poly-Seal Corporation ("Poly-Seal") for aggregate consideration of approximately $58.0 million. The purchase was financed through the issuance by Holding of $25.0 million of 14% preferred stock and warrants and additional borrowings under the senior credit facility. The operations of Poly-Seal are included in Berry's operations since the acquisition date using the purchase method of accounting. On October 4, 2000, Berry, through its newly-formed, wholly owned Italian subsidiary CBP Holdings S.r.l. ("Capsol"), acquired all of the outstanding capital stock of Capsol S.p.a., headquartered in Cornate d'Adda, near Milan, Italy and the whole quota capital of a related company, Ociesse S.r.l., for aggregate consideration of approximately $14.0 million. The purchase was financed through borrowings under the senior credit facility. The operations of Capsol are included in Berry's operations since the acquisition date using the purchase method of accounting. F-9 On May 14, 2001, Berry acquired all of the outstanding capital stock of Pescor Plastics, Inc. ("Pescor") for aggregate consideration of approximately $24.8 million. The purchase was financed through the issuance by Holding of $9.8 million of 14% preferred stock and additional borrowings under the senior credit facility. The operations of Pescor are included in Berry's operations since the acquisition date using the purchase method of accounting. The fair value of the net assets acquired was based on preliminary estimates and may be revised at a later date. The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Poly-Seal, Capsol, and Pescor acquisitions occurred at the beginning of each fiscal year presented.
YEAR ENDED ------------------------------- DECEMBER 29, DECEMBER 30, 2001 2000 --------------- --------------- Pro forma net sales $ 474,112 $ 459,657 Pro forma loss before extraordinary (2,663) (29,603) item Pro forma net loss (2,663) (30,625)
The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions been consummated at the above dates, nor are they necessarily indicative of future operating results. Further, the information gathered on the acquired companies is based upon unaudited internal financial information and reflects only pro forma adjustments for additional interest expense and amortization of the excess of the cost over the underlying net assets acquired, net of the applicable income tax effects. NOTE 4. INTANGIBLE ASSETS Intangible assets consist of the following:
DECEMBER 29, DECEMBER 30, 2001 2000 ------------- ------------ Deferred financing fees $ 20,894 $19,621 Covenants not to compete 7,376 9,997 Excess of cost over net assets acquired 146,494 131,775 Accumulated amortization (44,411) (32,903) ------------- ------------ $130,353 $128,490 ============= ============
Excess of cost over net assets acquired increased primarily due to the acquisition of Pescor in 2001. F-10 NOTE 5. LONG-TERM DEBT Long-term debt consists of the following:
DECEMBER 29, DECEMBER 30, 2001 2000 ------------ ------------ Holding 12.50% Senior Secured Notes $135,714 $127,282 Berry 12.25% Senior Subordinated Notes 125,000 125,000 Berry 11% Senior Subordinated Notes 75,000 75,000 Term loans 54,596 75,607 Revolving lines of credit 49,053 35,447 Second Lien Senior Credit Facility 25,000 25,000 Nevada Industrial Revenue Bonds 3,000 3,500 Capital leases 18,131 1,435 Debt premium, net 387 535 ------------ ------------ 485,881 468,806 Less current portion of long-term debt 22,292 23,232 ------------ ------------ $463,589 $445,574 ============ ============
HOLDING 12.50% SENIOR SECURED NOTES On June 18, 1996, Holding, as part of a recapitalization (see Note 9), issued 12.50% Senior Secured Notes due 2006 for net proceeds, after expenses, of approximately $100.2 million (or $64.6 million after deducting the amount of such net proceeds used to purchase marketable securities available for payment of interest on the notes). These notes were exchanged in October 1996 for the 12.50% Series B Senior Secured Notes due 2006 (the "1996 Notes"). Interest is payable semi-annually on June 15 and December 15 of each year. In addition, from December 15, 1999 until June 15, 2001, Holding paid interest, at an increased rate of 0.75% per annum, in additional 1996 Notes valued at 100% of the principal amount thereof. Holding issued an additional approximately $30.7 million ($8.4 million in 2001 and $15.3 million in 2000) aggregate principal amount of 1996 Notes in satisfaction of its interest obligation. The 1996 Notes rank senior in right of payment to all existing and future subordinated indebtedness of Holding, including Holding's subordinated guarantee of all of Berry's Senior Subordinated Notes and PARI PASSU in right of payment with all senior indebtedness of Holding. The 1996 Notes are effectively subordinated to all existing and future senior indebtedness of Berry, including borrowings under the senior credit facility, second lien senior credit facility, and the Nevada Industrial Revenue Bonds. BERRY 12.25% SENIOR SUBORDINATED NOTES On April 21, 1994, Berry completed an offering of 100,000 units consisting of $100.0 million aggregate principal amount of 12.25% Berry Plastics Corporation Senior Subordinated Notes, due 2004 (the "1994 Notes") and 100,000 warrants to purchase 1.13237 shares of Class A Common Stock, $.00005 par value (collectively the "1994 Transaction"), of Holding. The net proceeds to Berry from the sale of the 1994 Notes, after expenses, were $93.0 million. On August 24, 1998, Berry completed an additional offering of $25.0 million aggregate principal amount of 12.25% Series B Senior Subordinated Notes due 2004 (the "1998 Notes"). The net proceeds to Berry from the sale of the 1998 Notes, after expenses, were $25.2 million. The 1994 Notes and 1998 Notes mature on April 15, 2004 and interest is payable semi-annually on October 15 and April 15 of each year and commenced on October 15, 1994 and October 15, 1998 for the 1994 Notes and 1998 Notes, respectively. Holding and all of Berry's subsidiaries fully, jointly, severally, and unconditionally guarantee on a senior subordinated basis the 1994 Notes and 1998 Notes. There are no nonguarantor subsidiaries. Berry and all of Berry's subsidiaries are 100% owned by Holding. Separate narrative information or financial statements of guarantor subsidiaries have not been included as management believes they would not be material to investors (see Note 13). F-11 Berry is not required to make mandatory redemption or sinking fund payments with respect to the 1994 Notes and 1998 Notes. The 1994 Notes and 1998 Notes may be redeemed at the option of Berry, in whole or in part, at 102.042% through April 14, 2002 and 100% on April 15, 2002 and thereafter. Upon a change in control, as defined in the indenture entered into in connection with the 1994 Transaction (the "1994 Indenture") and the 1998 Transaction ("1998 Indenture"), each holder of notes will have the right to require Berry to repurchase all or any part of such holder's notes at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued interest. The 1994 Notes and 1998 Notes rank PARI PASSU with or senior in right of payment to all existing and future subordinated indebtedness of Berry. The notes rank junior in right of payment to all existing and future senior indebtedness of Berry, including borrowings under the senior credit facility, second lien senior credit facility, and the Nevada Industrial Revenue Bonds. The 1994 Indenture and 1998 Indenture contain certain covenants which, among other things, limit Berry and its subsidiaries' ability to incur debt, merge or consolidate, sell, lease or transfer assets, make dividend payments and engage in transactions with affiliates. BERRY 11% SENIOR SUBORDINATED NOTES On July 6, 1999, Berry completed an offering of $75.0 million aggregate principal amount of 11% Berry Plastics Corporation Senior Subordinated Notes, due 2007 (the "1999 Notes"). The net proceeds to Berry from the sale of the 1999 Notes, after expenses, were $72.0 million. The 1999 Notes mature on July 15, 2007 and interest is payable semi-annually on January 15 and July 15 of each year and commenced on January 15, 2000. Holding and all of Berry's subsidiaries fully, jointly, and severally, and unconditionally guarantee on a senior subordinated basis the 1999 Notes. There are no nonguarantor subsidiaries. Berry is not required to make mandatory redemption or sinking fund payments with respect to the 1999 Notes. On or subsequent to July 15, 2003, the 1999 Notes may be redeemed at the option of Berry, in whole or in part, at redemption prices ranging from 105.5% in 2003 to 100% in 2006 and thereafter. Upon a change in control, as defined in the indenture entered into in connection with the 1999 Transaction (the "1999 Indenture"), each holder of notes will have the right to require Berry to repurchase all or any part of such holder's notes at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued interest. CREDIT FACILITY The Company has a financing and security agreement (the "Financing Agreement") with a syndicate of lenders led by Bank of America for a senior secured credit facility (the "Credit Facility"). The Financing Agreement amended the prior agreement as additional funds were made available in connection with the acquisition of Poly-Seal. The amendment resulted in an extraordinary charge in fiscal 2000 of $1.0 million of deferred financing costs associated with the Financing Agreement and the prior financing agreement. As of December 29, 2001, the Credit Facility provides the Company with (i) a $80.0 million revolving line of credit ("US Revolver"), subject to a borrowing base formula, (ii) a $2.2 million (using the December 29, 2001 exchange rate) revolving line of credit denominated in British Sterling in the U.K. ("UK Revolver"), subject to a separate borrowing base formula, (iii) a $52.6 million term loan facility, (iv) a $2.0 million (using the December 29, 2001 exchange rate) term loan facility denominated in British Sterling in the U.K. ("UK Term Loan") and (v) a $3.2 million standby letter of credit facility to support the Company's and its subsidiaries' obligations under the Nevada Bonds. At December 29, 2001, the Company had unused borrowing capacity under the Credit Facility's revolving line of credit of approximately $17.7 million. The indebtedness under the Credit Facility is guaranteed by Holding and all of its subsidiaries (other than its subsidiaries in the United Kingdom and Italy). The obligations of the Company and the subsidiaries under the Credit Facility and the guarantees thereof are secured by substantially all of the assets of such entities. CBP Holdings, S.r.l. has a revolving credit facility (the "Italy Revolver") from Bank of America for $12.0 million (using the December 29, 2001 exchange rate) denominated in Euros. Bank of America also extends working capital financing (the "Italy Working Capital Line") of up to $1.5 million (using the December 29, 2001 exchange rate) denominated in Euros. The full amount available under the Italy Revolver and the Italy Working Capital Line are applied to reduce amounts available under the US Revolver, as does the outstanding balance under the UK Revolver. F-12 The Credit Facility matures on January 21, 2004 unless previously terminated by the Company or by the lenders upon an Event of Default as defined in the Financing Agreement. The term loan facility requires periodic payments, varying in amount, through the maturity of the facility. Interest on borrowings under the Credit Facility is based on either (i) the lender's base rate (which is the higher of the lender's prime rate and the federal funds rate plus 0.5%) plus an applicable margin of 0.25% to 1.0% or (ii) eurodollar LIBOR (adjusted for reserves) plus an applicable margin of 2.25% to 3.0%, at the Company's option (4.4% at December 29, 2001 and 8.9% at December 30, 2000). Following receipt of the quarterly financial statements, the agent under the Credit Facility shall change the applicable interest rate margin on loans (other than under the UK Revolver and UK Term Loan) once per quarter to a specified margin determined by the ratio of funded debt to EBITDA of the Company and its subsidiaries. Notwithstanding the foregoing, interest on borrowings under the UK Revolver and the UK Term Loan is based on sterling LIBOR (adjusted for reserves) plus 2.25% and 2.75%, respectively. Interest on borrowings under the Italy Revolver and the Italy Working Capital Line is based on EURIBOR plus 2.0%. The Credit Facility contains various covenants that include, among other things: (i) maintenance of certain financial ratios and compliance with certain financial tests and limitations, (ii) limitations on the issuance of additional indebtedness and (iii) limitations on capital expenditures. SECOND LIEN SENIOR CREDIT FACILITY On July 17, 2000, Berry obtained a second lien senior credit facility from General Electric Capital Corporation for an aggregate principal amount of $25.0 million (the "Second Lien Senior Facility"), resulting in net proceeds of $24.3 million after fees and expenses. The proceeds were utilized to reduce amounts then outstanding under the US Revolver. The indebtedness is guaranteed by Holding and all of its subsidiaries (other than its subsidiaries in the United Kingdom and Italy). The Second Lien Senior Facility is secured by a second priority lien on substantially the same collateral as the collateral for the Credit Facility. The $25.0 million principal amount is due upon the Second Lien Senior Facility's maturity on January 21, 2004. Interest is based on either (i) the lender's base rate (which is the higher of the prime rate and the federal funds rate plus 0.5%) plus an applicable margin of 3.25% or (ii) eurodollar LIBOR (adjusted for reserves) plus an applicable margin of 4.75%, at the Company's option (6.8% at December 29, 2001 and 11.1% at December 30, 2000). The covenants under the Second Lien Senior Facility are substantially the same as those in the Credit Facility. NEVADA INDUSTRIAL REVENUE BONDS The Nevada Industrial Revenue Bonds bear interest at a variable rate (1.7% at December 29, 2001 and 5.0% at December 30, 2000), require annual principal payments of $0.5 million on April 1, are collateralized by irrevocable letters of credit issued by Bank of America under the Credit Facility and mature in April 2007. OTHER Future maturities of long-term debt are as follows: 2002, $22,292; 2003, $15,975; 2004, $223,916; 2005, $2,682; 2006, $137,347 and $83,282 thereafter. Interest paid was $44,171, $32,836, and $29,759, for 2001, 2000, and 1999, respectively. Interest capitalized was $589, $1,707, and $1,447, for 2001, 2000, and 1999, respectively. NOTE 6. LEASE AND OTHER COMMITMENTS Certain property and equipment are leased using capital and operating leases. In 2001, Berry entered into various capital lease obligations with no immediate cash flow effect resulting in capitalized property and equipment of $18,737. Total capitalized lease property consists of manufacturing equipment and a building with a cost of $22,342 and $3,589 and related accumulated amortization of $3,442 and $1,483 at December 29, 2001 and December 30, 2000, respectively. Capital lease amortization is included in depreciation expense. Total rental expense from operating leases was approximately $8,292, $9,183, and $7,282 for 2001, 2000, and 1999, respectively. F-13 Future minimum lease payments for capital leases and noncancellable operating leases with initial terms in excess of one year are as follows:
AT DECEMBER 29, 2001 ------------------------ CAPITAL OPERATING LEASES LEASES ----------- ----------- 2002 $ 4,627 $ 7,594 2003 3,708 5,521 2004 3,465 5,000 2005 2,320 3,234 2006 1,611 1,985 Thereafter 5,454 731 ----------- ----------- 21,185 $24,065 Less: amount representing interest (3,054) =========== ----------- Present value of net minimum lease payments $ 18,131 ===========
NOTE 7. INCOME TAXES For financial reporting purposes, income (loss) before income taxes and extraordinary item, by tax jurisdiction, is comprised of the following:
DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 ------------ ------------ ------------ United States $ 5,046 $ (18,506) $ (8,105) Foreign (6,407) (3,721) (479) ------------ ------------ ------------ $ (1,361) $ (22,227) $ (8,584) ============ ============ ============
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax liabilities and assets are as follows:
DECEMBER 29, DECEMBER 30, 2001 2000 ------------ ------------ Deferred tax assets: Allowance for doubtful accounts $ 654 $ 565 Inventory 1,422 1,481 Compensation and benefit accruals 2,871 2,412 Insurance reserves 657 628 Net operating loss carryforwards 14,102 17,214 Alternative minimum tax (AMT) credit carryforwards 3,055 3,055 ------------ ------------ Total deferred tax assets 22,761 25,355 Valuation allowance (3,629) (6,607) ------------ ------------ Deferred tax assets, net of valuation allowance 19,132 18,748 Deferred tax liabilities: Depreciation and amortization 19,621 19,239 ------------ ------------ Net deferred tax liability $ (489) $(491) ============ ============
F-14 Income tax expense (benefit) consists of the following:
DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 ------------- ------------- ----------- Current Federal $ 154 $ - $ - Foreign 125 - 80 State 455 207 468 Deferred Federal - - - Foreign - (349) 6 State - - - ------------- ------------- ----------- Income tax expense (benefit) $ 734 $ (142) $ 554 ============= ============= ===========
Holding has unused operating loss carryforwards of approximately $37.7 million for federal and state income tax purposes which begin to expire in 2010. AMT credit carryforwards are available to Holding indefinitely to reduce future years' federal income taxes. Income taxes paid during 2001, 2000, and 1999 approximated $314, $329, and $860, respectively. A reconciliation of income tax expense (benefit), computed at the federal statutory rate, to income tax expense, as provided for in the financial statements, is as follows:
YEAR ENDED ---------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 -------------- ------------- ----------- Income tax expense (benefit) computed at $ (463) $ (7,557) $ (2,919) statutory rate State income tax expense, net of federal 795 (403) 309 benefit Amortization of goodwill 2,399 2,262 1,292 Expenses not deductible for income tax 36 119 248 purposes Change in valuation allowance (2,978) 5,340 1,773 Other 945 97 (149) -------------- ------------- ----------- Income tax expense (benefit) $ 734 $ (142) $ 554 ============== ============= ===========
NOTE 8. EMPLOYEE RETIREMENT PLANS Berry sponsors a defined contribution 401(k) retirement plan covering substantially all employees. Contributions are based upon a fixed dollar amount for employees who participate and percentages of employee contributions at specified thresholds. Contribution expense for this plan was approximately $1,349, $1,301, and $1,057, for 2001, 2000, and 1999, respectively. F-15 NOTE 9. STOCKHOLDERS' EQUITY COMMON STOCK On June 18, 1996, Holding consummated the transaction described below (the "1996 Transaction"). BPC Mergerco, Inc. ("Mergerco"), a wholly owned subsidiary of Holding, was organized by Atlantic Equity Partners International II, L.P. ("International"), J.P. Morgan Partners (SBIC), LLC (formerly known as Chase Venture Capital Associates, L.P.) ("JPMP(SBIC)"), and certain other institutional investors to effect the acquisition of a majority of the outstanding capital stock of Holding. Pursuant to the terms of a Common Stock Purchase Agreement dated as of June 12, 1996 each of International, JPMP(SBIC) and certain other equity investors (collectively the "Common Stock Purchasers") subscribed for shares of common stock of Mergerco. In addition, pursuant to the terms of a Preferred Stock Purchase Agreement dated as of June 12, 1996 (the "Preferred Stock Purchase Agreement"), JPMP(SBIC) and an additional institutional investor (the "Preferred Stock Purchasers") purchased shares of preferred stock of Mergerco (the "Preferred Stock") and warrants (the "1996 Warrants") to purchase shares of common stock of Mergerco. Immediately after the purchase of the common stock, the preferred stock and the 1996 Warrants of Mergerco, Mergerco merged (the "Merger") with and into Holding, with Holding being the surviving corporation. Upon the consummation of the Merger: each share of the Class A Common Stock, $.00005 par value, and Class B Common Stock, $.00005 par value, of Holding and certain privately-held warrants exercisable for such Class A and Class B Common Stock were converted into the right to receive cash equal to the purchase price per share for the common stock into which such warrants were exercisable less the amount of the nominal exercise price therefor, and all other classes of common stock of Holding, a majority of which was held by certain members of management, were converted into shares of common stock of the surviving corporation. In addition, upon the consummation of the Merger, the holders of the warrants (the "1994 Warrants") to purchase capital stock of Holding that were issued in connection with the 1994 Transaction became entitled to receive cash equal to the purchase price per share for the common stock into which such warrants were exercisable less the amount of the exercise price therefor. The Company's common stock shareholders who held common stock immediately preceding the 1996 Transaction retained 78% of the common stock. The authorized capital stock of Holding consists of 4,814,000 shares of capital stock, including 2,500,000 shares of Common Stock, $.01 par value (the "Holding Common Stock"). Of the 2,500,000 shares of Holding Common Stock, 500,000 shares are designated Class A Voting Common Stock (the "Class A Voting Stock"), 500,000 shares are designated Class A Nonvoting Common Stock (the "Class A Nonvoting Stock"), 500,000 shares are designated Class B Voting Common Stock (the "Class B Voting Stock"), 500,000 shares are designated Class B Nonvoting Common Stock (the "Class B Nonvoting Stock"), and 500,000 shares are designated Class C Nonvoting Common Stock (the "Class C Nonvoting Stock"). PREFERRED STOCK AND WARRANTS In June 1996, for aggregate consideration of $15.0 million, Holding issued units (the "Units") comprised of Series A Senior Cumulative Exchangeable Preferred Stock, par value $.01 per share (the "Preferred Stock"), and detachable warrants to purchase shares of Class B Common Stock (voting and non-voting) constituting 6% of the issued and outstanding Common Stock of all classes, determined on a fully-diluted basis (the "Warrants"). Dividends accrue at a rate of 14% per annum, compounding and payable quarterly in arrears (each date of payment, a "Dividend Payment Date") and will accumulate until declared and paid. Dividends declared and accruing prior to the first Dividend Payment Date occurring after the sixth anniversary of the issue date (the "Cash Dividend Date") may, at the option of Holding, be paid in cash in full or in part or accrue quarterly on a compound basis. Thereafter, all dividends are payable in cash in arrears. The dividend rate is subject to increase to a rate of (i) 16% per annum if (and for so long as) Holding fails to declare and pay dividends in cash for any quarterly period following the Cash Dividend Date and (ii) 15% per annum if (and for so long as) Holding fails to comply with its obligations relating to the rights and preferences of the Preferred Stock. If Holding fails to pay in full, in cash, (a) all accrued and unpaid dividends on or prior to the twelfth anniversary of the issue date or (b) all accrued dividends on any Dividend Payment Date following the twelfth anniversary of the issue date, the holders of Preferred Stock will be permitted to elect a majority of the Board of Directors of Holding. F-16 The Preferred Stock ranks prior to all other classes of stock of Holding upon liquidation and is entitled to receive, out of assets available for distribution, cash in the aggregate amount of $15.0 million, plus all accrued and unpaid dividends thereon. Subject to the terms of the 1996 Indenture, on any Dividend Payment Date, Holding has the option of exchanging the Preferred Stock, in whole but not in part, for Senior Subordinated Exchange Notes, at the rate of $25 in principal amount of notes for each $25 of liquidation preference of Preferred Stock held; provided, however, that no shares of Preferred Stock may be exchanged for so long as any shares of Preferred Stock are held by JPMP(SBIC) or its affiliates. Upon such exchange, Holding will be required to pay in cash all accrued and unpaid dividends. Pursuant to the Preferred Stock Purchase Agreement, the holders of Preferred Stock and Warrants have unlimited incidental registration rights (subject to cutbacks under certain circumstances). The exercise price of the Warrants is $.01 per Warrant and the Warrants are exercisable immediately upon issuance. All unexercised warrants will expire on the tenth anniversary of the issue date. The number of shares issuable upon exercise of a Warrant are subject to anti-dilution adjustments upon the occurrence of certain events. In conjunction with the acquisition of Venture Packaging, Inc. in 1997, Holding authorized and issued 200,000 shares of Series B Cumulative Preferred Stock to certain selling shareholders of Venture Packaging, Inc. The Preferred Stock has a stated value of $25 per share, and dividends accrue at a rate of 14.75% per annum and will accumulate until declared and paid. The Preferred Stock ranks junior to the Series A Preferred Stock and prior to all other capital stock of Holding. In addition, Warrants to purchase 9,924 shares of Class B Non-Voting Common Stock at $108 per share were issued to the same selling shareholders of Venture Packaging, Inc. Additional warrants to purchase 386 shares of Class B Non-Voting Common Stock at $108 per share were issued in fiscal 2000 to the same selling shareholders of Venture Packaging, Inc. In connection with the Poly-Seal acquisition in 2000, Holding issued 1,000,000 shares of Series A-1 Preferred Stock to JPMP(SBIC) and The Northwestern Mutual Life Insurance Company (collectively, the "Purchasers"). The Series A-1 Preferred Stock has a stated value of $25 per share, and dividends accrue at a rate of 14% per annum and will accumulate until declared and paid. The Series A-1 Preferred Stock ranks pari-passu to the Series A Preferred Stock and prior to all other capital stock of Holding. In addition, Warrants to purchase an aggregate of 25,997 shares of Class B Non-Voting Common Stock at $0.01 per share were issued to the Purchasers. In connection with the Pescor acquisition on May 14, 2001, Holding issued 13,168 shares of Series C Preferred Stock, as defined below, to certain selling shareholders of Pescor. The Series C Preferred Stock is comprised of 3,063 shares of Series C-1 Preferred Stock, 1,910 shares of Series C-2 Preferred Stock, 2,135 shares of Series C-3 Preferred Stock, 3,033 shares of Series C-4 Preferred Stock, and 3,027 shares of Series C-5 Preferred Stock. The Series C Preferred Stock has stated values ranging from $639 per share to $1,024 per share, and dividends accrue at a rate of 14% per annum and will accumulate until declared and paid. The Series C Preferred Stock ranks junior to the other preferred stock of Holding and prior to all other capital stock of Holding. In addition, the holders of the Series C Preferred have options beginning on December 31, 2001 to convert the Series C Preferred Stock to Series D Preferred Stock and Class B Nonvoting Common Stock. F-17 STOCK OPTION PLAN Pursuant to the provisions of the BPC Holding Corporation 1996 Stock Option Plan (the "Option Plan") as amended, whereby 76,620 shares have been reserved for issuance, Holding has granted options to certain officers and key employees to acquire shares of Class B Nonvoting Common Stock. These options are subject to various agreements, which among other things, set forth the class of stock, option price and performance thresholds to determine exercisability and vesting requirements. The Option Plan expires October 3, 2003 or such earlier date on which the Board of Directors of Holding, in its sole discretion, determines. Option prices range from $100 to $226 per share. Options granted under the Option Plan typically expire after seven years and vest over a five-year period with half of each person's award based on continued employment and half based on the Company achieving financial performance targets. Financial Accounting Standards Board Statement 123, ACCOUNTING FOR STOCK- BASED COMPENSATION ("Statement 123"), prescribes accounting and reporting standards for all stock-based compensation plans. Statement 123 provides that companies may elect to continue using existing accounting requirements for stock-based awards or may adopt a new fair value method to determine their intrinsic value. Holding has elected to continue following Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25") to account for its employee stock options. Under APB 25, because the exercise price of Holding's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized at the grant date. Information related to the Option Plan is as follows:
DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 ----------------- ---------------- ---------------- Weighted Weighted Weighted Number Average Number Average Number Average Of Exercise Of Exercise Of Exercise Shares Price Shares Price Shares Price ----------------- ---------------- ---------------- Options outstanding, 60,774 $132 51,479 $107 50,729 $105 beginning of year Options granted 10,975 226 16,225 226 1,500 170 Options exercised (2,713) 107 - - - - Options canceled (8,616) 116 (6,930) 158 (750) 115 --------- --------- -------- Options outstanding, 60,420 155 60,774 132 51,479 107 end of year ========= ========= ======== Option price range at end of year $100 - $226 $100 - $226 $100 - $170 Options exercisable at end of year 39,487 34,641 30,091 Options available for grant at year end 13,487 15,846 141 Weighted average fair value of options granted during year $226 $226 $170
The following table summarizes information about the options outstanding at December 29, 2001:
Weighted Weighted Number Average Average Exercisable Range of Remaining Exercise at Exercise Number Outstanding Contractual Price December 29, Prices At December 29, 2001 Life 2001 - --------------------------------------------------------------------------------------- $100 - $122 32,880 1 year $104 32,880 $170 - $226 27,540 5 years $215 6,607
Disclosure of pro forma financial information is required by Statement 123 as if Holding had accounted for its employee stock options using the fair value method as defined by the Statement. The fair value for options granted by Holding have been estimated at the date of grant using a Black Scholes option pricing model with the following weighted average assumptions: F-18
YEAR ENDED ------------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 -------------- ------------- -------------- Risk-free interest rate 5.5% 6.5% 7.0% Dividend yield 0.0% 0.0% 0.0% Volatility factor .28 .20 .19 Expected option life 6.5 years 6.5 years 5.0 years
For purposes of the pro forma disclosures, the estimated fair value of the stock options are amortized to expense over the related vesting period. Because compensation expense is recognized over the vesting period, the initial impact on pro forma net loss may not be representative of compensation expense in future years, when the effect of amortization of multiple awards would be reflected in the Consolidated Statement of Operations. Holding's pro forma net losses giving effect to the estimated compensation expense related to stock options are as follows:
YEAR ENDED ---------------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 ------------- --------------- ------------ Pro forma net loss $ (2,700) $ (23,514) $ (9,400)
STOCKHOLDERS AGREEMENTS Holding entered into a stockholders agreement (the "Stockholders Agreement") dated as of June 18, 1996, as amended with the Common Stock Purchasers, certain management stockholders and, for limited purposes thereunder, the Preferred Stock Purchasers. The Stockholders Agreement grants certain rights including, but not limited to, designation of members of Holding's Board of Directors, the initiation of an initial public offering of equity securities of the Company or a sale of Holding. The agreement also restricts certain transfers of Holding's equity. Holding has an agreement with its management stockholders and International that contains provisions (i) limiting transfers of equity by the management stockholders; (ii) requiring the management stockholders to sell their shares as designated by Holding or International upon the consummation of certain transactions; (iii) granting the management stockholders certain rights of co-sale in connection with sales by International; (iv) granting rights to repurchase capital stock from the management stockholders upon the occurrence of certain events; and (v) requiring the management stockholders to offer shares to Holding prior to any permitted transfer. NOTE 10. RELATED PARTY TRANSACTIONS First Atlantic Capital, Ltd. ("First Atlantic") is engaged by International to provide certain financial and management consulting services for which it receives annual fees. The Company is party to a management agreement (the "Management Agreement") with First Atlantic. Pursuant to the Management Agreement, First Atlantic received advisory fees of approximately $690, $580, $139, and $250 in July 1999, May 2000, March 2001, and June 2001, respectively, for originating, structuring and negotiating the acquisitions of CPI Holding Corporation, Poly-Seal, Capsol, and Pescor, respectively. In consideration of financial advisory and management consulting services, the Company paid First Atlantic fees and expenses of $756, $821, and $792 for fiscal 2001, 2000, and 1999, respectively. F-19 NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS INFORMATION Holding's and the Company's financial instruments generally consist of cash and cash equivalents and long-term debt. The carrying amounts of Holding's and the Company's financial instruments approximate fair value at December 29, 2001, except for the 1998 Notes and 1996 Notes for which the fair value was below the carrying value by approximately $0.5 million and $2.7 million, respectively, and the 1994 Notes and 1999 Notes for which the fair value exceeded the carrying value by $0.7 million and $3.0 million, respectively. NOTE 12. OPERATING SEGMENTS The Company has three reportable segments: containers, closures, and consumer products. The Company evaluates performance and allocates resources based on operating income before depreciation and amortization of intangibles adjusted to exclude (i) non-cash compensation, (ii) other non- recurring or "one-time" expenses, and (iii) management fees and reimbursed expenses paid to First Atlantic ("Adjusted EBITDA"). One-time expenses represent non-recurring expenses that primarily relate to recently acquired businesses and plant consolidations. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies.
YEAR ENDED ----------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 -------------- ------------- ------------- Net sales: Containers $234,441 $ 231,209 $188,696 Closures 132,384 112,202 81,035 Consumer Products 94,834 64,677 59,103 Adjusted EBITDA: Containers 63,997 47,578 41,303 Closures 28,444 23,646 20,476 Consumer Products 18,411 9,167 9,762 Total assets: Containers 204,001 189,129 147,931 Closures 158,009 178,768 133,230 Consumer Products 84,866 45,225 59,646 Reconciliation of Adjusted EBITDA to loss before income taxes and extraordinary item: Adjusted EBITDA for reportable segments $110,852 $ 80,391 $ 71,541 Net interest expense (54,355) (51,457) (40,817) Depreciation (38,105) (31,569) (24,580) Amortization (12,802) (10,579) (7,215) Loss on disposal of property and equipment (473) (877) (1,416) One-time expenses (5,045) (6,804) (5,224) Non-cash compensation (796) (459) - Management fees (637) (873) (873) -------------- ------------- ------------- Loss before income taxes and extraordinary item $(1,361) $(22,227) $(8,584) ============== ============= =============
F-20 NOTE 13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (IN THOUSANDS) Holding conducts its business through its wholly owned subsidiary, Berry. Holding and all of Berry's subsidiaries fully, jointly, severally, and unconditionally guarantee on a senior subordinated basis the 1994 Notes, 1998 Notes, and 1999 Notes issued by Berry. There are no nonguarantor subsidiaries with respect to the notes issued by Berry. Holding's 1996 Notes are not guaranteed by Berry or any of Berry's wholly owned subsidiaries. The 1994 Indenture, 1998 Indenture, and 1999 Indenture restrict, and the Credit Facility prohibits, Berry's ability to pay any dividend or make any distribution of funds to Holding to satisfy interest and other obligations on Holding's 1996 Notes. Berry and all of Berry's subsidiaries are 100% owned by Holding. Separate narrative information or financial statements of guarantor subsidiaries have not been included as management believes they would not be material to investors. Presented below is condensed consolidating financial information for Holding, Berry, and its subsidiaries at December 29, 2001 and December 30, 2000 and for the fiscal years ended December 29, 2001, December 30, 2000, and January 1, 2000. The equity method has been used with respect to investments in subsidiaries.
DECEMBER 29, 2001 ---------------------------------------------------------------------- BPC Berry Holding Plastics Combined Corporation Corporation Guarantor Consolidating (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED --------------- ----------- -------------- -------------- ------------ CONSOLIDATING BALANCE SHEETS Current assets $ 440 $32,459 $ 78,293 $ - $111,192 Net property and equipment - 71,437 131,780 - 203,217 Other noncurrent assets 23,980 289,764 109,632 (290,909) 132,467 --------------- ----------- -------------- -------------- ------------ Total assets $24,420 $393,660 $319,705 $(290,909) $446,876 =============== =========== ============== ============== ============ Current liabilities $ 861 $ 60,212 $ 30,792 $ - $ 91,865 Noncurrent liabilities 163,160 311,574 345,799 (325,921) 494,612 Equity (deficit) (139,601) 21,874 (56,886) 35,012 (139,601) --------------- ----------- -------------- -------------- ------------ Total liabilities and equity (deficit) $ 24,420 $393,660 $319,705 $(290,909) $446,876 =============== =========== ============== ============== ============ DECEMBER 30, 2000 ---------------------------------------------------------------------- BPC Berry Holding Plastics Combined Corporation Corporation Guarantor Consolidating (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED --------------- ----------- -------------- -------------- ------------ Consolidating Balance Sheets Current assets $ 220 $ 32,290 $ 72,192 $ - $104,702 Net property and equipment - 55,221 124,583 - 179,804 Other noncurrent assets 8,226 267,840 113,455 (260,905) 128,616 --------------- ----------- -------------- -------------- ------------ Total assets $ 8,446 $355,351 $310,230 $(260,905) $413,122 =============== =========== ============== ============== ============ Current liabilities $ 661 $ 50,968 $ 32,603 $ - $ 84,232 Noncurrent liabilities 144,938 299,694 312,691 (290,436) 466,887 Equity (deficit) (137,153) 4,689 (35,064) 29,531 (137,997) --------------- ----------- -------------- -------------- ------------ Total liabilities and equity (deficit) $ 8,446 $355,351 $ 310,230 $(260,905) $ 413,122 =============== =========== ============== ============== ============
F-21
YEAR ENDED DECEMBER 29,2001 ---------------------------------------------------------------------- BPC Berry Holding Plastics Combined Corporation Corporation Guarantor Consolidating (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED --------------- ----------- -------------- -------------- ------------ CONSOLIDATING STATEMENTS OF OPERATIONS Net sales $ - $159,783 $301,876 $ - $461,659 Cost of goods sold - 103,867 234,133 - 338,000 --------------- ----------- -------------- -------------- ------------ Gross margin - 55,916 67,743 - 123,659 Operating expenses 924 23,113 46,155 - 70,192 --------------- ----------- -------------- -------------- ------------ Operating income (loss) (924) 32,803 21,588 - 53,467 Other expenses - 46 427 - 473 Interest expense, net 17,469 7,277 29,609 - 54,355 Income taxes (benefit) (8,307) 8,682 359 - 734 Equity in net (income) loss from subsidiary (7,991) 8,807 - (816) - --------------- ----------- -------------- -------------- ------------ Net income (loss) $(2,095) $ 7,991 $(8,807) $816 $(2,095) =============== =========== ============== ============== ============ CONSOLIDATING STATEMENTS OF CASH FLOWS Net income (loss) $ (2,095) $7,991 $(8,807) $ 816 $(2,095) Non-cash expenses 9,775 16,146 37,523 - 63,444 Equity in net (income) loss from subsidiary (7,991) 8,807 - (816) - Changes in working capital 154 5,882 (13,037) - (7,001) --------------- ----------- -------------- -------------- ------------ Net cash provided by (used for)operating activities (157) 38,826 15,679 - 54,348 Net cash used for investing activities - (30,688) (25,602) - (56,290) Net cash provided by (used for)financing activities 377 (9,199) 9,402 - 580 Effect of exchange rate changes on cash - 540 - - 540 --------------- ----------- -------------- -------------- ------------ Net increase (decrease) in cash and cash equivalents 220 (521) (521) - (822) Cash and cash equivalents at beginning of year 220 642 1,192 - 2,054 --------------- ----------- -------------- -------------- ------------ Cash and cash equivalents at end of year $ 440 $ 121 $ 671 $ - $1,232 =============== =========== ============== ============== ============ YEAR ENDED DECEMBER 30,2000 ---------------------------------------------------------------------- BPC Berry Holding Plastics Combined Corporation Corporation Guarantor Consolidating (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED --------------- ----------- -------------- -------------- ------------ Consolidating Statements of Operations Net sales $ - $158,055 $250,033 $ - $408,088 Cost of goods sold - 108,739 203,380 - 312,119 --------------- ----------- -------------- -------------- ------------ Gross margin - 49,316 46,653 - 95,969 Operating expenses 616 23,303 41,943 - 65,862 --------------- ----------- -------------- -------------- ------------ Operating income (loss) (616) 26,013 4,710 - 30,107 Other expenses - 258 619 - 877 Interest expense, net 16,025 11,221 24,211 - 51,457 Income taxes (benefit) 18 168 (328) - (142) Extraordinary item - 1,022 - - 1,022 Equity in net (income) loss from subsidiary 6,448 19,792 - (26,240) - --------------- ----------- -------------- -------------- ------------ Net income (loss) $(23,107) $(6,448) $(19,792) $26,240 $(23,107) =============== =========== ============== ============== ============ Consolidating Statements of Cash Flows Net income (loss) $(23,107) $(6,448) $(19,792) $26,240 $(23,107) Non-cash expenses 16,958 13,332 32,360 - 62,650 Equity in net (income) loss from subsidiary 6,448 19,792 - (26,240) - Changes in working capital (646) 2,931 (5,722) - (3,437) --------------- ----------- -------------- -------------- ------------ Net cash provided by (used for) operating activities (347) 29,607 6,846 - 36,106 Net cash used for investing activities - (78,328) (30,387) - (108,715) Net cash provided by (used for) financing activities (136) 48,307 23,866 - 72,037 Effect of exchange rate changes on cash - 80 - - 80 --------------- ----------- -------------- -------------- ------------ Net increase (decrease) in cash and cash equivalents (483) (334) 325 - (492) Cash and cash equivalents at beginning of year 703 976 867 - 2,546 --------------- ----------- -------------- -------------- ------------ Cash and cash equivalents at end of year $ 220 $ 642 $ 1,192 $ - $ 2,054 =============== =========== ============== ============== ============
F-22
YEAR ENDED JANUARY 1, 2000 ---------------------------------------------------------------------- BPC Berry Holding Plastics Combined Corporation Corporation Guarantor Consolidating (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED --------------- ----------- -------------- -------------- ------------ Consolidating Statements of Operations Net sales $ - $149,901 $178,933 $ - $328,834 Cost of goods sold - 98,950 142,117 - 241,067 --------------- ----------- -------------- -------------- ------------ Gross margin - 50,951 36,816 - 87,767 Operating expenses 70 23,638 30,410 - 54,118 --------------- ----------- -------------- -------------- ------------ Operating income (loss) (70) 27,313 6,406 - 33,649 Other expenses - 21 1,395 - 1,416 Interest expense, net 13,845 8,389 18,583 - 40,817 Income taxes 18 425 111 - 554 Extraordinary item - - - - - Equity in net (income) loss from subsidiary (4,795) 13,683 - (8,888) - --------------- ----------- -------------- -------------- ------------ Net income (loss) $(9,138) $ 4,795 $(13,683) $8,888 $ (9,138) =============== =========== ============== ============== ============ Consolidating Statements of Cash Flows Net income (loss) $(9,138) $ 4,795 $(13,683) $8,888 $ (9,138) Non-cash expenses 14,135 10,663 23,986 - 48,784 Equity in net (income) loss from subsidiary (4,795) 13,683 - (8,888) - Changes in working capital (161) 90 (3,574) - (3,645) --------------- ----------- -------------- -------------- ------------ Net cash provided by operating activities 41 29,231 6,729 - 36,001 Net cash used for investing activities - (91,918) (15,060) - (106,978) Net cash provided by financing activities 40 63,207 7,888 - 71,135 Effect of exchange rate changes on cash - 70 - - 70 --------------- ----------- -------------- -------------- ------------ Net increase (decrease) in cash and cash equivalents 81 590 (443) - 228 Cash and cash equivalents at beginning of year 622 386 1,310 - 2,318 --------------- ----------- -------------- -------------- ------------ Cash and cash equivalents at end of year $ 703 $ 976 $ 867 $ - $ 2,546 =============== =========== ============== ============== ============
Note 14. Subsequent Event ON JANUARY 24, 2002, Berry acquired the Alcoa Flexible Packaging injection molding assets of Mt. Vernon Plastics Corporation for aggregate consideration of approximately $2.6 million. The purchase was financed through borrowings under the US Revolver. On January 31, 2002, Berry entered into a sale/leaseback arrangement with respect to these assets. F-23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 19th day of March, 2002. BPC HOLDING CORPORATION By /S/IRA G.BOOTS ------------------------ Ira G. Boots President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- /s/Roberto Buaron Chairman of the Board of Directors March 19, 2002 ----------------------- Roberto Buaron President and Director March 19, 2002 /s/Ira G. Boots (Principal Executive Officer) ------------------------- Ira G. Boots Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and /s/James M. Kratochvil Accounting Officer) March 19, 2002 ------------------------- James M. Kratochvil /s/David M. Clarke Director March 19, 2002 -------------------------- David M. Clarke /s/Lawrence G. Graev Director March 19, 2002 -------------------------- Lawrence G. Graev /s/Donald Hofmann, Jr. Director March 19, 2002 -------------------------- Donald Hofmann, Jr. Vice President, Assistant Secretary, March 19, 2002 /s/Joseph S. Levy and Director -------------------------- Joseph S. Levy /s/Mathew J. Lori Director March 19, 2002 -------------------------- Mathew J. Lori
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 19th day of March, 2002. BERRY PLASTICS CORPORATION By /S/IRA G. BOOTS -------------------- Ira G. Boots President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- /s/Roberto Buaron Chairman of the Board of Directors March 19, 2002 ----------------------- Roberto Buaron President, Chief Executive Officer March 19, 2002 /s/Ira G. Boots and Director (Principal Executive Officer) ------------------------- Ira G. Boots Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial and /s/James M. Kratochvil Accounting Officer) March 19, 2002 ------------------------- James M. Kratochvil Vice President, Assistant Secretary, March 19, 2002 /s/Joseph S. Levy and Director -------------------------- Joseph S. Levy /s/David M. Clarke Director March 19, 2002 -------------------------- David M. Clarke /s/Lawrence G. Graev Director March 19, 2002 -------------------------- Lawrence G. Graev /s/Donald Hofmann, Jr. Director March 19, 2002 -------------------------- Donald Hofmann, Jr. /s/Mathew J. Lori Director March 19, 2002 -------------------------- Mathew J. Lori
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANT WHICH HAS NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT The Registrants have not sent any annual report or proxy material to securityholders. BPC HOLDING CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
CHARGED TO BALANCE AT CHARGED TO OTHER BALANCE DESCRIPTION BEGINNING COSTS AND ACCOUNTS - DEDUCTIONS - AT END OF YEAR EXPENSES DESCRIBE DESCRIBE OF YEAR ---------------------------- ------------ ------------ ------------- -------------- ----------- Year ended December 29, 2001 Allowance for doubtful accounts $ 1,724 $ 337 $ 295 (2) $ 286 (1) $ 2,070 ============ ============ ============= ============== =========== Year ended December 30, 2000 Allowance for doubtful accounts $ 1,386 $ 79 $ 510 (2) $ 251 (1) $ 1,724 ============ ============ ============= ============== =========== Year ended January 1, 2000 Allowance for doubtful accounts $ 1,651 $ 324 $ 456 (2) $1,045 (1) $ 1,386 ============ ============ ============= ============== =========== (1) Uncollectible accounts written off, net of recoveries. (2) Primarily relates to purchase of accounts receivable and related allowance through acquisitions.
S-1
INDEX EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ------------------------- 2.1 Asset Purchase Agreement dated February 12, 1992, among Berry Plastics Corporation (the "Company"), Berry Iowa Corporation, Berry Carolina, Inc., Genpak Corporation, a New York corporation, and Innopac International Inc., a public Canadian corporation (filed as Exhibit 10.1 to the Registration Statement on Form S-1 filed on February 24, 1994 (the "Form S-1") and incorporated herein by reference) 2.2 Asset Purchase Agreement dated December 24, 1994, between the Company and Berry Plastics, Inc. (filed as Exhibit 10.2 to the Form S-1 and incorporated herein by reference) 2.3 Asset Purchase Agreement dated March 1, 1995, among Berry Sterling Corporation, Sterling Products, Inc. and the stockholders of Sterling Products, Inc. (filed as Exhibit 2.3 to the Annual Report on Form 10-K filed on March 31, 1995 (the "1994 Form 10-K") and incorporated herein by reference) 2.4 Asset Purchase Agreement dated December 21, 1995, among Berry Tri-Plas Corporation, Tri-Plas, Inc. and Frank C. DeVore (filed as Exhibit 2.4 to the Annual Report on Form 10-K filed on March 28, 1996 (the "1995 Form 10-K") and incorporated herein by reference) 2.5 Asset Purchase Agreement dated January 23, 1996, between the Company and Alpha Products, Inc. (filed as Exhibit 2.5 to the 1995 Form 10-K and incorporated herein by reference) 2.6 Stock Purchase and Recapitalization Agreement dated as of June 12, 1996, by and among Holding, BPC Mergerco, Inc. ("Mergerco") and the other parties thereto (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on July 3, 1996 (the "Form 8-K") and incorporated herein by reference) 2.7 Preferred Stock and Warrant Purchase Agreement dated as of June 12, 1996, by and among Holding, Mergerco, Chase Venture Capital Associates, L.P. ("CVCA") and The Northwestern Mutual Life Insurance Company ("Northwestern") (filed as Exhibit 2.2 to the Form 8-K and incorporated herein by reference) 2.8 Agreement and Plan of Merger dated as of June 18, 1996, by and between Holding and Mergerco (filed as Exhibit 2.3 to the Form 8-K and incorporated herein by reference) 2.9 Certificate of Merger of Mergerco with and into Holding, dated as of June 18, 1996 (filed as Exhibit 2.9 to the Registration Statement on Form S-4 filed on July 17, 1996 (the "1996 Form S-4") and incorporated herein by reference) 2.10 Agreement and Plan of Reorganization dated as of January 14, 1997 (the "PackerWare Reorganization Agreement"), among the Company, PackerWare Acquisition Corporation, PackerWare Corporation and the shareholders of PackerWare (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on February 4, 1997 (the "1997 8- K") and incorporated herein by reference) 2.11 Amendment to the PackerWare Reorganization Agreement dated as of January 20, 1997 (filed as Exhibit 2.2 to the 1997 8-K and incorporated herein by reference) 2.12 Asset Purchase Agreement dated as of January 17, 1997, among the Company, Container Industries, Inc. and the shareholders of Container Industries, Inc. (filed as Exhibit 2.12 to the Annual Report on Form 10-K for the fiscal year ended December 28, 1996 (the "1996 Form 10-K) and incorporated herein by reference) 2.13 Agreement and Plan of Reorganization dated as of January 14, 1997, as amended on January 20, 1997, among the Company, PackerWare Acquisition Corporation, PackerWare Corporation and the Shareholders of PackerWare Corporation (filed as Exhibits 2.1 and 2.2 to the Current Report on Form 8-K filed February 3, 1997 and incorporated herein by reference) 2.14 Asset Purchase Agreement dated May 13, 1997, among the Company, Berry Plastics Design Corporation, Virginia Design Packaging Corp. and the shareholders of Virginia Design Packaging Corp. (filed as Exhibit 2.14 to the Annual Report on Form 10-K for the fiscal year ended December 27, 1997 (the "1997 Form 10-K") and incorporated herein by reference) 2.15 Agreement for the Sale and Purchase of the Entire Issued Share Capital of Norwich Injection Moulders Limited dated July 2, 1998, among the Company, NIM Holdings Limited and the persons listed on Schedule 1 thereto (filed as Exhibit 2.15 to Amendment No. 1 to Form S-4 filed on December 29, 1998 (the "1998 Amended Form S-4") and incorporated herein by reference) 2.16 Stock Purchase Agreement dated June 18, 1999 among the Company, CPI Holding, Cardinal and the Shareholders of CPI Holding (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on July 21, 1999 and incorporated herein by reference) 2.17 Merger Agreement, dated May 5, 2000, among the Company, Berry Plastics Acquisition Corporation, Poly-Seal and certain shareholders of Poly-Seal (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on May 9, 2000 and incorporated herein by reference) 2.18 Share and Quota Purchase Agreement, dated July 27, 2000, between the Company and Annamaria Agnottoli, Guisepe Garibaldi, Francesco Garibaldi, Maddalena Garibaldi, and Maria Lorenza Zambon (filed as Exhibit 2.18 to the Annual Report on Form 10-K for the fiscal year ended December 30, 2000 (the "2000 Form 10-K") and incorporated herein by reference) 2.19 Agreement and Plan of Reorganization, dated as of May 14, 2001 among BPC Holding Corporation, Pescor, Inc., Pescor Plastics, Inc. and the shareholders of Pescor Plastics, Inc. named therein (filed as Exhibit 2.1 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.1 Amended and Restated Certificate of Incorporation of Holding (filed as Exhibit 3.1 to the 2000 Form 10-K and incorporated herein by reference) 3.2 By-laws of Holding (filed as Exhibit 3.2 to the Form S-1 and incorporated herein by reference) 3.3 Certificate of Incorporation of the Company (filed as Exhibit to the Form S-1 and incorporated herein by reference) 3.4 By-laws of the Company (filed as Exhibit 3.4 to the Form S-1 and incorporated herein by reference) 3.5 Certificate of Designation, Preferences, and Rights of Series B Cumulative Preferred Stock of Holding (filed as Exhibit 3.10 to the 1997 Form 10-K and incorporated herein by reference) 3.6 Certificate of Amendment of Certificate of Designation, Preferences and Rights of Series B Cumulative Preferred Stock of Holding (filed as Exhibit 3.6 to the 2000 Form 10-K and incorporated herein by reference) 3.7 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of BPC Holding Corporation (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.8 Certificate of Designation, Preferences and Rights of the Series C-1 Preferred Stock of BPC Holding Corporation (filed as Exhibit 3.2 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.9 Certificate of Designation, Preferences and Rights of the Series C-2 Preferred Stock of BPC Holding Corporation (filed as Exhibit 3.3 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.10 Certificate of Designation, Preferences and Rights of the Series C-3 Preferred Stock of BPC Holding Corporation (filed as Exhibit 3.4 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.11 Certificate of Designation, Preferences and Rights of the Series C-4 Preferred Stock of BPC Holding Corporation (filed as Exhibit 3.5 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) 3.12 Certificate of Designation, Preferences and Rights of the Series C-5 Preferred Stock of BPC Holding Corporation (filed as Exhibit 3.6 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) *3.13 Certificate of Designation, Preferences and Rights of the Series D Preferred Stock of BPC Holding Corporation 4.1 Indenture dated April 21, 1994 between the Company and United States Trust Company of New York, as Trustee (the "1994 Indenture") (including the form of Note and Guarantees as Exhibits A and B thereto respectively) (filed as Exhibit 4.1 to the Form S-1 and incorporated herein by reference) 4.2 Warrant Agreement between Holding and United States Trust Company of New York, as Warrant Agent (filed as Exhibit 4.2 to the Form S-1 and incorporated herein by reference) 4.3 Indenture dated as of June 18, 1996, between Holding and First Trust of New York, National Association, as Trustee (the "Trustee"), relating to Holding's Series A and Series B 12.5% Senior Secured Notes Due 2006 (filed as Exhibit 4.3 to the 1996 Form S-4 and incorporated herein by reference) 4.4 Pledge, Escrow and Disbursement Agreement dated as of June 18, 1996, by and among Holding, the Trustee and First Trust of New York, National Association, as Escrow Agent (filed as Exhibit 4.4 to the 1996 Form S-4 and incorporated herein by reference) 4.5 Holding Pledge and Security Agreement dated as of June 18, 1996, between Holding and First Trust of New York, National Association, as Collateral Agent (filed as Exhibit 4.5 to the 1996 Form S-4 and incorporated herein by reference) 4.6 Registration Rights Agreement dated as of June 18, 1996, by and among Holding and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") (filed as Exhibit 4.6 to the 1996 Form S-4 and incorporated herein by reference) 4.7 BPC Holding Corporation 1996 Stock Option Plan (filed as Exhibit 4.7 to the 1996 Form 10-K and incorporated herein by reference) 4.8 Form of Nontransferable Performance-Based Incentive Stock Option Agreement (filed as Exhibit 4.7 to the 1996 Form 10-K and incorporated herein by reference) 4.9 Indenture dated as of August 24, 1998 among the Company, the Guarantors and United States Trust Company of New York, as trustee (the "1998 Indenture") (filed as Exhibit 4.9 to the 1998 Amended Form S-4 and incorporated herein by reference) 4.10 Registration Rights Agreement dated as of August 24, 1998 by and among the Company, the Guarantors and DLJ (filed as Exhibit 4.10 to the 1998 Amended Form S-4 and incorporated herein by reference) 4.11 Indenture dated as of July 6, 1999 among the Company, the Guarantors and United States Trust Company of New York , as trustee (the "1999 Indenture") (filed as Exhibit 10.27 to the Registration Statement on Form S-4 (Registration No. 333-85739) filed on August 23, 1999 (the "1999 Form S-4") and incorporated herein by reference) 4.12 Registration Rights Agreement dated as of July 6, 1999 by and among the Company, the Guarantors, DLJ and Chase Securities, Inc. (filed as Exhibit 10.28 to the 1999 Form S-4 and incorporated herein by reference) 4.13 Fourth Supplemental Indenture to the 1994 Indenture dated as of June 10, 1997 among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation and United States Trust Company of New York, as trustee (filed as Exhibit 4.13 to the 2000 Form 10-K and incorporated herein by reference) 4.14 Tenth Supplemental Indenture to the 1994 Indenture dated as of October 2, 2000 among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Berry Plastics Technical Services, Inc., Venture Packaging Midwest, Inc., NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, Knight Plastics, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Poly-Seal Corporation, Berry Plastics Acquisition Corporation II, Berry Plastics Acquisition Corporation III and United States Trust Company of New York, as trustee (collectively, the "1994 Indenture Parties") (together with a schedule of previous supplemental indentures to the 1994 Indenture) (filed as Exhibit 4.14 to the 2000 Form 10-K and incorporated herein by reference) 4.15 Fourth Supplemental Indenture to the 1998 Indenture dated as of October 2, 2000 among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Berry Plastics Technical Services, Inc., Venture Packaging Midwest, Inc., NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, Knight Plastics, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Poly-Seal Corporation, Berry Plastics Acquisition Corporation II, Berry Plastics Acquisition Corporation III and United States Trust Company of New York, as trustee (collectively, the "1998 Indenture Parties") (together with a schedule of previous supplemental indentures to the 1998 Indenture) (filed as Exhibit 4.15 to the 2000 Form 10-K and incorporated herein by reference) 4.16 Second Supplemental Indenture to the 1999 Indenture dated as of October 2, 2000 among the Company, Holding, Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc., Berry Plastics Technical Services, Inc., Venture Packaging Midwest, Inc., NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, Knight Plastics, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Poly-Seal Corporation, Berry Plastics Acquisition Corporation II, Berry Plastics Acquisition Corporation III and United States Trust Company of New York, as trustee (collectively, the "1999 Indenture Parties") (together with a schedule of previous supplemental indentures to the 1999 Indenture) (filed as Exhibit 4.16 to the 2000 Form 10-K and incorporated herein by reference) *4.17 Eleventh Supplemental Indenture to the 1994 Indenture dated as of May 14, 2001, among the 1994 Indenture Parties, CBP Holdings, S.r.l., Capsol Berry Plastics S.p.a., Ociesse S.r.l. and Pescor, Inc. *4.18 Fifth Supplemental Indenture to the 1998 Indenture dated as of May 14, 2001, among the 1998 Indenture Parties, CBP Holdings, S.r.l., Capsol Berry Plastics S.p.a., Ociesse S.r.l. and Pescor, Inc. *4.19 Third Supplemental Indenture to the 1999 Indenture dated as of May 14, 2001, among the 1999 Indenture Parties, CBP Holdings, S.r.l., Capsol Berry Plastics S.p.a., Ociesse S.r.l. and Pescor, Inc. 10.1 Third Amended and Restated Financing and Security Agreement dated as of May 9, 2000, by and among the Company, NIM Holdings, Berry Plastics U.K. Limited, Bank of America, N.A., Fleet Capital Corporation, General Electric Capital Corporation, Heller Financial, Inc., PNC Bank, N.A., LaSalle Business Credit, Inc. and certain other lenders listed therein (the "Third Amended and Restated Financing Agreement") (filed as Exhibit 10.1 to the 2000 Form 10-K filed on March 30, 2001 and incorporated herein by reference) 10.2 Employment Agreement dated December 24, 1990, as amended, between the Company and Martin R. Imbler ("Imbler") (filed as Exhibit 10.9 to the Form S-1 and incorporated herein by reference) 10.3 Amendment to Imbler Employment Agreement dated November 30, 1995 (filed as Exhibit 10.6 to the 1995 Form 10-K and incorporated herein by reference) 10.4 Amendment to Imbler Employment Agreement dated June 30, 1996 (filed as Exhibit 10.4 to the 1996 Form S-4 and incorporated herein by reference) 10.5 Employment Agreement dated December 24, 1990, as amended, between the Company and R. Brent Beeler ("Beeler") (filed as Exhibit 10.10 to the Form S-1 and incorporated herein by reference) 10.6 Amendment to Beeler Employment Agreement dated November 30, 1995 (filed as Exhibit 10.8 to the 1995 Form 10-K and incorporated herein by reference) 10.7 Amendment to Beeler Employment Agreement dated June 30, 1996 (filed as Exhibit 10.7 to the 1996 Form S-4 and incorporated herein by reference) 10.8 Employment Agreement dated December 24, 1990, as amended, between the Company and James M. Kratochvil ("Kratochvil") (filed as Exhibit 10.12 to the Form S-1 and incorporated herein by reference) 10.9 Amendment to Kratochvil Employment Agreement dated November 30, 1995 (filed as Exhibit 10.12 to the 1995 Form 10-K and incorporated herein by reference) 10.10 Amendment to Kratochvil Employment Agreement dated June 30, 1996 (filed as Exhibit 10.13 to the 1996 Form S-4 and incorporated herein by reference) 10.11 Employment Agreement dated as of January 1, 1993, between the Company and Ira G. Boots ("Boots") (filed as Exhibit 10.13 to the Form S-1 and incorporated herein by reference) 10.12 Amendment to Boots Employment Agreement dated November 30, 1995 (filed as Exhibit 10.14 to the 1995 Form 10-K and incorporated herein by reference) 10.13 Amendment to Boots Employment Agreement dated June 30, 1996 (filed as Exhibit 10.16 to the 1996 Form S-4 and incorporated herein by reference) 10.14 Employment Agreement dated as of January 21, 1997, between the Company and Bruce J. Sims ("Sims") (filed as Exhibit 10.14 to the 1999 Form 10-K and incorporated herein by reference) 10.15 Financing Agreement dated as of April 1, 1991, between the City of Henderson, Nevada Public Improvement Trust and the Company (including exhibits) (filed as Exhibit 10.17 to the Form S-1 and incorporated herein by reference) 10.16 Letter of Credit of NationsBank, N.A. dated April 16, 1997 (filed as Exhibit 10.15 to the 1998 Amended Form S-4 and incorporated herein by reference) 10.17 Stockholders Agreement dated as of June 18, 1996, among Holding, Atlantic Equity Partners International II, L.P., CVCA and the other parties thereto (filed as Exhibit 10.23 to the 1996 Form S-4 and incorporated herein by reference) 10.18 Amended and Restated Warrant to purchase Class B Common Stock of Holding dated May 9, 2000, issued to JPMP(SBIC) (Warrant No. 5) (filed as Exhibit 4.4 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.19 Amended and Restated Warrant to purchase Class B Common Stock of Holding dated May 9, 2000, issued to JPMP(SBIC) (Warrant No. 6) (filed as Exhibit 4.5 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.20 Amended and Restated Warrant to purchase Class B Common Stock of Holding dated May 9, 2000, issued to The Northwestern Mutual Life Insurance Company (Warrant No. 7) (filed as Exhibit 4.6 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.21 Amended and Restated Warrant to purchase Class B Common Stock of Holding dated May 9, 2000, issued to The Northwestern Mutual Life Insurance Company (Warrant No. 8) (filed as Exhibit 4.7 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.22 Amended and Restated Stockholders Agreement dated June 18, 1996, among Holding and certain stockholders of Holding (filed as Exhibit 10.28 to the 1996 Form S-4 and incorporated herein by reference) 10.23 Second Amended and Restated Management Agreement dated June 18, 1996, between First Atlantic Capital, Ltd. and the Company (filed as Exhibit 10.29 to the 1996 Form S-4 and incorporated herein by reference) 10.24 Warrant to purchase Class B Non-Voting Common Stock of BPC Holding Corporation, dated August 29, 1997, issued to Willard J. Rathbun (filed as Exhibit 10.30 to the 1997 Form 10-K and incorporated herein by reference) 10.25 Warrant to purchase Class B Non-Voting Common Stock of BPC Holding Corporation, dated August 29, 1997, issued to Craig Rathbun (filed as Exhibit 10.31 to the 1997 Form 10-K and incorporated herein by reference) 10.26 Amended and Restated Tax Sharing Agreement dated March 15, 2001, between BPC Holding Corporation and its subsidiaries (filed as Exhibit 10.26 to the 2000 Form 10-K and incorporated herein by reference) 10.27 First Amendment to the Stockholders Agreement dated May 9, 2000 among Holding, Atlantic Equity Partners International II, L.P., JPMP(SBIC) and the other parties thereto (filed as Exhibit 10.27 to the 2000 Form 10-K and incorporated herein by reference) 10.28 Warrant to purchase Class B Nonvoting Common Stock of Holding dated May 9, 2000, issued to JPMP(SBIC) (Warrant No. CBNV No. 1) (filed as Exhibit 4.2 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.29 Warrant to purchase Class B Nonvoting Common Stock of Holding dated May 9, 2000, issued to The Northwestern Mutual Life Insurance Company (Warrant No. CBNV No. 2) (filed as Exhibit 4.3 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.30 Series A-1 Preferred Stock Purchase Agreement dated as of May 9, 2000 among Holding, JPMP(SBIC) and the Northwestern Mutual Life Insurance Company (filed as Exhibit 4.1 to the Current Report on Form 8-K filed May 9, 2000 and incorporated herein by reference) 10.31 First Amendment to the Third Amended and Restated Financing Agreement (filed as Exhibit 10.31 to the 2000 Form 10-K and incorporated herein by reference) 10.32 Second Amendment to the Third Amended and Restated Financing Agreement (filed as Exhibit 10.32 to the 2000 Form 10-K and incorporated herein by reference) 10.33 Loan and Security Agreement, dated July 17, 2000 by and among Berry, General Electric Capital Corporation and certain other lenders listed therein (filed as Exhibit 10.33 to the 2000 Form 10- K and incorporated herein by reference) 10.34 Letter Agreement, dated July 5, 2001 between Martin R. Imbler and Berry Plastics Corporation (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on August 13, 2001 and incorporated herein by reference) *10.35 Third Amendment to the Third Amended and Restated Financing Agreement *10.36 First Amendment to the Loan and Security Agreement *21 List of subsidiaries
* Filed herewith. EX-3.13 3 ex313.txt EXHIBIT 3.13 CERT OF DESIGNATION CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES D PREFERRED STOCK OF BPC HOLDING CORPORATION Pursuant to Section 151 of the Corporation Law of the State of Delaware I, James M. Kratochvil, Executive Vice President, Chief Financial Officer, Treasurer and Secretary of BPC Holding Corporation (the "CORPORATION"), a corporation organized and existing under the General Corporation Law of the State of Delaware, in accordance with the provisions of Section 151 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Restated Certificate of Incorporation of the Corporation (as it may be further amended or restated from time to time, the "RESTATED CERTIFICATE"), the Board of Directors on May 9, 2001, adopted the following resolution creating a series of 100,000 shares of Preferred Stock designated as Series D Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board by ARTICLE FOURTH of the Restated Certificate and out of the Preferred Stock authorized therein, the Board hereby authorizes that a series of Preferred Stock of the Corporation be, and it hereby is, created and that the designation and amount thereof and the voting powers (full or limited, or no voting powers), preferences and relative participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: * DESIGNATION AND AMOUNT; RANK. (a)The shares of such series of Preferred Stock shall be designated as the "SERIES D PREFERRED STOCK" (the "SERIES D PREFERRED STOCK") and the number of shares initially constituting such series shall be 100,000, which number may be decreased (but not increased) by the Board of Directors of the Corporation (the "BOARD OF DIRECTORS") without a vote of stockholders; PROVIDED, HOWEVER, that such number may not be decreased below the number of then currently outstanding shares of Series D Preferred Stock. The stated value and liquidation preference per share (the "LIQUIDATION PREFERENCE") of the Series D Preferred Stock shall be $100.00, as adjusted from time to time pursuant to the terms of the Merger Agreement. (b)The Series D Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the Corporation, junior to the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, and prior to all other Capital Stock of the Corporation (such other Capital Stock, other than the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, being herein referred to as the "JUNIOR STOCK"). * DEFINITIONS. Capitalized terms used herein shall have the meanings set forth in this Section 2: "AFFILIATE" means, with respect to any specified Person, any other Person which, directly or indirectly, controls, is under common control with, or is owned or controlled by, such specified Person. For purposes of this definition, (i) "control" means, with respect to any specified Person, either (x) the beneficial ownership of more than 30 percent of any class of equity securities or (y) the power to direct the management or policies of the specified Person through the ownership of voting securities, by contract, voting agreement or otherwise and (ii) the terms "controlling", "control with" and "controlled by", etc., shall have meanings correlative to the foregoing. "BERRY" means Berry Plastics Corporation. "BERRY CREDIT FACILITY" means the credit facility provided pursuant to the Third Amended and Restated Financing and Security Agreement dated as of May 9, 2000, by and among Berry, Bank of America, N.A. and the other Lenders thereunder, as amended, modified, renewed, refunded, replaced or refinanced from time to time which includes the addition, substitution or replacement of any or all lenders thereunder under the same or any replacement agreement. "BOARD OF DIRECTORS" has the meaning ascribed to such term in Section 1(a). "BPC SENIOR SUBORDINATED NOTES" means the 12-1/4% Senior Subordinated Notes due 2004 and the 11% Senior Subordinated Notes due 2007 issued pursuant to the BPC Senior Subordinated Notes Indentures. "BPC SENIOR SUBORDINATED NOTES INDENTURES" means, collectively, (i) the Indenture dated as of April 21, 1994, among the Corporation and the other Guarantors thereunder, Berry and United States Trust Corporation of New York, as Trustee (the "Trustee"), (ii) the Indenture dated as of August 24, 1998, among the Corporation and the other Guarantors thereunder, Berry and the Trustee, and (iii) the Indenture dated as of July 6, 1999, among the Corporation and the other Guarantors thereunder, Berry and the Trustee, as each such Indenture may be amended and supplemented from time to time. "BUSINESS DAY" means any day other than Saturday, Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "BY-LAWS" means the by-laws of the Corporation, as they may be amended or restated from time to time. "CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet prepared in accordance with GAAP. "CAPITAL STOCK" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including, without limitation, any preferred stock, and with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, but excluding any debt securities convertible into such equity. "CLOSING DATE" has the meaning ascribed to such term in the Merger Agreement. "COMMON STOCK" means the Common Stock, of all classes, of the Corporation. "CORPORATION" means BPC Holding Corporation, a Delaware corporation. "DGCL" means the General Corporation Law of the State of Delaware, as in effect from time to time. "DISQUALIFIED STOCK" has the meaning set forth in the BPC Senior Subordinated Notes Indenture which is dated July 6, 1999. "DIVIDEND ACCRUAL DATE" means the last day of March, June, September and December in each year. "DIVIDEND PERIOD" means each quarterly period ending on a Dividend Accrual Date. "DIVIDEND RATE" means, with respect to each share of Series D Preferred Stock, a rate of 14.00% per annum. "EVENT OF NONCOMPLIANCE" means the failure of the Corporation to perform, observe, or comply with any covenant, agreement, obligation, or restriction required hereunder, after giving effect to any grace period provided herein. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXISTING INDEBTEDNESS" means Indebtedness of the Corporation and its Subsidiaries (including, without limitation, the Berry Credit Facility, the Senior Secured Notes and the BPC Senior Subordinated Notes) in existence on the Closing Date, and including any Indebtedness incurred in connection with the refinancing, substitution or replacement of any such Indebtedness in existence on the Closing Date. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates. "INDEBTEDNESS" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, and also includes, to the extent not otherwise included, the Guarantee of any Indebtedness of such Person or any other Person. "INTERNATIONAL" means Atlantic Equity Partners International II, L.P. "ISSUE DATE" means the date on which the applicable shares of Series D Preferred Stock were originally issued by the Corporation. "JUNIOR PAYMENT" has the meaning ascribed to such term in Section 6.1(a). "JUNIOR STOCK" has the meaning ascribed to such term in Section 1(b). "LIQUIDATION PREFERENCE" has the meaning ascribed to such term in Section 1(a). "MERGER AGREEMENT" means the Agreement and Plan of Reorganization dated as of the Closing Date among the Corporation, Pescor, Inc., a Delaware corporation, Pescor Plastics, Inc., a Texas corporation, and its shareholders. "OFFICER" means the President, any Executive Vice President, any Vice President, the Treasurer, the Assistant Treasurer, the Secretary or the Assistant Secretary of the Corporation, as applicable. "OFFICERS' CERTIFICATE" means a certificate signed by two Officers. "PERSON" means any individual, corporation, general or limited partnership, joint venture, association, limited liability company, joint stock company, trust, business trust, bank, trust company, estate (including any beneficiaries thereof), unincorporated organization, cooperative, association or governmental branch, authority, agency or political subdivision thereof. "PREFERRED STOCK" means the preferred stock, par value $0.01 per share, of the Corporation. "REDEMPTION DATE" means the date of any redemption of the Series D Preferred Stock pursuant to Section 7. "SALE OF THE CORPORATION" means the sale of the Corporation to one or more Persons that are not Affiliates of any of the Corporation's stockholders or the Corporation in a single or series of related transactions pursuant to which the acquiring Person or Persons acquire (i) all of the outstanding capital stock of the Corporation (whether by way of sale, transfer, merger, consolidation or otherwise) or (ii) all or substantially all of the assets of the Corporation and its subsidiaries, taken as a whole. "SENIOR SECURED NOTES" means the 12-1/2% senior secured notes issued by the Corporation pursuant to the terms of the Senior Secured Notes Indenture. "SENIOR SECURED NOTES INDENTURE" means the Indenture dated as of June 18, 1996, between the Corporation and First Trust of New York, National Association, as trustee, regarding the Senior Secured Notes as the same may be modified and supplemented, and in effect from time to time. "SENIOR STOCK" means the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and any stock of the Corporation ranking prior to, or on a parity with, the Series D Preferred Stock either with respect to the payment of dividends or the distribution of assets, whether upon liquidation or otherwise. "SERIES A PREFERRED STOCK" means, collectively, the Series A Senior Cumulative Exchangeable Preferred Stock of the Corporation and the Series A-1 Senior Cumulative Preferred Stock of the Corporation. "SERIES B PREFERRED STOCK" means the Series B Cumulative Preferred Stock of the Corporation. "SERIES C PREFERRED STOCK" means, collectively, the Series C-1 Preferred Stock, the Series C-2 Preferred Stock, the Series C-3 Preferred Stock, the Series C-4 Preferred Stock and the Series C-5 Preferred Stock of the Corporation. "SERIES C-1 PREFERRED STOCK" means the Series C-1 Preferred Stock of the Corporation. "SERIES C-2 PREFERRED STOCK" means the Series C-2 Preferred Stock of the Corporation. "SERIES C-3 PREFERRED STOCK" means the Series C-3 Preferred Stock of the Corporation. "SERIES C-4 PREFERRED STOCK" means the Series C-4 Preferred Stock of the Corporation. "SERIES C-5 PREFERRED STOCK" means the Series C-5 Preferred Stock of the Corporation. "SUBSIDIARY" means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary shall refer to a Subsidiary of the Corporation. "SUCCESSOR CORPORATION" has the meaning ascribed to such term in Section 6.5(b). * DIVIDENDS AND DISTRIBUTIONS. (a)The holders of shares of Series D Preferred Stock, in preference to the holders of shares of Junior Stock but subject to the preferences of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, shall be entitled to receive cumulative dividends at the Dividend Rate on the Liquidation Preference plus all theretofore accrued and unpaid dividends, compounded quarterly, and no more, when and as declared by the Board of Directors, out of funds legally available for that purpose. Such dividends shall accrue quarterly on each Dividend Accrual Date, commencing on the first such date occurring after the Issue Date of such shares of Series D Preferred Stock, and shall be paid in cash only (i) if, when and as declared by the Board of Directors, out of funds legally available for that purpose, or (ii) upon redemption as provided in Section 7. (b)Dividends payable pursuant to Section 3(a) shall begin to accrue and be cumulative from the Issue Date, whether or not earned or declared and whether or not there exists profits, surplus or other funds legally available for the payment of dividends. The amount of dividends payable for any period shorter or longer than a full Dividend Period, including the first Dividend Period, shall be determined on the basis of twelve 30-day months and a 360-day year. Dividends paid on the shares of Series D Preferred Stock, including dividends paid in an amount less than the total amount of such dividends at the time accrued and payable on such shares, shall be allocated PRO RATA on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series D Preferred Stock entitled to receive payment of a dividend declared thereon, which record date shall be no more than 60 days nor less than 10 days prior to the date fixed for the payment thereof. If no record date is fixed, the record date for determining holders of shares of Series D Preferred Stock entitled to receive payment of a dividend declared thereon shall be at the close of business on the day on which the Board of Directors declares such dividend. * LIQUIDATION, DISSOLUTION OR WINDING UP. (i) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of shares of Series D Preferred Stock shall be entitled to receive, out of the assets of the Corporation available for distribution to its stockholders, subject in all events to the prior rights of the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, an amount equal to the Liquidation Preference per share of such series of Series D Preferred Stock plus all accrued and unpaid dividends thereon (whether or not declared) to the date of such payment, and no distribution shall be made to the holders of shares of Junior Stock upon liquidation, dissolution or winding up unless, prior thereto, the holders of shares of Series D Preferred Stock shall have received the foregoing amount (whether or not the declaration or payment of such dividends is legally permissible or is prohibited by any agreement or instrument to which the Corporation is subject). If, upon any such liquidation, dissolution or winding up, the assets of the Corporation available for distribution to the holders of Series D Preferred Stock shall be insufficient to pay such holders the full amounts to which they shall be entitled pursuant to this Section 4, the shares of Series D Preferred Stock shall share ratably in any distribution of assets according to the respective amounts which would be payable with respect to the shares held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full. (ii) Neither the consolidation, merger or other business combination of the Corporation with or into any other Person or Persons nor the sale, lease, exchange or conveyance of all or any part of the property, assets or business of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 4. * VOTING RIGHTS. Except for any voting rights provided by law, the holders of shares of Series D Preferred Stock shall have no voting rights and their consent shall not be required for the taking of any corporate action. * RESTRICTIVE COVENANTS. For so long as any shares of Series D Preferred Stock shall be outstanding, and unless the consent or approval of a greater number of shares shall then be required by law, without first obtaining the consent or approval of the holders of at least a majority of the shares of Series D Preferred Stock then outstanding, voting as a single class: 1.LIMITATION ON JUNIOR PAYMENTS. (a)Subject to Section 6.1(b), the Corporation shall not, directly or indirectly, (i) declare, pay, or set apart for payment on any Junior Stock, any dividend or make any distribution on or in respect of Junior Stock (including any payment in connection with any merger or consolidation involving the Corporation or any of its Subsidiaries), except dividends or distributions payable in shares (other than Disqualified Stock) of the classes or series upon which such dividends are declared or paid, or payable in shares of Common Stock with respect to Junior Stock other than Common Stock, together with cash in lieu of fractional shares, or (ii) purchase, redeem, retire or otherwise acquire for value any Junior Stock (any such dividend, distribution, purchase, redemption, or other acquisition being herein referred to as a "JUNIOR PAYMENT"). (b)The provisions of Section 6.1(a) shall not prohibit: (i) any purchase or redemption of Capital Stock of the Corporation made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Corporation (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary); (ii) the repurchase, redemption or other acquisition or retirement for value of Capital Stock of the Corporation pursuant to any management equity subscription, stockholder or stock option agreement; and (iii) any repurchase of Capital Stock from an "SBIC HOLDER" pursuant to the Restated Certificate. 1.AMENDMENT OF FINANCING DOCUMENTS. The Corporation will not amend or supplement the Senior Secured Notes or the Senior Secured Notes Indenture, as in effect on the Closing Date (or enter into any refinancing or replacement thereof, or any new financing agreement) if such amended or supplemented or new financing agreement would contain covenants that are more restrictive with respect to the ability of the Corporation to perform its obligations set forth herein, or in the Merger Agreement (only to the extent that such covenants relate to the Corporation's obligations to the holders of the Preferred Stock), than those currently set forth under the terms of the Existing Indebtedness or any document relating to any class of Capital Stock of the Corporation. 2.SENIOR STOCK. Except as may be required in order to comply with the terms and provisions relating to the Series A Preferred Stock or the Series B Preferred Stock, the Corporation shall not (i) authorize, create or issue any class or series, or any shares of any class or series, of Senior Stock, unless the proceeds from such issuance are used to redeem or repurchase all (but not less than all) of the then outstanding shares of Series C Preferred Stock and Series D Preferred Stock pursuant to the terms and conditions set forth herein and in the Merger Agreement; (ii) reclassify any shares of capital stock of the Corporation into shares of Senior Stock; or (iii) authorize or issue any security exchangeable for, convertible into, or evidencing the right to purchase any shares of Senior Stock. 3.RESTATED CERTIFICATE; BY-LAWS. The Corporation shall not amend, alter or repeal the Restated Certificate or By-Laws to alter or change the preferences, rights or powers of the Series D Preferred Stock so as to affect the holders of the Series D Preferred Stock adversely, to otherwise impair the rights of the holders of Series D Preferred Stock, or to increase the authorized number of shares of Series D Preferred Stock. 4.MERGER AND CONSOLIDATION. The Corporation shall not consolidate with or merge with or into, or convey, transfer, lease or sell all or substantially all its assets to, any Person, unless: (a) All outstanding shares of Series D Preferred Stock are purchased as a part of such transaction at a per share price of not less than the Liquidation Preference of each such share plus all accrued and unpaid dividends thereon through the date of such purchase; or (b) (i) the Corporation is the surviving corporation or, if the surviving corporation is not the Corporation, the resulting, surviving or transferee Person (the "SUCCESSOR CORPORATION") shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and (x) the Successor Corporation (if not the Corporation) shall expressly assume, by an amendment to the Merger Agreement in form and substance satisfactory to the holders of at least 51% of all outstanding shares of Series D Preferred Stock as of the date of such assumption, all the obligations of the Corporation thereunder relating to the Series D Preferred Stock, and (y) the Series D Preferred Stock shall be converted or exchanged for and shall become shares of such Successor Corporation, having in respect of such Successor Corporation the same powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereto, that the Series C Preferred Stock had immediately prior to such transaction; and (1) the Corporation shall have delivered to the holders of the Series D Preferred Stock an Officers' Certificate stating that such consolidation, merger, transfer or lease complies with this Section 6.5. The Successor Corporation shall succeed to, and be substituted for, and may exercise every right and power of, the Corporation to the extent set forth in the Merger Agreement, but in the case of a lease of all or substantially all its assets, the Corporation shall not be released from its obligations with respect to the Series D Preferred Stock. 1.NOTIFICATION OF CERTAIN EVENTS. The Corporation shall mail to each holder of record of the Series D Preferred Stock, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of (i) the occurrence of any Event of Noncompliance, and (ii) any failure by the Corporation to observe any covenant specified herein or any covenant in the Merger Agreement that relates to the Preferred Stock. 2.DISTRIBUTIONS OF JUNIOR STOCK. Except as otherwise provided for in SECTION 6.1(B), for so long as the Common Stock of the Corporation is not registered pursuant to Section 12 or 15 of the Exchange Act, any dividends, distributions or other payments made on or in respect of Junior Stock shall be held by holders of Junior Stock in trust for the benefit of the holders of Series D Preferred Stock and shall be remitted to the holders of Series D Preferred Stock, on a pro-rata basis with respect to their respective Liquidation Preference, until each holder of Series D Preferred Stock has received an amount equal to its respective per share Liquidation Preference plus all accrued and unpaid dividends; PROVIDED, HOWEVER, that the provisions of this Section 6.7 shall be subject in all respects to the preferences of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock as in effect on the Closing Date including, without limitation, the right of the holders of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock to receive distributions or other payments made in respect of Junior Stock. * REDEMPTION. (a) To the extent permitted under the terms of Existing Indebtedness, the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, the Corporation shall redeem the Series D Preferred Stock in accordance with the terms of Section 7(b) in the event of (i) the consummation of any transaction that results in International owning, directly or indirectly, immediately after the consummation of such transaction, less than two-thirds of the Common Stock of the Corporation currently held by International, (ii) the sale by Berry of all or substantially all of its assets to an unrelated third party, (iii) the consummation of a registered public offering, or a series of such public offerings, of Common Stock of the Corporation or Berry under the Securities Act of 1933, as amended, which result in aggregate net cash proceeds to the Corporation or Berry of $50,000,000 or greater during any one-year period, or (iv) the redemption in full of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and payment in full of all dividends payable with respect thereto. The redemption price shall be at a price per share equal to the Liquidation Preference plus all accrued and unpaid dividends thereon through the date of the consummation of the redemption. (b) Notice of any redemption of shares of Series D Preferred Stock pursuant to this Section 7 shall be mailed not less than 10 Business Days nor more than 60 days prior to the Redemption Date to each holder of shares of Series D Preferred Stock to be redeemed, at such holder's address as it appears on the transfer books of the Corporation. Each such notice shall state: (A) the Redemption Date, (B) the place or places where the redemption price will be paid (if other than the principal executive offices of the Corporation), (C) if less than all the shares held by any holder are to be redeemed pursuant to paragraph (a), the number of shares to be redeemed from such holder and (D) that dividends on the shares of Series D Preferred Stock to be redeemed will cease to accrue on the Redemption Date. In order to facilitate the redemption of shares of Series D Preferred Stock, the Board of Directors may fix a record date for the determination of shares of Series D Preferred Stock to be redeemed, not more than 60 days nor less than 30 days prior to the applicable Redemption Date. In the case of the redemption of less than all the outstanding shares of Series D Preferred Stock pursuant to paragraph (a), (1) the shares to be redeemed shall be selected PRO RATA among all holders of shares of Series D Preferred Stock on the basis of the number of shares so held and (2) if fewer than all shares represented by any certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (c) Notice having been mailed as specified in Section 7(b), and provided that on or before the Redemption Date specified in such notice all funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the PRO RATA benefit of the holders of the shares so called for redemption, so as to be and to continue to be available therefor, then, from and after the Redemption Date, dividends on the shares of Series D Preferred Stock called for redemption shall cease to accrue and said shares shall no longer be deemed to be outstanding, and all rights of the holders thereof set forth herein and otherwise as stockholders of the Corporation (except the right to receive from the Corporation the redemption price in accordance with this Section 7) shall cease. * REACQUIRED SHARES. Any shares of Series D Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof, and, if necessary to provide for the lawful redemption or purchase of such shares, the capital represented by such shares shall be reduced in accordance with the DGCL. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of another series of Preferred Stock (subject to any applicable limitations set forth herein). * * * * * ="C:\WORK\*" "() 206222d.doc" "S:\0625\040\206222e(d-a).doc"\* mergeformat S:\0625\040\206222e(d-a).doc -1- IN WITNESS WHEREOF, I have executed and subscribed this Certificate of Designation, Preferences and Rights and do affirm the foregoing as true under the penalties of perjury this 27th day of December, 2001. /s/ James M. Kratochvil _________________________________ James M. Kratochvil Executive Vice President, Chief Financial Officer Treasurer and Secretary -2- EX-4.17 4 ex417.txt EXHIBIT 4.17 ELEVENTH SUPPLEMENTAL INDENTURE ELEVENTH SUPPLEMENTAL INDENTURE The undersigned are executing and delivering this Eleventh Supplemental Indenture pursuant to Section 4.13 of the Indenture, dated as of April 21, 1994, as supplemented (the "Indenture"), among Berry Plastics Corporation (the "Company"), BPC Holding Corporation ("BPC Holding"), Berry Iowa Corporation ("Berry Iowa"), Berry Tri-Plas Corporation ("Berry Tri- Plas"), Berry Sterling Corporation ("Berry Sterling"), AeroCon, Inc. ("AeroCon"), PackerWare Corporation ("PackerWare"), Berry Plastics Design Corporation ("Berry Design"), Venture Packaging, Inc. ("Venture"), Berry Plastics Technical Services, Inc. ("Berry Technical"), Venture Packaging Midwest, Inc. ("Midwest"), NIM Holdings Limited ("NIM"), Berry Plastics U.K. Limited ("Berry UK"), Norwich Acquisition Limited ("Norwich"), Knight Plastics, Inc. ("Knight"), CPI Holding Corporation ("CPI"), Cardinal Packaging, Inc. ("Cardinal"), Poly-Seal Corporation ("Poly-Seal"), Berry Plastics Acquisition Corporation II ("BPAC II"), Berry Plastics Acquisition Corporation III ("BPAC III"), CBP Holdings S.r.l. (f/k/a Capsol Berry Plastics S.r.l.) ("CBP Holdings"), Capsol Berry Plastics S.p.A. (f/k/a Capsol S.p.A.) ("Capsol"), Ociesse S.r.l. ("Ociesse") and United States Trust Company of New York, as trustee (the "Trustee"). Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. By executing and delivering to the Trustee this Eleventh Supplemental Indenture, Pescor, Inc., a Delaware corporation ("New Guarantor"), hereby becomes a "Guarantor" under the Indenture and hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Indenture in the same manner as if it were an original signatory to such agreement. The New Guarantor hereby unconditionally guarantees that (i) the principal of and interest on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption or otherwise, and interest on the overdue principal of and interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee under the Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of the Indenture and the Notes and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. By executing and delivering to the Trustee this Eleventh Supplemental Indenture, each of BPC Holding, Berry Iowa, Berry Tri-Plas, Berry Sterling, AeroCon, PackerWare, Berry Design, Venture, Berry Technical, Midwest, NIM, Berry UK, Norwich, Knight, CPI, Cardinal, Poly- Seal, BPAC II, BPAC III, CBP Holdings, Capsol and Ociesse (each an "Old Guarantor") hereby reaffirms its obligations under the Indenture as previously supplemented and as further supplemented hereby. The obligations of each of the undersigned to each Holder and to the Trustee pursuant hereto are as expressly set forth in Article 10 of the Indenture which terms are incorporated herein by reference. This is a continuing guarantee and shall remain in full force and effect and shall be binding upon each of the undersigned and its successors and assigns until full and final payment of all of the Company's obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a guarantee of payment and not a guarantee of collection. Each of the Company and the Guarantors (hereinafter, collectively, the "Obligors") hereby agrees that all judicial proceedings brought against it arising out of or relating to the Indenture, or any obligations hereunder, may be brought in any State or Federal Court of competent jurisdiction in the State, County and City of New York in the United States of America. By executing and delivering this Eleventh Supplemental Indenture, each of the Obligors hereby irrevocably: (i) accepts generally and unconditionally the nonexclusive jurisdiction and venue of such courts, (ii) waives any defense of FORUM NON CONVENIENS; (iii) designates and appoints Joseph S. Levy, or such other persons located in New York State selected by the Obligors from time to time, and agreeing in writing to so serve, as its agent to receive on its behalf service of all process in any such proceedings in any such court, such service being hereby acknowledged by each of the Obligors to be effective and binding service in every respect (with a copy of any such process so served to be mailed by registered mail to each of the Obligors at its address provided that, unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of such process) and each of the Obligors hereby agrees that service of process sufficient for personal jurisdiction in any action in the State of New York may be made by registered or certified mail, return receipt requested, to it at its address and hereby acknowledges that such service shall be effective and binding in every respect; and nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right to bring proceedings against any of the Obligors in the courts of any other jurisdiction; and (iv) agrees that the provisions of this Eleventh Supplemental Indenture relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under New York General Obligations Law, Section 5-1402 or otherwise. Any and all payments to be made by any of the undersigned to the Trustee shall be made in U.S. Dollars. If, for the purpose of calculating the amount of any judgment in any court, it is necessary to convert into any other currency (the "Judgment Currency") an amount due in U.S. Dollars under the Indenture, then the conversion shall be made at the discretion of the Trustee, at the rate of exchange prevailing either on the date of default or on the day before the day on which the award or judgment is given (the "Conversion Date"). If there is a change in the rate of exchange prevailing between the Conversion Date and the date of actual payment of the amount due, the undersigned will pay such additional amounts (if any, but in any event, not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due in U.S. Dollars. This Eleventh Supplemental Indenture may be executed in counterparts. Each signed copy shall be an original, but all of them together represent the same agreement. IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Eleventh Supplemental Indenture as of the 14th day of May, 2001.
ATTEST: BERRY PLASTICS CORPORATION By: /S/ JAMES M. KRATOCHVIL By: James M. Kratochvil /S/ Executive Vice President, Chief Financial MARTIN Officer, Treasurer and Secretary R. IMBLER Martin R. Imbler BPC HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY IOWA CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY TRI-PLAS CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY STERLING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary AEROCON, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary PACKERWARE CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS DESIGN CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS TECHNICAL SERVICES, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING MIDWEST, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary NIM HOLDINGS LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director BERRY PLASTICS U.K. LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director NORWICH ACQUISITION LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director KNIGHT PLASTICS, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CPI HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CARDINAL PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION II By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION III By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary POLY-SEAL CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CBP HOLDINGS S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director CAPSOL BERRY PLASTICS S.P.A. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director OCIESSE S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director PESCOR, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary
UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE By: /S/ CYNTHIA CHANEY Name: Cynthia Chaney Title: Assistant Vice President
EX-4.18 5 ex418.txt EXHIBIT 4.18 FIFTH SUPPLEMENAL INDENTURE FIFTH SUPPLEMENTAL INDENTURE The undersigned are executing and delivering this Fifth Supplemental Indenture pursuant to Section 4.13 of the Indenture, dated as of August 24, 1998, as supplemented (the "Indenture"), among Berry Plastics Corporation (the "Company"), BPC Holding Corporation ("BPC Holding"), Berry Iowa Corporation ("Berry Iowa"), Berry Tri-Plas Corporation ("Berry Tri-Plas"), Berry Sterling Corporation ("Berry Sterling"), AeroCon, Inc. ("AeroCon"), PackerWare Corporation ("PackerWare"), Berry Plastics Design Corporation ("Berry Design"), Venture Packaging, Inc. ("Venture"), Berry Plastics Technical Services, Inc. ("Berry Technical"), Venture Packaging Midwest, Inc. ("Midwest"), NIM Holdings Limited ("NIM"), Berry Plastics U.K. Limited ("Berry UK"), Norwich Acquisition Limited ("Norwich"), Knight Plastics, Inc. ("Knight"), CPI Holding Corporation ("CPI"), Cardinal Packaging, Inc. ("Cardinal"), Poly-Seal Corporation ("Poly-Seal"), Berry Plastics Acquisition Corporation II ("BPAC II"), Berry Plastics Acquisition Corporation III ("BPAC III"), CBP Holdings S.r.l. (f/k/a Capsol Berry Plastics S.r.l.) ("CBP Holdings"), Capsol Berry Plastics S.p.A. (f/k/a Capsol S.p.A.) ("Capsol"), Ociesse S.r.l. ("Ociesse") and United States Trust Company of New York, as trustee (the "Trustee"). Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. By executing and delivering to the Trustee this Fifth Supplemental Indenture, Pescor, Inc., a Delaware corporation ("New Guarantor"), hereby becomes a "Guarantor" under the Indenture and hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Indenture in the same manner as if it were an original signatory to such agreement. The New Guarantor hereby unconditionally guarantees that (i) the principal of and interest on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption or otherwise, and interest on the overdue principal of and interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee under the Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of the Indenture and the Notes and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. By executing and delivering to the Trustee this Fifth Supplemental Indenture, each of BPC Holding, Berry Iowa, Berry Tri-Plas, Berry Sterling, AeroCon, PackerWare, Berry Design, Venture, Berry Technical, Midwest, NIM, Berry UK, Norwich, Knight, CPI, Cardinal, Poly- Seal, BPAC II, BPAC III, CBP Holdings, Capsol, and Ociesse (each an "Old Guarantor") hereby reaffirms its obligations under the Indenture as previously supplemented and as further supplemented hereby. The obligations of each of the undersigned to each Holder and to the Trustee pursuant hereto are as expressly set forth in Article 10 of the Indenture which terms are incorporated herein by reference. This is a continuing guarantee and shall remain in full force and effect and shall be binding upon each of the undersigned and its successors and assigns until full and final payment of all of the Company's obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a guarantee of payment and not a guarantee of collection. Each of the Company and the Guarantors (hereinafter, collectively, the "Obligors") hereby agrees that all judicial proceedings brought against it arising out of or relating to the Indenture, or any obligations hereunder, may be brought in any State or Federal Court of competent jurisdiction in the State, County and City of New York in the United States of America. By executing and delivering this Fifth Supplemental Indenture, each of the Obligors hereby irrevocably: (i) accepts generally and unconditionally the nonexclusive jurisdiction and venue of such courts, (ii) waives any defense of FORUM NON CONVENIENS; (iii) designates and appoints Joseph S. Levy, or such other persons located in New York State selected by the Obligors from time to time, and agreeing in writing to so serve, as its agent to receive on its behalf service of all process in any such proceedings in any such court, such service being hereby acknowledged by each of the Obligors to be effective and binding service in every respect (with a copy of any such process so served to be mailed by registered mail to each of the Obligors at its address provided that, unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of such process) and each of the Obligors hereby agrees that service of process sufficient for personal jurisdiction in any action in the State of New York may be made by registered or certified mail, return receipt requested, to it at its address and hereby acknowledges that such service shall be effective and binding in every respect; and nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right to bring proceedings against any of the Obligors in the courts of any other jurisdiction; and (iv) agrees that the provisions of this Fifth Supplemental Indenture relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under New York General Obligations Law, Section 5-1402 or otherwise. Any and all payments to be made by any of the undersigned to the Trustee shall be made in U.S. Dollars. If, for the purpose of calculating the amount of any judgment in any court, it is necessary to convert into any other currency (the "Judgment Currency") an amount due in U.S. Dollars under the Indenture, then the conversion shall be made at the discretion of the Trustee, at the rate of exchange prevailing either on the date of default or on the day before the day on which the award or judgment is given (the "Conversion Date"). If there is a change in the rate of exchange prevailing between the Conversion Date and the date of actual payment of the amount due, the undersigned will pay such additional amounts (if any, but in any event, not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due in U.S. Dollars. This Fifth Supplemental Indenture may be executed in counterparts. Each signed copy shall be an original, but all of them together represent the same agreement. IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Fifth Supplemental Indenture as of the 14th day of May, 2001.
ATTEST: BERRY PLASTICS CORPORATION By: /S/ JAMES M. KRATOCHVIL By: James M. Kratochvil /S/ Executive Vice President, Chief Financial MARTIN Officer, Treasurer and Secretary R. IMBLER Martin R. Imbler BPC HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY IOWA CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY TRI-PLAS CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY STERLING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary AEROCON, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary PACKERWARE CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS DESIGN CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS TECHNICAL SERVICES, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING MIDWEST, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary NIM HOLDINGS LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director BERRY PLASTICS U.K. LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director NORWICH ACQUISITION LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director KNIGHT PLASTICS, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CPI HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CARDINAL PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION II By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION III By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary POLY-SEAL CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CBP HOLDINGS S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director CAPSOL BERRY PLASTICS S.P.A. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director OCIESSE S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director PESCOR, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary
UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE By: /S/ CYNTHIA CHANEY Name: Cynthia Chaney Title: Assistant Vice President
EX-4.19 6 ex419.txt EXHIBIT 4.19 THIRD SUPPLEMENTAL INDENTURE THIRD SUPPLEMENTAL INDENTURE The undersigned are executing and delivering this Third Supplemental Indenture pursuant to Section 4.13 of the Indenture, dated as of July 6, 1999, as supplemented (the "Indenture"), among Berry Plastics Corporation (the "Company"), BPC Holding Corporation ("BPC Holding"), Berry Iowa Corporation ("Berry Iowa"), Berry Tri-Plas Corporation ("Berry Tri-Plas"), Berry Sterling Corporation ("Berry Sterling"), AeroCon, Inc. ("AeroCon"), PackerWare Corporation ("PackerWare"), Berry Plastics Design Corporation ("Berry Design"), Venture Packaging, Inc. ("Venture"), Berry Plastics Technical Services, Inc. ("Berry Technical"), Venture Packaging Midwest, Inc. ("Midwest"), NIM Holdings Limited ("NIM"), Berry Plastics U.K. Limited ("Berry UK"), Norwich Acquisition Limited ("Norwich"), Knight Plastics, Inc. ("Knight"), CPI Holding Corporation ("CPI"), Cardinal Packaging, Inc. ("Cardinal"), Poly-Seal Corporation ("Poly-Seal"), Berry Plastics Acquisition Corporation II ("BPAC II"), Berry Plastics Acquisition Corporation III ("BPAC III"), CBP Holdings S.r.l. (f/k/a Capsol Berry Plastics S.r.l.) ("CBP Holdings"), Capsol Berry Plastics S.p.A. (f/k/a Capsol S.p.A.) ("Capsol"), Ociesse S.r.l. ("Ociesse") and United States Trust Company of New York, as trustee (the "Trustee"). Capitalized terms used herein have the same meanings given in the Indenture unless otherwise indicated. By executing and delivering to the Trustee this Third Supplemental Indenture, Pescor, Inc., a Delaware corporation ("New Guarantor"), hereby becomes a "Guarantor" under the Indenture and hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Indenture in the same manner as if it were an original signatory to such agreement. The New Guarantor hereby unconditionally guarantees that (i) the principal of and interest on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for redemption or otherwise, and interest on the overdue principal of and interest, if any, on the Notes and all other obligations of the Company to the Holders or the Trustee under the Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of the Indenture and the Notes and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at maturity, by acceleration or otherwise. By executing and delivering to the Trustee this Third Supplemental Indenture, each of BPC Holding, Berry Iowa, Berry Tri-Plas, Berry Sterling, AeroCon, PackerWare, Berry Design, Venture, Berry Technical, Midwest, NIM, Berry UK, Norwich, Knight, CPI, Cardinal, Poly- Seal, BPAC II, BPAC III, CBP Holdings, Capsol, and Ociesse (each an "Old Guarantor") hereby reaffirms its obligations under the Indenture as previously supplemented and as further supplemented hereby. The obligations of each of the undersigned to each Holder and to the Trustee pursuant hereto are as expressly set forth in Article 10 of the Indenture which terms are incorporated herein by reference. This is a continuing guarantee and shall remain in full force and effect and shall be binding upon each of the undersigned and its successors and assigns until full and final payment of all of the Company's obligations under the Notes and the Indenture and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This is a guarantee of payment and not a guarantee of collection. Each of the Company and the Guarantors (hereinafter, collectively, the "Obligors") hereby agrees that all judicial proceedings brought against it arising out of or relating to the Indenture, or any obligations hereunder, may be brought in any State or Federal Court of competent jurisdiction in the State, County and City of New York in the United States of America. By executing and delivering this Third Supplemental Indenture, each of the Obligors hereby irrevocably: (i) accepts generally and unconditionally the nonexclusive jurisdiction and venue of such courts, (ii) waives any defense of FORUM NON CONVENIENS; (iii) designates and appoints Joseph S. Levy, or such other persons located in New York State selected by the Obligors from time to time, and agreeing in writing to so serve, as its agent to receive on its behalf service of all process in any such proceedings in any such court, such service being hereby acknowledged by each of the Obligors to be effective and binding service in every respect (with a copy of any such process so served to be mailed by registered mail to each of the Obligors at its address provided that, unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of such process) and each of the Obligors hereby agrees that service of process sufficient for personal jurisdiction in any action in the State of New York may be made by registered or certified mail, return receipt requested, to it at its address and hereby acknowledges that such service shall be effective and binding in every respect; and nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right to bring proceedings against any of the Obligors in the courts of any other jurisdiction; and (iv) agrees that the provisions of this Third Supplemental Indenture relating to jurisdiction and venue shall be binding and enforceable to the fullest extent permissible under New York General Obligations Law, Section 5-1402 or otherwise. Any and all payments to be made by any of the undersigned to the Trustee shall be made in U.S. Dollars. If, for the purpose of calculating the amount of any judgment in any court, it is necessary to convert into any other currency (the "Judgment Currency") an amount due in U.S. Dollars under the Indenture, then the conversion shall be made at the discretion of the Trustee, at the rate of exchange prevailing either on the date of default or on the day before the day on which the award or judgment is given (the "Conversion Date"). If there is a change in the rate of exchange prevailing between the Conversion Date and the date of actual payment of the amount due, the undersigned will pay such additional amounts (if any, but in any event, not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of payment will produce the amount then due in U.S. Dollars. This Third Supplemental Indenture may be executed in counterparts. Each signed copy shall be an original, but all of them together represent the same agreement. IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Third Supplemental Indenture as of the 14th day of May, 2001.
ATTEST: BERRY PLASTICS CORPORATION By: /S/ JAMES M. KRATOCHVIL By: James M. Kratochvil /S/ Executive Vice President, Chief Financial MARTIN Officer, Treasurer and Secretary R. IMBLER Martin R. Imbler BPC HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY IOWA CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY TRI-PLAS CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY STERLING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary AEROCON, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary PACKERWARE CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS DESIGN CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS TECHNICAL SERVICES, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary VENTURE PACKAGING MIDWEST, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary NIM HOLDINGS LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director BERRY PLASTICS U.K. LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director NORWICH ACQUISITION LIMITED By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director KNIGHT PLASTICS, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CPI HOLDING CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CARDINAL PACKAGING, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION II By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary BERRY PLASTICS ACQUISITION CORPORATION III By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary POLY-SEAL CORPORATION By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary CBP HOLDINGS S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director CAPSOL BERRY PLASTICS S.P.A. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director OCIESSE S.R.L. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Director PESCOR, INC. By: /S/ JAMES M. KRATOCHVIL James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary
UNITED STATES TRUST COMPANY OF NEW YORK, AS TRUSTEE By: /S/ CYNTHIA CHANEY Name: Cynthia Chaney Title: Assistant Vice President
EX-10.35 7 ex1035.txt EXHIBIT 10.35 THIRD AMENDMENT TO THIRD AMENDED Berry Third Amendment to 3rd A&R CFA.DOC 03/15/02 2:49 PM THIRD AMENDMENT TO THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT THIS THIRD AMENDMENT TO THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT (this "Amendment") is made effective as of the 11th day of May, 2001, by and among BERRY PLASTICS CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Borrower"), NIM HOLDINGS LIMITED, a company organized and existing under the laws of England and Wales ("NIM Holdings"), and BERRY PLASTICS UK LIMITED, a company organized and existing under the laws of England and Wales, formerly known as Norwich Injection Moulders Limited ("Berry UK"); BANK OF AMERICA, N.A., a national banking association ("Bank of America"), FLEET CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of Rhode Island ("Fleet"), GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of New York ("GE Capital"), HELLER FINANCIAL, INC., a corporation organized and existing under the laws of the State of Delaware ("Heller"), PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), LASALLE BUSINESS CREDIT, INC., a corporation organized and existing under the laws of the State of Delaware ("LaSalle"), and THE PROVIDENT BANK, a banking corporation organized and existing under the laws of the State of Ohio ("Provident") (collectively, the "Lenders" and individually, a "Lender"); GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of New York, as documentation agent, and BANK OF AMERICA, N. A., a national banking association, in its capacity as both collateral and administrative agent for the Lenders (the "Agent") and as lead arranger; Witnesseth: RECITALS The Lenders, the Borrower, Berry UK, NIM Holdings and the Agent are parties to that certain Third Amended and Restated Financing and Security Agreement dated as of May 9, 2000, as amended by (i) that certain First Amendment to Third Amended and Restated Financing and Security Agreement dated as of July 14, 2000 (the "First Amendment") and (ii) that certain Second Amendment to Third Amended and Restated Financing and Security Agreement dated as of September 6, 2000 (the "Second Amendment") (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"). Under and subject to the provisions of the Credit Agreement, the Lenders agreed to establish in favor of the Borrower, Berry UK and NIM Holdings certain revolving credit, letter of credit and term loan facilities. All capitalized terms used herein but not specifically defined herein shall have the meanings given such terms in the Credit Agreement. The Borrower has advised the Agent and the Lenders that contemporaneously with the execution and delivery of this Amendment, (i) the Parent has formed Pescor, Inc., a corporation organized and existing under the laws of the State of Delaware ("Pescor") and (ii) the Parent has acquired or intends to acquire Pescor Plastics, Inc., a corporation organized and existing under the laws of the State of Texas ("Pescor Target") in accordance with the provisions of that certain Agreement and Plan of Reorganization by and among the existing shareholders of Pescor Target, the Parent, and Pescor (as amended, restated, supplemented or otherwise modified, the "Pescor Merger Agreement"). Pescor Target will merge (the "Pescor Merger") into Pescor such that Pescor will be the surviving corporation. Promptly following the merger, the Parent intends to contribute all of the issued and outstanding stock of Pescor to the Borrower (the "Pescor Stock"). Following the Pescor Merger of and the Parent's contribution of the Pescor Stock to the Borrower, Pescor will be a wholly-owned subsidiary of the Borrower. The Borrower previously advised the Agent and the Lenders that (i) the Borrower had formed Berry Plastics Acquisition Corporation II, a corporation organized and existing under the laws of the State of Delaware ("Berry Italy"), and Berry Italy is a wholly-owned subsidiary of the Borrower, (ii) the Borrower has acquired ninety-five percent (95%) of the issued and outstanding capital stock of CBP Holdings, S.r.l. (formerly Capsol-Berry Plastics S.r.l.), a company duly incorporated and existing under the laws of Italy (the "Italian Holding Company") and Berry Italy has acquired five percent (5%) of the issued and outstanding capital stock of the Italian Holding Company, and (iii) the Italian Holding Company owns one hundred percent (100%) of the issued and outstanding capital stock of (1) Ociesse S.r.l. - Officina Costruzione Stampi Lavorazioni Meccaniche di Precisione, a company duly incorporated and existing under the laws of Italy ("Ociesse") and (2) Capsol Berry Plastics S.p.a., a company duly incorporated and existing under the laws of Italy ("Capsol Italy"). The Italian Holding Company has applied to Bank of America Italy for a revolving credit facility in a maximum principal amount not to exceed Euro 13,550,000 or, at the option of the Italian Holding Company, the equivalent amount in United States Dollars (the "Italian Revolving Credit Facility"). Capsol Italy has opened one or more bank accounts with Bank of America Italy with respect to which Bank of America Italy has agreed to provide overdraft facilities for a total amount not exceeding Euro 1,700,000 (the "Italian Overdraft Facility"). The obligations of the Italian Holding Company and/or Capsol Italy under and in connection with the Italian Revolving Credit Facility and the Italian Overdraft Facility (collectively, the "Italian Credit Facilities") are or will be secured by a first priority pledge of all issued and outstanding capital stock of the Italian Holding Company, Ociesse and Capsol Italy. In connection with the above transactions, the Borrower has requested that the Agent and the Lenders agree (i) to increase the Total Revolving Credit Committed Amount from $70,000,000 to $80,000,000, (ii) to make an additional term loan facility to the Borrower in the principal amount of $2,000,000, (iii) to amend the terms and conditions of the Credit Agreement relating to the Italian Credit Facilities set forth in the First Amendment and the Second Amendment to reflect the actual terms and conditions of the Italian Credit Facilities, and (iv) otherwise to amend certain terms and conditions of the Credit Agreement. In addition, the Borrower has requested that the Agent and the Lenders consent and agree to (1) the acquisition of the Pescor Target by the Parent in accordance with the terms and conditions of the Pescor Merger Agreement, (2) the Parent's issuance of a class of preferred stock to one or more existing shareholders of Pescor Target in accordance with the provisions of the Pescor Merger Agreement, and (3) the Parent's contribution of the Pescor Stock to the Borrower. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, Berry UK, NIM Holdings, the Lenders and the Agent hereby agree as follows: The Borrower, Berry UK and NIM Holdings hereby acknowledge and agree that the recitals set forth above are true and accurate in each and every respect and are incorporated herein by reference. The representations and warranties of the Borrower, Berry UK and NIM Holdings contained among the provisions of the Credit Agreement are true and correct as of the date of this Amendment (except that any such representations and warranties that are not qualified as to materiality need only be true and correct in all material respects) with the same effect as though such representations and warranties had been made as of such date, except that (i) the representations and warranties which relate to a specific date need only be true and correct as of such date and (ii) the representations and warranties which relate to financial statements which are referred to in Section 4.1.11 of the Credit Agreement, shall also be deemed to cover financial statements furnished from time to time to the Agent pursuant to Section 6.1.1 (Financial Statements) of the Credit Agreement. The Credit Agreement is hereby amended as follows: Section 1.1 beginning on page 3 of the Credit Agreement is hereby amended to add the following definitions: "BERRY ITALY" MEANS BERRY PLASTICS ACQUISITION CORPORATION II, A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF DELAWARE, AND ITS SUCCESSORS AND ASSIGNS. "NORWICH ACQUISITION" MEANS NORWICH ACQUISITION LIMITED, A COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF ENGLAND AND WALES, AND ITS SUCCESSORS AND ASSIGNS. "PESCOR" MEANS PESCOR, INC., A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE AND A CONSTITUENT CORPORATION IN THE MERGER OF PESCOR AND PESCOR TARGET, AND ITS SUCCESSORS AND ASSIGNS. "PESCOR CLOSING DATE" MEANS THE DATE ON WHICH THE PESCOR MERGER TRANSACTION IS CLOSED AND CONSUMMATED. "PESCOR MERGER" MEANS THE MERGER OF PESCOR TARGET INTO PESCOR WITH PESCOR AS THE SURVIVING CORPORATION. "PESCOR MERGER AGREEMENT" MEANS THAT CERTAIN AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF MAY 11, 2001 BY AND AMONG THE PARENT, PESCOR AND THE SHAREHOLDERS OF PESCOR TARGET, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED, TOGETHER WITH ANY AND ALL EXHIBITS AND SCHEDULES THERETO, AMENDMENTS, MODIFICATIONS, AND SUPPLEMENTS THERETO, RESTATEMENTS THEREOF, AND SUBSTITUTES THEREFOR. "PESCOR MERGER DOCUMENTS" MEANS COLLECTIVELY THE PESCOR MERGER AGREEMENT AND ANY AND ALL OTHER AGREEMENTS, DOCUMENTS OR INSTRUMENTS, PREVIOUSLY, NOW OR HEREAFTER EXECUTED AND DELIVERED BY THE PARENT, THE BORROWER, OR ANY OTHER PERSON IN CONNECTION WITH THE PESCOR MERGER TRANSACTION, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED AND MODIFIED. "PESCOR MERGER TRANSACTION" MEANS (I) THE PESCOR MERGER AND (II) THE ISSUANCE OF THE PESCOR PREFERRED STOCK, ALL IN ACCORDANCE WITH THE PROVISIONS OF THE PESCOR MERGER AGREEMENT, AND ALSO INCLUDES THE CONTRIBUTION OF THE PESCOR STOCK BY THE PARENT TO THE BORROWER. "PESCOR PREFERRED STOCK" MEANS THE ISSUED AND OUTSTANDING SHARES OF SERIES C-1, C-2, C-3, C-4 AND C-5 PREFERRED STOCK ISSUED BY THE PARENT TO THE EXISTING SHAREHOLDERS OF PESCOR TARGET IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE PESCOR MERGER AGREEMENT. "PESCOR PREFERRED STOCK SHAREHOLDER AGREEMENTS" MEANS ANY AND ALL AGREEMENTS, DOCUMENTS OR INSTRUMENTS NOW OR AT ANY TIME EXECUTED AND DELIVERED IN CONNECTION WITH THE ISSUANCE, SALE OR PURCHASE OF THE PESCOR PREFERRED STOCK IN CONNECTION WITH THE PESCOR MERGER TRANSACTION, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED. "PESCOR TARGET" MEANS PESCOR PLASTICS, INC., A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF TEXAS AND A CONSTITUENT CORPORATION IN THE MERGER OF PESCOR AND PESCOR TARGET, ITS SUCCESSORS AND ASSIGNS. "TERM LOAN C" AND "TERM LOANS C" HAVE THE MEANINGS DESCRIBED IN SECTION 2.12.1 (TERM LOAN C FACILITY). "TERM LOAN C COMMITMENT" AND "TERM LOAN C COMMITMENTS" HAVE THE MEANINGS DESCRIBED IN SECTION 2.12.1 (TERM LOAN C COMMITMENTS). "TERM LOAN C COMMITTED AMOUNT" HAS THE MEANING DESCRIBED IN SECTION 2.12.1 (TERM LOAN C COMMITMENTS). "TERM LOAN C FACILITY" MEANS THE FACILITY ESTABLISHED BY THE LENDERS PURSUANT TO SECTION 2.12 (TERM LOAN C FACILITY). "TERM LOAN C MANDATORY PREPAYMENT" AND "TERM LOAN A MANDATORY PREPAYMENTS" HAVE THE MEANINGS DESCRIBED IN SECTION 2.12.3 (MANDATORY PREPAYMENTS OF TERM LOAN C). "TERM LOAN C OPTIONAL PREPAYMENT" AND "TERM LOAN C OPTIONAL PREPAYMENTS" HAVE THE MEANINGS DESCRIBED IN SECTION 2.12.4 (OPTIONAL PREPAYMENTS OF TERM LOANS C). "TERM LOAN C PRO RATA SHARE" HAS THE MEANING DESCRIBED IN SECTION 2.12.1 (TERM LOAN C FACILITY). "TERM LOAN C NOTE" AND "TERM LOAN C NOTES" HAVE THE MEANING DESCRIBED IN SECTION 2.12.2 (AMORTIZATION OF TERM LOANS C). "THIRD AMENDMENT" MEANS THAT CERTAIN THIRD AMENDMENT TO THIRD AMENDED AND RESTATED FINANCING AND SECURITY AGREEMENT BY AND AMONG THE AGENT, THE LENDERS, THE BORROWER, BERRY UK AND NIM HOLDINGS. "TOTAL TERM LOAN C COMMITTED AMOUNT" HAS THE MEANING DESCRIBED IN SECTION 2.12.1 (TERM LOAN C COMMITMENTS). The definition of "Affiliate" on page 4 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "AFFILIATE" MEANS, WITH RESPECT TO ANY DESIGNATED PERSON, ANY OTHER PERSON, (A) DIRECTLY OR INDIRECTLY CONTROLLING, DIRECTLY OR INDIRECTLY CONTROLLED BY, OR UNDER DIRECT OR INDIRECT COMMON CONTROL WITH THE PERSON DESIGNATED, (B) DIRECTLY OR INDIRECTLY OWNING OR HOLDING TEN PERCENT (10%) OR MORE OF ANY EQUITY INTEREST IN SUCH DESIGNATED PERSON, OR (C) TEN PERCENT (10%) OR MORE OF WHOSE STOCK OR OTHER EQUITY INTEREST IS DIRECTLY OR INDIRECTLY OWNED OR HELD BY SUCH DESIGNATED PERSON. FOR PURPOSES OF THIS DEFINITION, THE TERM "CONTROL" (INCLUDING WITH CORRELATIVE MEANINGS, THE TERMS "CONTROLLING", "CONTROLLED BY" AND "UNDER COMMON CONTROL WITH") MEANS THE POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF A PERSON, WHETHER THROUGH OWNERSHIP OF VOTING SECURITIES OR OTHER EQUITY INTERESTS OR BY CONTRACT OR OTHERWISE. NOTWITHSTANDING THE FOREGOING, NONE OF THE HOLDERS OF THE PESCOR PREFERRED STOCK SHALL BE DEEMED TO BE AFFILIATES OF THE BORROWER OR ANY OF ITS AFFILIATES SOLELY BECAUSE OF HIS, HER OR ITS HOLDING OF SHARES OF THE PESCOR PREFERRED STOCK. The definition of "Assignment of Trademarks" on page 5 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "ASSIGNMENT OF TRADEMARKS" MEANS (A) THAT CERTAIN AMENDED AND RESTATED COLLATERAL ASSIGNMENT OF TRADEMARKS AS SECURITY DATED MAY 9, 2000 FROM THE BORROWER TO THE AGENT FOR THE BENEFIT OF THE LENDERS RATABLY AND THE AGENT, (B) THAT CERTAIN AMENDED, RESTATED AND CONSOLIDATED COLLATERAL ASSIGNMENT OF TRADEMARKS AS SECURITY DATED AS OF MAY 9, 2000 FROM PACKERWARE, VENTURE SOUTHEAST, VENTURE MIDWEST, KNIGHT, POLY-SEAL AND CARDINAL, AND (C) THAT CERTAIN COLLATERAL ASSIGNMENT OF TRADEMARKS DATED AS OF THE PESCOR CLOSING DATE FROM PESCOR, EACH AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED IN WRITING AT ANY TIME AND FROM TIME TO TIME. The definition of "BofA Permitted Ceiling" on page 2 of the First Amendment is hereby deleted in its entirety and the following is substituted in its place: "BOFA PERMITTED CEILING" HAS THE MEANING GIVEN SUCH TERM IN THE INTERCREDITOR AGREEMENT. The definition of "Capital Expenditures" on page 7 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "CAPITAL EXPENDITURE" MEANS AN EXPENDITURE WHICH WOULD BE CLASSIFIED AS SUCH IN ACCORDANCE WITH GAAP (WHETHER PAYABLE IN CASH OR OTHER PROPERTY OR ACCRUED AS A LIABILITY) FOR FIXED OR CAPITAL ASSETS, INCLUDING THE ENTERING INTO OF CAPITAL LEASES. The definition of "Capsol Italy" on page 3 of the First Amendment is hereby deleted in its entirety and the following is substituted in its place: "CAPSOL ITALY" MEANS CAPSOL BERRY PLASTICS S.P.A., A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. The definitions of "Commitment" and "Commitments" on page 8 of the Credit Agreement are hereby deleted in their entirety and the following is substituted in their places: "COMMITMENT" MEANS WITH RESPECT TO EACH LENDER, SUCH LENDER'S REVOLVING CREDIT COMMITMENT, LETTER OF CREDIT COMMITMENT, TERM LOAN A COMMITMENT, TERM LOAN B COMMITMENT, TERM LOAN C COMMITMENT, BOND LETTER OF CREDIT COMMITMENT, UK REVOLVING CREDIT COMMITMENT, OR UK TERM LOAN COMMITMENT AS THE CASE MAY BE, AND "COMMITMENTS" MEANS THE COLLECTIVE REFERENCE TO THE REVOLVING CREDIT COMMITMENTS, THE LETTER OF CREDIT COMMITMENTS, THE TERM LOAN A COMMITMENTS, THE TERM LOAN B COMMITMENTS, THE TERM LOAN C COMMITMENTS, THE BOND LETTER OF CREDIT COMMITMENTS, THE UK REVOLVING CREDIT COMMITMENTS AND THE UK TERM LOAN COMMITMENTS OF ALL OF THE LENDERS. The definitions of "Committed Amount" and "Committed Amounts" on page 8 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "COMMITTED AMOUNT" MEANS WITH RESPECT TO EACH LENDER, SUCH LENDER'S REVOLVING CREDIT COMMITTED AMOUNT, LETTER OF CREDIT COMMITTED AMOUNT, TERM LOAN A COMMITTED AMOUNT, TERM LOAN B COMMITTED AMOUNT, TERM LOAN C COMMITTED AMOUNT, THE BOND LETTER OF CREDIT COMMITTED AMOUNT, UK REVOLVING CREDIT COMMITTED AMOUNT, UK TERM LOAN COMMITTED AMOUNT, AS THE CASE MAY BE, AND "COMMITTED AMOUNTS" MEANS COLLECTIVELY THE REVOLVING LOAN COMMITTED AMOUNT, THE LETTER OF CREDIT COMMITTED AMOUNT, TERM LOAN A COMMITTED AMOUNT, TERM LOAN B COMMITTED AMOUNT, TERM LOAN C COMMITTED AMOUNT, THE BOND LETTER OF CREDIT COMMITTED AMOUNT OF EACH OF THE LENDERS, THE UK REVOLVING CREDIT COMMITTED AMOUNTS, AND THE UK TERM LOAN COMMITTED AMOUNTS. Paragraph (c) of the definition of "Dollar Interest Period" on pages 11 and 12 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: (C) NO DOLLAR INTEREST PERIOD SHALL EXTEND BEYOND THE REVOLVING CREDIT TERMINATION DATE OR THE SCHEDULED MATURITY DATE OF THE TERM LOANS A, THE TERM LOANS B, OR THE TERM LOANS C, AS APPROPRIATE. The definitions of "Domestic Credit Facility" and "Domestic Credit Facilities" on page 12 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "DOMESTIC CREDIT FACILITY" MEANS WITH RESPECT TO EACH LENDER, SUCH LENDER'S PRO RATA SHARE OF THE REVOLVING CREDIT FACILITY, THE LETTER OF CREDIT FACILITY, THE TERM LOAN A FACILITY, THE TERM LOAN B FACILITY, THE TERM LOAN C FACILITY, OR THE BOND LETTER OF CREDIT FACILITY, AS THE CASE MAY BE, AND "DOMESTIC CREDIT FACILITIES" MEANS COLLECTIVELY THE REVOLVING CREDIT FACILITY, THE LETTER OF CREDIT FACILITY, THE TERM LOAN A FACILITY, THE TERM LOAN B FACILITY, THE TERM LOAN C FACILITY, AND THE BOND LETTER OF CREDIT FACILITY, AND ANY AND ALL OTHER CREDIT FACILITIES NOW OR HEREAFTER EXTENDED TO THE BORROWER UNDER OR SECURED BY THIS AGREEMENT. The definition of "Euribor Base Rate" on page 2 of the Second Amendment is hereby deleted in its entirety. The definition of "Italian Holding Company" on page 4 of the First Amendment is hereby deleted in its entirety and the following is substituted in its place: "ITALIAN HOLDING COMPANY" MEANS CBP HOLDINGS, S.R.L. (FORMERLY CAPSOL-BERRY PLASTICS S.R.L.), A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. The definition of "Italian Revolving Credit Facility" on page 3 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: "ITALIAN REVOLVING CREDIT FACILITY" MEANS THE REVOLVING CREDIT FACILITIES AND/OR OVERDRAFT FACILITIES ESTABLISHED BY BANK OF AMERICA ITALY IN ACCORDANCE WITH THE TERMS OF THE ITALIAN CREDIT AGREEMENTS. The definition of "Italian Obligations" on page 3 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: "ITALIAN OBLIGATIONS" MEANS AND INCLUDES ALL PRESENT AND FUTURE INDEBTEDNESS, OBLIGATIONS, AND LIABILITIES, WHETHER NOW EXISTING OR CONTEMPLATED OR HEREAFTER ARISING, OF THE ITALIAN HOLDING COMPANY, CAPSOL ITALY AND/OR OCIESSE TO BANK OF AMERICA ITALY, UNDER, ARISING PURSUANT TO, IN CONNECTION WITH AND/OR ON ACCOUNT OF THE PROVISIONS OF THE ITALIAN CREDIT AGREEMENTS, INCLUDING UNDER OR PURSUANT TO REVOLVING CREDIT AND/OR OVERDRAFT FACILITIES. The definition of "Italian Revolving Credit Committed Amount" on page 3 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: "ITALIAN REVOLVING CREDIT COMMITTED AMOUNT" MEANS UP TO FIFTEEN MILLION TWO HUNDRED FIFTY THOUSAND (15,250,000) EUROS OR SUCH HIGHER AMOUNT AS MAY BE AGREED BY THE LENDERS, SUBJECT TO THE BOFA PERMITTED CEILING, AND SHALL INCLUDE THE PRINCIPAL AMOUNT OF ANY AND ALL REVOLVING CREDIT AND/OR OVERDRAFT FACILITIES ESTABLISHED BY BANK OF AMERICA ITALY IN FAVOR OF THE ITALIAN HOLDING COMPANY, CAPSOL ITALY AND/OR OCIESSE. The definition of "Italian Stock Pledge Agreement" on page 4 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: "ITALIAN STOCK PLEDGE AGREEMENT" MEANS THAT CERTAIN DEED OF PLEDGE FROM THE BORROWER, BERRY ITALY AND THE ITALIAN HOLDING COMPANY TO BANK OF AMERICA ITALY, WHICH GRANTS, PLEDGES AND ASSIGNS TO BANK OF AMERICA ITALY, AS SECURITY FOR THE ITALIAN OBLIGATIONS, ONE HUNDRED PERCENT (100%) OF THE ISSUED AND OUTSTANDING SHARES OF THE ITALIAN HOLDING COMPANY, CAPSOL ITALY AND OCIESSE, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED. The definitions of "Loan" and "Loans" on page 30 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "LOAN" MEANS EACH OF THE REVOLVING LOAN, A TERM LOAN A, A TERM LOAN B, A TERM LOAN C, THE UK REVOLVING LOAN, OR A UK TERM LOAN, AS THE CASE MAY BE, AND "LOANS" MEANS THE COLLECTIVE REFERENCE TO THE REVOLVING LOAN, THE TERM LOANS A, THE TERM LOANS B, THE TERM LOANS C, THE UK REVOLVING LOAN AND THE UK TERM LOANS. The definitions of "Note" and "Notes" on page 31 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "NOTE" MEANS ANY REVOLVING CREDIT NOTE, ANY TERM LOAN A NOTE, ANY TERM LOAN B NOTE, ANY TERM LOAN C NOTE, THE UK REVOLVING CREDIT NOTE, OR THE UK TERM NOTE, AS THE CASE MAY BE, AND "NOTES" MEANS COLLECTIVELY EACH REVOLVING CREDIT NOTE, EACH TERM LOAN A NOTE, EACH TERM LOAN B NOTE, EACH TERM LOAN C NOTE, THE UK REVOLVING CREDIT NOTE, THE UK TERM NOTE, AND ANY OTHER PROMISSORY NOTE WHICH MAY FROM TIME TO TIME EVIDENCE ALL OR ANY PORTION OF THE OBLIGATIONS. The definition of "Ociesse" on page 5 of the First Amendment is hereby deleted in its entirety and the following is substituted in its place: "OCIESSE" MEANS OCIESSE S.R.L. - OFFICINA COSTRUZIONE STAMPI LAVORAZIONI MECCANICHE DI PRECISIONE, A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. The definition of "Permitted Acquisition" on pages 32 through 35 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "PERMITTED ACQUISITION" MEANS THE ACQUISITION OR PURCHASE OF, OR INVESTMENT IN, ANY PERSON, ANY OPERATING DIVISION OR UNIT OF ANY PERSON, OR THE CAPITAL STOCK OR ASSETS OF ANY PERSON OR THE COMBINATION WITH ANY PERSON BY THE BORROWER OR ANY SUBSIDIARY GUARANTOR (EACH INDIVIDUALLY, A "SUBJECT TRANSACTION") APPROVED BY THE AGENT AND EACH OF THE LENDERS IN WRITING. THE AGENT AND THE LENDERS HEREBY ADVISE THE BORROWER THAT THE PESCOR MERGER TRANSACTION SHALL NOT CONSTITUTE A PERMITTED ACQUISITION UNLESS AFTER GIVING EFFECT TO ANY BORROWINGS UNDER THE REVOLVING LOAN NEEDED TO FINANCE THE PESCOR MERGER TRANSACTION, THE BORROWER AND THE SUBSIDIARY GUARANTORS (I) HAVE AVAILABILITY UNDER THE REVOLVING LOAN OR UNUSED AVAILABILITY UNDER THE BORROWING BASE IN AN AMOUNT AT LEAST EQUAL TO EIGHTEEN MILLION DOLLARS ($18,000,000) AND (II) ARE REASONABLY EXPECTED TO HAVE SUCH MINIMUM AVAILABILITY FOR A PERIOD OF TEN (10) BUSINESS DAYS AFTER CLOSING AND CONSUMMATION OF THE PESCOR MERGER TRANSACTION. THE BORROWER UNDERSTANDS AND AGREES THAT THE AGENT SHALL HAVE NO OBLIGATION OR COMMITMENT TO INCLUDE ANY OF THE ASSETS OR PROPERTIES OF ANY PERSON ACQUIRED IN THE BORROWING BASE PURSUANT TO A SUBJECT TRANSACTION. THE AGENT AND THE LENDERS AGREE, HOWEVER, THAT IF AFTER COMPLETION AND REVIEW OF A SATISFACTORY FIELD EXAMINATION OF THE ASSETS AND PROPERTIES WHICH CONSTITUTE OR ARE PART OF A PERMITTED ACQUISITION, SUCH ASSETS AND PROPERTIES SHALL BE INCLUDED IN THE BORROWING BASE IF THE RESULTS OF SUCH FIELD EXAMINATION AND AUDIT ARE REASONABLY ACCEPTABLE IN ALL RESPECTS TO THE AGENT IN ITS DISCRETION AND SUCH ASSETS AND PROPERTIES OTHERWISE SATISFY THE ELIGIBILITY CRITERIA FOR INCLUSION IN THE BORROWING BASE. NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS DEFINITION, THE LENDERS AND THE AGENT HAVE PREVIOUSLY CONSENTED, OR HEREBY CONSENT, TO THE POLY-SEAL STOCK PURCHASE TRANSACTION, THE ITALIAN TARGET STOCK PURCHASE TRANSACTION, THE PURCHASE OF CERTAIN ASSETS OF CAPSOL-CERTWOOD UK LTD. BY BERRY UK AND THE PESCOR MERGER TRANSACTION; AND, ACCORDINGLY, ALL SUCH TRANSACTIONS ARE DEEMED TO BE PERMITTED ACQUISITIONS. The definition of "Permitted Uses" on pages 37 and 38 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "PERMITTED USES" MEANS (A) THE PAYMENT OF THE CASH CONSIDERATION IN THE PESCOR MERGER FOLLOWING THE CONSUMMATION OF THE PESCOR MERGER TRANSACTION; PROVIDED THAT THE PARENT CONTRIBUTES ALL OF THE PESCOR STOCK TO THE BORROWER IMMEDIATELY FOLLOWING THE PESCOR MERGER, (B) THE REFINANCING AND PAYMENT OF ALL OBLIGATIONS OF PESCOR TO ANY LENDERS WITH RESPECT TO ANY INDEBTEDNESS FOR BORROWED MONEY EXISTING AS OF THE PESCOR CLOSING DATE, (C) THE PAYMENT OF ALL COSTS AND EXPENSES REASONABLY INCURRED IN CONNECTION WITH THE CLOSING AND CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THE PESCOR MERGER TRANSACTION, (D) THE PAYMENT OF EXPENSES INCURRED IN THE ORDINARY COURSE OF BUSINESS OF THE BORROWER OR ANY SUBSIDIARY GUARANTOR, (E) THE ACQUISITION OF ANY PERMITTED ACQUISITION AS AND TO THE EXTENT PERMITTED BY THE PROVISIONS OF THIS AGREEMENT, (F) THE PAYMENT OF ALL COSTS AND EXPENSES REASONABLY INCURRED IN CONNECTION WITH THE CLOSING AND CONSUMMATION OF A PERMITTED ACQUISITION, (G) WITH RESPECT TO THE REVOLVING LOAN FOR GENERAL CORPORATE PURPOSES OF THE BORROWER OR ANY SUBSIDIARY GUARANTOR AND WITH RESPECT TO THE UK REVOLVING LOAN FOR GENERAL CORPORATE PURPOSES OF BERRY UK OR NIM HOLDINGS. The definitions of "Prepayment" and "Prepayments" on page 39 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "PREPAYMENT" MEANS A REVOLVING LOAN MANDATORY PREPAYMENT, A REVOLVING LOAN OPTIONAL PREPAYMENT, A TERM LOAN A MANDATORY PREPAYMENT, A TERM LOAN A OPTIONAL PREPAYMENT, A TERM LOAN B MANDATORY PREPAYMENT, A TERM LOAN B OPTIONAL PREPAYMENT, A TERM LOAN C OPTIONAL PREPAYMENT, A UK REVOLVING LOAN MANDATORY PREPAYMENT, A UK REVOLVING LOAN OPTIONAL PREPAYMENT, A UK TERM LOAN OPTIONAL PREPAYMENT OR A UK TERM LOAN MANDATORY PREPAYMENT, AS THE CASE MAY BE, AND "PREPAYMENTS" MEAN COLLECTIVELY ALL REVOLVING LOAN MANDATORY PREPAYMENTS, ALL REVOLVING LOAN OPTIONAL PREPAYMENTS, ALL TERM LOAN A MANDATORY PREPAYMENTS, ALL TERM LOAN A OPTIONAL PREPAYMENTS, ALL TERM LOAN B MANDATORY PREPAYMENTS, ALL TERM LOAN B OPTIONAL PREPAYMENTS, ALL TERM LOAN C OPTIONAL PREPAYMENTS, ALL UK REVOLVING LOAN MANDATORY PREPAYMENTS, ALL UK REVOLVING LOAN OPTIONAL PREPAYMENTS, ALL UK TERM LOAN MANDATORY PREPAYMENTS AND ALL UK TERM LOAN OPTIONAL PREPAYMENTS. The definition of "Revolving Credit Termination Date" on page 40 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "REVOLVING CREDIT TERMINATION DATE" MEANS THE EARLIER OF (A) JANUARY 21, 2004, (B) THE REPAYMENT OR PREPAYMENT OF THE TERM LOANS IN FULL, (C) THE DATE ON WHICH THE REVOLVING CREDIT COMMITMENTS ARE TERMINATED PURSUANT TO SECTION 7.2 (REMEDIES) OR OTHERWISE. The definition of "Security Agreement" on page 41 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "SECURITY AGREEMENT" MEANS THAT CERTAIN AMENDED AND RESTATED SECURITY AGREEMENT DATED AS OF THE PESCOR CLOSING DATE FROM EACH SUBSIDIARY GUARANTOR TO THE AGENT FOR THE BENEFIT OF THE LENDERS, RATABLY, AND THE AGENT, AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED IN WRITING AT ANY TIME AND FROM TIME TO TIME. The definition of "Seller" on page 41 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: "SELLER" MEANS WITH RESPECT TO (I) ANY SUBJECT TRANSACTION WHICH CONSTITUTES AN ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE SHARES OF SUCH SUBJECT TRANSACTION, THE PERSONS SELLING SUCH SHARES, AND (II) ANY SUBJECT TRANSACTION WHICH CONSTITUTES AN ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF SUCH SUBJECT TRANSACTION, THE PERSONS SELLING SUCH ASSETS. The definition of "Stock Pledge Agreement" on pages 43 and 44 of the Credit Agreement, as amended by the First Amendment and the Second Amendment, is hereby deleted in its entirety and the following is substituted in its place: "STOCK PLEDGE AGREEMENT" MEANS (A) THAT CERTAIN AMENDED AND RESTATED STOCK PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT DATED AS OF THE PESCOR CLOSING DATE FROM THE BORROWER TO THE AGENT FOR THE BENEFIT OF THE LENDERS RATABLY AND THE AGENT, (B) THE UK STOCK PLEDGE AGREEMENT, (C) THAT CERTAIN AMENDED AND RESTATED STOCK PLEDGE AGREEMENT, ASSIGNMENT AND SECURITY AGREEMENT DATED AS OF MAY 9, 2000 FROM CPI TO THE AGENT FOR THE BENEFIT OF THE LENDERS RATABLY AND THE AGENT, AND (D) THE ITALIAN STOCK PLEDGE AGREEMENT, ALL AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED. 1. The definitions of "Subsidiary Guarantor" and "Subsidiary Guarantors" on pages 44 and 45 of the Credit Agreement are hereby deleted in their entirety and the following is substituted in their places: "SUBSIDIARY GUARANTOR" MEANS BIC, BTP, AEROCON, BERRY STERLING, PACKERWARE, BERRY DESIGN, BERRY VENTURE, VENTURE SOUTHEAST, VENTURE MIDWEST, KNIGHT, CPI, CARDINAL, POLY-SEAL, BERRY ITALY, PESCOR OR ANY OTHER DOMESTIC SUBSIDIARY (ORGANIZED AND EXISTING UNDER THE LAWS OF ANY STATE IN THE UNITED STATES) OF THE BORROWER OR THE PARENT WHICH IS DESIGNATED AND QUALIFIES AS A SUBSIDIARY GUARANTOR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.2.2 (SUBSIDIARIES), OR ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AS THE CASE MAY BE; AND, "SUBSIDIARY GUARANTORS" MEANS BIC, BTP, AEROCON, BERRY STERLING, BERRY DESIGN, PACKERWARE, BERRY VENTURE, VENTURE SOUTHEAST, VENTURE MIDWEST, KNIGHT, CPI, CARDINAL, POLY-SEAL, BERRY ITALY, PESCOR AND EACH OTHER DOMESTIC SUBSIDIARY OF THE BORROWER DESIGNATED AND QUALIFIED AS A "SUBSIDIARY GUARANTOR" IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.2.2 (SUBSIDIARIES), AND ALL OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. 2. The definitions of "Term Loan" and "Term Loans" on page 46 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "TERM LOAN" MEANS EITHER A TERM LOAN A, A TERM LOAN B, A TERM LOAN C OR A UK TERM LOAN; AND "TERM LOANS" MEANS EACH TERM LOAN A, TERM LOAN B, TERM LOAN C AND UK TERM LOAN. 3. The definitions of "Term Note" and "Term Notes" on page 46 of the Credit Agreement are hereby deleted in their entirety and the following are substituted in their places: "TERM NOTE" MEANS A TERM LOAN A NOTE, A TERM LOAN B NOTE, A TERM LOAN C NOTE, OR A UK TERM LOAN NOTE; "TERM NOTES" MEANS EACH TERM LOAN A NOTE, EACH TERM LOAN B NOTE, EACH TERM LOAN C NOTE AND EACH UK TERM LOAN NOTE. 4. Section 2.1.1 on pages 51 and 52 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: 2.1.1 REVOLVING CREDIT FACILITY. Subject to and upon the terms of this Agreement, the Lenders collectively, but severally, establish a revolving credit facility in favor of the Borrower. The aggregate of all advances under the Revolving Credit Facility is sometimes referred to in this Agreement collectively as the "Revolving Loan". The amount set forth below opposite each Lender's name is herein called such Lender's "Revolving Credit Committed Amount" and the total of each Lender's Revolving Credit Committed Amount is herein called the "Total Revolving Credit Committed Amount". The proportionate share set forth below opposite each Lender's name is herein called such Lender's "Revolving Credit Pro Rata Share":
LENDER REVOLVING REVOLVING CREDIT CREDIT PRO COMMITTED RATA SHARE AMOUNT FLEET $14,545,600 18.182% GE CAPITAL $ 7,096,829 8.871036249% BANK OF AMERICA $15,757,600 19.697% HELLER $12,121,600 15.152% PNC $12,121,600 15.152% PROVIDENT $ 5,556,771 6.945963751% LASALLE $12,800,000 16.000% TOTAL REVOLVING CREDIT COMMITTED AMOUNT $80,000,000.00 100.000%
Neither the Agent nor any of the Lenders shall be responsible for the Revolving Credit Commitment of any other Lender, nor will the failure of any Lender to perform its obligations under its Revolving Credit Commitment in any way relieve any other Lender from performing its obligations under its Revolving Credit Commitment. DURING THE REVOLVING CREDIT COMMITMENT PERIOD, THE BORROWER MAY REQUEST ADVANCES UNDER THE REVOLVING CREDIT FACILITY IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT; PROVIDED THAT AFTER GIVING EFFECT TO THE BORROWER'S REQUEST: (a) the outstanding principal balance of each Lender's Pro Rata Share of the Revolving Loan and the Letter of Credit Obligations would not exceed the lesser of (i) such Lender's Pro Rata Share of the Total Revolving Credit Committed Amount or (ii) such Lender's Pro Rata Share of the Borrowing Base; and, (B) THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN AND ALL LETTER OF CREDIT OBLIGATIONS WOULD NOT EXCEED THE LESSER OF (I) THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT OR (II) THE BORROWING BASE. IN ADDITION, THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE REVOLVING LOAN, ALL LETTER OF CREDIT OBLIGATIONS AND THE UK REVOLVING LOAN CANNOT EXCEED THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT. 5. The additional provisions added to the third paragraph of Section 2.1.2 on page7 and 8 of the Second Amendment are hereby deleted in their entirety and the following are substituted in their places: THE BORROWER AND THE LENDERS HEREBY IRREVOCABLY AUTHORIZE THE AGENT, ON BEHALF OF THE LENDERS, AT ANY TIME AND FROM TIME TO TIME, WITHOUT REQUEST FROM, PRIOR NOTICE TO, OR CONSENT OF, THE BORROWER OR ANY OF THE LENDERS TO MAKE ADVANCES UNDER THE REVOLVING LOAN TO REPAY ALL OR ANY PORTION OF THE ITALIAN OBLIGATIONS (EACH, AN "ITALIAN OBLIGATION ADVANCE" AND COLLECTIVELY, THE "ITALIAN OBLIGATION ADVANCES"). THE AGENT AGREES THAT AN ITALIAN OBLIGATION ADVANCE MAY BE MADE ONLY (I) UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT UNDER EITHER OR BOTH OF THE ITALIAN CREDIT AGREEMENTS OR (II) IF ALL OR ANY PORTION OF THE ITALIAN OBLIGATIONS ARE NOT PAID AS AND WHEN DUE AND PAYABLE (SUBJECT TO ANY APPLICABLE NOTICE, GRACE AND CURE PERIODS) IN ACCORDANCE WITH THE TERMS OF THE ITALIAN CREDIT AGREEMENTS. THE BORROWER ACKNOWLEDGES AND AGREES THAT NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, THE AGENT SHALL BE ENTITLED TO REQUIRE ITALIAN OBLIGATION ADVANCES REGARDLESS OF WHETHER THE OUTSTANDING PRINCIPAL AMOUNT OF THE REVOLVING LOAN AFTER TAKING INTO ACCOUNT ANY SUCH ITALIAN OBLIGATION ADVANCES EXCEEDS OR WOULD EXCEED THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT; PROVIDED THAT UNDER NO CIRCUMSTANCES SHALL THE AGGREGATE PRINCIPAL AMOUNT OF ITALIAN OBLIGATION ADVANCES EXCEED THE DOLLAR CURRENCY EQUIVALENT OF THE THEN OUTSTANDING ITALIAN OBLIGATIONS; NO LENDER, HOWEVER, SHALL HAVE ANY OBLIGATION OR COMMITMENT TO MAKE ANY ADVANCE TO OR FOR THE ACCOUNT OF THE BORROWER UNDER THE REVOLVING LOAN (INCLUDING ANY OBLIGATION OR COMMITMENT TO PURCHASE ANY PARTICIPATION INTEREST IN THE ITALIAN OBLIGATIONS) UNLESS OTHERWISE AGREED IN WRITING BY SUCH LENDER, IF AND TO THE EXTENT SUCH LENDER'S PRO RATA SHARE OF THE REVOLVING LOAN WOULD EXCEED, WITH THE MAKING OF SUCH ADVANCE OR REIMBURSEMENT, SUCH LENDER'S REVOLVING CREDIT COMMITTED AMOUNT. 6. The first paragraph of Section 2.1.3 on page 53 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: AS USED IN THIS AGREEMENT, THE TERM "BORROWING BASE" MEANS AT ANY TIME, AN AMOUNT EQUAL TO THE AGGREGATE OF (A) EIGHTY-FIVE PERCENT (85%) OF THE AMOUNT OF ELIGIBLE DOMESTIC RECEIVABLES, PLUS (B) THE LESSER OF (I) SIXTY-FIVE PERCENT (65%) OF THE AMOUNT OF ELIGIBLE DOMESTIC INVENTORY OR (II) THIRTY-EIGHT MILLION DOLLARS ($38,000,000). 7. Section 2.1.12 on pages 58 and 59 of the Credit Agreement, as amended by the First Amendment and the Second Amendment, is hereby deleted in its entirety and the following is substituted in its place: 2.1.12 REQUIRED AVAILABILITY UNDER THE REVOLVING CREDIT FACILITY. ON AN AVERAGE MONTHLY BASIS, TESTED AS OF THE LAST DAY OF EACH CALENDAR MONTH, COMMENCING WITH THE FIRST SUCH DATE FOLLOWING THE CLOSING DATE, THE OUTSTANDING PRINCIPAL AMOUNT OF THE REVOLVING LOAN SHALL NOT EXCEED AN AMOUNT EQUAL TO (X) THE GREATER OF (I) THE BORROWING BASE, OR (II) THE TOTAL REVOLVING CREDIT COMMITTED AMOUNT, MINUS (y) $9,470,000 (the "Required Availability"). The Borrower shall make a Revolving Loan Mandatory Prepayment pursuant to the provisions of Section 2.1.6 to the extent necessary to achieve and maintain compliance with this Section. The failure of the Borrower to make any such Revolving Loan Mandatory Prepayment shall constitute a Default, but shall not constitute an Event of Default unless such failure to make the required Revolving Loan Mandatory Prepayment continues uncured for a period of fourteen (14) days or the Borrower otherwise fails to attain and maintain the Required Availability within such fourteen (14) day period. NOTWITHSTANDING THE FOREGOING, THE REQUIRED AVAILABILITY SHALL BE REDUCED MONTHLY AS OF THE LAST DAY OF EACH CALENDAR MONTH TO THE AMOUNTS SET FORTH BELOW; PROVIDED THAT THE SCHEDULED PRINCIPAL PAYMENTS ON ACCOUNT OF TERM LOANS B DUE AS OF THE FIRST DAY OF EACH SUCH MONTH ARE MADE AS AND WHEN DUE AND PAYABLE: REQUIRED AVAILABILITY DATE $ 8,740,000 JUNE 1, 2001 $ 8,010,000 July 1, 2001 $ 7,280,000 AUGUST 1, 2001 $ 7,000,000 September 1, 2001 and ALL TIMES THEREAFTER IN ADDITION TO THE REQUIRED AVAILABILITY, THE BORROWER UNDERSTANDS AND AGREES THAT THE AGENT SHALL ESTABLISH AND MAINTAIN AN ADDITIONAL RESERVE AGAINST AVAILABILITY UNDER THE REVOLVING LOAN IN AN AMOUNT EQUAL AT ALL TIMES TO THE DOLLAR CURRENCY EQUIVALENT OF THE MAXIMUM AMOUNT (INCLUDING PRINCIPAL, INTEREST AND FEES) WHICH IS AND/OR MAY BE OUTSTANDING AT ANY TIME AND FROM TIME TO TIME UNDER THE ITALIAN CREDIT FACILITY (THE "ITALIAN CREDIT FACILITY REQUIRED AVAILABILITY"). THE AGENT AND THE LENDERS AGREE THAT THE ITALIAN CREDIT FACILITY REQUIRED AVAILABILITY IS IN SUBSTITUTION FOR, AND IN REPLACEMENT OF, THE PERMITTED ACQUISITION REQUIRED AVAILABILITY AND ACCORDINGLY CONSTITUTES A REPLACEMENT OF A PORTION OF THE REVOLVING CREDIT FACILITY AND NOT A PERMANENT REDUCTION OF THE REVOLVING CREDIT COMMITMENTS. THE BORROWER FURTHER UNDERSTANDS AND AGREES THAT THE AMOUNT OF THE ITALIAN CREDIT FACILITY REQUIRED AVAILABILITY MAY CHANGE FROM TIME TO TIME AS DETERMINED BY THE AGENT IN ITS SOLE DISCRETION TO TAKE INTO ACCOUNT ANY APPLICABLE FOREIGN EXCHANGE FLUCTUATIONS BETWEEN DOLLARS AND EUROS. THE BORROWER FURTHER UNDERSTANDS AND AGREES THAT THE ITALIAN CREDIT FACILITY REQUIRED AVAILABILITY MAY AT ANY TIME AND FROM TIME TO TIME EXCEED THE ITALIAN REVOLVING CREDIT COMMITTED AMOUNT IF AND TO THE EXTENT THE UNPAID BALANCE OF THE DOLLAR CURRENCY EQUIVALENT OF THE ITALIAN OBLIGATIONS EXCEEDS OR IS EXPECTED TO EXCEED THE DOLLAR CURRENCY EQUIVALENT OF THE ITALIAN REVOLVING CREDIT COMMITTED AMOUNT. 8. The reference to each Lender's Term Loan A Pro Rata Share on pages 59 and 60 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place:
LENDER TERM LOAN A PRO RATA SHARE FLEET 18.182% GE CAPITAL 8.871036249% BANK OF AMERICA 19.697% HELLER 15.152% PNC 15.152% PROVIDENT 6.945963751% LASALLE 16.000% TOTAL TERM LOAN B COMMITTED AMOUNT 100%
9. Section 2.2.2 on page 60 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: 2.2.2 AMORTIZATION OF TERM LOANS A; THE TERM LOAN A NOTES. The unpaid principal balance of the Term Loans A shall be due and payable in monthly installments of principal on each Installment Payment Date, each in the following amounts during the following periods: PERIOD AMOUNT May 1, 2001 through and and including January 1, 2004 $1,042,000 January 21, 2004 The then unpaid principal balance Unless sooner paid, the unpaid principal balance of the Term Loans A, together with interest accrued and unpaid thereon, shall be due and payable in full on the first to occur of (i) January 21, 2004 or (ii) the Revolving Credit Termination Date. THE OBLIGATION OF THE BORROWER TO PAY THE TERM LOANS A, WITH INTEREST, SHALL BE EVIDENCED BY A SERIES OF AMENDED AND RESTATED PROMISSORY NOTES (EACH AS FROM TIME TO TIME EXTENDED, AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED, A "TERM LOAN A NOTE" AND COLLECTIVELY, THE "TERM LOAN A NOTES"). EACH TERM LOAN A NOTE SHALL BE DATED AS THE PESCOR CLOSING DATE AND SHALL BE PAYABLE TO THE ORDER OF A LENDER AT THE TIMES PROVIDED IN THE TERM LOAN A NOTE, AND SHALL BE IN THE PRINCIPAL AMOUNT OF SUCH LENDER'S TERM LOAN A COMMITTED AMOUNT, INCLUDING ITS PRO RATA SHARE OF THE TERM LOAN A INCREASE. 10. Section 2.2.3 on pages 60 and 61 of the Credit Agreement is hereby amended to provide that if Term Loans A and Term Loans B have been paid in full by a Term Loan A Mandatory Prepayment made under subpart (a) of Section 2.2.3 or otherwise, the excess proceeds of each such Term Loan A Mandatory Prepayment due and payable under subpart (a) shall be applied to the then unpaid balance of the Term Loans C as a Term Loan C Optional Prepayment prior to being paid as a Revolving Loan Mandatory Prepayment. 11. The reference to each Lender's Term Loan B Pro Rata Share on page 62 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place:
LENDER TERM LOAN B PRO RATA SHARE FLEET 18.182% GE CAPITAL 8.871036249% BANK OF AMERICA 19.697% HELLER 15.152% PNC 15.152% PROVIDENT 6.945963751% LASALLE 16.000% TOTAL TERM LOAN B COMMITTED AMOUNT 100%
12. Section 2.3.2 on page 63 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: SECTION 2.3.2 AMORTIZATION OF TERM LOANS B; THE TERM LOAN B NOTES. THE UNPAID PRINCIPAL BALANCE OF THE TERM LOANS B SHALL BE DUE AND PAYABLE IN MONTHLY INSTALLMENTS OF PRINCIPAL ON EACH INSTALLMENT PAYMENT DATE, EACH IN THE AMOUNT OF $730,000. UNLESS SOONER PAID, THE UNPAID PRINCIPAL BALANCE OF THE TERM LOANS B, TOGETHER WITH INTEREST ACCRUED AND UNPAID THEREON, SHALL BE DUE AND PAYABLE IN FULL ON THE FIRST TO OCCUR OF (I) JANUARY 21, 2004 OR (II) THE REVOLVING CREDIT TERMINATION DATE. THE OBLIGATION OF THE BORROWER TO PAY THE TERM LOANS B, WITH INTEREST, SHALL BE EVIDENCED BY A SERIES OF PROMISSORY NOTES (EACH AS FROM TIME TO TIME EXTENDED, AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED, THE "TERM LOAN B NOTE" AND COLLECTIVELY, THE "TERM LOAN B NOTES"). EACH TERM LOAN B NOTE SHALL BE DATED AS THE DATE CLOSING DATE AND SHALL BE PAYABLE TO THE ORDER OF A LENDER AT THE TIMES PROVIDED IN THE TERM LOAN B NOTE, AND SHALL BE IN THE PRINCIPAL AMOUNT OF SUCH LENDER'S TERM LOAN B COMMITTED AMOUNT, INCLUDING ITS PRO RATA SHARE OF THE TERM LOAN B INCREASE. 13. The reference to each Lender's UK Revolving Credit Pro Rata Share on page 71 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place:
LENDER UK REVOLVING CREDIT PRO RATA SHARE FLEET 18.182% GE CAPITAL 8.871036249% BANK OF AMERICA 19.697% HELLER 15.152% PNC 15.152% PROVIDENT 6.945963751% LASALLE 16.000% UK REVOLVING CREDIT COMMITTED AMOUNT 100%
14. The reference to each Lender's UK Term Loan Pro Rata Share on page 77 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place:
LENDER UK TERM LOAN PRO RATA SHARE FLEET 18.182% GE CAPITAL 8.871036249% BANK OF AMERICA 19.697% HELLER 15.152% PNC 15.152% PROVIDENT 6.945963751% LASALLE 16.000% UK TERM LOAN COMMITTED AMOUNT 100%
15. Section 2.8.6 on pages 8, 9 and 10 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: 2.8.6 PARTICIPATIONS IN THE ITALIAN OBLIGATIONS. Each Lender (including Bank of America) hereby irrevocably authorizes Bank of America Italy to make advances under the Italian Revolving Credit Facility (including advances under any and all overdraft facilities) in accordance with the provisions of either or both of the Italian Credit Agreements. As of the date each such Italian Revolving Credit Loan is made, each Lender shall have an undivided participating interest in (a) the rights and obligations of Bank of America Italy under each such Italian Revolving Credit Loan, and (b) the Italian Obligations with respect to such Italian Revolving Credit Loan, in an amount equal to each Lender's Pro Rata Share thereof, subject to the rights of Bank of America Italy to receive and retain payment of all or a portion of the interest on the Italian Obligations as set forth in this Section and any fronting fees or other fees as set forth in the Italian Credit Agreements. If the Italian Holding Company, Capsol Italy and/or Ociesse fail to pay to Bank of America Italy, any Italian Obligations as and when due and payable (subject to any applicable notice, grace or cure period), the Agent shall promptly notify each of the Lenders and may demand payment from each of the Lenders of such Lender's Pro Rata Share of such unpaid Italian Obligations. In addition, if any amount paid to Bank of America Italy on account of the Italian Obligations is rescinded or required to be restored or turned over by Bank of America Italy, upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Italian Holding Company, Capsol Italy and/or Ociesse or upon or as a result of the appointment of a receiver, intervenor, trustee, conservator or similar officer for the Italian Holding Company, Capsol Italy and/or Ociesse, the Agent shall promptly notify each of the Lenders and may demand payment from each of the Lenders of its Pro Rata Share of its portion of the Italian Obligations to be remitted to the Italian Holding Company, Capsol Italy and/or Ociesse. Subject to Section 2.1.2, each of the Lenders irrevocably and unconditionally agrees to honor any such demands for payment under this Section and promises to pay to the account of the Agent for the benefit of Bank of America Italy on the same Business Day as demanded the amount of its Pro Rata Share of the Italian Obligations in Euros and/or Dollars, as requested by the Agent, in immediately available funds, without any setoff, counterclaim or deduction of any kind. Any payment by a Lender hereunder shall in no way release, discharge or lessen the obligation of the Italian Holding Company, Capsol Italy, Ociesse, the Borrower or any Subsidiary Guarantor to pay the Italian Obligations to Bank of America Italy, in accordance with the provisions of the Italian Credit Agreements. The date on which a payment is made by a Lender to the Agent for the account of Bank of America Italy shall be referred to as a "Italian Payment Date". THE OBLIGATION OF EACH OF THE LENDERS TO REMIT THE AMOUNTS OF ITS PRO RATA SHARE OF THE ITALIAN OBLIGATIONS FOR THE ACCOUNT OF BANK OF AMERICA ITALY, PURSUANT TO THIS SECTION SHALL BE UNCONDITIONAL AND IRREVOCABLE UNDER ANY AND ALL CIRCUMSTANCES (BUT SUBJECT TO SECTION 2.1.2) AND MAY NOT BE TERMINATED, SUSPENDED OR DELAYED FOR ANY REASON WHATSOEVER, PROVIDED THAT ALL PAYMENTS OF SUCH AMOUNTS BY EACH OF THE LENDERS SHALL BE WITHOUT PREJUDICE TO THE RIGHTS OF EACH OF THE LENDERS WITH RESPECT TO ANY ALLEGED WILLFUL MISCONDUCT OF BANK OF AMERICA ITALY. ANY CLAIM ANY LENDER MAY HAVE AGAINST BANK OF AMERICA ITALY AS A RESULT OF ANY ALLEGED WILLFUL MISCONDUCT OF BANK OF AMERICA ITALY MAY BE BROUGHT BY SUCH LENDER IN A SEPARATE ACTION AGAINST BANK OF AMERICA ITALY, BUT MAY NOT BE USED AS A DEFENSE TO PAYMENT UNDER THE PROVISIONS OF THIS SECTION. All interest on the unpaid principal balance of the Italian Obligations shall be payable to, and retained by, Bank of America Italy, except with respect to those Italian Obligations for which the Agent on account of Bank of America Italy, has demanded and received payment from a Lender pursuant to the provisions of this Section (each an "Italian Lender Payment"), in which case, the Lender making such payment shall be entitled to receive all interest payable on the Italian Obligations represented by such Italian Lender Payment at all times from and after the Italian Payment Date for such Italian Lender Payment (the "Lender's Share of Italian Interest"). Any payments received by Bank of America Italy, which are payable to a Lender shall be paid to such Lender in Euros and/or Dollars, as the case may be, in accordance with all payments to be made by the Agent to a Lender under the provisions of Section 2.12. EXCEPT TO THE EXTENT THAT THE AGENT ON BEHALF OF BANK OF AMERICA ITALY SHALL HAVE MADE DEMAND ON THE LENDERS FOR PAYMENT OF THEIR PRO RATA SHARE OF THE ITALIAN OBLIGATIONS (THE "ITALIAN OBLIGATIONS DEMAND DATE"), THE AGENT SHALL REMIT TO EACH LENDER FROM TIME TO TIME (BUT AT LEAST ONCE MONTHLY) SUCH LENDER'S PRO RATA SHARE OF THAT PORTION OF THE INTEREST PAID TO, AND RECEIVED BY, BANK OF AMERICA ITALY, IN COLLECTED FUNDS ON ACCOUNT OF SUCH LENDER'S UNFUNDED ITALIAN OBLIGATIONS CALCULATED AT THE APPLICABLE ITALIAN MARGIN FOR SUCH ITALIAN OBLIGATIONS ONLY; BANK OF AMERICA ITALY SHALL RETAIN ALL INTEREST CALCULATED AT BASE RATE OR BASE RATES PROVIDED IN THE ITALIAN CREDIT AGREEMENTS. SUCH PAYMENTS SHALL BE PAYABLE TO THE LENDERS IN CONSIDERATION OF THEIR AGREEMENT TO PURCHASE A PARTICIPATION INTEREST IN THE ITALIAN OBLIGATIONS IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, BUT SHALL BE PAYABLE ONLY IF AND TO THE EXTENT BANK OF AMERICA ITALY HAS RECEIVED THE INTEREST PAYMENT WHICH IS THE BASIS FOR SUCH PAYMENT TO THE LENDERS. Section 2.9.1(c) on page 84 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: (C) THE APPLICABLE MARGIN FOR (I) LIBOR LOANS, OTHER THAN THE UK TERM LOANS, TERM LOANS A, TERM LOANS B AND TERM LOANS C SHALL BE TWO HUNDRED TWENTY-FIVE (225) BASIS POINTS PER ANNUM, (II) LIBOR LOANS CONSISTING OF TERM LOANS A AND TERM LOANS C, SHALL BE TWO HUNDRED FIFTY (250) BASIS POINTS PER ANNUM, (III) LIBOR LOANS CONSISTING OF THE UK TERM LOANS, SHALL BE TWO HUNDRED SEVENTY-FIVE (275) BASIS POINTS PER ANNUM, (IV) LIBOR LOANS CONSISTING OF TERM LOANS B, SHALL BE THREE HUNDRED (300) BASIS POINTS PER ANNUM, (V) BASE RATE LOANS CONSISTING OF THE REVOLVING LOAN, SHALL BE TWENTY-FIVE (25) BASIS POINTS, (VI) BASE RATE LOANS CONSISTING OF TERM LOANS A AND TERM LOANS C, SHALL BE FIFTY (50) BASIS POINTS PER ANNUM, AND (VII) BASE RATE LOANS CONSISTING OF TERM LOANS B, SHALL BE ONE HUNDRED (100) BASIS POINTS, UNLESS AND UNTIL A CHANGE IS REQUIRED BY THE OPERATION OF SECTION 2.9.1(D). IN ADDITION, THE MANDATORY LIQUID ASSET COST RATE SHALL BE ADDED TO THE APPLICABLE MARGIN FOR EACH LIBOR LOAN MADE OR TO BE MADE UNDER THE UK CREDIT FACILITIES. Section 2.10.4 on page 90 is hereby deleted in its entirety and the following is substituted in its place: 2.10.4 COMMITMENT FEE The Borrower shall pay to the Agent for the ratable benefit of the Lenders, based on each Lender's Pro Rata Share of the Commitments, a commitment fee (the "Commitment Fee") in the aggregate amount of Sixty Thousand Dollars ($60,000) in consideration of each Lender's agreement to increase such Lender's Pro Rata Share of the Revolving Credit Commitment and the Term Loan A Increase. The Commitment Fee shall be payable on or before the Pescor Closing Date and shall be deemed fully earned on the date paid and is non-refundable. Section 2.10.5 on page 91 is hereby deleted in its entirety and the following is substituted in its place: 2.10.5 CONSENT FEE. The Borrower shall pay to the Agent for the ratable benefit of the Lenders, based on each Lender's Pro Rata Share of the Commitments, a consent fee (the "Consent Fee") in the aggregate amount of Four Hundred Twenty-three Thousand Three Hundred Eighteen Dollars ($423,318.00) in consideration of the Lenders' consent to the extension of the Credit Facilities and the Pescor Merger Transaction. The Consent Fee shall be payable on or before the Pescor Closing Date and shall be deemed fully earned on the date paid and is non-refundable. Article 2 of the Credit Agreement is hereby amended to add the following Sections: SECTION 2.12 THE TERM LOAN C FACILITY 2.12.1 TERM LOAN C COMMITMENTS. SUBJECT TO AND UPON THE TERMS OF THIS AGREEMENT, EACH LENDER SEVERALLY AGREES TO MAKE A LOAN (EACH A "TERM LOAN C"; AND COLLECTIVELY, THE "TERM LOANS C") TO THE BORROWER IN THE PRINCIPAL AMOUNT SET FORTH BELOW OPPOSITE SUCH LENDER'S NAME (HEREIN CALLED SUCH LENDER'S "TERM LOAN C COMMITTED AMOUNT"). THE TOTAL OF EACH LENDER'S TERM LOAN C COMMITTED AMOUNT IS HEREIN CALLED THE "TOTAL TERM LOAN C COMMITTED AMOUNT". THE PROPORTIONATE SHARE SET FORTH BELOW OPPOSITE EACH LENDER'S NAME IS HEREIN CALLED SUCH LENDER'S "TERM LOAN C PRO RATA SHARE": TERM LOAN C TERM LOAN C LENDER COMMITTED AMOUNT PRO RATA SHARE Fleet $363,640.00 18.182% GE Capital $177,420.72 8.871036249% Bank of America $393,940.00 19.697% Heller $303,040.00 15.152% PNC $303,040.00 15.152% Provident $138,919.28 6.945963751% LaSalle $320,000.00 16% TOTAL TERM LOAN C COMMITTED AMOUNT: $2,000,000 100% THE OBLIGATION OF EACH LENDER TO MAKE A TERM LOAN C IS SEVERAL AND IS LIMITED TO ITS TERM LOAN C COMMITTED AMOUNT, AND SUCH OBLIGATION OF EACH LENDER IS HEREIN CALLED ITS "TERM LOAN C COMMITMENT". THE TERM LOAN C COMMITMENT OF EACH OF THE LENDERS ARE HEREIN COLLECTIVELY REFERRED TO AS THE "TERM LOAN C COMMITMENTS". THE AGENT SHALL NOT BE RESPONSIBLE FOR THE TERM LOAN C COMMITMENT OF ANY LENDER; AND SIMILARLY, NONE OF THE LENDERS SHALL BE RESPONSIBLE FOR THE TERM LOAN C COMMITMENT OF ANY OF THE OTHER LENDERS; THE FAILURE, HOWEVER, OF ANY LENDER TO PERFORM ITS TERM LOAN C COMMITMENT SHALL NOT RELIEVE ANY OF THE OTHER LENDERS FROM THE PERFORMANCE OF THEIR RESPECTIVE TERM LOAN C COMMITMENTS. 2.12.2 AMORTIZATION OF TERM LOANS C; THE TERM LOAN C NOTES. THE UNPAID PRINCIPAL BALANCE OF THE TERM LOANS C SHALL BE DUE AND PAYABLE IN EQUAL MONTHLY INSTALLMENTS OF PRINCIPAL ON EACH INSTALLMENT PAYMENT DATE, EACH IN THE AMOUNT WHEN APPLIED TO THE PRINCIPAL AMOUNT OF TERM LOANS C WILL FULLY AMORTIZE ALL TERM LOANS C OVER A PERIOD OF FIVE (5) YEARS. Unless sooner paid, the unpaid principal balance of the Term Loans C, together with interest accrued and unpaid thereon, shall be due and payable in full on the first to occur of (i) January 21, 2004 or (ii) the Revolving Credit Termination Date. THE OBLIGATION OF THE BORROWER TO PAY THE TERM LOANS C, WITH INTEREST, SHALL BE EVIDENCED BY A SERIES OF AMENDED AND RESTATED PROMISSORY NOTES (EACH AS FROM TIME TO TIME EXTENDED, AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED, A "TERM LOAN C NOTE" AND COLLECTIVELY, THE "TERM LOAN C NOTES"). EACH TERM LOAN C NOTE SHALL BE DATED AS THE PESCOR CLOSING DATE AND SHALL BE PAYABLE TO THE ORDER OF A LENDER AT THE TIMES PROVIDED IN THE TERM LOAN C NOTE, AND SHALL BE IN THE PRINCIPAL AMOUNT OF SUCH LENDER'S TERM LOAN C COMMITTED AMOUNT. 2.12.3 OPTIONAL PREPAYMENTS OF TERM LOANS C. SUBJECT TO THE PROVISIONS OF SECTION 2.9.4 (INDEMNITY), THE BORROWER MAY, AT ITS OPTION, AT ANY TIME AND FROM TIME TO TIME, PREPAY (EACH A "TERM LOAN C OPTIONAL PREPAYMENT" AND COLLECTIVELY THE "TERM LOAN C OPTIONAL PREPAYMENTS") THE TERM LOANS C, IN WHOLE OR IN PART, UPON FIVE (5) BUSINESS DAYS PRIOR WRITTEN NOTICE, SPECIFYING THE DATE AND AMOUNT OF PREPAYMENT. THE AMOUNT TO BE SO PREPAID, TOGETHER WITH INTEREST ACCRUED THEREON TO DATE OF PREPAYMENT IF THE AMOUNT IS INTENDED AS A PREPAYMENT OF THE TERM LOANS C IN WHOLE, SHALL BE PAID BY THE BORROWER TO THE AGENT FOR THE RATABLE BENEFIT OF THE LENDERS ON THE DATE SPECIFIED FOR SUCH PREPAYMENT. PARTIAL TERM LOAN C OPTIONAL PREPAYMENTS SHALL BE APPLIED TO ALL OF THE REMAINING PRINCIPAL INSTALLMENTS DUE ON ACCOUNT OF THE TERM LOANS C ON A PRO RATA BASIS. Section 4.1.3 on pages 107 the Credit Agreement is hereby amended to add the following provisions: EACH OF THE PARENT, THE BORROWER AND THEIR RESPECTIVE SUBSIDIARIES, AS THE CASE MAY BE, HAS FULL CORPORATE POWER AND AUTHORITY TO EXECUTE AND DELIVER THE THIRD AMENDMENT, ALL OTHER FINANCING DOCUMENTS (RELATING TO THE THIRD AMENDMENT OR OTHERWISE), AND THE PESCOR MERGER DOCUMENTS TO WHICH IT IS A PARTY, TO MAKE THE BORROWINGS AND REQUEST LETTERS OF CREDIT AND BOND LETTERS OF CREDIT UNDER THIS AGREEMENT (AS AMENDED BY THE THIRD AMENDMENT AND OTHERWISE), TO CLOSE AND CONSUMMATE EACH ASPECT OF THE PESCOR MERGER TRANSACTION, AS APPROPRIATE AND TO INCUR AND PERFORM THE OBLIGATIONS WHETHER UNDER THIS AGREEMENT (AS AMENDED BY THE THIRD AMENDMENT OR OTHERWISE), THE OTHER FINANCING DOCUMENTS, THE PESCOR MERGER DOCUMENTS, ALL OF WHICH HAVE BEEN DULY AUTHORIZED BY ALL PROPER AND NECESSARY CORPORATE ACTION. NO CONSENT OR APPROVAL OF SHAREHOLDERS OR ANY CREDITORS OF THE PARENT, THE BORROWER OR ANY SUBSIDIARY, AND NO CONSENT, APPROVAL, FILING OR REGISTRATION WITH OR NOTICE TO ANY GOVERNMENTAL AUTHORITY ON THE PART OF THE PARENT, THE BORROWER OR ANY SUBSIDIARY, IS REQUIRED AS A CONDITION TO THE EXECUTION, DELIVERY, VALIDITY OR ENFORCEABILITY OF THE THIRD AMENDMENT, THE OTHER FINANCING DOCUMENTS (RELATED TO THE THIRD AMENDMENT OR OTHERWISE), ANY OF THE PESCOR MERGER DOCUMENTS, THE PERFORMANCE BY THE BORROWER OF THE OBLIGATIONS OR THE CLOSING AND CONSUMMATION OF THE PESCOR MERGER TRANSACTION, IN EACH CASE, IF REQUIRED, THE SAME HAS BEEN DULY OBTAINED. Section 4.1.12 on page 109 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: 4.1.12 PRO FORMA FINANCIAL STATEMENTS. The Borrower has furnished to the Agent a pro-forma consolidated balance sheet of the Borrower and the Subsidiaries as of a date on or about March 31, 2001 (the "Pro-forma Date"), but giving effect to the Pescor Merger Transaction and the transactions incident thereto (the "Pro-forma Balance Sheet") together with pro-forma financial projections of the Parent for the five-year period subsequent to the Pescor Merger Transaction (the "Pro-forma Financial Projections"). A copy of the Pro-forma Balance Sheet and the Pro-forma Financial Projections are attached hereto as Exhibits C-1 and C-2, respectively. The Pro- forma Balance Sheet is correct and complete, has been prepared in accordance with GAAP, and fairly presents in all material respects the consolidated financial condition of the Borrower and the Subsidiaries as of the Pro-forma Date, but giving effect to the Pescor Merger Transaction and the transactions incident thereto. The Pro-forma Financial Projections represent the best estimate of the future operations of the Parent and are based on reasonable and conservative assumptions, but do not constitute a guaranty of actual performance. Section 4.1.29 on page 113 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: HART-SCOTT-RODINO. The Borrower, the Seller and all other necessary Persons, as appropriate, have made such filings, if any, as may be required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and have provided such supplemental information that may be required by such Act, with respect to the sales contemplated by the Pescor Merger Transaction. The waiting periods under such Act have terminated or expired. Section 4.1.31 on page 13 of the First Amendment is hereby amended to reflect that (1) Berry Italy is a Wholly-Owned Subsidiary of the Borrower, (2) the Borrower is the owner of a ninety-five percent (95%) interest in the Italian Holding Company, (3) Berry Italy is the owner of a five percent (5%) interest in the Italian Holding Company, and (4) that Capsol Italy and Ociesse are each Wholly-Owned Subsidiaries of the Italian Holding Company. Article 4 of the Credit Agreement is hereby amended to add the following additional section: 4.1.32 PESCOR MERGER TRANSACTION. The Agent has received true and correct photocopies of the Pescor Merger Agreement and each of the other Pescor Merger Documents executed, delivered and/or furnished on or before the date of the Third Amendment in connection with the Pescor Merger Transaction. Neither the Pescor Merger Agreement nor any of the other Pescor Merger Documents have been modified, changed, supplemented, canceled, amended or otherwise altered, except as otherwise disclosed to the Agent in writing on or before the date of the Third Amendment. The Pescor Merger Transaction has been effected, closed and consummated pursuant to, and in accordance with, the terms and conditions of the Pescor Merger Agreement and with all applicable Laws. Section 6.1.13(a) (Tangible Capital Funds), Section 6.1.13(c) (Interest Coverage Ratio), Section 6.1.13(e) (Debt Service Coverage Ratio) on pages 128 and 129 of the Credit Agreement, as amended by the First Amendment, are hereby deleted in their entirety. Section 6.1.13(b) on page 128 of the Credit Agreement, as amended by the First Amendment, is hereby deleted in its entirety and the following is substituted in its place: (B) FUNDED DEBT TO EBITDA. The Borrower, Berry UK, NIM Holdings and the Subsidiary Guarantors, on a consolidated basis, will not permit the ratio of (x) Funded Debt to (y) EBITDA, for the prior twelve (12) month trailing period (reflecting actual and historical performance of each Subject Transaction which constitutes a Permitted Acquisition during such twelve (12) month period), tested as of the last day of each fiscal quarter, to be greater than the following amounts as of the following dates: DATE RATIO June 30, 2001 4.25 to 1.00 September 30, 2001 4.00 to 1.00 December 31, 2001 3.75 to 1.00 March 31, 2002 3.50 to 1.00 June 30, 2002 3.50 to 1.00 September 30, 2002 3.25 to 1.00 and the last day of each fiscal quarter thereafter Section 6.1.13(d) on page 129 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: (D) FIXED CHARGE COVERAGE RATIO. The Borrower, Berry UK, NIM Holdings and the Subsidiary Guarantors will maintain, on a consolidated basis, will not permit the Fixed Charge Coverage Ratio for the prior twelve (12) month trailing period, tested as of the last day of each fiscal quarter, to be less than 1.00 to 1.00 as of the end of each fiscal quarter Section 6.1.25 on page 11 of the Second Amendment is hereby deleted in its entirety and the following is substituted in its place: 6.1.25 ITALIAN CREDIT AGREEMENTS. The Borrower covenants and agrees to execute and deliver and to cause Berry Italy, the Italian Holding Company, Capsol Italy and Ociesse to execute and deliver the Italian Credit Agreements and the Italian Stock Pledge Agreement in form and content acceptable to the Agent as soon as commercially practicable but in any event on or before June 15, 2001. Section 6.2.3 on page 135 of the Credit Agreement is hereby amended to add the following provisions: NOTWITHSTANDING THE FOREGOING, THE BORROWER SHALL NOT BE PERMITTED TO DECLARE OR PAY ANY DISTRIBUTIONS TO THE PARENT IF (I) THERE EXISTS A DEFAULT OR AN EVENT OF DEFAULT AS OF THE DATE OF SUCH PROPOSED DISTRIBUTION OR (II) THE MAKING OF ANY SUCH DISTRIBUTION WOULD GIVE RISE, DIRECTLY OR INDIRECTLY, TO A DEFAULT OR AN EVENT OF DEFAULT. Section 6.2.4(h) on page 136 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: (H) CAPITAL LEASES AS AND TO THE EXTENT PERMITTED BY SECTION 6.2.6; 16. Section 6.2.4(i) on page 136 of the Credit Agreement, as amended by the First Amendment, is hereby deleted in its entirety and the following is substituted in its place: (I) INDEBTEDNESS FOR BORROWED MONEY OF THE BORROWER TO ANY SUBSIDIARY GUARANTOR OR OF ANY SUBSIDIARY GUARANTOR TO THE BORROWER OR ANY OTHER SUBSIDIARY GUARANTOR AND INDEBTEDNESS FOR BORROWED MONEY OF BERRY UK, NIM HOLDINGS, NORWICH, THE ITALIAN HOLDING COMPANY, CAPSOL ITALY AND/OR OCIESSE TO THE BORROWER OR ANY OTHER DOMESTIC SUBSIDIARY GUARANTOR (THE "FOREIGN INTERCOMPANY INDEBTEDNESS"), PROVIDED THAT THE AGGREGATE AMOUNT OF SUCH FOREIGN INTERCOMPANY INDEBTEDNESS AND FOREIGN INTERCOMPANY INVESTMENTS (EXCLUDING INTERCOMPANY ALLOCATIONS OF EXPENSES AND CHARGES AND EXCLUDING THE AMOUNT USED TO FUND THE PURCHASE OF THE ASSETS OF CAPSOL-CERTWOOD UK LTD.), SHALL NOT EXCEED, IN THE AGGREGATE, TEN MILLION FOUR HUNDRED THOUSAND DOLLARS ($10,400,000); Section 6.2.5(vii) on page 138 of the Credit Agreement, as amended by the First Amendment, is deleted in its entirety and the following is substituted in its place: (VII) (1) THE BORROWER'S ACQUISITION, CREATION, OWNERSHIP AND INITIAL CAPITALIZATION OF NIM HOLDING AND THE ITALIAN HOLDING COMPANY, (2) THE INITIAL CAPITALIZATION OF BERRY UK AND NORWICH ACQUISITION AS PART OF AND AT THE TIME OF THE BORROWER'S ACQUISITION OF NIM HOLDINGS, (3) THE INITIAL CAPITALIZATION OF CAPSOL ITALY AND/OR OCIESSE AS PART OF AND AT THE TIME OF THE BORROWER'S ACQUISITION OF THE ITALIAN HOLDING COMPANY, (4) THE PURCHASE OF CERTAIN ASSETS OF CAPSOL-CERTWOOD UK LTD., AND (5) ANY ADDITIONAL CAPITAL OR OTHER EQUITY CONTRIBUTIONS OR INVESTMENTS IN BERRY UK, NIM HOLDINGS, THE ITALIAN HOLDING COMPANY, CAPSOL AND OCIESSE; PROVIDED THAT THE AGGREGATE AMOUNT OF ANY SUCH ADDITIONAL CAPITAL OR OTHER EQUITY CONTRIBUTIONS (COLLECTIVELY, THE "FOREIGN INTERCOMPANY INVESTMENTS"), TOGETHER WITH ANY FOREIGN INTERCOMPANY INDEBTEDNESS (EXCLUDING INTERCOMPANY ALLOCATIONS OF EXPENSES AND CHARGES AND EXCLUDING THE AMOUNT USED TO FUND THE PURCHASE OF THE ASSETS OF CAPSOL- CERTWOOD UK LTD.) PERMITTED BY THE TERMS OF THIS AGREEMENT, MAY NOT EXCEED AT ANY TIME IN THE AGGREGATE TEN MILLION FOUR HUNDRED THOUSAND DOLLARS ($10,400,000); Section 6.2.6 on page 139 of the Credit Agreement is hereby deleted in its entirety and the following is substituted in its place: 6.2.6 CAPITAL EXPENDITURES. Except for Permitted Acquisitions, permitted reinvestments of Permitted Asset Dispositions and Capital Expenditures made for the acquisition or construction of Fixed or Capital Assets that are contemplated to be sold in connection with a sale-leaseback transaction referred to in clause (A) of the last sentence of Section 6.2.16, neither the Borrower, Berry UK nor NIM Holdings will or will permit any Subsidiary to, directly or indirectly, make any Capital Expenditures in the aggregate for the Borrower, Berry UK, NIM Holdings and their respective Subsidiaries (taken as a whole) in an amount which exceeds the "Capital Expenditure Ceiling" during any fiscal year as set forth below. If in any given fiscal year, the total Capital Expenditures of the Borrower, Berry UK, NIM Holdings and its or their Subsidiaries, taken as a whole, are less than the applicable Capital Expenditure Ceiling for that fiscal year, the unused portion of the amount permitted for Capital Expenditures (the "Carry Forward Amount') may be used to increase the applicable Capital Expenditure Ceiling for the then next succeeding fiscal year. The Carry Forward Amount for any given fiscal year cannot be carried forward for more than one (1) fiscal year. FISCAL YEAR ENDING CAPITAL EXPENDITURE CEILING December 31, 2001 $45,000,000 December 31, 2002 $50,000,000 December 31, 2003 and $51,000,000 each fiscal year thereafter Section 7.1.13 on page 145 of the Credit Agreement is hereby amended to provide that, except to the extent permitted by Section 6.2.1 of the Credit Agreement, (1) the Borrower's failure to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of Berry Italy, (2) the failure of the Borrower and/or Berry Italy to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of the Italian Holding Company, and/or (3) the Italian Holding Company's failure to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of Capsol Italy and Ociesse, shall constitute an Event of Default under Section 7.1.13 of the Credit Agreement. Section 9.1 beginning on page 159 of the Credit Agreement is hereby amended to delete the notice address for the Agent and for Bank of America and the following is substituted in their place: AGENT: BANK OF AMERICA, N.A. BANK OF AMERICA BUSINESS CREDIT 231 S. LASALLE STREET CHICAGO, ILLINOIS 60697 ATTENTION: BRIAN J. WRIGHT BANK OF AMERICA: BANK OF AMERICA, N.A. BANK OF AMERICA BUSINESS CREDIT 231 S. LASALLE STREET CHICAGO, ILLINOIS 60697 ATTENTION: BRIAN J. WRIGHT The term "this Agreement" as used in the Credit Agreement and the term "Credit Agreement" as used in any of the Financing Documents shall mean the Credit Agreement as modified herein unless the context clearly indicates or dictates a contrary meaning. Any and all such Financing Documents are deemed hereby amended to reflect the terms and conditions of this Amendment, including, without limitation, the Deeds of Trust. The Borrower, the Agent and the Lenders will execute such confirmatory instruments with respect to the Credit Agreement and/or any of the Financing Documents as the Agent may reasonably require. This Amendment may not be amended, changed, modified, altered or terminated without in each instance the prior written consent of the Agent, the Lenders and the Borrower. This Amendment shall be construed in accordance with, and governed by, the laws of the State of Maryland. The Borrower agrees that neither the execution and delivery of this Amendment nor any of the terms, provisions, covenants, or agreements contained in this Amendment shall in any manner release, impair, lessen, waive, or otherwise adversely affect the joint and several liability and obligations of the Borrower under the terms of the Credit Agreement. The Agent and the Lenders acknowledge and agree that to the extent the provisions of the Credit Agreement are contrary to or inconsistent with the Italian Credit Agreement, the provisions of the Credit Agreement shall control and the provisions of the Italian Credit Agreement shall be interpreted in a manner to be consistent with the Credit Agreement. This Amendment may be executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts shall be deemed to be an original and all taken together shall constitute but one and the same instrument. The parties agree that their respective signatures may be delivered by facsimile. Any party who chooses to deliver its signature by facsimile agrees to provide a counterpart of this Amendment with its inked signature promptly to each other party. The Lenders and the Agent hereby waive the Defaults and Events of Default arising solely from the failure of the Borrower, Berry UK and/or NIM Holdings to comply with the terms of Section 6.2.4(i) and Section 6.2.5(vii). This paragraph shall not be deemed to waive any other existing or future Events of Default or Defaults. - - IN WITNESS WHEREOF, the Borrower, NIM Holdings, Berry UK, the Agent and the Lenders have caused this Amendment to be executed under seal as of the date first above written. WITNESS: BERRY PLASTICS CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: NIM HOLDINGS LIMITED _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS UK LIMITED _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS: BANK OF AMERICA, N.A., in its capacity as Agent _________________________ By:/s/ Brian J. Wright (Seal) Brian J. Wright Vice President WITNESS: BANK OF AMERICA, N.A., in its capacity as a Lender _________________________ By:/s/ Brian J. Wright (Seal) Brian J. Wright Vice President - - WITNESS: FLEET CAPITAL CORPORATION, in its capacity as a Lender _________________________ By:/s/ Fleet Capital Corporation (Seal) Name: Title: WITNESS: GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as a Lender _________________________ By:/s/ General Electric Capital Corporation (Seal) Name: Title: WITNESS: HELLER FINANCIAL, INC. in its capacity as a Lender _________________________ By:/s/ Heller Financial, Inc. (Seal) Name: Title: WITNESS: PNC BANK, NATIONAL ASSOCIATION in its capacity as a Lender _________________________ By:/s/ PNC Bank, National Association (Seal) Name: Title: WITNESS: LASALLE BUSINESS CREDIT, INC., in its capacity as a Lender _________________________ By:/s/ LaSalle Business Credit, Inc. (Seal) Name: Title: - - WITNESS: THE PROVIDENT BANK in its capacity as a Lender _________________________ By:/s/ The Provident Bank (Seal) Name: Title: ACKNOWLEDGMENT AND CONSENT BPC HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Parent"), BERRY IOWA CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Iowa"), BERRY TRI-PLAS CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Tri-Plas"), AEROCON, INC., a corporation organized and existing under the laws of the State of Delaware ("AeroCon"), BERRY STERLING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Sterling"), BERRY PLASTICS DESIGN CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Design"), PACKERWARE CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("PackerWare"), VENTURE PACKAGING, INC., a corporation organized and existing under the laws of the State of Delaware ("Venture Holding"), BERRY PLASTICS TECHNICAL SERVICES, INC., a corporation organized and existing under the laws of the State of Delaware, formerly known as Venture Packaging Southeast, Inc. ("Venture Southeast"), VENTURE PACKAGING MIDWEST, INC., a corporation organized and existing under the laws of the State of Delaware ("Venture Midwest"), KNIGHT PLASTICS, INC., a corporation organized and existing under the laws of the State of Delaware ("Knight"), CPI HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("CPI"), CARDINAL PACKAGING, INC., a corporation organized and existing under the laws of the State of Ohio ("Cardinal"), POLY-SEAL CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Poly-Seal"), and PESCOR, INC., a corporation organized and existing under the laws of the State of Delaware ("Pescor") (the Parent, Berry Iowa, Berry Tri-Plas, AeroCon, Berry Sterling, Berry Design, PackerWare, Venture Holding, Venture Southeast, Venture Midwest, Knight, CPI, Cardinal, Poly-Seal, and Pescor are herein collectively and individually referred to as the "Guarantor") hereby consent and agree to the foregoing Amendment and hereby acknowledge and agree that (i) the joint and several obligations and liabilities of the Guarantors under and in connection with those certain Guaranty of Payment Agreements and all other Financing Documents executed and delivered in connection with the Obligations (as amended, restated, supplemented or otherwise modified, the "Guaranty Documents") shall include and to the extent necessary are hereby amended to include the increase in any and all Obligations contemplated by the foregoing Amendment and to include the Italian Obligations and (ii) neither the execution and delivery of the foregoing Amendment nor any of the terms, provisions and agreements contained in the foregoing Amendment shall in any manner impair, lessen, waive, discharge or otherwise adversely affect the indebtedness, liabilities, and obligations of the Guarantors under and in connection with any and all Financing Documents previously, now or hereafter executed and delivered by either of them, including, without limitation, the Guaranty Documents. IN WITNESS WHEREOF, each of the parties hereby have executed and delivered this Acknowledgment under their respective seals as of the day and year first written above. WITNESS OR ATTEST: BERRY IOWA CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY TRI-PLAS CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY STERLING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: AERO CON, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: PACKERWARE CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS DESIGN CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BPC HOLDING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: VENTURE PACKAGING, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS TECHNICAL SERVICES, INC., f/k/a Venture Packaging Southeast, Inc. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: VENTURE PACKAGING MIDWEST, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: KNIGHT PLASTICS, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: CPI HOLDING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: CARDINAL PACKAGING, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: POLY-SEAL CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: PESCOR, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President EX-10.36 8 ex1036.txt EXHIBIT 10.36 FIRST AMENDMENT TO LOAN AND SECURITY Berry 1st Amendment to Loan Agreement -- GE.DOC 03/15/02 2:44 PM FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is made as of the ____ day of May, 2001, by BERRY PLASTICS CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of New York ("GE Capital"), and each other financial institution which is a party to this Amendment whether by execution and delivery of this Amendment or otherwise pursuant to Section 9.5 (Assignments by Lender) (collectively, the "Lenders", and individually, a "Lender"), GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized and existing under the laws of the State of New York, in its capacity as administrative agent for the Lenders (the "Agent"), and BANK OF AMERICA, N.A.., a national banking association, in its capacity as collateral agent for the Agent and the Lenders (the "BofA Agent"). RECITALS The Borrower, the Lenders, the Agent and the BofA Agent entered into a Loan and Security Agreement dated July 14, 2000 (as amended, restated, modified, substituted, extended, and renewed from time to time, the "Loan Agreement"). Under and subject to the provisions of the Loan Agreement, the Lenders agreed to establish in favor of the Borrower certain term loan facilities. The Borrower has advised the Agent and the Lenders that contemporaneously with the execution and delivery of this Amendment, (i) the Parent has formed Pescor, Inc., a corporation organized and existing under the laws of the State of Delaware ("Pescor") and (ii) the Parent has acquired or intends to acquire Pescor Plastics, Inc., a corporation organized and existing under the laws of the State of Texas ("Pescor Target") in accordance with the provisions of that certain Agreement and Plan of Reorganization by and among the existing shareholders of Pescor Target, the Parent, and Pescor (as amended, restated, supplemented or otherwise modified, the "Pescor Merger Agreement"). Pescor Target will merge (the "Pescor Merger") into Pescor such that Pescor will be the surviving corporation. Promptly following the merger, the Parent intends to contribute all of the issued and outstanding stock of Pescor to the Borrower (the "Pescor Stock"). Following the Pescor Merger of and the Parent's contribution of the Pescor Stock to the Borrower, Pescor will be a wholly-owned subsidiary of the Borrower. The Borrower previously advised the Agent and the Lenders that (i) the Borrower had formed Berry Plastics Acquisition Corporation II, a corporation organized and existing under the laws of the State of Delaware ("Berry Italy"), and Berry Italy is a wholly-owned subsidiary of the Borrower, (ii) the Borrower has acquired ninety-five percent (95%) of the issued and outstanding capital stock of CBP Holdings, S.r.l. (formerly Capsol-Berry Plastics S.r.l.), a company duly incorporated and existing under the laws of Italy (the "Italian Holding Company") and Berry Italy has acquired five percent (5%) of the issued and outstanding capital stock of the Italian Holding Company, and (iii) the Italian Holding Company owns one hundred percent (100%) of the issued and outstanding capital stock of (1) Ociesse S.r.l. - Officina Costruzione Stampi Lavorazioni Meccaniche di Precisione, a company duly incorporated and existing under the laws of Italy ("Ociesse") and (2) Capsol Berry Plastics S.p.a., a company duly incorporated and existing under the laws of Italy ("Capsol Italy"). The Italian Holding Company has applied to Bank of America Italy for a revolving credit facility in a maximum principal amount not to exceed Euro 13,550,000 or, at the option of the Italian Holding Company, the equivalent amount in United States Dollars (the "Italian Revolving Credit Facility"). Capsol Italy has opened one or more bank accounts with Bank of America Italy with respect to which Bank of America Italy has agreed to provide overdraft facilities for a total amount not exceeding Euro 1,700,000 (the "Italian Overdraft Facility"). The obligations of the Italian Holding Company and/or Capsol Italy under and in connection with the Italian Revolving Credit Facility and the Italian Overdraft Facility (collectively, the "Italian Credit Facilities") are or will be secured by a first priority pledge of all issued and outstanding capital stock of the Italian Holding Company, Ociesse and Capsol Italy. The Borrower has requested that the Lenders extend the maturity date of the facility from July 1, 2002 to January 21, 2004. In addition, the Borrower has requested that the Agent and the Lenders consent and agree to (1) the acquisition of the Pescor Target by the Parent in accordance with the terms and conditions of the Pescor Merger Agreement, (2) the Parent's issuance of a class of preferred stock to one or more existing shareholders of Pescor Target in accordance with the provisions of the Pescor Merger Agreement, and (3) the Parent's contribution of the Pescor Stock to the Borrower. The Agent, the BofA Agent and the Lenders are willing to agree to the Borrower's request on the condition, among others, that this Amendment be executed. AGREEMENTS NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, receipt of which is hereby acknowledged, the Borrower, the Agent and the Lenders agree as follows: The Borrower, the Agent and the Lenders agree that the Recitals above are a part of this Amendment. Unless otherwise expressly defined in this Amendment, terms defined in the Loan Agreement shall have the same meaning under this Amendment. The Borrower, the Agent and the Lenders agree that on the date hereof the aggregate outstanding principal balance under the Term Note is $25,000,000. The Borrower represents and warrants to the Agent and the Lenders as follows: The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the state in which it was organized and is duly qualified to do business as a foreign corporation in good standing in every other state wherein the conduct of its business or the ownership of its property requires such qualification. The Borrower has the power and authority to execute and deliver this Amendment and perform its obligations hereunder and has taken all necessary and appropriate corporate action to authorize the execution, delivery and performance of this Amendment. The Loan Agreement, as amended by this Amendment, and each of the other Financing Documents remains in full force and effect, and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms. The representations and warranties of the Borrower contained among the provisions of the Loan Agreement are true and correct as of the date of this Amendment (except that any such representations and warranties that are not qualified as to materiality need only be true and correct in all material respects) with the same effect as though such representations and warranties had been made as of such date, except that (i) the representations and warranties which relate to a specific date need only be true and correct as of such date and (ii) the representations and warranties which relate to financial statements which are referred to in Section 4.1.11 of the Loan Agreement shall also be deemed to cover financing statements furnished from time to time to the Agent pursuant to Section 6.1.1 (Financial Statements) of the Credit Agreement. No Event of Default and no event which, with notice, lapse of time or both would constitute an Event of Default, has occurred and is continuing under the Loan Agreement or the other Financing Documents which has not been waived in writing by the Lenders. Section 1.1 (Certain Defined Terms) is hereby amended by adding the following definitions: "BERRY ITALY" MEANS BERRY PLASTICS ACQUISITION CORPORATION II, A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF DELAWARE, AND ITS SUCCESSORS AND ASSIGNS. "FIRST AMENDMENT" MEANS THAT CERTAIN FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT DATED AS OF MAY __, 2001 BY AND AMONG THE AGENT, THE LENDERS, THE BORROWER, AND THE BOFA AGENT. "PESCOR" MEANS PESCOR, INC., A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE AND A CONSTITUENT CORPORATION IN THE MERGER OF PESCOR AND PESCOR TARGET, AND ITS SUCCESSORS AND ASSIGNS. "PESCOR MERGER" MEANS THE MERGER OF PESCOR TARGET INTO PESCOR WITH PESCOR AS THE SURVIVING CORPORATION. "PESCOR MERGER AGREEMENT" MEANS THAT CERTAIN AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF MAY 11, 2001 BY AND AMONG THE PARENT, PESCOR AND THE SHAREHOLDERS OF PESCOR TARGET, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED, TOGETHER WITH ANY AND ALL EXHIBITS AND SCHEDULES THERETO, AMENDMENTS, MODIFICATIONS, AND SUPPLEMENTS THERETO, RESTATEMENTS THEREOF, AND SUBSTITUTES THEREFOR. "PESCOR MERGER DOCUMENTS" MEANS COLLECTIVELY THE PESCOR MERGER AGREEMENT AND ANY AND ALL OTHER AGREEMENTS, DOCUMENTS OR INSTRUMENTS, PREVIOUSLY, NOW OR HEREAFTER EXECUTED AND DELIVERED BY THE PARENT, THE BORROWER, OR ANY OTHER PERSON IN CONNECTION WITH THE PESCOR MERGER TRANSACTION, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED AND MODIFIED. "PESCOR MERGER TRANSACTION" MEANS (I) THE PESCOR MERGER AND (II) THE ISSUANCE OF THE PESCOR PREFERRED STOCK, ALL IN ACCORDANCE WITH THE PROVISIONS OF THE PESCOR MERGER AGREEMENT, AND ALSO INCLUDES THE CONTRIBUTION OF THE PESCOR STOCK BY THE PARENT TO THE BORROWER. "PESCOR PREFERRED STOCK" MEANS THE ISSUED AND OUTSTANDING SHARES OF SERIES C-1, C-2, C-3, C-4 AND C-5 PREFERRED STOCK ISSUED BY THE PARENT TO THE EXISTING SHAREHOLDERS OF PESCOR TARGET IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE PESCOR MERGER AGREEMENT. "PESCOR PREFERRED STOCK SHAREHOLDER AGREEMENTS" MEANS ANY AND ALL AGREEMENTS, DOCUMENTS OR INSTRUMENTS NOW OR AT ANY TIME EXECUTED AND DELIVERED IN CONNECTION WITH THE ISSUANCE, SALE OR PURCHASE OF THE PESCOR PREFERRED STOCK IN CONNECTION WITH THE PESCOR MERGER TRANSACTION, AS THE SAME MAY FROM TIME TO TIME BE AMENDED, RESTATED, SUPPLEMENTED OR MODIFIED. "PESCOR TARGET" MEANS PESCOR PLASTICS, INC., A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF TEXAS AND A CONSTITUENT CORPORATION IN THE MERGER OF PESCOR AND PESCOR TARGET AND ITS SUCCESSORS AND ASSIGNS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Affiliate" and substituting the following in its place: "AFFILIATE" MEANS, WITH RESPECT TO ANY DESIGNATED PERSON, ANY OTHER PERSON, (A) DIRECTLY OR INDIRECTLY CONTROLLING, DIRECTLY OR INDIRECTLY CONTROLLED BY, OR UNDER DIRECT OR INDIRECT COMMON CONTROL WITH THE PERSON DESIGNATED, (B) DIRECTLY OR INDIRECTLY OWNING OR HOLDING TEN PERCENT (10%) OR MORE OF ANY EQUITY INTEREST IN SUCH DESIGNATED PERSON, OR (C) TEN PERCENT (10%) OR MORE OF WHOSE STOCK OR OTHER EQUITY INTEREST IS DIRECTLY OR INDIRECTLY OWNED OR HELD BY SUCH DESIGNATED PERSON. FOR PURPOSES OF THIS DEFINITION, THE TERM "CONTROL" (INCLUDING WITH CORRELATIVE MEANINGS, THE TERMS "CONTROLLING", "CONTROLLED BY" AND "UNDER COMMON CONTROL WITH") MEANS THE POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND POLICIES OF A PERSON, WHETHER THROUGH OWNERSHIP OF VOTING SECURITIES OR OTHER EQUITY INTERESTS OR BY CONTRACT OR OTHERWISE. NOTWITHSTANDING THE FOREGOING, NONE OF THE HOLDERS OF THE PESCOR PREFERRED STOCK SHALL BE DEEMED TO BE AFFILIATES OF THE BORROWER OR ANY OF ITS AFFILIATES SOLELY BECAUSE OF HIS, HER OR ITS HOLDING OF SHARES OF THE PESCOR PREFERRED STOCK. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Capital Expenditure" and substituting the following in its place: "CAPITAL EXPENDITURE" MEANS AN EXPENDITURE WHICH WOULD BE CLASSIFIED AS SUCH IN ACCORDANCE WITH GAAP (WHETHER PAYABLE IN CASH OR OTHER PROPERTY OR ACCRUED AS A LIABILITY) FOR FIXED OR CAPITAL ASSETS, INCLUDING THE ENTERING INTO OF CAPITAL LEASES. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Capsol Italy" and substituting the following in its place: "CAPSOL ITALY" MEANS CAPSOL BERRY PLASTICS S.P.A., A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Italian Holding Company" and substituting the following in its place: "ITALIAN HOLDING COMPANY" MEANS CBP HOLDINGS, S.R.L. (FORMERLY CAPSOL-BERRY PLASTICS S.R.L.), A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Maturity Date" and substituting the following in its place: "MATURITY DATE" MEANS JANUARY 21, 2004. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Ociesse" and substituting the following in its place: "OCIESSE" MEANS OCIESSE S.R.L. - OFFICINA COSTRUZIONE STAMPI LAVORAZIONI MECCANICHE DI PRECISIONE, A COMPANY DULY INCORPORATED AND EXISTING UNDER THE LAWS OF ITALY, AND ITS SUCCESSORS AND ASSIGNS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Permitted Acquisition" and substituting the following in its place: "PERMITTED ACQUISITION" MEANS THE ACQUISITION OR PURCHASE OF, OR INVESTMENT IN, ANY PERSON, ANY OPERATING DIVISION OR UNIT OF ANY PERSON, OR THE CAPITAL STOCK OR ASSETS OF ANY PERSON OR THE COMBINATION WITH ANY PERSON BY THE BORROWER OR ANY SUBSIDIARY GUARANTOR (EACH INDIVIDUALLY, A "SUBJECT TRANSACTION") APPROVED BY THE AGENT AND EACH OF THE LENDERS IN WRITING. THE AGENT AND THE LENDERS HEREBY ADVISE THE BORROWER THAT THE PESCOR MERGER TRANSACTION SHALL NOT CONSTITUTE A PERMITTED ACQUISITION UNLESS AFTER GIVING EFFECT TO ANY BORROWINGS UNDER THE REVOLVING LOAN NEEDED TO FINANCE THE PESCOR MERGER TRANSACTION, THE BORROWER AND THE SUBSIDIARY GUARANTORS (I) HAVE AVAILABILITY UNDER THE REVOLVING LOAN OR UNUSED AVAILABILITY UNDER THE BORROWING BASE IN AN AMOUNT AT LEAST EQUAL TO EIGHTEEN MILLION DOLLARS ($18,000,000) AND (II) ARE REASONABLY EXPECTED TO HAVE SUCH MINIMUM AVAILABILITY FOR A PERIOD OF TEN (10) BUSINESS DAYS AFTER CLOSING AND CONSUMMATION OF THE PESCOR MERGER TRANSACTION. NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS DEFINITION, THE LENDERS AND THE AGENT HAVE PREVIOUSLY CONSENTED, OR HEREBY CONSENT, TO THE POLY-SEAL STOCK PURCHASE TRANSACTION, THE ITALIAN TARGET STOCK PURCHASE TRANSACTION, THE PURCHASE OF CERTAIN ASSETS OF CAPSOL-CERTWOOD UK LTD. BY BERRY UK AND THE PESCOR MERGER TRANSACTION; AND, ACCORDINGLY, ALL SUCH TRANSACTIONS ARE DEEMED TO BE PERMITTED ACQUISITIONS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the term "Seller" and substituting the following in its place: "SELLER" MEANS WITH RESPECT TO (I) ANY SUBJECT TRANSACTION WHICH CONSTITUTES AN ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE SHARES OF SUCH SUBJECT TRANSACTION, THE PERSONS SELLING SUCH SHARES, AND (II) ANY SUBJECT TRANSACTION WHICH CONSTITUTES AN ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF SUCH SUBJECT TRANSACTION, THE PERSONS SELLING SUCH ASSETS. Section 1.1 (Certain Defined Terms) is hereby amended by deleting the definition of the terms "Subsidiary Guarantor" and "Subsidiary Guarantors" and substituting the following in their place: "SUBSIDIARY GUARANTOR" MEANS BIC, BTP, AEROCON, BERRY STERLING, PACKERWARE, BERRY DESIGN, BERRY VENTURE, VENTURE SOUTHEAST, VENTURE MIDWEST, KNIGHT, CPI, CARDINAL, POLY-SEAL, BERRY ITALY, PESCOR PLASTICS OR ANY OTHER DOMESTIC SUBSIDIARY (ORGANIZED AND EXISTING UNDER THE LAWS OF ANY STATE IN THE UNITED STATES) OF THE BORROWER OR THE PARENT WHICH IS DESIGNATED AND QUALIFIES AS A SUBSIDIARY GUARANTOR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.2.2 (SUBSIDIARIES), OR ANY OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AS THE CASE MAY BE; AND, "SUBSIDIARY GUARANTORS" MEANS BIC, BTP, AEROCON, BERRY STERLING, BERRY DESIGN, PACKERWARE, BERRY VENTURE, VENTURE SOUTHEAST, VENTURE MIDWEST, KNIGHT, CPI, CARDINAL, POLY-SEAL, BERRY ITALY, PESCOR PLASTICS AND EACH OTHER DOMESTIC SUBSIDIARY OF THE BORROWER DESIGNATED AND QUALIFIED AS A "SUBSIDIARY GUARANTOR" IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.2.2 (SUBSIDIARIES), AND ALL OF THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. Subsection (c) of Section 2.2.1 (Applicable Interest Rates) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its place: C. THE APPLICABLE MARGIN FOR (I) LIBOR LOANS SHALL BE FOUR HUNDRED SEVENTY-FIVE (475) BASIS POINTS PER ANNUM AND (II) INDEX RATE LOANS SHALL BE THREE HUNDRED TWENTY-FIVE (325) BASIS POINTS. Section 4.1.3 (Power and Authority) of the Loan Agreement is hereby amended to add the following provisions: EACH OF THE PARENT, THE BORROWER AND THEIR RESPECTIVE SUBSIDIARIES, AS THE CASE MAY BE, HAS FULL CORPORATE POWER AND AUTHORITY TO EXECUTE AND DELIVER THE FIRST AMENDMENT, ALL OTHER FINANCING DOCUMENTS (RELATING TO THE FIRST AMENDMENT OR OTHERWISE), AND THE PESCOR MERGER DOCUMENTS TO WHICH IT IS A PARTY, TO MAKE THE BORROWINGS AND REQUEST LETTERS OF CREDIT AND BOND LETTERS OF CREDIT UNDER THIS AGREEMENT (AS AMENDED BY THE FIRST AMENDMENT AND OTHERWISE), TO CLOSE AND CONSUMMATE EACH ASPECT OF THE PESCOR MERGER TRANSACTION, AS APPROPRIATE AND TO INCUR AND PERFORM THE OBLIGATIONS WHETHER UNDER THIS AGREEMENT (AS AMENDED BY THE FIRST AMENDMENT OR OTHERWISE), THE OTHER FINANCING DOCUMENTS, THE PESCOR MERGER DOCUMENTS, ALL OF WHICH HAVE BEEN DULY AUTHORIZED BY ALL PROPER AND NECESSARY CORPORATE ACTION. NO CONSENT OR APPROVAL OF SHAREHOLDERS OR ANY CREDITORS OF THE PARENT, THE BORROWER OR ANY SUBSIDIARY, AND NO CONSENT, APPROVAL, FILING OR REGISTRATION WITH OR NOTICE TO ANY GOVERNMENTAL AUTHORITY ON THE PART OF THE PARENT, THE BORROWER OR ANY SUBSIDIARY, IS REQUIRED AS A CONDITION TO THE EXECUTION, DELIVERY, VALIDITY OR ENFORCEABILITY OF THE FIRST AMENDMENT, THE OTHER FINANCING DOCUMENTS (RELATED TO THE FIRST AMENDMENT OR OTHERWISE), ANY OF THE PESCOR MERGER DOCUMENTS, THE PERFORMANCE BY THE BORROWER OF THE OBLIGATIONS OR THE CLOSING AND CONSUMMATION OF THE PESCOR MERGER TRANSACTION, IN EACH CASE, IF REQUIRED, THE SAME HAS BEEN DULY OBTAINED. Section 4.1.12 (Pro-forma Financial Statements) is hereby deleted in its entirety and the following is substituted in its place: 4.1.12 PRO FORMA FINANCIAL STATEMENTS. The Borrower has furnished to the Agent a pro-forma consolidated balance sheet of the Borrower and the Subsidiaries as of a date on or about March 31, 2001 (the "Pro-forma Date"), but giving effect to the Pescor Merger Transaction and the transactions incident thereto (the "Pro-forma Balance Sheet") together with pro-forma financial projections of the Parent for the five-year period subsequent to the Pescor Merger Transaction (the "Pro-forma Financial Projections"). A copy of the Pro-forma Balance Sheet and the Pro-forma Financial Projections are attached hereto as Exhibits C-1 and C-2, respectively. The Pro- forma Balance Sheet is correct and complete, has been prepared in accordance with GAAP, and fairly presents in all material respects the consolidated financial condition of the Borrower and the Subsidiaries as of the Pro-forma Date, but giving effect to the Pescor Merger Transaction and the transactions incident thereto. The Pro-forma Financial Projections represent the best estimate of the future operations of the Parent and are based on reasonable and conservative assumptions, but do not constitute a guaranty of actual performance. Section 4.1.26 (Italian Target Stock Purchase Transaction) is hereby amended to reflect that (1) Berry Italy is a Wholly-Owned Subsidiary of the Borrower, (2) the Borrower is the owner of a ninety-five percent (95%) interest in the Italian Holding Company, (3) Berry Italy is the owner of a five percent (5%) interest in the Italian Holding Company, and (4) that Capsol Italy and Ociesse are each Wholly-Owned Subsidiaries of the Italian Holding Company. Section 4.1.27 (Hart-Scott-Rodino) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its place: 4.1.27 HART-SCOTT-RODINO. The Borrower, the Seller and all other necessary Persons, as appropriate, have made such filings, if any, as may be required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and have provided such supplemental information that may be required by such Act, with respect to the sales contemplated by the Pescor Merger Transaction. The waiting periods under such Act have terminated or expired. Article IV of the Loan Agreement is hereby amended to add the following additional section: SECTION 4.1.29 PESCOR MERGER TRANSACTION. The Agent has received true and correct photocopies of the Pescor Merger Agreement, each of the other Pescor Merger Documents executed, delivered and/or furnished on or before the date of the First Amendment in connection with the Pescor Merger Transaction. Neither the Pescor Merger Agreement, any of the other Pescor Merger Documents have been modified, changed, supplemented, canceled, amended or otherwise altered, except as otherwise disclosed to the Agent in writing on or before the date of the First Amendment. The Pescor Merger Transaction have been effected, closed and consummated pursuant to, and in accordance with, the terms and conditions of the Pescor Merger Agreement and with all applicable Laws. Section 6.1.13(a) (Tangible Capital Funds), Section 6.1.13(c) (Interest Coverage Ratio) and Section 6.1.13(e) (Debt Service Coverage Ratio) of the Loan Agreement are hereby deleted in their entirety. Section 6.1.13(b) (Funded Debt to EBITDA) is hereby deleted in its entirety and the following is substituted in its place: (B) FUNDED DEBT TO EBITDA. The Borrower, Berry UK, NIM Holdings and the Subsidiary Guarantors, on a consolidated basis, will not at any time permit the ratio of (x) Funded Debt to (y) EBITDA, for the prior twelve (12) month trailing period (reflecting actual and historical performance of each Subject Transaction which constitutes a Permitted Acquisition during such twelve (12) month period), tested as of the last day of each fiscal quarter, to be greater than the following amounts as of the following dates: DATE RATIO June 30, 2001 4.25 to 1.00 September 30, 2001 4.00 to 1.00 December 31, 2001 3.75 to 1.00 March 31, 2002 3.50 to 1.00 June 30, 2002 3.50 to 1.00 September 30, 2002 and 3.25 to 1.00 the last day of each fiscal quarter thereafter Section 6.1.13(d) (Fixed Charge Coverage Ratio) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its place: (D) FIXED CHARGE COVERAGE RATIO. The Borrower, Berry UK, NIM Holdings and the Subsidiary Guarantors will maintain, on a consolidated basis, will not permit the Fixed Charge Coverage Ratio for the prior twelve (12) month trailing period, tested as of the last day of each fiscal quarter, to be less than 1.00 to 1.00 as of the end of each fiscal quarter. Section 6.2.4(h) (Indebtedness) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in its place: (H) CAPITAL LEASES AS AND TO THE EXTENT PERMITTED BY SECTION 6.2.6; Section 6.2.4(i) of the Loan Agreement (Indebtedness) is hereby deleted in its entirety and the following is substituted in its place: (I) INDEBTEDNESS FOR BORROWED MONEY OF THE BORROWER TO ANY SUBSIDIARY GUARANTOR OR OF ANY SUBSIDIARY GUARANTOR TO THE BORROWER OR ANY OTHER SUBSIDIARY GUARANTOR AND INDEBTEDNESS FOR BORROWED MONEY OF BERRY UK, NIM HOLDINGS, NORWICH, THE ITALIAN HOLDING COMPANY, CAPSOL ITALY AND/OR OCIESSE TO THE BORROWER OR ANY OTHER DOMESTIC SUBSIDIARY GUARANTOR (THE "FOREIGN INTERCOMPANY INDEBTEDNESS"), PROVIDED THAT THE AGGREGATE AMOUNT OF SUCH FOREIGN INTERCOMPANY INDEBTEDNESS AND FOREIGN INTERCOMPANY INVESTMENTS (EXCLUDING INTERCOMPANY ALLOCATIONS OF EXPENSES AND CHARGES AND EXCLUDING THE AMOUNT USED TO FUND THE PURCHASE OF THE ASSETS OF CAPSOL-CERTWOOD UK LTD.), SHALL NOT EXCEED, IN THE AGGREGATE, TEN MILLION FOUR HUNDRED THOUSAND DOLLARS ($10,400,000); Section 6.2.5(vii) of the Loan Agreement (Investments, Loans and Other Transactions) is deleted in its entirety and the following is substituted in its place: (VII) (1) THE BORROWER'S ACQUISITION, CREATION, OWNERSHIP AND INITIAL CAPITALIZATION OF NIM HOLDING AND THE ITALIAN HOLDING COMPANY, (2) THE INITIAL CAPITALIZATION OF BERRY UK AND NORWICH ACQUISITION AS PART OF AND AT THE TIME OF THE BORROWER'S ACQUISITION OF NIM HOLDINGS, (3) THE INITIAL CAPITALIZATION OF CAPSOL ITALY AND/OR OCIESSE AS PART OF AND AT THE TIME OF THE BORROWER'S ACQUISITION OF THE ITALIAN HOLDING COMPANY, (4) THE PURCHASE OF CERTAIN ASSETS OF CAPSOL-CERTWOOD UK LTD., AND (5) ANY ADDITIONAL CAPITAL OR OTHER EQUITY CONTRIBUTIONS OR INVESTMENTS IN BERRY UK, NIM HOLDINGS, THE ITALIAN HOLDING COMPANY, CAPSOL AND OCIESSE; PROVIDED THAT THE AGGREGATE AMOUNT OF ANY SUCH ADDITIONAL CAPITAL OR OTHER EQUITY CONTRIBUTIONS (COLLECTIVELY, THE "FOREIGN INTERCOMPANY INVESTMENTS"), TOGETHER WITH ANY FOREIGN INTERCOMPANY INDEBTEDNESS (EXCLUDING INTERCOMPANY ALLOCATIONS OF EXPENSES AND CHARGES AND EXCLUDING THE AMOUNT USED TO FUND THE PURCHASE OF THE ASSETS OF CAPSOL- CERTWOOD UK LTD.) PERMITTED BY THE TERMS OF THIS AGREEMENT, MAY NOT EXCEED AT ANY TIME IN THE AGGREGATE TEN MILLION FOUR HUNDRED THOUSAND DOLLARS ($10,400,000); Section 6.2.6 of the Loan Agreement (Capital Expenditures) is hereby deleted in its entirety and the following is substituted in its place: 6.2.6 CAPITAL EXPENDITURES. Except for Permitted Acquisitions, permitted reinvestments of Permitted Asset Dispositions and Capital Expenditures made for the acquisition or construction of Fixed or Capital Assets that are contemplated to be sold in connection with a sale-leaseback transaction referred to in clause (A) of the last sentence of Section 6.2.16, neither the Borrower, Berry UK nor NIM Holdings will or will permit any Subsidiary to, directly or indirectly, make any Capital Expenditures in the aggregate for the Borrower, Berry UK, NIM Holdings and their respective Subsidiaries (taken as a whole) in an amount which exceeds the "Capital Expenditure Ceiling" during any fiscal year as set forth below. If in any given fiscal year, the total Capital Expenditures of the Borrower, Berry UK, NIM Holdings and its or their Subsidiaries, taken as a whole, are less than the applicable Capital Expenditure Ceiling for that fiscal year, the unused portion of the amount permitted for Capital Expenditures (the "Carry Forward Amount') may be used to increase the applicable Capital Expenditure Ceiling for the then next succeeding fiscal year. The Carry Forward Amount for any given fiscal year cannot be carried forward for more than one (1) fiscal year. FISCAL YEAR ENDING CAPITAL EXPENDITURE CEILING December 31, 2001 $45,000,000 December 31, 2002 $50,000,000 December 31, 2003 and $51,000,000 each fiscal year thereafter Section 7.1.13 (Change in Ownership) of the Loan Agreement is hereby amended to provide that, except to the extent permitted by Section 6.2.1 (Capital Structure) of the Loan Agreement, (1) the Borrower's failure to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of Berry Italy, (2) the failure of the Borrower and/or Berry Italy to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of the Italian Holding Company, and/or (3) the Italian Holding Company's failure to own and control, beneficially and of record, one hundred percent (100%) of the issued and outstanding shares of Capsol Italy and Ociesse, shall constitute an Event of Default under Section 7.1.13 of the Loan Agreement. Section 9.1 (Notices) of the Loan Agreement is hereby amended to delete the notice address for the Collateral Agent and the following is substituted in its place: COLLATERAL AGENT: BANK OF AMERICA, N.A. (ON OR BEFORE BANK OF AMERICA BUSINESS CREDIT BOFA TERMINATION 231 S. LASALLE STREET DATE) CHICAGO, ILLINOIS 60697 ATTN: BRIAN J. WRIGHT The term "this Agreement" as used in the Loan Agreement and the term "Loan Agreement" as used in any of the Financing Documents shall mean the Loan Agreement as modified herein unless the context clearly indicates or dictates a contrary meaning. Any and all such Financing Documents are deemed hereby amended to reflect the terms and conditions of this Amendment, including, without limitation, the Deeds of Trust. The Borrower, the Agent and the Lenders will execute such confirmatory instruments with respect to the Loan Agreement and/or any of the Financing Documents as the Agent may reasonably require. As a condition to the Agent's and the Lenders' agreement to enter into this Amendment and the waivers granted herein, the Borrower hereby agrees to pay to the Agent, for the ratable benefit of the Lenders, an amendment fee in the amount of $250,000, which fee shall be due at the time this Amendment is executed and is fully earned and non-refundable upon payment. This Amendment may not be amended, changed, modified, altered or terminated without in each instance the prior written consent of the Agent, the BofA Agent, the Lenders and the Borrower. This Amendment shall be construed in accordance with, and governed by, the laws of the State of Maryland. The Borrower agrees that neither the execution and delivery of this Amendment nor any of the terms, provisions, covenants, or agreements contained in this Amendment shall in any manner release, impair, lessen, waive, or otherwise adversely affect the joint and several liability and obligations of the Borrower under the terms of the Loan Agreement. This Amendment may be executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts shall be deemed to be an original and all taken together shall constitute but one and the same instrument. The parties agree that their respective signatures may be delivered by facsimile. Any party who chooses to deliver its signature by facsimile agrees to provide a counterpart of this Amendment with its inked signature promptly to each other party. The Lenders and the Agent hereby waive the Defaults and Events of Default arising solely from the failure of the Borrower, Berry UK and/or NIM Holdings to comply with the terms of Section 6.2.4(i) and Section 6.2.5(vii). This paragraph shall not be deemed to waive any other existing or future Events of Default or Defaults. IN WITNESS WHEREOF, the Borrower, the Lenders, the Agent and the BofA Agent have executed this Amendment under seal as of the date and year first written above. ATTEST: BERRY PLASTICS CORPORATION _____________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS: GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as Agent _____________________________ By:/s/ General Electric Capital Corporation (SEAL) Name: Title: WITNESS: GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as Lender _____________________________ By:/s/ General Electric Capital Corporation (SEAL) Name: Title: WITNESS: BANK OF AMERICA, N.A., in its capacity as BofA Agent _____________________________ By:/s/ Brian J. Wright (SEAL) Brian J. Wright Vice President Berry 1st Amendment to Loan Agreement -- GE.DOC March 15, 20022:44 PM ACKNOWLEDGMENT AND CONSENT BPC HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Parent"), BERRY IOWA CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Iowa"), BERRY TRI-PLAS CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Tri-Plas"), AEROCON, INC., a corporation organized and existing under the laws of the State of Delaware ("AeroCon"), BERRY STERLING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Sterling"), BERRY PLASTICS DESIGN CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Berry Design"), PACKERWARE CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("PackerWare"), VENTURE PACKAGING, INC., a corporation organized and existing under the laws of the State of Delaware ("Venture Holding"), BERRY PLASTICS TECHNICAL SERVICES, INC., a corporation organized and existing under the laws of the State of Delaware, formerly known as Venture Packaging Southeast, Inc. ("Venture Southeast"), VENTURE PACKAGING MIDWEST, INC., a corporation organized and existing under the laws of the State of Delaware ("Venture Midwest"), KNIGHT PLASTICS, INC., a corporation organized and existing under the laws of the State of Delaware ("Knight"), CPI HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("CPI"), CARDINAL PACKAGING, INC., a corporation organized and existing under the laws of the State of Ohio ("Cardinal"), POLY-SEAL CORPORATION, a corporation organized and existing under the laws of the State of Delaware ("Poly-Seal"), PESCOR, INC., a corporation organized and existing under the laws of the State of Delaware ("Pescor") and BERRY PLASTICS ACQUISITION CORPORATION II, a corporation organized and existing under the laws of the State of Delaware ("Berry Italy") (the Parent, Berry Iowa, Berry Tri-Plas, AeroCon, Berry Sterling, Berry Design, PackerWare, Venture Holding, Venture Southeast, Venture Midwest, Knight, CPI, Cardinal, Poly-Seal, Pescor and Berry Italy are herein collectively and individually referred to as the "Guarantor") hereby consent and agree to the foregoing Amendment and hereby acknowledge and agree that neither the execution and delivery of the foregoing Amendment nor any of the terms, provisions and agreements contained in the foregoing Amendment shall in any manner impair, lessen, waive, discharge or otherwise adversely affect the indebtedness, liabilities, and obligations of the Guarantors under and in connection with any and all Financing Documents previously, now or hereafter executed and delivered by either of them, including, without limitation, the Guaranty Documents. IN WITNESS WHEREOF, each of the parties hereby have executed and delivered this Acknowledgment under their respective seals as of the day and year first written above. WITNESS OR ATTEST: BERRY IOWA CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY TRI-PLAS CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY STERLING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: AERO CON, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: PACKERWARE CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS DESIGN CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President Berry 1st Amendment to Loan Agreement -- GE.DOC March 15, 20022:44 PM WITNESS OR ATTEST: BPC HOLDING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: VENTURE PACKAGING, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS TECHNICAL SERVICES, INC., f/k/a Venture Packaging Southeast, Inc. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: VENTURE PACKAGING MIDWEST, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: KNIGHT PLASTICS, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: CPI HOLDING CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: CARDINAL PACKAGING, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: POLY-SEAL CORPORATION _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: PESCOR, INC. _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President WITNESS OR ATTEST: BERRY PLASTICS ACQUSITION CORPORATION II _________________________ By:/s/ James M. Kratochvil (SEAL) James M. Kratochvil Executive Vice President EX-21 9 ex21.txt LIST OF SUBSIDIARIES EXHIBIT 21
Name of Subsidiary State of Incorporation Berry Iowa Corporation Delaware PackerWare Corporation Delaware Knight Plastics, Inc. Delaware Berry Sterling Corporation Delaware Berry Plastics Design Corporation Delaware Poly-Seal Corporation Delaware Berry Plastics Acquisition Corporation II Delaware Venture Packaging, Inc. Delaware Venture Packaging Midwest, Inc. Delaware Berry Plastics Technical Services, Inc. Delaware NIM Holdings Limited England and Wales Berry Plastics U.K. Limited England and Wales Norwich Acquisition Limited England and Wales CPI Holding Corporation Delaware Cardinal Packaging, Inc. Ohio AeroCon, Inc. Delaware Berry Tri-Plas Corporation Delaware Berry Plastics Acquisition Corporation III Delaware CBP Holdings S.r.l. Italy Capsol S.p.a. Italy Ociesse S.r.l. Italy Pescor Inc. Delaware
="C:\WORK\*" "() OGK Default.dot" "C:\WINDOWS\TEMP\206753.doc"\* mergeformat C:\WINDOWS\TEMP\206753.doc -----END PRIVACY-ENHANCED MESSAGE-----