-----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, EITUM648EpItIjcjfAn6DILUIq7x9XfDrQO/vYSQ6OjpVA0SQQvxDcRcAUOJECbG FbPIGoHd629IVtMJVz8wrw== 0000950123-02-007588.txt : 20020809 0000950123-02-007588.hdr.sgml : 20020809 20020808201039 ACCESSION NUMBER: 0000950123-02-007588 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 20020809 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: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-97849 FILM NUMBER: 02723626 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 S-4 1 y62674sv4.txt BERRY PLASTICS CORPORATION AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 2002 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- BERRY PLASTICS CORPORATION GUARANTORS LISTED ON SCHEDULE A HERETO (Exact Name of Registrants as Specified in their Charters) DELAWARE 3089 35-1813706 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification No.)
101 OAKLEY STREET EVANSVILLE, INDIANA 47710 (812) 424-2904 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) --------------------- JAMES M. KRATOCHVIL EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY BERRY PLASTICS CORPORATION 101 OAKLEY STREET EVANSVILLE, INDIANA 47710 (812) 424-2904 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) --------------------- COPY TO: STUART H. GELFOND, ESQ. FRIED, FRANK, HARRIS, SHRIVER & JACOBSON ONE NEW YORK PLAZA NEW YORK, NEW YORK 10004 (212) 859-8000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon as practicable after the effective date of this Registration Statement. If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE FEE - --------------------------------------------------------------------------------------------------------------------------------- 10 3/4% Senior Notes due 2012............ $250,000,000 100% $250,000,000 $23,000 - --------------------------------------------------------------------------------------------------------------------------------- Guarantees of 10 3/4% Senior Notes due 2012................................... $250,000,000 (2) (2) (2) - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act. (2) No separate filing fee is required pursuant to Rule 457(n) under the Securities Act. --------------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SHALL SPECIFICALLY STATE THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE A GUARANTORS BPC HOLDING CORPORATION BERRY IOWA CORPORATION PACKERWARE CORPORATION KNIGHT PLASTICS, INC. BERRY STERLING CORPORATION BERRY PLASTICS DESIGN CORPORATION POLY-SEAL CORPORATION VENTURE PACKAGING, INC. VENTURE PACKAGING MIDWEST BERRY PLASTICS TECHNICAL SERVICES, INC. CPI HOLDING CORPORATION CARDINAL PACKAGING, INC. AERO CON, INC. BERRY TRI-PLAS CORPORATION BERRY PLASTICS ACQUISITION CORPORATION III PESCOR, INC. BERRY PLASTICS ACQUISITION CORPORATION IV BERRY PLASTICS ACQUISITION CORPORATION V BERRY PLASTICS ACQUISITION CORPORATION VI BERRY PLASTICS ACQUISITION CORPORATION VII BERRY PLASTICS ACQUISITION CORPORATION VIII BERRY PLASTICS ACQUISITION CORPORATION IX BERRY PLASTICS ACQUISITION CORPORATION X BERRY PLASTICS ACQUISITION CORPORATION XI BERRY PLASTICS ACQUISITION CORPORATION XII BERRY PLASTICS ACQUISITION CORPORATION XIII BERRY PLASTICS ACQUISITION CORPORATION XIV, LLC BERRY PLASTICS ACQUISITION CORPORATION XV, LLC EXPLANATORY NOTE This registration statement covers the registration of an aggregate principal amount of $250,000,000 of our 10 3/4% senior subordinated notes dues 2012, which we hereinafter refer to as the exchange notes, that may be exchanged for an equal principal amount of our outstanding 10 3/4% senior subordinated notes due 2012. This registration statement also covers the registration of exchange notes for resale by Goldman, Sachs & Co. and J.P. Morgan Securities Inc. in market-making transactions. The complete prospectus relating to the exchange offer follows immediately after this explanatory note. Following the exchange offer prospectus are selected pages of the prospectus relating solely to these market-making transactions, including an alternate front cover page, and alternate sections entitled "Use of proceeds" and "Plan of distribution." In addition, the market-making prospectus will not include the following captions, or the information set forth under these captions, included in the exchange offer prospectus: "Prospectus summary--The exchange offer," "Risk factors--Risks related to the notes--You may have difficulty selling the notes which you do not exchange," "The exchange offer," and "Material U.S. federal tax considerations--U.S. federal income tax consequences of the exchange offer." The table of contents of the market-making prospectus will reflect these changes accordingly. All other sections of the exchange offer prospectus will be included in the market-making prospectus. PROSPECTUS [BERRY PLASTICS LOGO] BERRY PLASTICS CORPORATION EXCHANGE OFFER FOR $250,000,000 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 We are offering to exchange 10 3/4% senior subordinated notes due 2012 for our currently outstanding 10 3/4% senior subordinated notes due 2012. The exchange notes are the same as the outstanding notes, except that the exchange notes will have been registered under the federal securities laws and will not bear any legend restricting their transfer. The exchange notes will represent the same debt as the outstanding notes, and we will issue the exchange notes under the same indenture. The exchange notes will be guaranteed by BPC Holding Corporation, and all of our existing and future domestic subsidiaries, except as provided herein. The notes will not be guaranteed by our foreign subsidiaries: Berry Plastics Acquisition Corporation II, NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, CBP Holdings S.r.l., Capsol Berry Plastics S.p.a. or Ociesse S.r.l. The notes will not be guaranteed by any foreign subsidiaries in the future unless any such foreign subsidiary guarantees any senior indebtedness of ours or any of our subsidiaries (other than that of another foreign subsidiary). The notes will be subordinated in right of payment to all obligations of our non-guarantor subsidiaries. The notes will also be subordinated in right of payment to all existing and future senior indebtedness, will rank equally in right of payment with any existing and future senior subordinated indebtedness and will be senior in right of payment to all future subordinated obligations. The notes will also be effectively subordinated to all of our and our subsidiaries' secured indebtedness to the extent of the value of the assets securing such indebtedness. The principal features of the exchange offer are as follows: - Expires 5:00 p.m., New York City time, on , 2002, unless extended. - We will exchange all outstanding notes that are validly tendered and not validly withdrawn prior to the expiration date of the exchange offer. - You may withdraw tendered outstanding notes at any time prior to the expiration of the exchange offer. - The exchange of outstanding notes for exchange notes pursuant to the exchange offer will be a tax free event for United States federal tax purposes. - We will not receive any proceeds from the exchange offer. - We do not intend to apply for listing of the exchange notes on any securities exchange or automated quotation system. Broker-dealers receiving exchange notes in exchange for outstanding notes acquired for their own account through market-making or other trading activities must deliver a prospectus in any resale of the exchange notes. INVESTING IN THE EXCHANGE NOTES INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 2002. IN MAKING YOUR INVESTMENT DECISION, YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY OTHER INFORMATION. IF YOU RECEIVE ANY OTHER INFORMATION YOU SHOULD NOT RELY ON IT. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE THAN ON THE FRONT COVER OF THIS PROSPECTUS. TABLE OF CONTENTS
PAGE Prospectus summary.................... 1 Risk factors.......................... 8 The acquisition....................... 19 Use of proceeds....................... 21 Capitalization........................ 22 Unaudited pro forma financial information......................... 23 Selected consolidated financial data................................ 32 Management's discussion and analysis of financial condition and results of operations....................... 34 Business.............................. 43 Management............................ 56 Principal stockholders................ 63
PAGE Related party transactions............ 64 Description of other indebtedness..... 66 The exchange offer.................... 70 Description of the exchange notes..... 80 Registration rights; additional interest............................ 131 Material U.S. federal tax considerations...................... 133 ERISA considerations.................. 140 Plan of distribution.................. 142 Legal matters......................... 143 Independent auditors.................. 143 Incorporation of certain documents by reference........................... 143 Index to financial statements......... F-1
--------------------- Berry Plastics Corporation is a Delaware corporation. Our principal executive offices are located at 101 Oakley Street, Evansville, Indiana, 47710, and our telephone number at that address is 812-424-2904. In this prospectus, unless the context otherwise requires, "BPC Holding" or "Holding" refers to BPC Holding Corporation, "we," "our" or "us" refer to BPC Holding Corporation together with its consolidated subsidiaries, "Berry Plastics" refers to Berry Plastics Corporation, a wholly owned subsidiary of BPC Holding and the issuer of the notes, and "initial purchasers" refers to the firms listed on the cover of this prospectus. Unless otherwise indicated, all references in this prospectus to fiscal years are to the 52/53 week period ending on the Saturday closest to December 31. Unless the context requires otherwise, all references in this prospectus to "2001," "2000," "1999," "1998" and "1997," or to such periods as fiscal years, relate to the fiscal years ended December 29, 2001, December 30, 2000, January 1, 2000, January 2, 1999 and December 27, 1997, respectively. --------------------- "Outstanding notes" refers to all the 10 3/4% senior subordinated notes due 2012 that were issued on July 22, 2002 and "exchange notes" refers to the 10 3/4% senior subordinated notes due 2012 offered pursuant to this prospectus. We sometimes refer to the outstanding notes and the exchange notes collectively as the "notes." --------------------- NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY i JURISDICTION IN WHICH SUCH AN OFFER TO SELL OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. WHERE YOU CAN FIND MORE INFORMATION This prospectus is part of a registration statement of Form S-4 that we filed with the Securities and Exchange Commission (the "SEC"). This prospectus does not contain all of the information in that registration statement. For further information with respect to us and the notes, see the registration statement, including the exhibits. We are subject to the reporting requirements of the Securities Exchange Act of 1934 and in accordance with its requirements file annual, quarterly and current reports, proxy statements and other information with the SEC. These reports, proxy statements and other information may be obtained: - at the public reference room of the SEC, Room 1024-Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; - from the SEC, Public Reference Room, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; or - from the Internet site maintained by the SEC at http://.www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers, including us, that file electronically with the SEC. Some locations may charge prescribed rates or modest fees for copies. For more information on the public reference room, call the SEC at 1-800-SEC-0330. Our filings will also be available to the public from commercial document retrieval services. Statements made in this prospectus as to the contents of any contract, agreement, or other documents referred to are not necessarily complete. For a more complete understanding and description of each contract, agreement or other document filed as an exhibit to the registration statement, we encourage you to read the documents contained in the exhibits. Following the consummation of the exchange offer, whether or not required by the SEC, we will file a copy of all the information mentioned above with the SEC for public availability within the time periods specified in the SEC's rule and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospectus investors upon request. In addition, we have agreed that we will furnish to holders and securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time as we have either exchanged the notes pursuant to the exchange offer or until such time as holders of the notes have disposed of their notes pursuant to an effective registration statement under the Securities Act. ii CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This prospectus includes "forward-looking statements," within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect to our financial condition, results of operations and business and our expectations or beliefs concerning future events. Such statements include, in particular, statements about our plans, strategies and prospects under the headings "Prospectus summary," "Management's discussion and analysis of financial condition and results of operations" and "Business." You can identify certain forward-looking statements by our use of forward-looking terminology such as, but not limited to, "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "likely," "will," "would," "could" and similar expressions identify forward-looking statements. All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in our industry and markets. Others are more specific to our operations. The occurrence of the events described and the achievement of the expected results depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from the forward-looking statements contained in this prospectus. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include: - risks associated with our substantial indebtedness and debt service; - performance of our business and future operating results; - risks of competition in our existing and future markets; - changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices; - catastrophic loss of our key manufacturing facility; - risks related to our acquisition strategy and integration of acquired businesses; - general business and economic conditions, particularly an economic downturn; - increases in the cost of compliance with laws and regulations, including environmental laws and regulations; and - the other risks described under the heading "Risk factors" beginning on page 8. All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur. iii MARKET DATA The data included in this prospectus regarding markets, product categories and ranking, including, but not limited to, the size of certain markets and product categories and our position and the positions of our competitors within these markets and product categories, are based on our estimates and definitions, which have been derived from our management's knowledge and experience in the areas in which we operate, and information obtained from our customers, distributors, suppliers, trade and business organizations and other contacts in the areas in which we operate. Unless otherwise specified, all our market share and product category data relate to the injection-molding segment of the plastics packaging industry. Although we believe that these sources are generally reliable, we have not independently verified data from these sources or obtained third party verification of this data and we do not guarantee the accuracy or completeness of this information. In addition, data within our industry are intended to provide general guidance but is inherently imprecise. References herein to our being a leader in a product segment or product category refer to our having a leading position based on sales in 2001 of injected-molded plastic products in such segment or product category, unless the context otherwise requires. The plastics packaging industry consists of rigid and non-rigid plastic products. There are three primary manufacturing processes used in the rigid plastics packaging segment of the plastics packaging industry: injection-molding and thermoforming, which we use, and blow molding, which we currently do not use. Each of these processes may be interchangeable depending on the product and the cost. Blow molding is used to produce most plastic drinking bottles, which constitutes approximately three-fourths of the U.S. plastic container demand by weight. iv PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that may be important to you. We urge you to read this entire prospectus carefully, including the "Risk factors" section and our consolidated financial statements and related notes. THE COMPANY We are one of the world's leading manufacturers and suppliers of a diverse mix of injection-molded plastics packaging products focusing on the open-top container, closure, aerosol overcap, drink cup and housewares markets. We sell a broad product line to over 12,000 customers. We concentrate on manufacturing higher quality, value-added products sold to image-conscious marketers of institutional and consumer products. We believe that our large operating scale, low-cost manufacturing capabilities, purchasing leverage, proprietary thermoforming technology and extensive collection of over 1,000 active proprietary molds provide us with a competitive advantage in the marketplace. We have been able to leverage our broad product offering, value-added manufacturing capabilities and long-standing customer relationships into leading positions across a number of products. We believe that over 60% of our 2001 revenues were generated from the sale of products that held a number one position relative to competing injection-molded products. Our products are primarily sold to customers in industries that exhibit relatively stable demand characteristics and are considered less sensitive to overall economic conditions, such as pharmaceuticals, food, dairy and health and beauty. Additionally, we operate 13 high-volume manufacturing facilities and have extensive distribution capabilities. We organize our product categories into three business divisions: containers; closures; and consumer products. The following table displays our net sales by division for each of the past five fiscal years.
- ------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS) 1997 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------- Containers..................................... $124.8 $154.0 $188.7 $231.2 $234.4 Closures....................................... 47.1 56.4 81.0 112.2 132.4 Consumer products.............................. 55.1 61.4 59.1 64.7 94.8 ------------------------------------------ Total net sales........................... $227.0 $271.8 $328.8 $408.1 $461.6 - -------------------------------------------------------------------------------------------
1 COMPETITIVE STRENGTHS We believe that our consistent financial performance is the direct result of the following competitive strengths: - Leading positions across a broad product offering. - Significant scale resulting in low-cost position and strong cash flow. - Ability to pass through changes in the cost of resin. - Large, diverse and stable customer base. - Proven ability to integrate strategic acquisitions. - Unique, proprietary thermoforming drink cup manufacturing process. - Proven and motivated management team. BUSINESS STRATEGY Our goal is to maintain and enhance our market position and leverage our core strengths to increase profitability. Our strategy to achieve this goal includes the following elements: - Increase sales to our existing customers. - Aggressively pursue new customers. - Continue to effectively manage costs. - Selectively pursue strategic acquisitions in our core businesses. RECENT DEVELOPMENTS THE ACQUISITION On July 22, 2002, GS Berry Acquisition Corp., a newly formed entity controlled by GS Capital Partners 2000, L.P. ("GSCP 2000") and related private equity funds merged with and into BPC Holding. BPC Holding was the surviving corporation in the merger. The total amount of consideration paid in the merger, including amounts related to the repayment of indebtedness, the redemption of the outstanding preferred stock of BPC Holding and the payment of transaction costs incurred by BPC Holding and its stockholders, was approximately $868.7 million (which includes the amount of certain indebtedness which remains outstanding and the value of certain shares of BPC Holding common stock held by our employees which were contributed to GS Berry Acquisition Corp. immediately prior to the effective time of the merger). The purchase price is subject to post-closing adjustments related to the level of working capital of BPC Holding at the time of closing. BPC Holding and GS Berry Acquisition Corp. closed the merger simultaneously with the issuance of the outstanding notes and the closing of our senior secured credit facilities. The transaction is referred to in this prospectus as the "Acquisition." See "The acquisition." 2 THE EXCHANGE OFFER On July 22, 2002, we completed the offering of $250 million aggregate principal amount of 10 3/4% senior subordinated notes due 2012 in a transaction exempt from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The net proceeds of this transaction were used to finance the Acquisition. In connection with this transaction, we entered into a registration rights agreement with the initial purchasers of the outstanding notes, in which we agreed to commence this exchange offer. Accordingly, you may exchange your outstanding notes for exchange notes which have substantially the same terms. You should read the discussion under the headings "The exchange offer" and "Description of the exchange notes" for further information regarding the exchange notes to be issued in the exchange offer. SECURITIES OFFERED......Up to $250 million in principal amount of 10 3/4% senior subordinated notes due 2012, registered under the Securities Act. The terms of the exchange notes offered in the exchange offer are substantially identical to those of the outstanding notes, except that the transfer restrictions, registration rights and penalty interest provisions relating to the outstanding notes do not apply to the exchange notes. THE EXCHANGE OFFER......We are offering exchange notes in exchange for a like principal amount of our outstanding notes. We are offering these exchange notes to satisfy our obligations under a registration rights agreement which we entered into with the initial purchasers of the outstanding notes. You may tender your outstanding notes for exchange by following the procedures described under the heading "The exchange offer." TENDERS; EXPIRATION DATE; WITHDRAWAL........The exchange offer will expire at 5:00 p.m., New York City time, on , 2002, unless we extend it. If you decide to exchange your outstanding notes for exchange notes, you must acknowledge that you are not engaged in, and do not intend to engage in, a distribution of the exchange notes. You may withdraw any outstanding notes that you tender for exchange at any time prior to the expiration date of this exchange offer. See "The exchange offer--Terms of the exchange offer" for a more complete description of the tender and withdrawal period. MATERIAL U.S. FEDERAL TAX CONSIDERATIONS......Your exchange of outstanding notes for exchange notes to be issued in the exchange offer will not result in any gain or loss to you for United States federal income tax purposes. See "Material U.S. federal tax considerations" for a summary of material United States federal income tax consequences associated with the exchange of outstanding notes for the exchange notes and the ownership and disposition of those exchange notes. USE OF PROCEEDS.........We will not receive any cash proceeds from the exchange offer. EXCHANGE AGENT..........U.S. Bank Trust National Association 3 SHELF REGISTRATION......If applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer, we will be required to use our reasonable best efforts to file, and cause to become effective, a shelf registration statement under the Securities Act, which would cover resales of outstanding. See "Registration rights; additional interest." CONSEQUENCES OF FAILURE TO EXCHANGE YOUR OUTSTANDING NOTES.......Outstanding notes not exchanged in the exchange offer will continue to be subject to the restrictions on transfer that are described in the legend on the outstanding notes. In general, you may offer or sell your outstanding notes only if they are registered under, or offered or sold under an exemption from, the Securities Act and applicable state securities laws. We do not currently intend to register the outstanding notes under the Securities Act. If your notes are not tendered and accepted in the exchange offer, it may become more difficult for you to sell or transfer your outstanding notes. CONSEQUENCES OF EXCHANGING YOUR OUTSTANDING NOTES.......Based on interpretations of the staff of the SEC, we believe that you may offer for resale, resell or otherwise transfer the exchange notes that we issue in the exchange offer without complying with the registration and prospectus delivery requirements of the Securities Act if: - you acquire the exchange notes issued in the exchange offer in the ordinary course of your business; - you are not participating, do not intend to participate, and have no arrangement or undertaking with anyone to participate, in the distribution of the exchange notes issued to you in the exchange offer; and - you are not an "affiliate" of us, as described in Rule 405 of the Securities Act. If any of these conditions are not satisfied and you transfer any exchange notes issued to you in the exchange offer without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. We will not be responsible for, or indemnify you against, any liability you incur. Any broker-dealer that acquires exchange notes in the exchange offer for its own account in exchange for outstanding notes which it acquired through market-making or other trading activities must acknowledge that it will deliver a prospectus when it resells or transfers any exchange notes issued in the exchange offer. See "Plan of distribution" for a description of the prospectus delivery obligations of broker-dealers in the exchange offer. 4 THE EXCHANGE NOTES The following is a brief summary of the terms of the exchange notes. For a more complete description of the terms of the exchange notes, see "Description of the exchange notes" in this prospectus. ISSUER..................Berry Plastics Corporation, a Delaware Corporation SECURITIES OFFERED......$250,000,000 in aggregate principal amount of 10 3/4% senior subordinated notes due 2012 MATURITY DATE...........July 15, 2012 INTEREST PAYMENT DATES..January 15 and July 15, commencing on January 15, 2003 GUARANTORS..............The exchange notes will be fully and unconditionally guaranteed by BPC Holding Corporation, our parent company, and each of our and future domestic subsidiaries. These guarantees can be released upon the circumstances described under "Description of the exchange notes--Certain covenants--Future note guarantors and release of note guarantees." If we cannot make payments on the notes when they are due, the note guarantors will be obligated to make them instead. RANKING.................The notes will be unsecured and: - will be subordinated in right of payment to all existing and future senior debt; - will rank equally in right of payment with any existing and future senior subordinated debt; - will rank senior in right of payment to all future subordinated debt; - will be effectively subordinated to our secured debt to the extent of the value of the assets securing such debt; and - will be effectively subordinated to all liabilities and preferred stock of our subsidiaries that do not guarantee the notes. Similarly, the guarantees of the notes by BPC Holding and our guarantor subsidiaries will be unsecured and: - will be subordinated in right of payment to all of the applicable note guarantor's existing and future senior debt; - will rank equally in right of payment with any of the applicable note guarantors' existing and future senior subordinated debt; - will rank senior in right of payment to all of the applicable note guarantors' future subordinated debt; 5 - will be effectively subordinated to all secured debt of such note guarantor to the extent of the value of the assets securing such debt; and - will be effectively subordinated to the obligations of any subsidiary of a note guarantor if that subsidiary is not a note guarantor. As of March 30, 2002, after giving pro forma effect to the Acquisition and related financings: - we would have had approximately $349.9 million of senior debt to which the notes and the note guarantees would be subordinated (which amount excludes $5.7 million of letters of credit and the remaining availability of $94.3 million under our revolving credit facility and $50.0 million of availability under our delayed draw term loan facility); - we would not have had any senior subordinated debt (other than the notes); - we would not have had any subordinated debt; and - our subsidiaries that are not guarantors of the notes would have had $8.5 million of liabilities including trade payables, but excluding liabilities owed to us. OPTIONAL REDEMPTION.....We may redeem the notes, in whole or in part, at any time beginning on July 15, 2007 at the redemption prices listed under "Description of the exchange notes--Optional redemption." In addition, before July 15, 2005, we may redeem up to 35% of the notes with the net cash proceeds from certain equity offerings at the price listed under "Description of the exchange notes--Optional redemption." CHANGE OF CONTROL.......Upon the occurrence of a change of control, unless we have exercised our right to redeem all of the notes as described above, you will have the right to require us to purchase all or a portion of your notes at a purchase price in cash equal to 101% of the principal amount plus accrued and unpaid interest to the date of purchase. See "Description of the exchange notes--Change of control." BASIC COVENANTS.........We will issue the exchange notes under the same indenture which governs the issuance of the outstanding notes. This indenture contains covenants that impose significant restrictions on our business. The restrictions these covenants place on us and our restricted subsidiaries include limitations on our ability and the ability of our restricted subsidiaries to: - incur indebtedness; - pay dividends or make distributions in respect of our capital stock or to make certain other restricted payments or investments; 6 - sell assets, including capital stock of restricted subsidiaries; - agree to payment restrictions affecting our restricted subsidiaries; - consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; - enter into transactions with our affiliates; and - designate our subsidiaries as unrestricted subsidiaries. These covenants are subject to important exceptions and qualifications, which are described under "Description of the exchange notes--Certain covenants." REGISTRATION RIGHTS; ADDITIONAL INTEREST.....In connection with the offering of the outstanding notes, we and our guarantors entered into a registration rights agreement pursuant to which we are obligated to file with the Commission this registration statement. Alternatively, if the exchange offer is not available or cannot be completed or some holders are not able to participate in the exchange offer, we are required to file a shelf registration statement to cover resales of the notes under the Securities Act. If we do not comply with these obligations, we will be required to pay additional interest on the notes under specified circumstances. See "Registration rights; additional interest." RISK FACTORS You should carefully consider all the information in this prospectus prior to participating in the exchange offer. In particular, we urge you to consider carefully the factors set forth under "Risk factors" beginning on page 8 of this prospectus. 7 RISK FACTORS You should read and consider carefully each of the following factors, as well as the other information contained in this prospectus before participating in the exchange offer. RISKS RELATED TO THE NOTES WE HAVE SUBSTANTIAL DEBT AND WE MAY INCUR SUBSTANTIALLY MORE DEBT, WHICH COULD AFFECT OUR ABILITY TO MEET OUR OBLIGATIONS UNDER THE NOTES AND MAY OTHERWISE RESTRICT OUR ACTIVITIES. We have substantial debt, and we may be able to incur substantial additional debt in the future. On a pro forma basis as of March 30, 2002, after giving effect to the Acquisition and relating financings, we had total indebtedness of approximately $599.9 million, excluding $5.7 million in letters of credit under our revolving credit facility and, subject to certain conditions to borrowing, $144.3 million available for future borrowings under our revolving credit facility and delayed draw term loan facility. We are also permitted by the terms of the notes to incur substantial additional indebtedness, subject to the restrictions therein. See "Description of other indebtedness--The senior secured credit facilities." Our substantial debt could have important consequences to you. For example, it could: - make it more difficult for us to satisfy our obligations under the notes; - require us to dedicate a substantial portion of our cash flow to payments on our indebtedness, which would reduce the amount of cash flow available to fund working capital, capital expenditures, product development and other corporate requirements; - increase our vulnerability to general adverse economic and industry conditions, including changes in raw material costs; - limit our ability to respond to business opportunities; - limit our ability to borrow additional funds, which may be necessary; and - subject us to financial and other restrictive covenants, which, if we fail to comply with these covenants and our failure is not waived or cured, could result in an event of default under our debt. TO SERVICE OUR DEBT, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to make payments on our debt, including the notes, and to fund planned capital expenditures and research and development efforts will depend on our ability to generate cash in the future. This, to an extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, including those described in this "Risk factors" section, that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our new senior secured credit facilities in an amount sufficient to enable us to pay our debt, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of 8 our debt, including our new senior secured credit facilities and the notes, on commercially reasonable terms or at all. THE AGREEMENTS GOVERNING THE NOTES AND OUR OTHER DEBT IMPOSE RESTRICTIONS ON OUR BUSINESS. The indenture governing the notes and the agreements governing our senior secured credit facilities contain a number of covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. The restrictions these covenants place on us and our restricted subsidiaries include limitations on our ability and the ability of our restricted subsidiaries to: - incur indebtedness or issue preferred shares; - pay dividends or make distributions in respect of our capital stock or to make certain other restricted payments; - create liens; - agree to payment restrictions affecting our restricted subsidiaries; - make acquisitions; - consolidate, merge, sell or lease all or substantially all of our assets; - enter into transactions with our affiliates; and - designate our subsidiaries as unrestricted subsidiaries. Our senior secured credit facilities also require us to meet a number of financial ratios. Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions and are subject to the risks in this "Risk factors" section. The breach of any of these covenants or restrictions could result in a default under the indenture governing the notes or our senior secured credit facilities. An event of default under our debt agreements would permit some of our lenders to declare all amounts borrowed from them to be immediately due and payable. If we were unable to repay debt to our lenders, these lenders could proceed against the collateral securing that debt. In addition, acceleration of our other indebtedness may cause us to be unable to make interest payments on the notes and repay the principal amount of the notes. YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER, THE GUARANTEES OF THE NOTES ARE JUNIOR TO ALL OF OUR GUARANTORS' EXISTING INDEBTEDNESS AND POSSIBLY TO ALL OF THEIR FUTURE BORROWINGS. The notes and the guarantees rank behind all of our and our guarantors' existing indebtedness, and all of our and their future borrowings, except any future indebtedness that expressly provides that it ranks equal with, or subordinated in right of payment to, the notes and the guarantees. As a result, upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors or our or their property, the holders of our senior debt and senior debt of 9 the guarantors will be entitled to be paid in full before any payment may be made with respect to the notes or the guarantees. In addition, all payments on the notes and the guarantees will be blocked in the event of a payment default on senior debt and may be blocked for up to 179 of 360 consecutive days in the event of specified non-payment defaults on senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors, holders of the notes will participate with trade creditors and all other holders of our and the guarantors' subordinated indebtedness in the assets remaining after we and the guarantors have paid all of our and their senior debt. However, because the senior debt is secured and because the indenture requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead, holders of the notes may receive less, ratably, than holders of trade payables in the proceeding. In any of these cases, we and the guarantors may not have sufficient funds to pay all of our creditors and holders of notes may receive less, ratably, than the holders of our senior debt. THE NOTES ARE NOT SECURED BY ANY OF OUR ASSETS. HOWEVER, OUR SENIOR SECURED CREDIT FACILITIES ARE SECURED AND, THEREFORE, OUR BANK LENDERS HAVE A PRIOR CLAIM ON SUBSTANTIALLY ALL OF OUR ASSETS. The notes are not secured by any of our assets. However, our senior secured credit facilities are secured by (1) a pledge of 100% of the stock of our existing and future domestic subsidiaries and 65% of the stock of our existing and future first-tier foreign subsidiaries, and (2) substantially all of our assets. If we become insolvent or are liquidated, or if payment under any of the instruments governing our secured debt is accelerated, the lenders under these instruments will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to instruments governing such debt. Accordingly, the lenders under our senior secured credit facilities have a prior claim on our guarantors' assets. In that event, because the notes are not secured by any of our assets, it is possible that our remaining assets might be insufficient to satisfy your claims in full. YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES COULD BE ADVERSELY AFFECTED IF ANY OF OUR NONGUARANTOR SUBSIDIARIES DECLARE BANKRUPTCY, LIQUIDATE, OR REORGANIZE; THE NOTES WILL BE STRUCTURALLY SUBORDINATED TO THE OBLIGATIONS OF OUR NON-GUARANTOR SUBSIDIARIES. Some but not all of our subsidiaries guarantee the notes. Our foreign subsidiaries are not guarantors on the notes, and will become so in the future only if they guarantee other debt of Berry Plastics or Berry Plastics' non-foreign subsidiaries. Furthermore, the guarantee of the notes may be released under the circumstances described under "Description of the exchange notes--Certain covenants--Future note guarantors and release of note guarantees." Our obligations under the notes are structurally subordinated to the obligations of our non-guarantor subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. Assuming we had completed the Acquisition on March 30, 2002, our non-guarantor subsidiaries would have held 5.4% of our 10 consolidated assets as of that date. These non-guarantor subsidiaries would have accounted for 4.6% of our revenues and 2.2% of our pro forma Adjusted EBITDA for fiscal year 2001. FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTE HOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor under specific circumstances, including circumstances where the guarantor, at the time it incurred the indebtedness evidenced by its guarantee: - received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and - was insolvent or rendered insolvent by reason of such incurrence; or - was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; or - if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or - it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard. WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE. Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all then-outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest and additional interest, if any, to the date of repurchase. However, it is 11 possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of notes or that restrictions in our new senior secured credit facilities will not allow such repurchases. In addition, various important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "Change of Control" under the indenture. See "Description of the exchange notes--Change of control." WE HAVE EXPERIENCED CONSOLIDATED NET LOSSES. Our net losses were $14.4 million for fiscal 1997, $7.6 million for fiscal 1998, $9.1 million for fiscal 1999, $23.1 million for fiscal 2000 and $2.1 million for fiscal 2001. Consolidated earnings have been insufficient to cover fixed charges by $13.9 million for fiscal 1997, by $7.0 million for fiscal 1998, by $7.1 million for fiscal 1999, by $20.5 million for fiscal 2000, and by $0.8 million for fiscal 2001. See "Management's discussion and analysis of financial condition and results of operations." THE NOTES HAVE NO PRIOR PUBLIC MARKET, AND WE CANNOT ASSURE YOU THAT ANY PUBLIC MARKET FOR THE NOTES WILL DEVELOP OR BE SUSTAINED. The outstanding notes were issued to, and we believe these securities are currently owned by, a relatively small number of beneficial owners. The outstanding notes have not been registered under the Securities Act and will remain subject to restrictions on transferability if they are not exchanged for the exchange notes. Although the exchange notes may be resold or otherwise transferred by the holders (who are not our affiliates) without compliance with the registration requirements under the Securities Act, they will constitute a new issue of securities with no established trading market. We cannot assure you that such a market will develop or be sustained. In addition, the exchange notes will not be listed on any national securities exchange. The exchange notes may trade at a discount from the initial offering price of the outstanding notes, depending upon prevailing interest rates, the market for similar securities, our operating results and other factors. We have been advised by the initial purchasers that they currently intend to make a market in the exchange notes, as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to do so, and any such market-making activities may be discounted at any time without notice. In addition, such market-making activity may be limited during the exchange offer and the pendency of a shelf registration. Therefore, we cannot assure you that an active market for any of the exchange notes will develop, either prior to or after our performance of our obligations under the registration rights agreement. If an active public market does not develop, the market price and liquidity of the exchange notes may be adversely affected. Historically, the market for non-investment grade debt has been volatile in terms of price. It is possible that the market for the exchange notes will be volatile. This volatility in price may affect your ability to resell your exchange notes or the timing of their sale. Notwithstanding the registration of the exchange notes in the exchange offer, holders who are "affiliates" (as defined under Rule 405 of the Securities Act) of us may publicly offer for sale or resale the exchange notes only in compliance with the provisions of Rule 144 under the Securities Act. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a 12 result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See "Plan of distribution." Because we are an affiliate of Goldman, Sachs & Co. and J.P. Morgan Securities Inc., two of the initial purchasers of the outstanding notes, following consummation of this exchange offer, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are required to deliver a current "market-maker" prospectus and otherwise comply with the registration requirements of the Securities Act in connection with any secondary market sale of the notes, which may affect their ability to continue market-making activities. Following completion of the exchange offer, we have agreed to make a "market-maker" prospectus generally available to Goldman, Sachs & Co. and J.P. Morgan Securities Inc. to permit them to engage in market-making transactions. However, the registration rights agreement also provides that at any time after consummation of the exchange offer we may, for valid business reasons, allow the market-maker prospectus to cease to be effective and usable for a period of time not to exceed 60 days in the aggregate in any consecutive 12-month period, including without limitation, a potential acquisition, divestiture of assets or other material corporate transaction. As a result, the liquidity of the secondary market for the notes may be materially adversely affected by the unavailability of a current "market-maker" prospectus following the exchange offer. YOU MAY HAVE DIFFICULTY SELLING THE NOTES WHICH YOU DO NOT EXCHANGE. If you do not exchange your outstanding notes for the exchange notes offered in this exchange offer, you will continue to be subject to the restrictions on the transfer of your outstanding notes. Those transfer restrictions are described in the indenture and in the legend contained on the outstanding notes, and arose because we originally issued the outstanding notes under exemptions from, and in transactions not subject to, the registration requirements of the Securities Act. In general, you may offer or sell your outstanding notes only if they are registered under the Securities Act and applicable state securities laws, or if they are offered and sold under an exemption from those requirements. We do not intend to register the outstanding notes under the Securities Act. If a large number of outstanding notes are exchanged for notes issued in the exchange offer, it may be more difficult for you to sell your unexchanged notes. In addition, if you do not exchange your outstanding notes in the exchange offer, you will no longer be entitled to have those notes registered under the Securities Act. See "The exchange offer--Consequences of failure to exchange outstanding notes" for a discussion of the possible consequences of failing to exchange your outstanding notes. RISKS RELATED TO OUR BUSINESS WE DO NOT HAVE FIRM CONTRACTS WITH PLASTIC RESIN SUPPLIERS. We source plastic resin primarily from major industry suppliers such as Dow Chemical, Chevron, ExxonMobil and Equistar. We have long-standing relationships with certain of these suppliers but have not entered into a firm supply contract with any of our resin vendors. We may not be able to arrange for other sources of resin in the event of an industry-wide general shortage of resins used by us, or a shortage or discontinuation of certain types of grades of resin purchased 13 from one or more of our suppliers. Any such shortage may negatively impact our competitive position versus companies that are able to better or more cheaply source resin. Additionally, we may be subject to significant increases in prices that may materially impact our financial condition. IF MARKET CONDITIONS DO NOT PERMIT US TO PASS ON THE COST OF PLASTIC RESINS TO OUR CUSTOMERS ON A TIMELY BASIS, OR AT ALL, OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD SUFFER MATERIALLY. To produce our products we use large quantities of plastic resins, which in fiscal 2001 cost us approximately $116.0 million, or 34.3% of our total cost of goods sold. Plastic resins are subject to cyclical price fluctuations, including those arising from supply shortages and changes in the prices of natural gas, crude oil and other petrochemical intermediates from which resins are produced. The instability in the world markets for petroleum and natural gas could materially adversely affect the prices and general availability of raw materials quickly. Historically, we have generally been able to pass on a significant portion of the increases in resin prices to our customers over a period of time, but even in such cases there have been negative short-term impacts to our financial performance. Certain of our customers (currently fewer than 10% of our net revenues) purchase our products pursuant to fixed-price arrangements in respect of which we have at times and may continue to enter into hedging or similar arrangements. In the future, we may not be able to pass on substantially all of the increases in resin prices to our customers on a timely basis, if at all, which would have a material adverse effect on our competitive position and financial performance. WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AND OUR CUSTOMERS MAY NOT CONTINUE TO PURCHASE OUR PRODUCTS. We face intense competition in the sale of our products. We compete with multiple companies in each of our product lines, including divisions or subsidiaries of larger companies. We compete on the bases of a number of considerations, including price, service, quality, product characteristics and the ability to supply products to customers in a timely manner. Our products also compete with metal and glass, paper and other packaging materials as well as plastic packaging materials made through different manufacturing processes. Many of our product lines also compete with plastic products in other lines and segments. Many of our competitors have financial and other resources that are substantially greater than ours and may be better able than us to withstand price competition. In addition, some of our customers do and could in the future choose to manufacture the products they require for themselves. Each of our product lines faces a different competitive landscape. We may not be able to compete successfully with respect to any of the foregoing factors. Competition could result in our products losing market share or our having to reduce our prices, either of which would have a material adverse effect on our business and results of operations and financial condition. In addition, since we don't have long-term arrangements with many of our customers, these competitive factors could cause our customers to shift suppliers and/or packaging material quickly. IN THE EVENT OF A CATASTROPHIC LOSS OF OUR KEY MANUFACTURING FACILITY, OUR BUSINESS WOULD BE ADVERSELY AFFECTED. Our primary manufacturing facility is in Evansville, Indiana, where we produce approximately one-third of our products. While we maintain insurance covering the facility, including business 14 interruption insurance, a catastrophic loss of the use of all or a portion of the facility due to accident, labor issues, weather conditions, other natural disaster or otherwise, whether short or long-term, could have a material adverse effect on us. OUR ACQUISITION STRATEGY MAY BE UNSUCCESSFUL. As part of our growth strategy, we plan to pursue the acquisition of other companies, assets and product lines that either complement or expand our existing business. We cannot assure you that we will be able to consummate any such transactions at all or that any future acquisitions will be able to be consummated at acceptable prices and terms. We continually evaluate potential acquisition opportunities in the ordinary course of business, including those that could be material in size and scope. Acquisitions involve a number of special risks and factors, including: - the focus of management's attention to the assimilation of the acquired companies and their employees and on the management of expanding operations; - the incorporation of acquired products into our product line; - the increasing demands on our operational systems; - adverse effects on our reported operating results; and - the loss of key employees and the difficulty of presenting a unified corporate image. We may be unable to make appropriate acquisitions because of competition for the specific acquisition. In pursuing acquisitions, we compete against other plastic product manufacturers, some of which are larger than we are and have greater financial and other resources than we have. We compete for potential acquisitions based on a number of factors, including price, terms and conditions, size and ability to offer cash, stock or other forms of consideration. Increased competition for acquisition candidates could result in fewer acquisition opportunities for us and higher acquisition prices. As a company without public equity, we may not be able to offer attractive equity to potential sellers. Additionally, our acquisition strategy may result in significant increases in our outstanding indebtedness and debt service requirements. In addition, the negotiation of potential acquisitions may require members of management to divert their time and resources away from our operations. THE INTEGRATION OF ACQUIRED BUSINESSES MAY RESULT IN SUBSTANTIAL COSTS, DELAYS OR OTHER PROBLEMS. We may not be able to successfully integrate our acquisitions without substantial costs, delays or other problems. We will have to continue to expend substantial managerial, operating, financial and other resources to integrate our businesses. The costs of such integration could have a material adverse effect on our operating results and financial condition. Such costs include non-recurring acquisition costs including accounting and legal fees, investment banking fees, recognition of transaction-related obligations, plant closing and similar costs and various other acquisition-related costs. In addition, although we conduct what we believe to be a prudent level of investigation regarding the businesses we purchase, in light of the circumstances of each transaction, an unavoidable level of risk remains regarding the actual condition of these businesses. Until we actually assume operating control of such business assets and their operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations. 15 Once we acquire a business, we are faced with risks, including: - the possibility that it will be difficult to integrate the operations into our other operations; - the possibility that we have acquired substantial undisclosed liabilities; - the risks of entering markets or offering services for which we have no prior experience; - the potential loss of customers as a result of changes in management; and the possibility we may be unable to recruit additional managers with the necessary skills to supplement the incumbent management of the acquired business. We may not be successful in overcoming these risks. WE RELY ON UNPATENTED PROPRIETARY KNOW-HOW AND TRADE SECRETS. In addition to relying on patent and trademark rights, we rely on unpatented proprietary know-how and trade secrets, and employ various methods, including confidentiality agreements with employees and consultants, to protect our know-how and trade secrets. However, these methods and our patents and trademarks may not afford complete protection and there can be no assurance that others will not independently develop the know-how and trade secrets or develop better production methods than us. Further, we may not be able to deter current and former employees, contractors and other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property rights. Additionally, we have licensed, and may license in the future, patents, trademarks, trade secrets, and similar proprietary rights to and from third parties. While we attempt to ensure that our intellectual property and similar proprietary rights are protected and that the third party rights we need are licensed to us when entering into business relationships, third parties may take actions that could materially and adversely affect our rights or the value of our intellectual property, similar proprietary rights or reputation. Furthermore, no assurance can be given that claims or litigation asserting infringement of intellectual property rights will not be initiated by third parties seeking damages, the payment of royalties or licensing fees and/or an injunction against the sale of our products or that we would prevail in any litigation or be successful in preventing such judgment. See "Business--Legal proceedings." In the future, we may also rely on litigation to enforce our intellectual property rights and contractual rights, and, if not successful, we may not be able to protect the value of our intellectual property. Any litigation could be protracted and costly and could have a material adverse effect on our business and results of operations regardless of its outcome. Although we believe that our intellectual property rights are sufficient to allow us to conduct our business without incurring liability to third parties, our products may infringe on the intellectual property rights of third parties and our intellectual property rights may not have the value we believe them to have. CURRENT AND FUTURE ENVIRONMENTAL AND OTHER GOVERNMENTAL REQUIREMENTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND OUR ABILITY TO CONDUCT OUR BUSINESS. Certain of our operations are subject to federal, state, local and foreign environmental laws and regulations that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage and disposal of solid and hazardous wastes. While we have not been required historically to make significant capital expenditures in order 16 to comply with applicable environmental laws and regulations, we cannot predict with any certainty our future capital expenditure requirements because of continually changing compliance standards and environmental technology. Furthermore, violations or contaminated sites that we do not know about (including contamination caused by prior owners and operators of such sites) could result in additional compliance or remediation costs or other liabilities. We have limited insurance coverage for environmental liabilities and we do not anticipate increasing such coverage in the future. We may also assume significant environmental liabilities in acquisitions. In addition, federal, state and local governments could enact laws or regulations concerning environmental matters that increase the cost of producing, or otherwise adversely affect the demand for, plastic products. Legislation that would prohibit, tax or restrict the sale or use of certain types of plastic and other containers, and would require diversion of solid wastes such as packaging materials from disposal in landfills, has been or may be introduced in the U.S. Congress, in state legislatures and other legislative bodies. While container legislation has been adopted in a few jurisdictions, similar legislation has been defeated in public referenda in several states, local elections and many state and local legislative sessions. Although we believe that the laws promulgated to date have not had a material adverse effect on us, there can be no assurance that future legislation or regulation would not have a material adverse effect on us. Furthermore, a decline in consumer preference for plastic products due to environmental considerations could have a negative effect on our business. The Food and Drug Administration ("FDA") regulates the material content of direct-contact food containers and packages we manufacture pursuant to the Federal Food, Drug and Cosmetic Act. Furthermore, some of our products are regulated by the Consumer Product Safety Commission ("CPSC") pursuant to various federal laws, including the Consumer Product Safety Act. Both the FDA and the CPSC can require the manufacturer of defective products to repurchase or recall these products and may also impose fines or penalties on the manufacturer. Similar laws exist in some states, cities and other countries in which we sell products. In addition, laws exist in certain states restricting the sale of packaging with certain levels of heavy metals and imposing fines and penalties for noncompliance. Although we use FDA-approved resins and pigments in containers that directly contact food products and we believe our products are in material compliance with all applicable requirements, we remain subject to the risk that our products could be found to be not in compliance with these and other requirements. A recall of any of our products or any fines and penalties imposed in connection with non-compliance could have a materially adverse effect on us. See "Business -- Environmental matters and government regulation." OUR OPERATIONS OUTSIDE OF THE UNITED STATES ARE SUBJECT TO ADDITIONAL CURRENCY EXCHANGE, POLITICAL, INVESTMENT AND OTHER RISKS. We currently operate two facilities and made approximately 5% of our 2001 sales outside the United States. This amount may change in the future. As we are subject to the risks associated with selling and operating in foreign countries, including devaluations and fluctuations in foreign currencies, unstable political conditions, imposition of limitations on conversion of foreign currencies into U.S. dollars and remittance of dividends and payments by foreign subsidiaries. The imposition of taxes and imposition or increase of investment and other restrictions, tariffs or quotas may also have a negative effect on our business and profitability. 17 WE ARE CONTROLLED BY AFFILIATES OF GOLDMAN, SACHS & CO. AND J.P. MORGAN SECURITIES INC., AND THEIR INTERESTS AS EQUITY HOLDERS MAY CONFLICT WITH YOUR INTERESTS AS A CREDITOR. As a result of the Acquisition, certain private equity funds affiliated with Goldman, Sachs & Co. and J.P. Morgan Securities Inc. own a substantial majority of our common stock. The interests of Goldman, Sachs & Co. and J.P. Morgan Securities Inc. and their respective affiliates may not in all cases be aligned with your interests as a holder of the notes. 18 THE ACQUISITION THE MERGER AGREEMENT The following is a summary of the material terms of the merger agreement, dated as of May 25, 2002, among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P. and GS Capital Partners 2000 Employees Fund, L.P., BPC Holding, certain of BPC Holding's stockholders, us and the designated representatives of BPC Holding's stockholders. The summary is qualified in its entirety by reference to the merger agreement. THE MERGER Pursuant to the terms of the merger agreement, GS Berry Acquisition Corp. merged with and into BPC Holding with BPC Holding continuing as the surviving corporation. Pursuant to the terms of the merger agreement, the amount available for payment to BPC Holding's common stockholders in the merger was $837,500,000 less the amounts related to the (i) repayment of substantially all of the outstanding indebtedness of BPC Holding on a consolidated basis, (ii) redemption all of BPC Holding's issued and outstanding shares of preferred stock, (iii) payment of transaction costs incurred by BPC Holding and its stockholders and (iv) amount of remaining outstanding indebtedness and the value of BPC Holding common stock held by our employees that was contributed to GS Berry Acquisition Corp. Some of our employees who were stockholders of BPC Holding agreed to contribute their shares of BPC Holding common stock to GS Berry Acquisition Corp. immediately prior to the effective time of the merger and received capital stock of the surviving corporation instead of cash in the merger. BPC Holding and GS Berry Acquisition Corp. closed the Acquisition simultaneously with the issuance of the outstanding notes and the closing of our senior secured credit facilities. Under the terms of the merger agreement, a portion of the consideration paid to BPC Holding's stockholders in the merger (including a portion of the shares of common stock of the surviving corporation issued to our employees who contributed shares of BPC Holding common stock to GS Berry Acquisition Corp. prior to the effective time) were held in escrow to secure the payment of any claims arising under BPC Holding's stockholders' indemnification obligations. Additionally, the consideration paid in the merger is subject to a post-closing adjustment based on the amount of BPC Holding's consolidated working capital at the time of the closing of the merger. WORKING CAPITAL ADJUSTMENT Following the closing of the merger, the consideration available for payment to BPC Holding's stockholders will be subject to a working capital adjustment. We are in the process of determining the amount of the post-closing adjustment. DEBT TENDER OFFERS Pursuant to the terms of the merger agreement, Berry Plastics commenced a tender offer and consent solicitation for all of its outstanding 11% Senior Subordinated Notes due 2007 (the "11% Notes") and 12.25% Senior Subordinated Notes due 2004 and 12.25% Series B Senior Subordinated Notes due 2004 (together, the "12.25% Notes"), and BPC Holding commenced a 19 tender offer and consent solicitation for all of its outstanding 12.5% Senior Secured Notes due 2006 (the "12.5% Notes"). The tender offers expired on July 22, 2002 and we repurchased 100% of the then-outstanding 11% Notes, 93% of the then-outstanding 12.25% Notes and 93% of the then-outstanding 12.5% Notes. We intend to redeem all of the 12.25% Notes and 12.5% Notes not purchased in the debt tender offers within 30 days after the closing of the Acquisition. 20 USE OF PROCEEDS We will not receive any proceeds in connection with the exchange offer. In consideration for issuing the exchange notes in exchange for the outstanding notes as described in this prospectus, we will receive, retire and cancel the outstanding notes tendered in the exchange offer. The net proceeds from the sale of the outstanding notes, after deducting fees and expenses, were approximately $241.6 million. We used all of the net proceeds to fund payment of the consideration for, and fees and expenses relating to, the Acquisition. 21 CAPITALIZATION The following table sets forth our (i) capitalization as of March 30, 2002 and (ii) capitalization as of such date as adjusted to give effect to the Acquisition, including the financing thereof. This table should be read in conjunction with "The acquisition," our combined financial statements and related notes and the unaudited pro forma financial statements included elsewhere in the offering memorandum.
- ----------------------------------------------------------------------------------- AS OF MARCH 30, 2002 (UNAUDITED) --------------------- (DOLLARS IN THOUSANDS) ACTUAL ADJUSTED - ----------------------------------------------------------------------------------- Long-term debt (including current portion thereof): Senior secured credit facilities Previous credit facility(1)........................... $ 131,620 $ - Revolving credit facility(1).......................... - - Term loan facility(1)................................. - 330,000 Delayed draw term loan facility(1).................... - - Previous notes(2)........................................ 335,714 - Notes offered hereby..................................... - 250,000 Capital lease obligations(3)............................. 21,897 16,897 Nevada industrial revenue bonds.......................... 3,000 3,000 Debt premium............................................. 350 - --------------------- Total debt............................................ 492,581 599,897 Preferred stock............................................. 48,045 - Common stock, paid-in capital and warrants.................. 31,292 124,081 Retained earnings (deficit)................................. (215,497) - Accumulated other comprehensive loss........................ (1,716) - --------------------- Total stockholders' equity (deficit).................. (137,876) 124,081 --------------------- Total capitalization........................................ $ 354,705 $ 723,978 - -----------------------------------------------------------------------------------
(1) As of March 30, 2002, on a pro forma basis after giving effect to the offering and the Acquisition, including the financing thereof, we would have had unused borrowing capacity under the revolving credit facility of $94.3 million, with $5.7 million in letters of credit outstanding thereunder, and unused borrowing capacity under our delayed draw term loan facility of $50.0 million. (2) Assumes all of the previous notes are purchased in the tender offers or redeemed at the closing of the Acquisition. The previous notes consist of the 11% Notes and the 12.25% Notes and the 12.5% Notes. (3) We may repay a portion of these capital leases with additional borrowings. 22 UNAUDITED PRO FORMA FINANCIAL INFORMATION Set forth below are the unaudited pro forma combined balance sheet of BPC Holding as of March 30, 2002, assuming the Acquisition occurred on March 30, 2002, and the unaudited pro forma combined statements of operations of BPC Holding for the year ended December 29, 2001, the thirteen week period ended March 30, 2002 and the 52 week period ended March 30, 2002, assuming the transactions described below occurred at the beginning of the respective period. The unaudited pro forma combined financial information is presented for informational purposes only and does not purport to represent the financial condition of BPC Holding had the Acquisition occurred on March 30, 2002 or the results of operations of us for the year ended December 29, 2001, the thirteen week period ended March 30, 2002 or the 52 weeks ended March 30, 2002 had the Acquisition or the other transactions described below occurred on December 31, 2000, or to project the results for any future date or period. The unaudited pro forma combined statements of operations of BPC Holding give effect to (a) the Acquisition, including the financing thereof and (b) our acquisitions of Mt. Vernon Plastics Corporation and Pescor Plastics, Inc., as if they occurred at the beginning of the periods presented. The pro forma statements of operations do not reflect the premiums to be paid to prepay the debt being repaid in connection with the Acquisition, the write-off of historical deferred financing fees, transaction costs and employee-related compensation charges related to the amendment, modification and vesting of options and Acquisition bonuses. See "Management's discussion and analysis of financial condition and results of operations" and "The acquisition." The unaudited pro forma combined financial information should be read in conjunction with the financial statements and related notes thereto included elsewhere in this prospectus and the information set forth in "Management's discussion and analysis of financial condition and results of operations." 23 BPC HOLDING PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 30, 2002
- ---------------------------------------------------------------------------------------------- ADJUSTMENTS PRO FORMA BPC HOLDING FOR THE FOR THE (DOLLARS IN THOUSANDS) HISTORICAL ACQUISITION ACQUISITION - ---------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents......................... $ 774 $ - $ 774 Accounts receivable............................... 62,943 - 62,943 Inventories....................................... 57,591 - 57,591 Other current assets.............................. 4,900 - 4,900 --------------------------------------- Total current assets........................... 126,208 - 126,208 Property and equipment (less accumulated depreciation)..................................... 206,944 - 206,944 Intangible assets.................................... 128,991 325,220(1) 454,211 Other assets......................................... 2,103 - 2,103 --------------------------------------- Total assets.................................... $ 464,246 $ 325,220 $ 789,466 --------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.................................. $ 35,146 $ - $ 35,146 Accrued interest.................................. 13,862 (13,852)(2) 10 Other liabilities................................. 27,244 - 27,244 Current portion of long-term debt................. 21,124 (13,286)(3) 7,838 --------------------------------------- Total current liabilities...................... 97,376 (27,138) 70,238 Long-term debt (less current portion)................ 471,457 120,602(4) 592,059 Accrued dividends on preferred stock................. 30,201 (30,201)(5) - Other liabilities.................................... 3,088 - 3,088 --------------------------------------- Total liabilities.............................. 602,122 63,263 665,385 Stockholders' equity (deficit): Preferred stock................................... 48,045 (48,045)(6) - Common stock...................................... 31,292 92,789(7) 124,081 Retained earnings (deficit)....................... (215,497) 215,497(7) - Accumulated other comprehensive loss.............. (1,716) 1,716(7) - --------------------------------------- Total stockholders' equity (deficit)........... (137,876) 261,957 124,081 --------------------------------------- Total liabilities and stockholders' equity (deficit)................................... $ 464,246 $ 325,220 $ 789,466 - ----------------------------------------------------------------------------------------------
24 NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS) (1) The Acquisition will be accounted for as a purchase. Preliminarily, we have allocated the excess of the purchase price over the net assets acquired to goodwill (included in intangible assets). Under generally accepted accounting principles, goodwill is not amortized but is reviewed for impairment annually. We have not begun the process of reviewing our assets to determine the amount of any write-up or write-down to fair value of our net assets in connection with the Acquisition. Accordingly, the allocation described below is subject to change when we determine the purchase price allocation. If our non-goodwill assets are written up to fair value in connection with the Acquisition, our expenses in the future will be higher as a result of increased depreciation and amortization of our assets. Similarly, if our non-goodwill assets are written down to fair value, our depreciation and amortization will decrease in the future.
- ----------------------------------------------------------------------- Purchase price.............................................. $ 837,500 Estimated transaction costs................................. 31,200 --------- Total consideration......................................... 868,700 Less: Net assets acquired(a)................................ 398,761 Adjustment of carryover basis of continuing stockholders(b).......................................... (144,719) --------- Net adjustment.............................................. $ 325,220 - -----------------------------------------------------------------------
(a) Net assets acquired equals the historical basis of the assets acquired ($464.2 million) less liabilities assumed in the Acquisition not reflected in the purchase price above ($65.4 million). (b) Represents the pro rata basis of the continuing stockholders in the stockholders' deficit of BPC Holding less a deemed cash distribution to such continuing stockholders. (2) This adjustment reflects the elimination of the accrued interest as of March 30, 2002 on the debt being repaid in connection with the Acquisition. (3) This adjustment reflects the elimination of the current portion of long-term debt being repaid in connection with the Acquisition offset by the current portion of the long-term debt being incurred to finance the Acquisition.
- ---------------------------------------------------------------------- Current portion of debt being repaid........................ $(16,586) Current portion of debt being incurred...................... 3,300 -------- Net adjustment.............................................. $(13,286) - ----------------------------------------------------------------------
(4) This adjustment reflects the incurrence of long-term debt being incurred to finance the Acquisition offset by the elimination of the long-term debt being repaid in connection with the Acquisition. 25
- ----------------------------------------------------------------------- Term loan................................................... $ 326,700 Notes offered hereby........................................ 250,000 Long-term debt being repaid................................. (456,098) --------- Net adjustment.............................................. $ 120,602 - -----------------------------------------------------------------------
This adjustment assumes all of our existing notes are purchased in the tender offers or redeemed at or after the closing of the Acquisition. (5) This adjustment reflects the payment of the accrued dividends as of March 30, 2002, on the preferred stock being redeemed in connection with the Acquisition. (6) This adjustment reflects the repurchase of the preferred stock in connection with the Acquisition. (7) This adjustment reflects the increase to stockholders' equity resulting from the equity capital being contributed less an adjustment for the carryover basis of continuing stockholders.
- ----------------------------------------------------------------------- Equity contribution......................................... $ 268,800 Adjustment of carryover basis of continuing stockholders(a).......................................... (144,719) --------- Total stockholders' equity.................................. $ 124,081 - -----------------------------------------------------------------------
(a) Represents the pro rata basis of the continuing stockholders in the stockholders' deficit of BPC Holding less a deemed cash distribution to such continuing stockholders. 26 BPC HOLDING PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FISCAL YEAR ENDED DECEMBER 29, 2001
- -------------------------------------------------------------------------------------------------- PRO FORMA FOR THE MT. VERNON AND MT. VERNON ADJUSTMENTS PESCOR BPC HOLDING AND PESCOR FOR THE ACQUISITIONS AND (DOLLARS IN THOUSANDS) HISTORICAL ACQUISITIONS ACQUISITION THE ACQUISITION - -------------------------------------------------------------------------------------------------- Net sales......................... $ 461,659 $ 28,665(1) $ - $ 490,324 Cost of goods sold................ 338,000 25,328(2) - 363,328 -------------------------------------------------------------- Gross margin...................... 123,659 3,337 - 126,996 Operating expenses................ 70,192 2,448 10,341(3) 82,981 -------------------------------------------------------------- Operating income (loss)........... 53,467 889 (10,341) 44,015 Other expenses.................... 473 - - 473 Interest expense, net............. 54,355 266 (6,828)(4) 47,793 -------------------------------------------------------------- Income (loss) before income taxes.......................... (1,361) 623 (3,513) (4,251) Income taxes...................... 734 117 -(5) 851 -------------------------------------------------------------- Net income (loss)................. (2,095) 506 (3,513) (5,102) Preferred stock dividends......... 9,790 - (9,790)(6) - Amortization of preferred stock dividend....................... 1,024 - (1,024)(7) - -------------------------------------------------------------- Net income (loss) attributable to common stockholders............ $ (12,909) $ 506 $ 7,301 $ (5,102) -------------------------------------------------------------- OTHER DATA: Depreciation and amortization..... 50,907 1,593 11,112(3) 63,612 Adjusted EBITDA(8)................ 110,852 2,482 - 113,334 Adjusted EBITDA margin............ 24.0% 8.7% - 23.1% - --------------------------------------------------------------------------------------------------
27 BPC HOLDING PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS THIRTEEN WEEKS ENDED MARCH 30, 2002
- -------------------------------------------------------------------------------------------------- PRO FORMA FOR THE ADJUSTMENTS MT. VERNON BPC HOLDING MT. VERNON FOR THE ACQUISITION AND (DOLLARS IN THOUSANDS) HISTORICAL ACQUISITION ACQUISITION THE ACQUISITION - -------------------------------------------------------------------------------------------------- Net sales......................... $ 122,934 $ 1,111(1) $ - $ 124,045 Cost of goods sold................ 90,299 943(2) - 91,242 -------------------------------------------------------------- Gross margin...................... 32,635 168 - 32,803 Operating expenses................ 15,028 105 (157)(3) 14,976 -------------------------------------------------------------- Operating income.................. 17,607 63 157 17,827 Other expenses.................... 144 - - 144 Interest expense, net............. 12,806 - (807)(4) 11,999 -------------------------------------------------------------- Income before income taxes........ 4,657 63 964 5,684 Income taxes (benefit)............ (109) - -(5) (109) -------------------------------------------------------------- Net income........................ 4,766 63 964 5,793 Preferred stock dividends......... 2,755 - (2,755)(6) - Amortization of preferred stock discount....................... 256 - (256)(7) - -------------------------------------------------------------- Net income attributable to common stockholders................... $ 1,755 $ 63 $ 3,975 $ 5,793 -------------------------------------------------------------- OTHER DATA: Depreciation and amortization..... 10,835 49 - 10,884 Adjusted EBITDA(8)................ 29,715 112 - 29,827 Adjusted EBITDA margin............ 24.2% 10.1% - 24.0% - --------------------------------------------------------------------------------------------------
28 BPC HOLDING PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 52 WEEK PERIOD ENDED MARCH 30, 2002
- ------------------------------------------------------------------------------------------------ PRO FORMA FOR THE MT. VERNON MT. VERNON ADJUSTMENTS AND PESCOR BPC HOLDING AND PESCOR FOR THE ACQUISITIONS AND (DOLLARS IN THOUSANDS) HISTORICAL ACQUISITIONS ACQUISITION THE ACQUISITION - ------------------------------------------------------------------------------------------------ Net sales......................... $ 468,577 $ 17,235(1) $ - $ 485,812 Cost of goods sold................ 344,372 15,093(2) - 359,465 ------------------------------------------------------------ Gross margin...................... 124,205 2,142 - 126,347 Operating expenses................ 67,701 1,454 7,230(3) 76,385 ------------------------------------------------------------ Operating income (loss)........... 56,504 688 (7,230) 49,962 Other expenses.................... 645 - - 645 Interest expense, net............. 53,667 - (5,735)(4) 47,932 ------------------------------------------------------------ Income (loss) before income taxes.......................... 2,192 688 (1,495) 1,385 Income taxes...................... 543 - -(5) 543 ------------------------------------------------------------ Net income (loss)................. 1,649 688 (1,495) 842 Preferred stock dividends......... 10,429 - (10,429)(6) - Amortization of preferred stock discount....................... 1,024 - (1,024)(7) - ------------------------------------------------------------ Net income (loss) attributable to common stockholders............ $ (9,804) $ 688 $ 9,958 $ 842 ------------------------------------------------------------ OTHER DATA: Depreciation and amortization..... 50,326 913 7,914(3) 59,153 Adjusted EBITDA(8)................ 112,804 1,602 - 114,406 Adjusted EBITDA margin............ 24.1% 9.3% - 23.5% - ------------------------------------------------------------------------------------------------
29 NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS) (1) This amount represents adjusted net sales of Mt. Vernon and Pescor during the relevant period after the elimination of sales made by Mt. Vernon during the relevant period to a customer which informed Mt. Vernon that it intended to stop purchasing products from Mt. Vernon after the closing of the Mt. Vernon acquisition.
- ---------------------------------------------------------------------------------------------- THIRTEEN FIFTY-TWO FISCAL YEAR ENDED WEEKS ENDED WEEKS ENDED DECEMBER 29, 2001 MARCH 30, 2002 MARCH 30, 2002 - ---------------------------------------------------------------------------------------------- Net sales of Mt. Vernon and Pescor....... $ 34,066 $ 1,111 $ 22,636 Eliminated sales......................... (5,401) - (5,401) --------------------------------------------------- Adjusted net sales....................... $ 28,665 $ 1,111 $ 17,235 - ----------------------------------------------------------------------------------------------
(2) This amount represents adjusted cost of sales of Mt. Vernon and Pescor during the relevant period after the elimination of the cost of sales with respect to the sales being eliminated in note (1) above.
- ---------------------------------------------------------------------------------------------- THIRTEEN FIFTY-TWO FISCAL YEAR ENDED WEEKS ENDED WEEKS ENDED DECEMBER 29, 2001 MARCH 30, 2002 MARCH 30, 2002 - ---------------------------------------------------------------------------------------------- Cost of sales of Mt. Vernon and Pescor... $ 30,729 $ 943 $ 20,494 Eliminated cost of sales................. (5,401) - (5,401) --------------------------------------------------- Adjusted cost of sales................... $ 25,328 $ 943 $ 15,093 - ----------------------------------------------------------------------------------------------
(3) This adjustment represents in the relevant periods (i) the elimination of the annual management fee charged by our largest voting stockholder prior to the Acquisition, (ii) the elimination of professional fees incurred by BPC Holding principally relating to indebtedness of BPC Holding that was not guaranteed by Berry Plastics and that will not remain outstanding after the Acquisition and (iii) the inclusion of amortization of goodwill resulting from the Acquisition on a 20-year straight line basis offset by the elimination of the amortization of historical goodwill. Goldman, Sachs & Co. and J.P. Morgan Chase & Co. and their respective affiliates will not receive any ongoing annual management fee after the Acquisition. Effective January 1, 2002 goodwill is no longer amortized in accordance with the new accounting standard SFAS 142, "Goodwill and Other Intangible Assets." We recorded pro forma amortization of $21,076 in the 52 weeks ended December 29, 2001 and $15,807 in the 52 weeks ended March 30, 2002. In addition, the pro forma financial statements assume that the excess of the purchase price of the Acquisition over the net assets acquired will all be allocated to goodwill. As described, goodwill is not amortized but is reviewed for impairment annually. We have not begun the process of reviewing our assets to determine the amount of any write-up or write-down to fair value of our net assets in connection with the Acquisition. If in connection with our finalization of our purchase price accounting our non-goodwill assets are written up to fair value, our expenses in the future will be higher as a result of increased 30 depreciation and amortization of our assets. Similarly, if our non-goodwill assets are written down to fair value in connection with the Acquisition, our depreciation and amortization will decrease in the future. See Note (1) to Notes to Pro Forma Condensed Balance Sheet. (4) This adjustment reflects in the relevant periods the elimination of the historical interest expense incurred on the debt being repaid in connection with the Acquisition, including the elimination of the amortization of debt financing costs, offset by the interest expense on the estimated debt being incurred in connection with the Acquisition and the amortization of deferred financing costs incurred in connection therewith. This adjustment assumes an interest rate of 10 3/4% on the notes and an interest rate of 5 1/4% on the term loan. The deferred financing costs are being amortized based on the maturity of the loans.
- ---------------------------------------------------------------------------------------------- THIRTEEN FIFTY-TWO FISCAL YEAR ENDED WEEKS ENDED WEEKS ENDED DECEMBER 29, 2001 MARCH 30, 2002 MARCH 30, 2002 - ---------------------------------------------------------------------------------------------- Elimination of historical interest expense on debt being repaid........... $ (53,243) $ (12,411) $ (52,150) Interest on notes offered hereby......... 26,875 6,719 26,875 Interest on term loan.................... 17,325 4,331 17,325 Amortization of deferred financing costs associated with notes offered hereby................................ 840 210 840 Amortization of deferred financing costs associated with term loan............. 1,375 344 1,375 --------------------------------------------------- Adjustment to net interest expense....... $ (6,828) $ (807) $ (5,735) - ----------------------------------------------------------------------------------------------
(5) No adjustment has been made to tax expense attributable to the pro forma adjustments on the assumption that an offsetting adjustment to the valuation allowance would be recorded with respect to the resultant tax loss carryforward asset. (6) This adjustment reflects the elimination of preferred stock dividends on the preferred stock redeemed in connection with the Acquisition. (7) This adjustment reflects the elimination of the amortization of preferred stock discount on the preferred stock redeemed in connection with the Acquisition. 31 SELECTED CONSOLIDATED FINANCIAL DATA The following table sets forth Holding's selected consolidated historical financial data for each of the fiscal years 1997, 1998, 1999, 2000 and 2001, which have been derived from the consolidated financial statements of Holding which have been audited by Ernst & Young LLP, independent auditors and for the thirteen weeks ended March 30, 2002 and March 31, 2001, which is derived from our unaudited consolidated financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited interim financial data includes all adjustments, consisting of only normal nonrecurring adjustments, considered necessary for a fair presentation of this information. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. Holding's fiscal year is a 52/53 week period ending on the Saturday closest to December 31. All references herein to fiscal "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. The following data should be read in conjunction with our consolidated financial statements and related notes, "Management's discussion and analysis of financial condition and results of operations," "Unaudited pro forma financial information" and other financial information included elsewhere in this prospectus.
THIRTEEN WEEKS FISCAL ENDED --------------------- ---------------------------------------------------- MARCH 31, MARCH 30, (DOLLARS IN THOUSANDS) 1997 1998 1999 2000 2001 2001 2002 - ------------------------------------------------------------------------------------------------------------------------ (UNAUDITED) Statement of operations data: Net sales.............................. $226,953 $271,830 $328,834 $408,088 $461,659 $116,016 $122,934 Cost of goods sold..................... 180,249 199,227 241,067 312,119 338,000 83,927 90,299 ---------------------------------------------------------------------------- Gross margin........................... 46,704 72,603 87,767 95,969 123,659 32,089 32,635 Operating expenses Selling............................. 11,320 14,780 17,383 21,630 21,996 5,742 5,780 General and administrative.......... 11,505 19,308 22,034 24,408 28,535 7,242 7,108 Research and development............ 1,310 1,690 2,338 2,606 1,948 401 547 Amortization of intangibles......... 2,226 4,139 7,215 10,579 12,802 2,751 477 Other expenses...................... 4,144 4,084 5,148 6,639 4,911 1,383 1,116 ---------------------------------------------------------------------------- Total operating expenses............ 30,505 44,001 54,118 65,862 70,192 17,519 15,028 Operating income....................... 16,199 28,602 33,649 30,107 53,467 14,570 17,607 Other expense (income)(a).............. 226 1,865 1,416 877 473 (28) 144 Interest expense, net(b)............... 30,246 34,556 40,817 51,457 54,355 13,494 12,806 ---------------------------------------------------------------------------- Income (loss) before income taxes and extraordinary item.................. (14,273) (7,819) (8,584) (22,227) (1,361) 1,104 4,657 Income taxes (benefit)................. 138 (249) 554 (142) 734 82 (109) ---------------------------------------------------------------------------- Net income (loss) before extraordinary item................................ (14,441) (7,570) (9,138) (22,085) (2,095) 1,022 4,766 Extraordinary item net of tax(c)....... - - - 1,022 - - - ---------------------------------------------------------------------------- Net income (loss)...................... (14,411) (7,570) (9,138) (23,107) (2,095) 1,022 4,766 Preferred stock dividends.............. 2,558 3,551 3,776 6,655 9,790 2,116 2,755 Amortization of preferred stock discount............................ 74 292 292 768 1,024 256 256 ---------------------------------------------------------------------------- Net income (loss) attributable to common stockholders................. $(17,043) $(11,413) $(13,206) $(30,530) $(12,909) $ (1,350) $ 1,755 ----------------------------------------------------------------------------
32
THIRTEEN WEEKS FISCAL ENDED --------------------- ---------------------------------------------------- MARCH 31, MARCH 30, (DOLLARS IN THOUSANDS) 1997 1998 1999 2000 2001 2001 2002 - ------------------------------------------------------------------------------------------------------------------------ (UNAUDITED) Other financial data: Adjusted EBITDA(d)..................... $ 40,269 $ 59,764 $ 71,541 $ 80,391 $110,852 $ 27,763 $ 29,715 Adjusted EBITDA margin(e).............. 17.7% 22.0% 21.8% 19.7% 24.0% 23.9% 24.2% Depreciation and amortization(f)....... $ 19,026 $ 24,829 $ 31,795 $ 42,148 $ 50,907 11,416 10,835 Cash provided by operating activities.......................... 14,154 34,131 36,001 36,106 54,348 2,654 7,489 Cash used for investing activities..... (102,102) (52,120) (106,978) (108,715) (56,290) (5,865) (12,999) Cash provided by financing activities.......................... 80,444 17,619 71,135 72,037 580 4,023 5,609 Capital expenditures................... 16,774 22,595 30,738 31,530 32,834 5,893 9,801 Ratio of earnings to fixed charges(g).......................... - - - - - 1.1x 1.4x Balance sheet data (at end of period): Working capital........................ $ 20,863 $ 4,762 $ 10,527 $ 20,470 $ 19,327 $ 29,891 $ 28,832 Property and equipment, net............ 108,218 120,005 146,792 179,804 203,217 177,338 206,944 Total assets........................... 239,444 255,317 340,807 413,122 446,876 422,149 464,246 Total debt............................. 306,335 323,298 403,989 468,806 485,881 471,181 492,581 - ------------------------------------------------------------------------------------------------------------------------
(a) Other expenses consist of net losses (gains) on disposal of property and equipment for the respective years. (b) Includes non-cash interest expense of $13,260, $14,824, $15,567, $18,047 and $11,268, in fiscal 1997, 1998, 1999, 2000 and 2001, respectively, and $4,953 and $631 for the thirteen weeks ended March 31, 2001 and March 30, 2002, respectively. (c) Extraordinary item relates to deferred financing fees written off as a result of amending our senior credit facility. (d) Adjusted EBITDA should not be considered in isolation or as an alternative to income from operations or to cash flows from operating activities (as determined in accordance with accounting principles generally accepted in the United States) and should not be construed as an indication of a company's operating performance or as a measure of liquidity. We believe this information enhances an investor's understanding of our ability to satisfy our obligations with respect to indebtedness or otherwise. In addition, our calculation of Adjusted EBITDA differs from that presented by certain other companies and thus is not necessarily comparable to similarly titled measures used by other companies. The following table reconciles operating income to Adjusted EBITDA for each respective period.
THIRTEEN WEEKS FISCAL ENDED --------------------- ------------------------------------------------ MARCH 31, MARCH 30, (DOLLARS IN THOUSANDS) 1997 1998 1999 2000 2001 2001 2002 - ------------------------------------------------------------------------------------------------------------------------- (UNAUDITED) Operating income............................... $16,199 $28,602 $33,649 $30,107 $ 53,467 14,570 17,607 Depreciation and amortization.................. 19,026 24,829 31,795 42,148 50,907 11,416 10,835 ------------------------------------------------------------------------ EBITDA......................................... 35,225 53,431 65,444 72,255 104,374 25,986 28,442 One-time expenses: Plant shutdown expenses.................. 849 2,556 1,499 3,702 2,194 699 907 Acquisition integration expenses......... 3,267 1,525 3,649 2,237 2,717 684 209 Litigation expenses related to drink cup patent................................ 100 631 - 700 - - - Corporate expenses: Non-cash compensation.................... - 600 - 459 796 150 - Holding professional fees(1)............. - 149 76 165 134 32 26 Management fees and expenses(2).......... 828 872 873 873 637 212 131 ------------------------------------------------------------------------ Adjusted EBITDA................................ $40,269 $59,764 $71,541 $80,391 $110,852 $27,763 $29,715 - -------------------------------------------------------------------------------------------------------------------------
(1) Represents fees paid by BPC Holding for professional services principally relating to indebtedness of BPC Holding that was not guaranteed by Berry Plastics and that are not outstanding after the Acquisition. (2) Represents fees paid to First Atlantic, our largest voting stockholder prior to the Acquisition. GSCP 2000 and J.P. Morgan Partners Global Investors, L.P. and their respective affiliates will not receive any annual management fees after the Acquisition. (e) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales. (f) Depreciation and amortization excludes non-cash amortization of deferred financing fees and debt premium discount amortization, which are included in interest expense. (g) For purposes of calculating the ratio of earnings to fixed charges, "earnings" represent net income (loss) before extraordinary items. "Fixed charges" consist of interest expense, including amortization of debt issuance costs and that portion of rental expenses which we consider to be a reasonable approximation of the interest factor of operating lease payments. For fiscal 1997, 1998, 1999, 2000 and 2001, our fixed charges exceeded our earnings by $13,932, $7,042, $7,137, $20,520 and $772, respectively. 33 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our financial condition and results of operations with our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk factors" section of this prospectus. Our actual results may differ materially from those contained in any forward- looking statements. CRITICAL ACCOUNTING POLICIES We disclose those accounting policies that we consider to be significant in determining the amounts to be utilized for communicating our consolidated financial position, results of operations and cash flows in the second note to our 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 our financial position or results of operations. We believe that the following accounting policies are the most critical because they have the greatest impact on the presentation of our financial condition and results of operations. Accounts receivable. We evaluate our allowance for doubtful accounts on a quarterly basis and review any significant customers with delinquent balances to determine future collectibility. We base our determinations on legal issues (such as bankruptcy status), past history, current financial and credit agency reports, and the experience of our credit representatives. We reserve accounts that we deem to be uncollectible in the quarter in which we make the determination. We maintain additional reserves based on our historical bad debt experience. We believe, based on past history and our credit policies, that the net accounts receivable are of good quality. Medical. We offer our employees medical insurance that is primarily self-insured by us. We evaluate our medical claims reserve on a quarterly basis and obtain an independent actuarial analysis on an annual basis. We accrue as a liability estimated claims incurred but not reported and any known claims. Based on our analysis, we believe that our medical claims reserves are adequate. Workers' compensation. Starting in fiscal 2000, we converted the majority of our facilities to a large deductible program for workers' compensation insurance. On a quarterly basis, we evaluate our reserves based on third-party adjusters' independent analyses by claim. Based on our analysis, we believe that our workers' compensation reserves are adequate. Based on a critical assessment of its accounting policies and the underlying judgements and uncertainties affecting the application of those policies, management believes that our consolidated financial statements provide a meaningful and fair perspective of BPC Holding and its consolidated subsidiaries. This is not to suggest that other risk factors such as changes 34 in economic conditions, changes in material costs, and others could not adversely impact our consolidated financial position, results of operations and cash flows in future periods. ACQUISITIONS We maintain a selective and disciplined acquisition strategy, which is focused on improving our financial performance in the long-term, enhancing our market positions and expanding our product lines or, in some cases, providing us with a new or complementary product line. We have historically acquired businesses with EBITDA margins that are lower than that of our existing business, which results in a temporary decrease in our margins. We have historically achieved significant reductions in manufacturing and overhead costs of acquired companies by introducing advanced manufacturing processes, exiting low-margin businesses or product lines, reducing headcount, rationalizing facilities and machinery, applying best practices and capitalizing on economies of scale. In connection with our acquisitions, we have in the past and may in the future incur non-recurring charges related to these reductions and rationalizations. In connection with the Acquisition, we will incur charges related to premiums paid to prepay debt being repaid, the write-off of historical deferred financing fees, transaction costs and employee-related compensation charges related to the amendment, modification and vesting of options and Acquisition bonuses. RESULTS OF OPERATIONS COMPARISON OF THE 13 WEEKS ENDED MARCH 30, 2002 (THE "QUARTER") TO THE 13 WEEKS ENDED MARCH 31, 2001 (THE "PRIOR QUARTER") Net sales. Net sales increased $6.9 million, or 6%, to $122.9 million for the Quarter from $116.0 million for the Prior Quarter with an approximate 2% decrease in net selling price due primarily to reduced raw material costs. Container net sales increased $1.8 million from the Prior Quarter with the Mt. Vernon acquisition providing approximately $3.3 million of net sales in the Quarter. Closure net sales decreased $1.6 million from the Prior Quarter. Consumer products net sales for the Quarter were $6.8 million more than the Prior Quarter with the Pescor acquisition providing net sales of approximately $6.9 million in the Quarter. Gross profit. Gross profit increased by $0.5 million to $32.6 million (27% of net sales) for the Quarter from $32.1 million (28% of net sales) for the Prior Quarter. This increase of 2% includes the combined impact of the added Pescor and Mt. Vernon sales volume, effects of decreases in net selling prices, decreases in raw material costs, acquisition integration and productivity improvement initiatives. We have continued to consolidate products and businesses of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, we removed molding operations from our Fort Worth, Texas facility (acquired in the Pescor acquisition) in the fourth quarter of 2001. The business from this location was distributed throughout our facilities. Also, significant productivity improvements were made since the Prior Quarter, including the addition of state of-the-art injection-molding equipment, molds and printing equipment at several of our facilities. Operating expenses. Selling expenses increased by $0.1 million to $5.8 million for the Quarter from $5.7 million for the Prior Quarter principally as a result of the Pescor acquisition partially offset by cost reductions. General and administrative expenses decreased from $7.2 million for the Prior Quarter to $7.1 million for the Quarter. This decrease of $0.1 million is primarily attributable to cost reduction initiatives partially offset by the Pescor acquisition. During the 35 Quarter, one-time transition expenses were $0.2 million related to acquisitions and $0.9 million related to the shutdown and reorganization of facilities. In the Prior Quarter, one-time transition expenses were $0.7 million related to acquisitions and $0.7 million related to the shutdown and reorganization of facilities. Interest expense, net. Net interest expense decreased $0.7 million to $12.8 million for the Quarter compared to $13.5 million for the Prior Quarter primarily due to lower interest rates on our variable interest rate debt. Income tax. For the Quarter, we recorded an income tax benefit of $109,000 compared to income tax expense of $82,000 for the Prior Quarter. We continue to operate in a net operating loss carryforward position for federal income tax purposes. Net income. We recorded net income of $4.8 million for the Quarter compared to $1.0 million for the Prior Quarter for the reasons discussed above. COMPARISON OF THE YEAR ENDED DECEMBER 29, 2001 TO THE 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. 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 decreases in 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, we continued to consolidate the products and businesses of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, we closed our York, Pennsylvania facility in the third quarter of 2000 and removed remaining production from our Minneapolis, Minnesota facility (acquired in the Cardinal acquisition) in the fourth quarter of 2000. Also, in the fourth quarter of 2001, we removed molding operations from our Fort Worth, Texas facility (acquired in the Pescor acquisition). The business from these locations was distributed throughout our facilities. Also, significant productivity improvements were made during both years, including the addition of state-of-the-art injection-molding equipment, molds and decorating equipment at several of our facilities. Additional cost reductions were achieved in connection with our realignment in the third quarter of 2000 from a functional based organization to a divisional structure. This realignment has enabled us 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 36 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 million related to recently acquired businesses and $2.2 million 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 was due 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, we recorded an expense of $0.7 million for income taxes compared to a benefit of $0.1 million for fiscal 2000. We continue to operate in a net operating loss carryforward position for federal income tax purposes. Extraordinary item. As a result of amending our senior credit facility, $1.0 million of deferred financing and organization fees related to the facility was charged to expense in 2000 as an extraordinary item. Net loss. We 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. COMPARISON OF THE YEAR ENDED DECEMBER 30, 2000 TO THE 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. Closure net sales increased $31.2 million 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 promotional program in 1999 that did not reoccur in 2000. Net sales in the consumer division increased $5.6 million in 2000 primarily as a result of a significant new drink cup and strong retail demand in housewares. 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 our primary raw material, resin, increased approximately 29% in 2000 when compared to 1999. A major focus during this period and going forward was the consolidation of products and business of recent acquisitions to the most efficient tooling, providing customers with improved products and customer service. As part of the integration, we closed our York, Pennsylvania facility and removed remaining production from our Minneapolis, Minnesota facility (acquired in the Cardinal acquisition) in the fourth quarter of 2000. Additionally, we closed our Arlington Heights, Illinois facility (acquired in the Knight acquisition) in the first quarter of 1999 and our Ontario, California facility (acquired in the Cardinal acquisition) in the third quarter of 1999. In addition, we made two configuration changes that were completed in the fourth quarter of 1999 with the Minneapolis, Minnesota 37 and Iowa Falls, Iowa locations closing their molding operations. The business from these locations are distributed throughout our facilities. Also, significant productivity improvements were made during both years, including the addition of state-of-the-art injection-molding equipment, molds and printing equipment at several of our facilities. Operating expenses. Operating expenses during 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 as 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 was due 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, we recorded a benefit of $0.1 million for income taxes compared to an expense of $0.6 million for fiscal 1999. We continue to operate in a net operating loss carryforward position for federal income tax purposes. Extraordinary item. As a result of amending our senior credit facility, $1.0 million of deferred financing and origination fees related to the facility was charged to expense in 2000 as an extraordinary item. Net Loss. We 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 As of December 29, 2001, BPC Holding had 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. As a result of the Acquisition, the amount of the carryforward which can be used in any given year will be limited to approximately $12.0 million. 38 LIQUIDITY AND CAPITAL RESOURCES BEFORE THE ACQUISITION We have historically generally funded our ongoing obligations from cash flow from operations, borrowings under our revolving credit facilities, term loans and capital leases. We also incurred approximately $335.7 million of debt from high yield bond issuances since 1994. Net cash provided by operating activities was $7.5 million for the thirteen weeks ended March 30, 2002 compared to $2.7 million for the thirteen weeks ended March 31, 2001. The increase was primarily the result of improved operating performance with net income before depreciation and amortization increasing $3.2 million from the thirteen weeks ended March 31, 2001. Capital spending of $9.8 million for the thirteen weeks ended March 30, 2002 represented an increase of $3.9 million from the thirteen weeks ended March 31, 2001. Capital spending for thirteen weeks ended March 30, 2002 included $0.7 million for buildings and systems, $5.0 million for molds, $2.6 million for molding and printing machines, and $1.5 million for accessory equipment and systems. 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 our 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 due in part 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 approximately $38 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 $71.1 million in 1999. AFTER THE ACQUISITION We intend to fund our ongoing obligations from cash flow from operations, capital leases and borrowings under our $100.0 million revolving credit facility and $50.0 million delayed draw term loan facility. In connection with the Acquisition, we incurred a $330.0 million term loan and the outstanding notes. Borrowings under our revolving credit facility and delayed draw term loan facility will be subject to certain conditions described under "Description of other indebtedness." Our credit facilities contain significant financial and operating covenants, including prohibitions on our ability to incur certain additional indebtedness or to pay dividends, and restrictions on 39 our ability to make capital expenditures. Amounts available under the delayed draw term loan facility may be borrowed (but not reborrowed) during the 18-month period beginning on July 22, 2002, provided that, among other things, no default or event of default exists at the time of borrowing, and the leverage ratio is not in excess of 5.20:1.00 if the borrowing is made on or prior to June 29, 2003 or 5.00:1.00 if the borrowing is made thereafter. Delayed draw term loans may only be made in connection with permitted acquisitions. The senior secured credit facilities also contain (i) a minimum interest coverage ratio as of the last day of any quarter, beginning with the quarter ending December 2002, of 2.00:1.00 per quarter through the quarter ending March 2004, 2.10:1.00 per quarter for the quarters ending June 2004 and September 2004, 2.15:1.00 per quarter for the quarters ending December 2004 and March 2005, 2.25:1.00 per quarter for the quarters ending June 2005 through the quarter ending March 2006, 2.35:1.00 per quarter for the quarters ending June 2006 through the quarter ending December 2006 and 2.50:1.00 per quarter thereafter, (ii) a maximum amount of capital expenditures (subject to the rollover of certain unexpended amounts from the prior year) of $45 million for the year ending 2002, $50 million for the years ending 2003 and 2004, $60 million for the years ending 2005, 2006 and 2007, and $65 million for each year thereafter, and (iii) a maximum total leverage ratio as of the last day of any quarter, beginning with the quarter ending December 2002, of 5.90:1.00 per quarter through the quarter ending June 2003, 5.75:1.00 per quarter for the quarters ending September 2003 through the quarter ending March 2004, 5.50:1.00 per quarter for the quarters ending June 2004 and September 2004, 5.25:1.00 per quarter for the quarters ending December 2004 through the quarter ending June 2005, 5.00:1.00 per quarter for the quarters ending September 2005 and December 2005, 4.75:1.00 per quarter for the quarters ending March 2006 and June 2006, 4.50:1.00 per quarter for the quarters ending September 2006 through the quarter ending March 2007, 4.25:1.00 per quarter for the quarters ending June 2007 through the quarter ending December 2007, and 4.00:1.00 per quarter thereafter. Our credit facilities also contain borrowing conditions and customary events of default, including nonpayment of principal or interest, violation of covenants, inaccuracy of representations and warranties, cross-defaults to other indebtedness, bankruptcy and other insolvency events (other than in the case of certain foreign subsidiaries). The occurrence of a default, an event of default or a material adverse effect on our company would result in our inability to obtain further borrowings under our revolving credit facility and could also result in the acceleration of our obligations under any or all of our credit agreements, each of which could materially and adversely affect our business. TERM LOAN/DELAYED DRAW TERM LOAN FACILITY/PREPAYMENT The term loan will amortize quarterly as follows: - $825,000 each quarter beginning September 30, 2002 and ending June 30, 2009; and - $76,725,000 each quarter beginning September 30, 2009 and ending June 30, 2010. The delayed draw term loan facility will amortize quarterly commencing March 31, 2004 based on the amounts outstanding as of that date as follows: (i) 2% per quarter in 2004, (ii) 4% per quarter in 2005, (iii) 6% per quarter in 2006, (iv) 8% per quarter in 2007 and (v) 10% per quarter in each of the first two quarters in 2008. 40 Borrowings and commitments under the senior secured facilities will be subject to mandatory prepayment under specified circumstances, including some assets sales and issuance of equity securities and from our excess cash flow (as defined in our senior secured credit facilities). There will be no required amortization of the revolving credit facility. Outstanding borrowings under the revolving credit facility may be repaid at any time, and may be reborrowed at any time prior to July 22, 2008. The revolving credit facility will allow us to obtain up to $15 million of letters of credit instead of borrowing and up to $10 million of swingline loans. Our contractual cash obligations as of December 29, 2001, on a pro forma basis to give effect to the Acquisition and the Mt. Vernon acquisition, are summarized in the following table.
- ------------------------------------------------------------------------------------------ PAYMENTS DUE BY PERIOD AT DECEMBER 29, 2001 ------------------------------------------------- <1 1-3 4-5 >5 (DOLLARS IN THOUSANDS) TOTAL YEARS YEARS YEARS YEARS - ------------------------------------------------------------------------------------------ Long-term debt, excluding capital leases.............................. $583,000 $ 3,800 $ 7,600 $ 7,600 $564,000 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............ 3,815 2,554 1,261 - - ------------------------------------------------- Total contractual cash obligations..... $629,011 $17,071 $23,293 $16,134 $572,513 - ------------------------------------------------------------------------------------------
We believe that our existing working capital, borrowings available under our revolving credit facility and internally generated funds should provide sufficient resources to support current business activities. We expect to fund acquisitions through our $50 million delayed draw term loan facility, the other sources described above and to the extent required additional debt or equity financing. To the extent we accelerate our growth plans, consummate acquisitions or have lower than anticipated sales or increases in expenses, we may also need to raise additional capital. In particular, increased working capital needs occur whenever we consummate acquisitions or experience strong incremental demand or there is a significant rise in the cost of raw materials, particularly resin. Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures and research and development efforts will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control as well as factors described under "Risk factors." We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facilities and the notes, on commercially reasonable terms or at all. RECENT ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which we 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, us 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 41 hedge, changes in its fair value are either 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 is immediately recognized in earnings. The adoption of SFAS No. 133 did not have a material effect on our earnings and financial position. 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. 142 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. 142 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. We adopted SFAS Nos. 141 and 142 as of the beginning of fiscal 2002. Prior to reporting our second quarter results, we will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets. 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 supersedes 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. We adopted this standard as of the beginning of fiscal 2002. The application of SFAS No. 144 is not expected to have a material impact on our results of operations and financial position. INFLATION We believe that we are not affected by inflation except to the extent that the economy in general is thereby affected. Should inflationary pressures drive costs higher, we believe that general industry competitive price increases would sustain operating results, although we can give you no assurance that this will be the case. SEASONALITY Our business is somewhat seasonal with a higher percentage of our sales generally realized in the second and third quarters of the year. However, the timing of acquisitions may impact the effects of seasonality on our business. We build inventory throughout the fourth and first quarters of each year to satisfy the seasonal demands of the spring and summer months when consumption increases. 42 BUSINESS GENERAL We are one of the world's leading manufacturers and suppliers of a diverse mix of injection-molded plastics packaging products focusing on the open-top container, closure, aerosol overcap, drink cup and housewares markets. We sell a broad product line to over 12,000 customers. We concentrate on manufacturing higher quality, value-added products sold to image-conscious marketers of institutional and consumer products. We believe that our large operating scale, low-cost manufacturing capabilities, purchasing leverage, proprietary thermoforming technology and extensive collection of over 1,000 active proprietary molds provide us with a competitive advantage in the marketplace. We have been able to leverage our broad product offering, value-added manufacturing capabilities and long-standing customer relationships into leading positions across a number of products. We believe that over 60% of our 2001 revenues were generated from the sale of products that held a number one position relative to competing injection-molded products. Our products are primarily sold to customers in industries that exhibit relatively stable demand characteristics and are considered less sensitive to overall economic conditions, such as pharmaceuticals, food, dairy and health and beauty. Additionally, we operate 13 high-volume manufacturing facilities and have extensive distribution capabilities. We organize our product categories into three business divisions: containers; closures; and consumer products. The following table displays our net sales by division for each of the past five fiscal years.
- ------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS) 1997 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------- Containers..................................... $124.8 $154.0 $188.7 $231.2 $234.4 Closures....................................... 47.1 56.4 81.0 112.2 132.4 Consumer products.............................. 55.1 61.4 59.1 64.7 94.8 ------------------------------------------ Total net sales.............................. $227.0 $271.8 $328.8 $408.1 $461.6 - -------------------------------------------------------------------------------------------
COMPETITIVE STRENGTHS We believe that our consistent financial performance is the direct result of the following competitive strengths: LEADING POSITIONS ACROSS A BROAD PRODUCT OFFERING. We believe that over 60% of our fiscal 2001 sales were in product categories in which we were the nation's leading supplier relative to competing injection-molded products, including: - thinwall open-top containers; pry-off open-top containers; - aerosol overcaps; - drink cups; and - seasonal semi-disposable housewares. We use over 1,000 proprietary molds to provide our customers with a wide range of products, which favorably positions us to benefit from ongoing vendor consolidation among our 43 customers. We believe that our extensive product offerings, market experience, product quality and focus on customer satisfaction allow us to maintain and grow our positions in our key businesses. SIGNIFICANT SCALE RESULTING IN LOW-COST POSITION AND STRONG CASH FLOW. We are one of the largest domestic manufacturers and suppliers of injection-molded plastics packaging products, and we have reported ten consecutive years of positive year-over-year growth in net sales and Adjusted EBITDA. In addition, our low-cost manufacturing position allowed us to generate Adjusted EBITDA margins of approximately 20% or better in each of the last four fiscal years and an Adjusted EBITDA margin of 23.5% on a pro forma basis for the fifty-two weeks ended March 30, 2002. We believe our size enables us to achieve superior operating efficiencies and financial results through several scale-driven advantages: - Large, high-volume manufacturing equipment results in lower unit production costs than many of our competitors. For example, our largest injection-molded presses can produce as many as thirty-two 32-ounce drink cups per molding cycle versus a typical competitor's press that can only produce 12 to 24 cups of this size. - Flexible, cross-facility and cross-product manufacturing capabilities further lower our unit-production costs as a result of higher capacity utilization and longer production runs. - Enhanced purchasing power lowers our cost of raw materials such as resin. - Broad, low-cost distribution capabilities, as a result of the strategic location of our manufacturing facilities near our customers, reduce shipping costs. We operate 11 manufacturing facilities in the United States and two facilities in Western Europe. - Modern and extensive post-molding capabilities, including printing, silk screening, lining, hot stamping, labeling, assembly, packing and distribution enable us to tailor products to our clients' needs and produce higher value-added products. - Our ability to produce high volumes of a wide variety of products favorably positions us to capitalize on the ongoing trend toward vendor consolidation. ABILITY TO PASS THROUGH CHANGES IN THE COST OF RESIN. The majority of our revenues are derived from customers to which we are able to pass through changes in the costs of resin, the principal raw material used in manufacturing our products. We have contractual price escalators and de-escalators tied to the price of resin representing approximately 40% of net sales that result in price increases to many of our customers in a relatively short period of time, typically quarterly. In addition, we have experienced high success rates in quickly passing through price increases and decreases in the price of resin to customers without indexed price agreements. Pricing flexibility is enhanced by the fact that our products typically represent a very small component of the overall cost of production for the end customer. Fewer than 10% of our net sales are generated from fixed-price arrangements, and we have at times entered into negotiated purchase agreements with resin suppliers to lock in the cost of resin related to these fixed-price arrangements. We can further mitigate the effect of resin price movements through our ability to accommodate raw material switching for certain products between HDPE and PP as prices fluctuate. We estimate that we pass on approximately 75% of an increase in the price of resin within the first three months, and the remainder within one year of the price increase. For example, in 2000, the price of resin increased significantly and we estimate that we were able to pass on approximately 85% of the increase to our customers during 2000. 44 LARGE, DIVERSE AND STABLE CUSTOMER BASE. We sell our products to over 12,000 customers that are principally engaged in industries that are considered to be generally less sensitive to changing economic conditions, including dairy, food, health and beauty and pharmaceuticals. We believe that this provides us with a stable client base that is generally less affected by economic market fluctuations. In addition, our sales force of over 50 dedicated professionals focuses on working with customers to develop customized packaging and allows us to maintain close working relationships with our clients. The average length of our relationship with our top 10 customers in fiscal 2001 was over 15 years. We also believe that we are the single-source or largest supplier of plastic aerosol overcaps, containers and drink cups to a majority of our customers. Our top ten customers represented approximately 20% of our fiscal 2001 net sales with no customer accounting for more than 5% of our fiscal 2001 net sales. PROVEN ABILITY TO INTEGRATE STRATEGIC ACQUISITIONS. We have successfully integrated 15 acquisitions since 1992. We maintain a selective and disciplined acquisition strategy, which is focused on improving our financial performance in the long-term and expanding our product lines or, in some cases, providing us with a new or complementary product line. For example, the acquisition of Poly-Seal in 2000 enabled us to enter the United States closures business, which now represents approximately 10% of our net sales. We have historically achieved significant reductions in manufacturing and overhead costs of acquired companies by introducing advanced manufacturing processes, exiting low-margin businesses or product lines, reducing headcount, rationalizing facilities and tools, applying best practices and capitalizing on economies of scale. We estimate the weighted average EBITDA margin of the 11 businesses we acquired since the beginning of 1997 was approximately 13% during the year prior to acquisition, while our overall business, including the businesses we acquired, has achieved Adjusted EBITDA margins of approximately 20% or better in each of the last four fiscal years. UNIQUE, PROPRIETARY THERMOFORMING DRINK CUP MANUFACTURING PROCESS. Over a period of several years, we have invested approximately $17 million to develop and implement a proprietary thermoforming molding process utilizing polypropylene that enables us to produce large drink cups (22-ounce to 44-ounce) at a lower cost than competitors that use polystyrene in thermoform production. This cost advantage is driven by the fact that polypropylene typically costs approximately 20% less per pound than polystyrene. We are the only producer in North America capable of thermoforming polypropylene in high cavitation, deep draw molds for large drink cups. The core elements of this in-line process include continuous feed, high cavitation, high output and deep-draw technology. Our thermoformed polypropylene cups, like our injection-molded cups, offer a number of advantages over traditional paper, including decreased sogginess, increased rigidity, unique designs and the ability for larger size cups to fit into automobile cup holders. Our thermoforming production line is currently operating at full capacity and we expect to introduce additional capacity in the third quarter of 2002, enabling us to leverage our proprietary manufacturing technique to further penetrate the market. Existing customers driving demand of our thermoformed drink cups include Aramark, Hardee's, Wendy's and Applebee's. PROVEN AND MOTIVATED MANAGEMENT TEAM. The five members of our senior management team provide significant packaging expertise, with an average of 15 years of experience with us, including companies acquired by us, and an average of 18 years of industry experience. The senior management team includes President and CEO Ira Boots, who has been with us for 24 years, and CFO Jim Kratochvil, who has been with us for 17 years. This team has been responsible for developing and executing our strategy that has generated a track record of growth and strong cash flow. Additionally, the team has extensive experience in developing 45 and maintaining customer relationships, expanding product offerings and implementing innovative technological manufacturing enhancements. The senior management team is investing approximately 70% of their net proceeds from the Acquisition in the company and the management team as a whole will own, or have the right to acquire, over 15% of the company on a fully diluted basis upon completion of the Acquisition. BUSINESS STRATEGY Our goal is to maintain and enhance our market position and leverage our core strengths to increase profitability. Our strategy to achieve this goal includes the following elements: INCREASE SALES TO OUR EXISTING CUSTOMERS. We believe we have significant opportunities to increase sales to our over 12,000 existing customers as we expand our product portfolio and extend our existing product lines. For example, our container and closures divisions are penetrating new markets with new products such as tamper-resistant lids and child-resistant closures. Also, we recently introduced a leak-proof milk jug closure to the dairy market at the request of one of our customers. This product has been rapidly accepted by our customers, and as a result, we have already reached full production capacity and are adding additional capacity. We believe our broad and growing product lines will allow us to capitalize on the corporate consolidation occurring among our customers and the continuing consolidation of their vendor relationships. With our extensive manufacturing capabilities, product breadth and national distribution capabilities, we can provide our customers with a cost-effective, single source from which to purchase substantially all of their injection-molded plastic packaging products. For example, after many years serving as Marigold Foods' primary supplier for its institutional dairy packaging products, we recently were awarded Marigold's business to supply its retail dairy packaging needs, thereby making us their single source supplier for dairy packaging. AGGRESSIVELY PURSUE NEW CUSTOMERS. We intend to aggressively pursue new customer relationships in order to drive additional growth. We believe that our large direct sales force, our ability to offer new customers a cost effective, single source from which to purchase substantially all of their injection-molded plastic packaging products and our proven ability to create innovative new products do position us well to continue growing and diversifying our customer base. For example, our proprietary thermoforming process, which offers a substantial competitive advantage with respect to cost, was introduced to the drink cup market in the first half of 2001 and has been highly successful to date in allowing us to win new customer relationships, including Hardee's and Jack in the Box. We believe there is a significant growth opportunity from our thermoforming process in both drink cups and in a variety of container applications. CONTINUE TO EFFECTIVELY MANAGE COSTS. We continually focus on reducing our costs in order to maintain and enhance our low-cost position. We employ a number of cost-reducing strategies including: - leveraging our increasing scale to reduce resin costs; - reinvesting capital into our manufacturing processes to maintain technological leadership and achieve productivity gains; focusing on ways to streamline operations through plant and overhead rationalization; and - monitoring and rationalizing the number of vendors from which we purchase nonresin materials in order to increase our purchasing power. 46 We expect to continue to increase the size of our business and our operating efficiencies through both organic growth and selective acquisitions. SELECTIVELY PURSUE STRATEGIC ACQUISITIONS IN OUR CORE BUSINESSES. We believe that there is significant opportunity for future growth through selective acquisitions given the high degree of industry fragmentation and the increasing trend of our customers to focus on fewer key vendors. As a result of our scale and prior successes in acquiring and integrating acquisitions, we believe that we are well-positioned to capitalize on potential future acquisition opportunities in new and existing product lines. We intend to continue to apply a selective and disciplined acquisition strategy, which is focused on improving our financial performance in the long-term and expanding our product lines or, in some cases, providing us with a new or complementary product line. PRODUCT OVERVIEW We organize our product lines into three categories: containers, closures and consumer products. CONTAINERS We classify our containers into six product lines: thinwall, pry-off, dairy, industrial, polypropylene and specialty. We believe that we have leading positions in key injection-molded plastic container segments including thinwall (household products and food) and pry-off (building materials), as well as strong positions in frozen dessert (ice cream and yogurt) and clear polypropylene (high value food and consumer applications). The following table describes our container product lines.
PRODUCT LINE DESCRIPTION SIZES MAJOR END-USES - ------------ ----------- ----- -------------- Thinwall Thinwalled, multi-purpose 8 oz. to 2 gallons Food, promotional products, containers with or without toys and a wide variety of handles and lids other uses Pry-off Containers having a tight 4 oz. to 2 gallons Building products, lid-fit and requiring an adhesives, chemicals and opening device other industrial uses Dairy Thinwall containers in 4 oz. to 5 lbs. Cultured dairy products, traditional dairy market Multi-pack including yogurt, cottage sizes and styles cheese, sour cream and dips and frozen desserts Polypropylene Usually clear containers in 6 oz. to 5 lbs Food, deli, sauces and round, oblong or salads rectangular shapes Industrial Thick-walled, larger pails 2.5 to 5 gallons Building products, designed to accommodate chemicals, paints and other heavy loads industrial uses Specialty Customer specific Various Premium consumer items, such as tobacco and drink mixes
The largest end-uses for our containers are food products, building products, chemicals and dairy products. We have a diverse customer base for our container lines, and no single container customer exceeded 4% of our total net sales in fiscal 2001. 47 We believe that we offer the broadest product line among U.S.-based injection-molded plastic container manufacturers. Our container capacities range from 4 ounces to 5 gallons and are offered in various styles with accompanying lids, bails and handles, some of which we produce, as well as a wide array of decorating options. In addition to a complete product line, we have 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. Our product engineers work with customers to design and commercialize new containers. In addition, as part of our dedication to customer service, on occasion, we provide filling machine equipment to some of our customers, primarily in the dairy market, and we also provide the services necessary to operate such equipment. We believe providing such equipment and services increases customer retention by increasing the customer's production efficiency. The cost of, and revenue from, such equipment is not material. We seek to develop niche container products and new applications by taking advantage of our state-of-the-art decorating and graphic arts capabilities and dedication to service and quality. We believe that these capabilities have given us a significant competitive advantage in certain high-margin niche container 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, we rely extensively on our national sales force. Once these opportunities are identified, our sales force interfaces with our product design engineers to satisfy customers' needs. In non-industrial containers, our strongest competitors include Airlite, Sweetheart, Landis, and Polytainers. We also produce commodity industrial pails for a market that is dominated by large volume competitors such as Letica, Plastican, NAMPAC and Ropak. We do not participate heavily in this large market. CLOSURES Our closures division focuses on aerosol overcaps and closures. AEROSOL OVERCAPS We believe we are the worldwide leading producer of injection-molded aerosol overcaps. Our aerosol overcaps are used in a wide variety of consumer goods including spray paints, household and personal care products, insecticides and numerous other commercial and consumer products. Most U.S. manufacturers of aerosol products, and companies that fill aerosol products on a contractual basis, are our customers for some portion of their needs. Approximately 19% of the U.S. injection-molded market consists of manufacturers who produce overcaps in-house for their own needs. We believe that a portion of these in-house producers will increase the outsourcing of their production to high-technology, low-cost manufacturers, such as us, as a means of reducing manufacturing assets and focusing on their core marketing objectives. We believe that, over the years, we have developed several significant competitive advantages, including (i) a reputation for outstanding quality, (ii) short lead-time requirements to fill customer orders, (iii) long-standing relationships with major customers, (iv) the ability to accurately reproduce over 3,500 colors, (v) proprietary packing technology that minimizes freight cost and warehouse space, (vi) high-speed, low-cost molding and decorating capability 48 and (vii) a broad product line of proprietary molds. We continue to develop new products in the overcap market, including a "spray-thru" line of aerosol overcaps that has a built-in release button. In fiscal 2001, no single aerosol overcap customer accounted for over 2% of our total net sales. Competitors include Dubuque Plastics, Cobra and Plasticum. In addition, a number of companies, including several of our customers, currently produce aerosol overcaps for their own use. CLOSURES We believe our combined product line offerings to the closures market establish us as a leading provider of closures. Our product line offerings include continuous thread, dispensing, tamper evident, and child resistant closures. In addition, we are a leading provider of (i) fitments and plugs for medical applications, (ii) cups and spouts for liquid laundry detergent, (iii) dropper bulb assemblies for medical and personal care applications and (iv) jiggers for mouthwash products. Our 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. We are a major provider of closures to many of the leading companies in these markets. We believe the capabilities and expertise we have 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 computerized vision inspection technology. In addition, we have an in-house package development and design group focused on developing new closures to meet customers' proprietary needs. We have a strong reputation for quality and have received numerous "Supplier Quality Achievement Awards" from customers in different markets. In fiscal 2001, no single closure customer accounted for over 2% of our total net sales. Competitors include Owens-Illinois, Kerr/Suncoast, Phoenix Closures, Portola, Rexam Closures and Seaquist Closures. CONSUMER PRODUCTS Our consumer product division focuses on drink cups and housewares. DRINK CUPS We believe that we are the largest 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, we believe that the plastic drink cup market will expand because of plastic's desirability over paper for larger drink cups. We produce injection-molded plastic cups that range in size from 12 to 64 ounces. 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 we are known in the industry for our innovative, state-of-threat graphics capability. We launched our thermoformed drink cup line in fiscal 2001. Our thermoformed product line offers sizes ranging from 22 to 44 ounces. Our thermoform process is unique in the industry in that it uses polypropylene instead of more expensive polystyrene in producing deep draw drink 49 cups. This offers a material competitive advantage versus competitive thermoformed drink cups. In fiscal 2001, no single drink cup customer accounted for more than 5% of our total net sales. Drink cup competitors include Huhtamaki (formerly Packaging Resources Incorporated) and WNA (formerly Cups Illustrated). HOUSEWARES Our participation in the housewares market is focused on producing seasonal (spring and summer) semi-disposable plastic housewares and plastic garden products. Examples of our products include plates, bowls, pitchers, tumblers and outdoor flowerpots. We sell virtually all of our products in this market through major national retail marketers and national chain stores, such as Wal-Mart. PackerWare is our recognized brand name in these markets and PackerWare branded products are often co-branded by our customers. Our position in this market has been to provide high value to consumers at a relatively modest price, consistent with the key price points of the retail marketers. We believe outstanding service and ability to deliver products with timely combination of color and design further enhance our position in this market. This focus allowed PackerWare to be named Wal-Mart's category manager for its seasonal housewares department. In fiscal 2001, no single housewares customer accounted for more than 5% of our total net sales. Housewares competitors include imported products from China, Arrow Plastics and United Plastics. MARKETING AND SALES We reach our large and diversified base of over 12,000 customers primarily through our direct field sales force of over 50 dedicated professionals. Our field sales, production and support staff meet with customers to understand their needs and improve our product offerings and services. While these field sales representatives are focused on individual product lines, they are also encouraged to sell all our products to serve the needs of our customers. We believe that a direct field sales force is able to better focus on target markets and customers, with the added benefit of permitting us to control pricing decisions centrally. We also utilize the services of manufacturing representatives to assist our direct sales force. We believe that we produce a high level of customer satisfaction. Highly skilled customer service representatives are located in each of our facilities to support the national field sales force. In addition, telemarketing representatives, marketing managers and sales/marketing executives oversee 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. Our sales force is supported by technical specialists and our in-house graphics and design personnel. Our Graphic Arts department includes computer-assisted graphic design capabilities and in-house production of photopolymer printing plates. We also have a centralized Color Matching and Materials Blending department that utilizes a computerized spectrophotometer to insure that colors match those requested by customers. 50 MANUFACTURING We primarily manufacture our 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, silkscreening, labeling) or assembled (e.g., bail handles fitted to containers). We believe that our molding and post-molding capabilities are among the best in the industry. In 2001, after several years of development, we introduced our proprietary thermoforming molding process that enables us to mass-produce large drink cups (22-ounce to 44-ounce) less expensively than our competitors. The thermoforming machine used in our process was built by a third-party manufacturer to standard specifications. We modified the machine on-site in order to produce high-cavitation, deep draw cups using our process. These modifications were made without the help of outside consultants. There are currently three manufacturers that build basic thermoforming machines that we can modify to produce deep draw cups made from polypropylene. The company that built our initial thermoforming machine has declared bankruptcy and a new manufacturer is building our next thermoforming machine, which is scheduled to be delivered to us in the third quarter of 2002. Our overall manufacturing philosophy is to be a low-cost producer by using (i) high-speed molding machines, (ii) modern multi-cavity hot runner, cold runner and insulated runner molds, (iii) extensive material handling automation and (iv) sophisticated printing technology. We utilize state-of-the-art robotic packaging processes for large volume products, which enables us to reduce breakage while lowering warehousing and shipping costs. Each plant has complete tooling maintenance capability to support molding and decorating operations. We have historically made, and intend to continue to make, significant capital investments in plant and equipment because of our objectives to improve productivity, maintain competitive advantages and foster continued growth. Over the past five fiscal years our capital expenditures in plant and equipment, exclusive of acquisitions, were $134.5 million. RESEARCH AND PRODUCT DEVELOPMENT AND DESIGN We believe our technology base and research and development support are among the best in the rigid plastics packaging industry. Our full-time product engineers use three-dimensional computer-aided-design (CAD) technology to design and modify new products and prepare mold drawings. In addition, our engineers use an in-house model shop, which includes a thermoforming machine, to produce prototypes and sample parts. We 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 which we have extensive experience and established relationships. Our engineers oversee the mold-building process from start to finish. Many of our customers work in partnership with our technical representatives to develop new, more competitive products. We have enhanced our relationships with these customers by providing the technical service needed to develop products combined with our internal graphic arts support. 51 We spent $1.9 million, $2.6 million and $2.3 million on research and development in 2001, 2000, and 1999, respectively, and $0.5 million in the first quarter of 2002. We also utilize our in-house graphic design department to develop color and styles for new products. Our design professionals work directly with our customers to develop new styles and use computer-generated graphics to enable our customers to visualize the finished product. 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 ISO certified, which demonstrates compliance by a company with a set of shipping, trading and technology standards promulgated by the International Standardization Organization ("ISO"). We are actively pursuing ISO certification in all of our 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 our quality assurance activities. SYSTEMS We utilize a fully integrated computer software system at each of our plants that produces complete financial and operational reports. This accounting and control system is easily expandable to add new features and/or locations as we grow. In addition, we have 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 us is plastic resin. We 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. Polypropylene is generally a lower cost material than polyethylene. The price of these materials is subject to cyclical fluctuation. Based on information from Plastics News, the price of polypropylene ranged from $0.27 to $0.44 per pound between 1997 and 2001 and the price of HDPE ranged from $0.285 to $0.465 per pound during that period. HDPE averaged approximately five cents per pound less than polypropylene during 2001, according to information from industry sources. We are able to pass through price changes through contractual price escalators and de-escalators tied to raw material costs and due to the relatively short lead time we have in implementing price changes to our other customers without such contracts. Fewer than 10% of our net sales are generated from fixed-price arrangements, and we have at times and may continue to enter into negotiated purchase agreements with resin suppliers related to these fixed price arrangements. We estimate we pass on approximately 85% of an increase in the price of resin within the first three months, and the remainder within one year of the price increase. For example, in 2000, the price of resin increased significantly and we estimate that we were able to pass on approximately 85% of the increase to our customers during that calendar year. Our purchasing strategy is to deal with only high-quality, dependable suppliers, such as Dow, Chevron, Nova, Equistar, and ExxonMobil. Although we do not have any supply requirements 52 contracts with our key suppliers, we believe that we have maintained strong relationships with these key suppliers and expect that such relationships will continue into the foreseeable future. Based on our experience, we believe that adequate quantities of plastic resins will be available at market prices, but we can give you no assurances as to such availability or the prices thereof. EMPLOYEES As of March 30, 2002, we had approximately 3,200 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 March 30, 2002, 347 employees of Poly-Seal Corporation, all of which are located in our Baltimore facility, were covered by this agreement. None of our other employees are covered by collective bargaining agreements. We believe our relations with our employees are good. PATENTS AND TRADEMARKS We rely on a combination of patents, trade secrets, unpatented know-how, trademarks, copyrights and other intellectual property rights, nondisclosure agreements and other protective measures to protect our proprietary rights. We do not believe that any individual item of our intellectual property portfolio is material to our current business. We employ various methods, including confidentiality and non-disclosure agreements with third parties, employees and consultants, to protect our trade secrets and know-how. We have licensed, and may license in the future, patents, trademarks, trade secrets, and similar proprietary rights to and from third parties. PROPERTIES Our principal executive offices are located at 101 Oakley Street, Evansville, Indiana 47710. We own most of the real property used in our operations. We believe that our properties and equipment are in good operating condition and are adequate for our present needs. 53 The following table sets forth our principal manufacturing facilities:
- ----------------------------------------------------------------- APPROXIMATE SQUARE OWNED/ LOCATION ACRES FOOTAGE USE LEASED - ----------------------------------------------------------------- Evansville, IN 18.7 420,000 Headquarters and Owned 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 - -----------------------------------------------------------------
ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION Our past and present operations and our past and present ownership and operations of real property are subject to extensive and changing federal, state, local and foreign environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposition of wastes or otherwise relating to the protection of the environment. We believe that we are in substantial compliance with applicable environmental laws and regulations. However, we cannot predict with any certainty that we 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 us (including contamination caused by prior owners and operators of such sites) or the off-site disposal of hazardous substances. Like any manufacturer, we are subject to the possibility that we may receive notices of potential liability in connection with materials that were sent to third-party recycling, treatment, and/or disposal facilities under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), and comparable state statutes, which impose liability for investigation and remediation of contamination without regard to fault or the legality of the conduct that contributed to the contamination. Liability under CERCLA is retroactive and joint and several. The FDA regulates the material content of direct-contact food containers and packages, including certain thinwall containers we manufacture pursuant to the Federal Food, Drug and Cosmetics Act. Certain of our products are also regulated by the Consumer Product Safety Commission ("CPSC") pursuant to various federal laws, including the Consumer Product Safety Act. Both the FDA and the CPSC can require the manufacturer of defective products to repurchase or recall such products and may also impose fines or penalties on the manufacturer. Similar law exists in some states, cities and other countries in which we sell our products. In addition, laws exist in certain states restricting the sale of packaging with certain levels of 54 heavy metals, imposing fines and penalties for non-compliance. Although we use FDA approved resins and pigments in containers that directly contact food products and believe they are in material compliance with all such applicable FDA regulations, and we believe our products are in material compliance with all applicable requirements, we remain subject to the risk that our products could be found not to be in compliance with such requirements. The plastics industry, including us, 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 resins used in our products, HDPE and polypropylene, are recyclable, and, accordingly, we believe that the legislation promulgated to date and such initiatives to date have not had a material adverse effect on us. There can be no assurance that any such future legislative or regulatory efforts or future initiatives would not have a material adverse effect on us. 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, they principally require the use of post consumer regrind ("PCR") as an ingredient in containers or the reduction of their weight. These regulations do not apply to food, cosmetic or drug containers. Oregon and California provide for an exemption from these regulations if statewide recycling rates for rigid plastic containers reach or exceeds 25%. We assist our customers in complying with these regulations. Oregon's aggregate recycling rate for rigid plastic containers has exceeded the 25% goal since the effective date of the law, and the Oregon Department of Environmental Quality has estimated that Oregon will continue to exceed the 25% goal for the foreseeable future. Therefore, rigid plastic containers are exempt from the requirements of the Oregon statute. However, California has failed to reach its 25% recycling rate goal for rigid plastic containers since 1996. Accordingly, California has been enforcing its recycled content requirements on non-food plastic containers from eight ounces to five gallons. In order to facilitate individual customer compliance with these regulations, we are providing customers the option of purchasing containers with limited amounts of PCR or reduced weight. LEGAL PROCEEDINGS We are a defendant in a lawsuit brought by Cobra Plastics, a competitor, alleging that we engaged in antitrust violations in our alleged aerosol overcap market. The antitrust lawsuit was filed in June 2002 shortly after we filed a patent infringement lawsuit against the antitrust plaintiff. There have been no material proceedings or discovery in the litigation to date. We intend to vigorously defend against the allegations of the antitrust lawsuit and believe that it will not have a material adverse effect on our financial condition. On July 8, 2002, a complaint was filed against us by Aptargroup, Inc. and Seaquist Closures Foreign, Inc. alleging infringement of an Aptar patent relating to certain plastic closures which accounted for less than 1% of our net sales in fiscal 2001. The complaint has not yet been served on us. We are investigating the matter and intend to vigorously defend against the allegations contained in the complaint and believe that it will not have a material adverse effect on our financial condition. We are party to other legal proceedings arising in the normal course of business that we believe, based on available information, will not have a material adverse effect on our financial condition. 55 MANAGEMENT Our directors and executive officers and their ages, are as follows:
- --------------------------------------------------------------------------------------------------- NAME AGE TITLE - --------------------------------------------------------------------------------------------------- Ira G. Boots 48 President, Chief Executive Officer, and Director James M. Kratochvil 45 Executive Vice President, Chief Financial Officer, Treasurer and Secretary R. Brent Beeler 49 Executive Vice President and General Manager-Containers William J. Herdrich 52 Executive Vice President and General Manager-Closures Bruce J. Sims 53 Executive Vice President and General Manager-Consumer Products Joseph H. Gleberman 44 Chairman of the Board Christopher C. Behrens 41 Director Patrick J. Dalton 34 Director Douglas F. Londal 36 Director Mathew J. Lori 38 Director - ---------------------------------------------------------------------------------------------------
Ira G. Boots has been our President and Chief Executive Officer since June 2001, and a director 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 us from 1984 to December 1990 as Vice President, Operations. James M. Kratochvil has been our Executive Vice President, Chief Financial Officer, Secretary and Treasurer 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. Mr. Kratochvil was employed by us from 1985 to 1991 as Controller. R. Brent Beeler has been our Executive Vice President and General Manager-Containers 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 us from October 1988 to December 1990 as Vice President, Sales and Marketing. William J. Herdrich has been our Executive Vice President and General Manager-Closures 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 our Executive Vice President and General Manager-Consumer Products 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. 56 Joseph H. Gleberman has been our chairman of the board of directors since the closing of the Acquisition and has been a Managing Director at Goldman, Sachs & Co. since 1996. Prior to joining GS Capital Partners in 1993, he worked in the Mergers & Acquisitions Department of Goldman, Sachs & Co. from 1982 to 1993. He serves on the Board of Directors of aaiPharma, BackWeb Technologies, Dade Behring Holdings, iFormation Group, IPC Information Systems, MCG Credit, and Starpoint Solutions. Mr. Gleberman received his M.B.A in 1982 from Stanford University Graduate School of Business and a M.A./B.A. from Yale University in 1980. Christopher C. Behrens has been a director since the closing of the Acquisition and has been a Partner of J.P. Morgan Partners, LLC and its predecessor, Chase Capital Partners, since 1999. Prior to joining Chase Capital Partners, Mr. Behrens served as Vice President in Chase's Merchant Banking Group. Mr. Behrens serves on the Board of Directors of Dominos Pizza, Carrizo Oil & Gas, and Portola Packaging Inc. as well as a number of private companies. Mr. Behrens received a B.A. from the University of California at Berkeley and an M.A. from Columbia University. Patrick J. Dalton has been a director since the closing of the Acquisition and has been a Vice President at Goldman, Sachs & Co. since 2001. Prior to joining GS Capital Partners in 2000, Mr. Dalton was at The Chase Manhattan Bank from 1990 to 1997 and Chase Securities Inc. from 1997 to 2000. He serves on the Board of Directors of First Asset Management and Waddington North America. Mr. Dalton received his M.B.A. in 1997 from Columbia University Graduate School of Business and a B.S. from Boston College in 1990. Douglas F. Londal has been a director since the closing of the Acquisition and has been a Managing Director at Goldman, Sachs & Co. since 1999. Prior to joining GS Capital Partners in 1995, he worked in the Mergers & Acquisitions Department of Goldman, Sachs & Co. from 1991 to 1995. He serves on the Board of Directors of 21st Century Newspapers, NextMedia Group, Ruth's Chris Steak House, and Village Voice Media. Mr. Londal received his M.B.A in 1991 from the University of Chicago and a B.A. from the University of Michigan in 1987. Mathew J. Lori has been a director since the closing of the Acquisition and has been a principal with J.P. Morgan Partners, LLC and its predecessor, Chase Capital Partners, since 1998, and prior to that, he had been an Associate. Mr. Lori has been on the board of Berry Plastics since 1996, and is also a director of Doane Pet Care Company. Mr. Lori received an M.B.A. from Kellogg Graduate School of Management at Northwestern University. BOARD OF DIRECTORS Our board of directors currently consists of six directors. Pursuant to the stockholders' agreement entered into with affiliates of Goldman, Sachs & Co. and affiliates of J.P. Morgan Securities Inc., described below, affiliates of Goldman, Sachs & Co. have the right to designate an additional member of our board of directors. Our board of directors will appoint our executive officers. COMMITTEES OF THE BOARD OF DIRECTORS Our audit committee is comprised of Patrick J. Dalton, Douglas F. Londal and Mathew J. Lori. The audit committee recommends the annual appointment of auditors with whom the audit committee reviews the scope of audit and non-audit assignments and related fees, accounting principles we use in financial reporting, internal auditing procedures and the adequacy of our internal control procedures. Our compensation committee is comprised of Ira G. Boots, Joseph H. Gleberman, Christopher C. Behrens and Douglas F. Londal. The compensation committee 57 reviews and approves the compensation and benefits for our employees, directors and consultants, administers our employee benefit plans, authorizes and ratifies stock option grants and other incentive arrangements and authorizes employment and related agreements. COMPENSATION OF DIRECTORS Directors who are also our employees or employees of our principal stockholders will receive no additional compensation for their services as directors. STOCKHOLDERS' AGREEMENT In connection with the Acquisition, we entered into a stockholders' agreement with GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co., which in the aggregate own a majority of our common stock. and J.P. Morgan Partners Global Investors, L.P. and other private equity funds affiliated with J.P. Morgan Securities Inc., which own approximately 30% of our common stock. GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co. have the right to designate five members of our board of directors, one of which shall be a member of our management, and J.P. Morgan Partners Global Investors, L.P. and other private equity funds affiliated with J.P. Morgan Securities Inc. have the right to designate two members of our board of directors, one of which will be designated by J.P. Morgan Partners Global Investors, L.P. The stockholders' agreement contains customary terms including terms regarding transfer restrictions, rights of first offer, tag along rights, drag along rights, preemptive rights and veto rights. 58 MANAGEMENT COMPENSATION The following table sets forth a summary of the compensation paid by the Company to its Chief Executive Officers during the 2001 fiscal year 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 COMPENSATION ANNUAL ------------ COMPENSATION SECURITIES ---------------------- UNDERLYING SALARY BONUS OPTIONS ALL OTHER NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) COMPENSATION($)(1) - ------------------------------------------------------------------------------------------------- Ira G. Boots(2)................ 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 Martin R. Imbler............... 2001 208,522 99,300 - 242,638(3) Former President and Chief 2000 390,122 137,235 - 1,670 Executive Officer (Retired) 1999 362,940 121,201 - 1,620 James M. Kratochvil............ 2001 231,919 64,166 - 1,670 Executive Vice President, 2000 212,049 120,000 - 1,604 Chief Financial Officer, 1999 200,894 80,083 - 1,620 Treasurer and Secretary R. Brent Beeler................ 2001 284,251 78,750 - 1,670 Executive Vice President and 2000 257,236 135,000 - 1,670 General Manager--Containers 1999 226,504 79,350 - 1,620 William J. Herdrich............ 2001 258,690 62,800 - 1,670 Executive Vice President and 2000 99,003 18,986 2,000(4) - General Manager--Closures 1999 - - - - Bruce J. Sims.................. 2001 207,500 49,875 - 1,627 Executive Vice President and 2000 201,500 114,000 - 1,627 General Manager--Consumer 1999 190,000 95,486 - 1,620 Products - -------------------------------------------------------------------------------------------------
(1) Amounts shown reflect contributions by the Company under the Company's 401(k) plan. (2) Ira G. Boots has been President and Chief Executive Officer since June 2001. (3) Amount also reflects twice-monthly payments beginning June 15, 2001 in the amount of $17,212 that were made by the Company pursuant to Mr. Imbler's separation agreement. (4) Taking into account adjustments required in connection with the Acquisition, Mr. Herdrich's option to purchase 2,000 shares became an option to purchase 6,244 shares. 59 FISCAL YEAR-END OPTION HOLDINGS The following table provides information with respect to the number of exercisable and unexercisable management stock options held by the Named Executive Officers at December 29, 2001. FISCAL YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------- NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE- UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL OPTIONS AT FISCAL YEAR-END(#)(1) YEAR-END($)(2) -------------------------------- ------------------------------ NAME EXERCISABLE(3) UNEXERCISABLE EXERCISABLE(4) UNEXERCISABLE - ----------------------------------------------------------------------------------------------------- Ira G. Boots...................... 4,171 0 1,205,477 0 Martin R. Imbler.................. 6,778 0 1,958,726 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 Bruce J. Sims..................... 1,300 0 365,300 0 - -----------------------------------------------------------------------------------------------------
(1) All options granted to management of the Company are exercisable for shares of common stock, par value $.01 per share of Holding. (2) None of Holding's capital stock is currently publicly traded. The values set forth in the table reflect management's estimate of the fair market value on December 29, 2001. (3) Taking into account adjustments required in connection with the Acquisition and exercises immediately prior to the Acquisition, Mssrs. Boots, Kratochvil, Beeler, Herdrich and Sims currently have outstanding exercisable options to acquire 16,278, 10,175, 10,175, 6,244 and 4,059 shares of common stock, respectively. Mr. Imbler exercised all of his options immediately prior to the Acquisition. (4) Taking into account adjustments required in connection with the Acquisition, exercises immediately prior to the Acquisition and a per share price of $312 paid in the Acquisition, the value of vested and unexercised in-the-money options as of the date of the Acquisition held by Mssrs. Boots, Imbler, Kratochvil, Beeler, Herdrich and Sims was $1,106,416, $691,595, $691,595, $172,397 and $265,499, respectively. Mr. Imbler exercised all of his options immediately prior to the Acquisition. The following is a summary of BPC Holding's employee equity plans and certain employment agreements Berry Plastics has entered into with Berry Plastics' Chief Executive Officer and each of its other four most highly compensated executive officers, based on compensation paid for services rendered during the 2001 fiscal year. 1996 OPTION PLAN BPC Holding currently maintains the Amended and Restated BPC Holding Corporation 1996 Stock Option Plan ("1996 Option Plan") pursuant to which nonqualified options to purchase 150,536 shares are outstanding. All outstanding options under the 1996 Option Plan are scheduled to expire on July 22, 2012 and no additional options will be granted under it. Option agreements issued pursuant to the 1996 Option Plan generally provide that options become vested and exercisable at a rate of 10% per year based on continued service. Additional options also vest in years during which certain financial targets are attained. Notwithstanding the vesting provisions in the option agreements, all options that were scheduled to vest prior to December 31, 2002 accelerated and became vested immediately before the Acquisition. 2002 OPTION PLAN BPC Holding has adopted a new employee stock option plan ("2002 Option Plan") pursuant to which options to acquire up to 437,566 shares of BPC Holding's common stock may be granted 60 to its employees, directors and consultants. Options granted under the 2002 Option Plan will have an exercise price per share that either (1) is fixed at the fair market value of a share of common stock on the date of grant or (2) commences at the fair market value of a share of common stock on the date of grant and increases at the rate of 15% per year during the term. Generally, options will have a ten-year term, subject to earlier expiration upon the termination of the optionholder's employment and other events. Some options granted under the plan will become vested and exercisable over a five-year period based on continued service with BPC Holding. Other options will become vested and exercisable based on the achievement by BPC Holding of certain financial targets, or if such targets are not achieved, based on continued service with BPC Holding. Upon a change in control of BPC Holding, the vesting schedule with respect to certain options may accelerate for a portion of the shares subject to such options. EMPLOYEE STOCK PURCHASE PLAN In connection with the Acquisition, a number of senior employees of BPC Holding acquired a new class of shares of BPC Holding common stock pursuant to an employee stock purchase program. Such employees paid for these shares with any combination of: (1) shares of BPC Holding common stock that they held prior to the Acquisition; (2) their cash transaction bonus, if any; and (3) a promissory note. In this manner, the senior employees acquired 182,699 shares in the aggregate. In the event that any employee defaults on a promissory note used to purchase shares, BPC Holding would be entitled only to the shares of BPC Holding securing such note. BPC Holding has adopted another employee stock purchase program pursuant to which a number of employees other than those senior employees who acquired shares in the manner described in the immediately preceding paragraph will also have the opportunity to invest in BPC Holding on a leveraged basis. Each eligible employee will be permitted to purchase shares of BPC Holding common stock having an aggregate value of up to the greater of (1) 150% of the value attributable to shares of BPC Holding held by such employee immediately prior to the Acquisition or (2) $60,000. Employees participating in this program will be permitted to finance two-thirds of their purchases of shares of BPC Holding common stock under the program with a promissory note. In the event that an employee defaults on a promissory note used to purchase such shares, BPC Holding's only recourse will be to the shares of BPC Holding securing the note. EMPLOYMENT AGREEMENTS Berry Plastics has entered into employment agreements with each of Messrs. Boots, Kratochvil, Beeler, Herdrich and Sims. Messrs. Boots, Kratochvil and Beeler's employment agreements expire on January 1, 2007, Mr. Herdrich's expires on December 31, 2003 and Mr. Sims' expires on January 2, 2007. During the fiscal year 2001, these executive officers received base compensation of $316,461, $231,919, $284,251, $256,054 and $211,851, respectively. Each of their employment agreements provides that base salary is subject to review and may be increased by Holding. In addition, the agreements provide that the executives are entitled to participate in all other benefit arrangements and incentive compensation programs established for executive officers of Holding and its subsidiaries. They also include customary noncompetition, nondisclosure and nonsolicitation provisions. The employment agreements provide for severance in the event of termination under enumerated circumstances. Specifically, if any of Messrs. Boots, Kratochvil, Beeler and Sims is 61 terminated by Berry Plastics without "cause" or resigns for "good reason" (as such terms are defined in the employment agreements), that individual is entitled to: (1) the greater of (a) base salary until the later of (i) July 22, 2004 or (ii) one year after termination or (b) 1/12 of 1 year's base salary for each year of employment up to 30 years (up to 24 years for Sims) by Berry Plastics or a predecessor in interest and (2) the pro rata portion of his annual bonus. In the event of a termination in connection with certain enumerated transactions, Messrs. Kratochvil, Boots and Beeler's employment agreements further provide for payment of their accrued bonus as of the termination date. If Mr. Herdrich is terminated without "cause" or by Berry Plastics at the end of the employment term (which is December 31, 2003), he is entitled to: (1) one-year's base salary; (2) a pro rata portion of his annual bonus; and (3) the remaining of 30 monthly payments of $20,833.33, the first of which was paid in May of 2000. Effective May 31, 2001, Berry Plastics entered into a separation agreement with Mr. Imbler which expires on or before December 31, 2003. The separation agreement terminated his employment agreement and provides for monthly payments until May 31, 2002 ranging from $17,212 to $34,424, plus a one-time payment of $158,695 on March 15, 2002. However, such payments cease to be payable following a "sale of the corporation," the definition of which includes the Acquisition. The separation agreement contains customary noncompetition, nondisclosure and nonsolicitation provisions and provides for the use of his consulting services through May 31, 2002. 62 PRINCIPAL STOCKHOLDERS The following table sets forth information regarding the estimated beneficial ownership of the shares of BPC Holding after giving effect to the Acquisition. The address for each of GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P., Bridge Street Special Opportunities Fund 2000, L.P. and Goldman Sachs Direct Investment Fund 2000, L.P. is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004. The address for each of J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P., J.P. Morgan Partners Global Investors A, L.P. and J.P. Morgan Partners (BHCA), L.P. is 1221 Avenue of the Americas, New York, New York 10020. The address of Ira G. Boots, James M. Kratochvil, R. Brent Beeler, William J. Herdrich, and Bruce J. Sims is c/o Berry Plastics Corporation, 101 Oakley Street, Evansville, Indiana 47710.
- ------------------------------------------------------------------------------------------- NUMBER OF PERCENTAGE OF COMMON NAME SHARES STOCK OUTSTANDING - ------------------------------------------------------------------------------------------- GS Capital Partners 2000, L.P. .......................... 960,705 35.2% GS Capital Partners 2000 Offshore, L.P. ................. 349,083 12.8% GS Capital Partners 2000 GmbH & Co. Beteiligungs KG...... 40,155 1.5% GS Capital Partners 2000 Employee Fund, L.P. ............ 305,057 11.2% Stone Street Fund 2000, L.P. ............................ 30,000 1.1% Bridge Street Special Opportunities Fund 2000, L.P. ..... 15,000 * Goldman Sachs Direct Investment Fund 2000, L.P. ......... 50,000 1.8% J.P. Morgan Partners Global Investors, L.P. ............. 97,239 3.6% J.P. Morgan Partners Global Investors (Cayman), L.P. .... 48,209 1.8% J.P. Morgan Partners Global Investors (Cayman) II, L.P. ................................................. 5,762 * J.P. Morgan Partners Global Investors A, L.P. ........... 3,578 * J.P. Morgan Partners (BHCA), L.P. ....................... 638,800 23.4% Ira G. Boots............................................. 54,063(1) * James M. Kratochvil...................................... 32,132(2) * R. Brent Beeler.......................................... 32,383(3) * William J. Herdrich...................................... 21,648(4) * Bruce J. Sims............................................ 18,075(5) * - -------------------------------------------------------------------------------------------
* less than 1% (1) Includes 16,278 shares subject to options which are currently exercisable or exercisable within 60 days of the date of this prospectus. (2) Includes 10,175 shares subject to options which are currently exercisable or exercisable within 60 days of the date of this prospectus. (3) Includes 10,175 shares subject to options which are currently exercisable or exercisable within 60 days of the date of this prospectus. (4) Includes 6,244 shares subject to options which are currently exercisable or exercisable within 60 days of the date of this prospectus. (5) Includes 4,059 shares subject to options which are currently exercisable or exercisable within 60 days of the date of this prospectus. 63 RELATED PARTY TRANSACTIONS FIRST ATLANTIC Prior to the Acquisition, First Atlantic was our largest voting stockholder. Pursuant to a management agreement, First Atlantic provided us with financial advisory and management consulting services in exchange for an annual fee of $750,000 and reimbursement for out-of-pocket costs and expenses. In consideration of such services, we paid First Atlantic fees and expenses of approximately $756,000 for fiscal 2001, $821,000 for fiscal 2000, and $792,000 for fiscal 1999. 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. GS CAPITAL PARTNERS 2000 AND J.P. MORGAN PARTNERS GLOBAL INVESTORS, L.P. As of the closing of the Acquisition, GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co. own a majority of the common stock of BPC Holding and received a transaction fee of $6.0 million in connection with the Acquisition. Goldman, Sachs & Co., an affiliate of GSCP 2000 and its related investment funds, provided advisory and other services to GSCP 2000 and the issuer in connection with sourcing, structuring and arranging the Acquisition and received fees of $2.0 million for these services. Goldman, Sachs & Co. acted as an initial purchaser in the offering of the outstanding notes. Goldman, Sachs & Co. and/or its affiliates may also purchase goods and services from us from time to time in the future. Goldman Sachs Credit Partners, L.P., an affiliate of GSCP 2000 and its related investment funds, acted as the joint lead arranger, joint bookrunner and administrative agent under our senior secured credit facilities. In addition, Goldman, Sachs & Co. and its affiliates may in the future engage in commercial banking, investment banking or other financial advisory transactions with the issuer and its affiliates. As of the closing of the Acquisition, J.P. Morgan Partners Global Investors, L.P. and other private equity funds affiliated with J.P. Morgan Chase & Co. (each of which are affiliates of an entity that was a stockholder prior to the Acquisition) own approximately 30% of the common stock of BPC Holding. J.P. Morgan Securities Inc. provided advisory and other services to the issuer in connection with the Acquisition and received fees of $5.2 million for these services. J.P. Morgan Securities Inc. acted as an initial purchaser in the offering of the outstanding notes and as a dealer-manager in connection with our debt tender offers. JPMorgan Chase Bank and/or its affiliates may also purchase goods and services from us from time to time in the future. J.P. Morgan Securities Inc., an affiliate of J.P. Morgan Partners Global Investors, L.P. and its related investment funds, acted as the joint lead arranger and joint bookrunner under our senior secured credit facilities. JPMorgan Chase Bank acted as syndication agent under our senior credit facilities. In addition, J.P. Morgan Securities Inc. and its affiliates may in the future engage in commercial banking, investment banking or other financial advisory transactions with the issuer and its affiliates. STOCKHOLDERS' AGREEMENTS In connection with the Acquisition, we entered into a stockholders' agreement with GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co., which in the aggregate own a majority of our common stock. and J.P. Morgan Partners Global Investors, L.P. and other 64 private equity funds affiliated with J.P. Morgan Securities Inc., which own approximately 30% of our common stock. GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co., have the right to designate five members of our board of directors, one of which shall be a member of our management, and J.P. Morgan Partners Global Investors, L.P. and other private equity funds affiliated with J.P. Morgan Securities Inc. have the right to designate two members of our board of directors, one of which will be designated by J.P. Morgan Partners Global Investors, L.P. The stockholders' agreement contains customary terms including terms regarding transfer restrictions, rights of first offer, tag along rights, drag along rights, preemptive rights and veto rights. 65 DESCRIPTION OF OTHER INDEBTEDNESS THE SENIOR SECURED CREDIT FACILITIES In connection with the Acquisition, we and BPC Holding and our domestic subsidiaries entered into the senior secured credit facilities with the lenders from time to time party thereto, Goldman Sachs Credit Partners L.P., as administrative agent, JPMorgan Chase Bank, as syndication agent, Fleet National Bank, as collateral agent, issuing bank and swing line lender, and The Royal Bank of Scotland plc and General Electric Capital Corporation, as co- documentation agents. For purposes of this section, "we," "our" and "us" refer to Berry Plastics Corporation. Set forth below is a summary of the terms and conditions of the senior secured credit facilities. The senior secured credit facilities are comprised of (i) a $330.0 million term loan, (ii) a $50.0 million delayed draw term loan facility, and (iii) a $100.0 million revolving credit facility. We are the borrower under the senior secured credit facilities. The maturity date of the term loan is July 22, 2010 and the maturity date of the revolving credit facility is July 22, 2008. The term loan was funded on the closing date. TERM LOAN/DELAYED DRAW TERM LOAN FACILITY/PREPAYMENT The term loan will amortize quarterly as follows: - $825,000 each quarter beginning September 30, 2002, and ending June 30, 2009; and - $76,725,000 each quarter beginning September 30, 2009 and ending June 30, 2010. The delayed draw term loan facility will amortize quarterly commencing March 31, 2004 based on the amounts outstanding as of that date as follows: (i) 2% per quarter in 2004, (ii) 4% per quarter in 2005, (iii) 6% per quarter in 2006, (iv) 8% per quarter in 2007 and (v) 10% per quarter in each of the first two quarters in 2008. The senior secured credit facilities may be prepaid at any time; provided, however, that voluntary prepayments will be applied first to repay swingline loans, and second, as between revolving loans on the one hand and the term loan and delayed draw term loans on the other hand, as we direct. Voluntary prepayments of the term loan and the delayed draw term loan facility will be made pro rata in accordance with the then outstanding principal amount under each loan and will be applied pro rata across scheduled amortization payments. Borrowings and commitments under our credit facilities will be subject to mandatory prepayment under specified circumstances, including some asset sales, receipt of proceeds of casualty insurance or condemnation, issuances of equity securities and from our excess cash flow (as defined in our senior secured credit facilities). DELAYED DRAW TERM LOAN FACILITY Amounts available under the delayed draw term loan facility may be borrowed (but not reborrowed) during the 18-month period beginning on July 22, 2002, provided that, among other things, no default or event of default exists at the time of borrowing, and the leverage ratio is not in excess of 5.20:1.00 if the borrowing is made on or prior to June 29, 2003 or 5.00:1.00 if the borrowing is made thereafter. Delayed draw term loans may only be made in connection with permitted acquisitions. 66 REVOLVING LOANS There will be no required amortization of the revolving credit facility. Outstanding borrowings under the revolving credit facility may be repaid at any time and may be reborrowed at any time prior to July 22, 2008. The revolving credit facility will allow us to obtain up to $15 million of letters of credit instead of borrowing and up to $10 million of swingline loans. Revolving loans in connection with permitted acquisitions will only be made if a leverage ratio is met. INTEREST RATE AND FEES Borrowings under the senior secured credit facilities bear interest, at our option, at either (i) a base rate (defined as a rate per annum equal to the greater of the prime rate and the federal funds effective rate in effect on the date of determination plus 1/2 of 1.00%) plus the applicable margin (as defined below) (the "Base Rate Loans") or (ii) an adjusted Eurodollar Rate (defined as the rate (as adjusted for statutory reserve requirements for eurocurrency liabilities) for Eurodollar deposits for a period of one, two, three or six months, as we select) (the "Eurodollar Rate Loans") plus the applicable margin. With respect to the term loan, the "applicable margin" is (i) with respect to Base Rate Loans, 2.00% per annum and (ii) with respect to Eurodollar Rate Loans, 3.00% per annum. With respect to the delayed draw term loan facility and the revolving credit facility, the "applicable margin" is, with respect to Eurodollar Rate Loans, initially 2.75% per annum. After the end of the quarter ending March 30, 2003, the "applicable margin" with respect to Eurodollar Rate Loans will be subject to a pricing grid which ranges from 2.75% per annum to 2.00% per annum, depending on our leverage ratio. The "applicable margin" with respect to Base Rate Loans will always be 1.00% per annum less than the "applicable margin" for Eurodollar Rate Loans. Interest will be payable quarterly for Base Rate Loans and at the end of the relevant interest period of one, two, three, or six months (or quarterly in certain cases) for all Eurodollar Rate Loans. The interest rate applicable to overdue payments and to outstanding amounts following an event of default under the senior secured credit facilities is equal to the interest rate at the time of an event of default plus 2.00%. The senior secured credit facilities also require us to pay commitment fees equal to 0.75% per annum on the average daily unused portion of the delayed draw term loan facility and 0.50% per annum on the average daily unused portion of the revolving credit facility, which fee is subject to a pricing grid ranging from 0.50% per annum to 0.375% per annum after the end of the quarter ending March 30, 2003, letter of credit fees (equal to the "applicable margin" for revolving loans that are Eurodollar Rate Loans) and fronting fees (not to exceed 0.25%) on the average daily unused portion of the letters of credit, as well as annual agency fees. SECURITY Our obligations under the senior secured credit facilities are secured by a first priority security interest (with certain exceptions) in substantially all of our assets and the assets of the guarantors described below and, in addition, by a pledge of 100% of our shares and 100% of the shares of our domestic subsidiaries and up to 65% of the shares of our foreign subsidiaries and all intercompany debt with the exception of debt owed to our foreign subsidiaries. GUARANTORS BPC Holding and each of our domestic subsidiaries have guaranteed our obligations under the senior secured credit facilities. 67 REPRESENTATIONS AND WARRANTIES The senior secured credit facilities contain representations and warranties customary for this type of financing. COVENANTS AND CONDITIONS In addition to customary affirmative covenants, the senior secured credit facilities require us to enter into interest rate hedging agreements to the extent necessary for at least 50% of the total indebtedness (not including indebtedness owed under the revolving credit facility) to be at a fixed rate and require us to provide funding protections customary for this type of financing, including breakage costs, gross-up for withholding, compensation for increased costs and compliance with capital adequacy and other regulatory restrictions. The senior secured credit facilities include negative covenants that restrict our and the guarantors' ability to, among other things: - incur additional indebtedness; - incur liens; - enter into agreements with negative pledge clauses; - make investments; - guarantee obligations; - pay dividends or make redemptions or other payments in respect of capital stock; - make payments with respect to subordinated debt; - engage in mergers and make acquisitions; - sell assets; - make capital expenditures; - enter into leases; - engage in transactions with affiliates; and - make investments in foreign subsidiaries. The senior secured credit facilities also contain (i) a minimum interest coverage ratio as of the last day of any quarter, beginning with the quarter ending December 2002, of 2.00:1.00 per quarter through the quarter ending March 2004, 2.10:1.00 per quarter for the quarters ending June 2004 and September 2004, 2.15:1.00 per quarter for the quarters ending December 2004 and March 2005, 2.25:1.00 per quarter for the quarters ending June 2005 through the quarter ending March 2006, 2.35:1.00 per quarter for the quarters ending June 2006 through the quarter ending December 2006 and 2.50:1.00 per quarter thereafter, (ii) a maximum amount of capital expenditures (subject to the rollover of certain unexpended amounts from the prior year) of $45 million for the year ending 2002, $50 million for the years ending 2003 and 2004, $60 million for the years ending 2005, 2006 and 2007, and $65 million for each year thereafter, and (iii) a maximum total leverage ratio as of the last day of any quarter, beginning with the quarter ending December 2002, of 5.90:1.00 per quarter through the quarter ending June 2003, 5.75:1.00 per quarter for the quarters ending September 2003 through the quarter ending March 2004, 5.50:1.00 per quarter for the quarters ending June 2004 and September 2004, 5.25:1.00 per quarter for the quarters ending December 2004 through the quarter ending 68 June 2005, 5.00:1.00 per quarter for the quarters ending September 2005 and December 2005, 4.75:1.00 per quarter for the quarters ending March 2006 and June 2006, 4.50:1.00 per quarter for the quarters ending September 2006 through the quarter ending March 2007, 4.25:1.00 per quarter for the quarters ending June 2007 through the quarter ending December 2007, and 4.00:1.00 per quarter thereafter. Certain conditions must be met for us to borrow under the revolving credit facility or the delayed draw term loan facility in the future, including that there has been no material adverse change to the business, operations, properties, assets, condition (financial or otherwise) or prospects of the company and the guarantors, taken as a whole. EVENTS OF DEFAULT The senior secured credit facilities contain customary and appropriate events of default, which are subject to customary grace periods and materiality standards. CAPITAL LEASES We and our subsidiaries are also party to capital leases entered into in the ordinary course of business. As of March 30, 2002, we had $21.9 million of capital leases outstanding. We repaid approximately $5.0 million of the outstanding capital leases at the time of the Acquisition. NEVADA INDUSTRIAL REVENUE BONDS We are party to a Financing Agreement with the City of Henderson, Nevada Public Improvement Trust, pursuant to which we have agreed to pay amounts sufficient to pay principal, interest and any premium on an issue of Nevada Industrial Revenue Bonds. The Nevada Industrial Revenue Bonds had $3.0 million outstanding as of March 30, 2002, bear interest at a variable rate (1.6% at March 30, 2002), require annual principal payments of $0.5 million on each April 1 until maturity, are collateralized by an irrevocable letter of credit issued by JPMorgan Chase Bank under our revolving credit facility and mature in April 2007. 69 THE EXCHANGE OFFER PURPOSE OF THE EXCHANGE OFFER When we sold the outstanding notes on July 22, 2002, we entered into a registration rights agreement with the initial purchasers of the outstanding notes, which requires us to: - file with the SEC a registration statement related to the exchange notes; - use our reasonable best efforts to have the registration statement declared effective by the SEC under the Securities Act on or before April 22, 2003; - offer to the holders of the outstanding notes the opportunity to exchange their outstanding notes for a like principal amount of exchange notes upon the effectiveness of the registration statement; and - use our reasonable best efforts to issue on or prior to 60 business days, or longer, if required by the federal securities laws, after the date the registration statement is declared effective by the SEC, the exchange notes for all notes tendered in the exchange offer. If we fail to satisfy our registration and exchange obligations under the registration rights agreement, we will be required to pay additional interest to the holders of the notes. A copy of the registration rights agreement is filed as an exhibit to the registration statement of which this prospectus is a part. TERMS OF THE EXCHANGE OFFER This prospectus and the accompanying letter of transmittal together constitute the exchange offer. Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange outstanding notes which are properly tendered on or before the expiration date and are not withdrawn as permitted below. The expiration date for this exchange offer is 5:00 p.m., New York City time, on , 2002, or such later date and time to which we, in our sole discretion, extend the exchange offer. The form and terms of the exchange notes are the same as the form and terms of the outstanding notes, except that: - the exchange notes will have been registered under the Securities Act; - the exchange notes will not bear the restrictive legends restricting their transfer under the Securities Act; and - the exchange notes will not contain the registration rights additional interest provisions contained in the outstanding notes. Notes tendered in the exchange offer must be in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. We expressly reserve the right, in our sole discretion: - to extend the expiration date; - to delay accepting any outstanding notes; 70 - if any of the conditions set forth below under "--Conditions to the exchange offer" have not been satisfied, to terminate the exchange offer and not accept any outstanding notes for exchange; or - to amend the exchange offer in any manner. We will give oral or written notice of any extension, delay, non-acceptance, termination or amendment as promptly as practicable by a public announcement, and in the case of an extension, no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. During an extension, all outstanding notes previously tendered will remain subject to the exchange offer and may be accepted for exchange by us. Any outstanding notes not accepted for exchange for any reason will be returned without cost to the holder that tendered them as promptly as practicable after the expiration or termination of the exchange offer. HOW TO TENDER NOTES FOR EXCHANGE When the holder of outstanding notes tenders, and we accept, such notes for exchange, a binding agreement between us and the tendering holder is created, subject to the terms and conditions set forth in this prospectus and the accompanying letter of transmittal. Except as set forth below, a holder of outstanding notes who wishes to tender such notes for exchange must, on or prior to the expiration date: - transmit a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, to the U.S. Bank Trust National Association, which will act as the exchange agent, at the address set forth below under the heading "--The exchange agent"; or - if outstanding notes are tendered pursuant to the book-entry procedures set forth below, the tendering holder must transmit an agent's message to the exchange agent at the address set forth below under the heading "--The exchange agent." In addition, either: - the exchange agent must receive the certificates for the outstanding notes and the letter of transmittal; - the exchange agent must receive, prior to the expiration date, a timely confirmation of the book-entry transfer of the outstanding notes being tendered into the exchange agent's account at The Depository Trust Company, or DTC, along with the letter of transmittal or an agent's message; or - the holder must comply with the guaranteed delivery procedures described below. The term "agent's message" means a message, transmitted to DTC and received by the exchange agent and forming a part of a book-entry transfer, or "book-entry confirmation," which states that DTC has received an express acknowledgement that the tendering holder agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against such holder. The method of delivery of the outstanding notes, the letters of transmittal and all other required documents is at the election and risk of the holders. If such delivery is by mail, we recommend registered mail, properly insured, with return receipt requested. In all cases, you 71 should allow sufficient time to assure timely delivery. No letters of transmittal or notes should be sent directly to us. Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the outstanding notes surrendered for exchange are tendered: - by a registered holder of the outstanding notes; or - for the account of an eligible institution. An "eligible institution" is a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States. If signatures on a letter of transmittal or notice of withdrawal are required to be guaranteed, the guarantor must be an eligible institution. If outstanding notes are registered in the name of a person other than the signer of the letter of transmittal, the outstanding notes surrendered for exchange must be endorsed by, or accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder with the holder's signature guaranteed by an eligible institution. We will determine all questions as to the validity, form, eligibility (including time of receipt) and acceptance of outstanding notes tendered for exchange in our sole discretion. Our determination will be final and binding. We reserve the absolute right to: - reject any and all tenders of any outstanding note improperly tendered; - refuse to accept any outstanding note if, in our judgment or the judgment of our counsel, acceptance of the outstanding note may be deemed unlawful; and - waive any defects or irregularities or conditions of the exchange offer as to any particular outstanding note either before or after the expiration date, including the right to waive the ineligibility of any holder who seeks to tender outstanding notes in the exchange offer. Our interpretation of the terms and conditions of the exchange offer as to any particular outstanding notes either before or after the expiration date, including the letter of transmittal and the instructions to it, will be final and binding on all parties. Holders must cure any defects and irregularities in connection with tenders of notes for exchange within such reasonable period of time as we will determine, unless we waive such defects or irregularities. Neither we, the exchange agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of outstanding notes for exchange, nor shall any of us incur any liability for failure to give such notification. If a person or persons other than the registered holder or holders of the outstanding notes tendered for exchange signs the letter of transmittal, the tendered outstanding notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the outstanding notes. If trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity sign the letter of transmittal or any outstanding notes or any power of attorney, such persons should so indicate when signing, and you must submit proper evidence satisfactory to us of such person's authority to so act unless we waive this requirement. 72 By tendering, each holder will represent to us that, among other things, the person acquiring exchange notes in the exchange offer is obtaining them in the ordinary course of its business, whether or not such person is the holder, and neither the holder nor such other person has any arrangement or understanding with any person to participate in the distribution of the exchange notes issued in the exchange offer. If any holder or any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of us, or is engaged in or intends to engage in or has an arrangement or understanding with any person to participate in a distribution of such notes to be acquired in the exchange offer, such holder or any such other person: - may not rely on applicable interpretations of the staff of the SEC; and - must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. Each broker-dealer who acquired its outstanding notes as a result of market-making activities or other trading activities, and thereafter receives exchange notes issued for its own account in the exchange offer, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes issued in the exchange offer. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. See "Plan of distribution" for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer. ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF NOTES ISSUED IN THE EXCHANGE OFFER Upon satisfaction or waiver of all the conditions to the exchange offer, we will accept, promptly after the expiration date, all outstanding notes properly tendered and will issue exchange notes registered under the Securities Act. For purposes of the exchange offer, we shall be deemed to have accepted properly tendered outstanding notes for exchange when, as and if we have given oral or written notice to the exchange agent, with written confirmation of any oral notice to be given promptly thereafter. See "--Conditions to the exchange offer" for a discussion of the conditions that must be satisfied before we accept any outstanding notes for exchange. For each outstanding note accepted for exchange, the holder will receive an exchange note registered under the Securities Act having a principal amount equal to that of the surrendered outstanding note. Accordingly, registered holders of exchange notes issued in the exchange offer on the relevant record date for the first interest payment date following the consummation of the exchange offer will receive interest accruing from the most recent date to which interest has been paid. Outstanding notes that we accept for exchange will cease to accrue interest from and after the date of consummation of the exchange offer. Under the registration rights agreement, we may be required to make additional payments in the form of penalty interest to the holders of the outstanding notes under circumstances relating to the timing of the exchange offer. 73 In all cases, we will issue exchange notes for outstanding notes that are accepted for exchange only after the exchange agent timely receives: - certificates for such outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent's account at DTC; - a properly completed and duly executed letter of transmittal or an agent's message; and - all other required documents. If for any reason set forth in the terms and conditions of the exchange offer we do not accept any tendered outstanding notes, or if a holder submits outstanding notes for a greater principal amount than the holder desires to exchange, we will return such unaccepted or non-exchanged notes without cost to the tendering holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent's account at DTC, such non-exchanged notes will be credited to an account maintained with DTC. We will return the outstanding notes or have them credited to DTC account as promptly as practicable after the expiration or termination of the exchange offer. BOOK-ENTRY TRANSFER The exchange agent will make a request to establish an account with respect to the outstanding notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC's system must make book-entry delivery of outstanding notes by causing DTC to transfer such outstanding notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfer. Such participant should transmit its acceptance to DTC on or prior to the expiration date or comply with the guaranteed delivery procedures described below. DTC will verify such acceptance, execute a book-entry transfer of the tendered outstanding notes into the exchange agent's account at DTC and then send to the exchange agent confirmation of such book-entry transfer. The confirmation of such book-entry transfer will include an agent's message confirming that DTC has received an express acknowledgment from such participant that such participant has received and agrees to be bound by the letter of transmittal and that we may enforce the letter of transmittal against such participant. Delivery of exchange notes issued in the exchange offer may be effected through book-entry transfer at DTC. However, the letter of transmittal or facsimile thereof or an agent's message, with any required signature guarantees and any other required documents, must: - be transmitted to and received by the exchange agent at the address set forth below under "--The exchange agent" on or prior to the expiration date; or - comply with the guaranteed delivery procedures described below. GUARANTEED DELIVERY PROCEDURES If a holder of outstanding notes desires to tender such notes and the holder's outstanding notes are not immediately available, or time will not permit such holder's outstanding notes or other required documents to reach the exchange agent before the expiration date, or the 74 procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if: - the holder tenders the outstanding notes through an eligible institution: - prior to the expiration date, the exchange agent receives from such eligible institution a properly completed and duly executed notice of guaranteed delivery, acceptable to us, by telegram, telex, facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the outstanding notes tendered and the amount of the outstanding notes being tendered. The notice of guaranteed delivery shall state that the tender is being made and guarantee that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal or agent's message with any required signature guarantees and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and - the exchange agent receives the certificates for all physically tendered outstanding notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal or agent's message with any required signature guarantees and any other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery. WITHDRAWAL RIGHTS You may withdraw tenders of your outstanding notes at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective, you must send a written notice of withdrawal to the exchange agent at one of the addresses set forth below under "--The exchange agent." Any such notice of withdrawal must: - specify the name of the person that has tendered the outstanding notes to be withdrawn; - identify the outstanding notes to be withdrawn, including the principal amount of such outstanding notes; and - where certificates for outstanding notes are transmitted, specify the name in which outstanding notes are registered, if different from that of the withdrawing holder. If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution. If outstanding notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn notes and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices and our determination will be final and binding on all parties. Any tendered notes so withdrawn will be deemed not to have been 75 validly tendered for exchange for purposes of the exchange offer. Any outstanding notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder. In the case of outstanding notes tendered by book-entry transfer into the exchange agent's account at DTC, the outstanding notes withdrawn will be credited to an account maintained with DTC for the outstanding notes. The outstanding notes will be returned or credited to DTC account as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn outstanding notes may be re-tendered by following one of the procedures described under "-- How to tender notes for exchange" above at any time on or prior to 5:00 p.m., New York City time, on the expiration date. CONDITIONS TO THE EXCHANGE OFFER We are not required to accept the outstanding notes in the exchange offer or to issue the exchange notes. We may terminate or amend the exchange offer if at any time before the acceptance of such outstanding notes for exchange: - any federal law, statute, rule or regulation shall have been adopted or enacted which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; - any stop order shall be threatened or in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended; or - there shall occur a change in the current interpretation by the staff of the SEC which permits the notes issued in the exchange offer in exchange for the outstanding notes to be offered for resale, resold and otherwise transferred by such holders, other than broker-dealers and any such holder which is an "affiliate" of us within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such notes acquired in the exchange offer are acquired in the ordinary course of such holder's business and such holder has no arrangement or understanding with any person to participate in the distribution of such notes issued in the exchange offer. The preceding conditions are for our sole benefit, and we may assert them regardless of the circumstances giving rise to any such condition. We may waive the preceding conditions in whole or in part at any time and from time to time in our sole discretion. Our failure at any time to exercise the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right which we may assert at any time and from time to time. THE EXCHANGE AGENT The U.S. Bank Trust National Association has been appointed as our exchange agent for the exchange offer. All executed letters of transmittal should be directed to our exchange agent at the address set forth below. Questions and requests for assistance, requests for additional 76 copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery should be directed to the exchange agent addressed as follows: By mail: U.S. Bank Trust National Association P.O. Box 64111 4th Floor St. Paul, MN 55164-0111 Attention: Shauna Thilmany By hand or overnight mail: U.S. Bank Trust National Association 180 East Fifth Street 4th Floor--Bond Drop Window St. Paul, MN 55101 Attention: Shauna Thilmany By hand: U.S. Bank Trust National Association 100 Wall Street 16th Floor--Bond Drop Window New York, NY 10005 Attention: Barbara Nastro By telecopier: (612) 244-1537 Originals of all documents sent by facsimile should be promptly sent to the exchange agent by registered or certified mail, by hand, or by overnight delivery service. DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL. FEES AND EXPENSES We will not make any payment to brokers, dealers or others soliciting acceptance of the exchange offer except for reimbursement of mailing expenses. The cash expenses to be incurred in connection with the exchange offer will be paid by us and are estimated in the aggregate to be approximately $0.4 million. TRANSFER TAXES Holders who tender their outstanding notes for exchange notes will not be obligated to pay any transfer taxes in connection with the exchange. If, however, exchange notes issued in the exchange offer are to be delivered to, or are to be issued in the name of, any person other than the holder of the outstanding notes tendered, or if a transfer tax is imposed for any reason other than the exchange of outstanding notes in connection with the exchange offer, then the holder must pay any such transfer taxes, whether imposed on the registered holder or on any other person. If satisfactory evidence of payment of, or exemption from, such taxes is 77 not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder. CONSEQUENCES OF FAILURE TO EXCHANGE OUTSTANDING NOTES Holders who desire to tender their outstanding notes in exchange for notes registered under the Securities Act should allow sufficient time to ensure timely delivery. Neither the exchange agent nor our company is under any duty to give notification of defects or irregularities with respect to the tenders of notes for exchange. Outstanding notes that are not tendered or are tendered but not accepted will, following the consummation of the exchange offer, continue to accrue interest and to be subject to the provisions in the indenture regarding the transfer and exchange of the outstanding notes and the existing restrictions on transfer set forth in the legend on the outstanding notes and in the offering memorandum dated July 22, 2002, relating to the outstanding notes. Except in limited circumstances with respect to specific types of holders of outstanding notes, we will have no further obligation to provide for the registration under the Securities Act of such outstanding notes. In general, outstanding notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not currently anticipate that we will take any action to register the outstanding notes under the Securities Act or under any state securities laws. Upon completion of the exchange offer, holders of the outstanding notes will not be entitled to any further registration rights under the registration rights agreement, except under limited circumstances. CONSEQUENCES OF EXCHANGING OUTSTANDING NOTES Based on interpretations of the staff of the SEC, as set forth in no-action letters to third parties, we believe that the notes issued in the exchange offer may be offered for resale, resold or otherwise transferred by holders of such notes, other than by any holder which is an "affiliate" of us within the meaning of Rule 405 under the Securities Act. Such notes may be offered for resale, resold or otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act, if: - such holder is not a broker-dealer tendering notes acquired directly from us; - such notes issued in the exchange offer are acquired in the ordinary course of such holder's business and; - such holder, other than broker-dealers, has no arrangement or understanding with any person to participate in the distribution of such notes issued in the exchange offer. However, the SEC has not considered the exchange offer in the context of a no-action letter, and we cannot guarantee that the staff of the SEC would make a similar determination with respect to the exchange offer as in such other circumstances. Each holder, other than a broker-dealer, must furnish a written representation, at our request, that: - it is not an affiliate of us; - it is not a broker-dealer tendering notes acquired directly from us; 78 - it is not engaged in, and does not intend to engage in, a distribution of the notes issued in the exchange offer and has no arrangement or understanding to participate in a distribution of notes issued in the exchange offer; and - it is acquiring the notes issued in the exchange offer in the ordinary course of its business. Each broker-dealer that receives notes issued in the exchange offer for its own account in exchange for outstanding notes must acknowledge that such outstanding notes were acquired by such broker-dealer as a result of market-making or other trading activities and that it will deliver a prospectus in connection with any resale of such notes issued in the exchange offer. See "Plan of distribution" for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer. In addition, to comply with state securities laws of certain jurisdictions, the notes issued in the exchange offer may not be offered or sold in any state unless they have been registered or qualified for sale in such state or an exemption from registration or qualification is available and complied with by the holders selling the exchange notes. We have not agreed to register or qualify the exchange notes for offer or sale under state securities laws. 79 DESCRIPTION OF THE EXCHANGE NOTES Definitions of certain terms used in this Description of the exchange notes may be found under the heading "Certain definitions." Defined terms used in this description but not defined below under the heading "Certain definitions" have the meanings assigned to them in the Indenture. For purposes of this section, (i) the term "Company" refers only to Berry Plastics Corporation and not to any of its subsidiaries and (ii) the term "Holding" refers to BPC Holding Corporation, the parent company of the Company, and not to any of its Subsidiaries. Certain of the Company's Subsidiaries and Holding will guarantee the exchange notes and therefore will be subject to many of the provisions contained in this "Description of the exchange notes". Each company which guarantees the Notes is referred to in this section as a "Note Guarantor." Each such guarantee is termed a "Note Guarantee." The Company will issue the exchange notes under the Indenture, dated as of July 22, 2002 (the "Indenture"), among the Company, the Note Guarantors and U.S. Bank Trust National Association, as trustee (the "Trustee"), filed as an exhibit to the registration statement of which this prospectus is a part. The Indenture contains provisions which define your rights under the Notes. In addition, the Indenture governs the obligations of the Company and of each Note Guarantor under the Notes. The terms of the exchange notes include those stated in the Indenture and, upon effectiveness of a registration statement with respect to the exchange notes, those made part of the Indenture by reference to the TIA. Any outstanding notes that remain outstanding after completion of the exchange offer, together with the exchange notes issued in the exchange offer, will be treated as a single class of securities under the Indenture, including for purposes of amending the Indenture. The following description is meant to be only a summary of certain provisions of the Indenture. It does not restate the terms of the Indenture in their entirety. We urge that you carefully read the Indenture as it, and not this description, governs our obligations and your rights as Holders. OVERVIEW OF THE NOTES AND THE NOTE GUARANTEES THE NOTES These Notes: - are general unsecured obligations of the Company; - are equally in right of payment with any existing and future Senior Subordinated Indebtedness of the Company; - are subordinated in right of payment to all existing and future Senior Indebtedness of the Company; - are senior in right of payment to all future Subordinated Obligations of the Company; - are effectively subordinated to all Secured Indebtedness of the Company and its Subsidiaries to the extent of the value of the assets securing such Indebtedness; and - are effectively subordinated to all liabilities (including Trade Payables) and Preferred Stock of each Subsidiary of the Company that is not a Note Guarantor. 80 THE NOTE GUARANTEES These Notes are guaranteed by Holding, and all existing and future Domestic Subsidiaries of the Company, except as provided below. The Note Guarantee of each Note Guarantor: - is general unsecured obligations of such Note Guarantor; - ranks equally in right of payment with any existing and future Senior Subordinated Indebtedness of such Note Guarantor; - is subordinated in right of payment to all existing and future Senior Indebtedness of such Note Guarantor; - is senior in right of payment to all future Subordinated Obligations of such Note Guarantor; - is effectively subordinated to all Secured Indebtedness of such Note Guarantor and its Subsidiaries to the extent of the value of the assets securing such Indebtedness; and - is effectively subordinated to the obligations of any Subsidiary of a Note Guarantor if that Subsidiary is not a Note Guarantor. The Notes will not be guaranteed by Berry Plastics Acquisition Corporation II, NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, CBP Holdings S.r.l., Capsol Berry Plastics S.p.a. or Ociesse S.r.l. The Notes will not be guaranteed by any Foreign Subsidiaries in the future unless any such Foreign Subsidiary Guarantees any Senior Indebtedness of the Company or any of the Company's Subsidiaries (other than that of another Foreign Subsidiary). The Note Guarantee of any Note Guarantor may be released in certain circumstances as described under "Certain covenants--Future note guarantors and release of note guarantees." As of and for the fifty-two weeks ended March 30, 2002, after giving effect to the Transactions and eliminating intercompany activity, these non-guarantor Subsidiaries would have (i) had approximately $8.5 million of total liabilities (including trade payables), (ii) had approximately 5.0% of the Company's Consolidated assets and (iii) generated approximately 4.4% of the Company's Consolidated revenues and 1.7% of its EBITDA. PRINCIPAL, MATURITY AND INTEREST We initially issued Notes in an aggregate principal amount of $250.0 million. The Notes will mature on July 15, 2012. We will issue the Notes in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. Each Note we issue will bear interest at a rate of 10 3/4% per annum beginning on July 22, 2002 or from the most recent date to which interest has been paid or provided for. We will pay interest semiannually to Holders of record at the close of business on the January 1 or July 1 immediately preceding the interest payment date on January 15 and July 15 of each year. We will begin paying interest to Holders on January 15, 2003. We will also pay additional interest ("Additional Interest") to Holders if we fail to file a registration statement relating to the Notes or if the registration statement is not declared effective on a timely basis or if certain other conditions are not satisfied. These Additional Interest provisions are more fully explained under the heading "Registration rights; additional interest." Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. 81 INDENTURE MAY BE USED FOR FUTURE ISSUANCES We may issue from time to time additional Notes having identical terms and conditions to the Notes we are currently offering (the "Additional Notes"). We will only be permitted to issue such Additional Notes if at the time of such issuance we are in compliance with the covenants contained in the Indenture, but the amount of such Additional Notes will not otherwise be restricted by the Indenture. Any Additional Notes will be part of the same issue as the Notes that we are currently offering and will vote on all matters with such Notes. PAYING AGENT AND REGISTRAR We will pay the principal of, premium, if any, interest (including Additional Interest), if any, on the Notes at any office of ours or any agency designated by us which is located in the Borough of Manhattan, The City of New York. We have initially designated the corporate trust office of the Trustee to act as the agent of the Company in such matters. The location of the corporate trust office is 100 Wall Street, 16th Floor, New York, New York 10005. We, however, reserve the right to pay interest to Holders by check mailed directly to Holders at their registered addresses. Holders may exchange or transfer their Notes at the same location given in the preceding paragraph. No service charge will be made for any registration of transfer or exchange of Notes. We, however, may require Holders to pay any transfer tax or other similar governmental charge payable in connection with any such transfer or exchange. OPTIONAL REDEMPTION Except as set forth in the following paragraph, we may not redeem the Notes prior to July 15, 2007. After this date, we may redeem the Notes, in whole or in part, on one or more occasions, on not less than 30 nor more than 60 days' prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest, including Additional Interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 15 of the years set forth below:
- ------------------------------------------------------------------------ REDEMPTION YEAR PRICE - ------------------------------------------------------------------------ 2007........................................................ 105.375% 2008........................................................ 103.583% 2009........................................................ 101.792% 2010 and thereafter......................................... 100.000% - ------------------------------------------------------------------------
Prior to July 15, 2005, we may, on one or more occasions, also redeem up to a maximum of 35% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) with the Net Cash Proceeds of one or more Equity Offerings (1) by the Company or (2) by Holding to the extent the Net Cash Proceeds thereof are contributed to the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from the Company, at a redemption price equal to 110.75% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the 82 relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption: (1) at least 65% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) remains outstanding; and (2) any such redemption by the Company must be made within 60 days of such Equity Offering and must be made in accordance with certain procedures set forth in the Indenture. SELECTION If we partially redeem Notes, the Trustee will select the Notes to be redeemed on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and reasonable, although no Note of $1,000 in original principal amount or less will be redeemed in part. If we redeem any Note in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption so long as we have deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and Additional Interest thereon, if any, the Notes to be redeemed. RANKING The Notes will be unsecured Senior Subordinated Indebtedness of the Company, will be subordinated in right of payment to all existing and future Senior Indebtedness of the Company, will rank equally in right of payment with any existing and future Senior Subordinated Indebtedness of the Company and will be senior in right of payment to all future Subordinated Obligations of the Company. The Notes also will be effectively subordinated to all Secured Indebtedness of the Company and its Subsidiaries to the extent of the value of the assets securing such Indebtedness. However, payment from the money or the proceeds of U.S. Government Obligations held in any defeasance trust described below under the caption "Defeasance" will not be subordinated to any Senior Indebtedness or subject to the restrictions described herein. The Note Guarantees will be unsecured Senior Subordinated Indebtedness of the applicable Note Guarantor, will be subordinated in right of payment to all existing and future Senior Indebtedness of such Note Guarantor, will rank equally in right of payment with any existing and future Senior Subordinated Indebtedness of such Note Guarantor and will be senior in right of payment to all future Subordinated Obligations of such Note Guarantor. The Note Guarantees also will be effectively subordinated to all Secured Indebtedness of the applicable Note Guarantor and its Subsidiaries to the extent of the value of the assets securing such Secured Indebtedness and effectively subordinated to the obligations of any Subsidiary of a Note Guarantor if that Subsidiary is not a Note Guarantor. The Company currently conducts most of its operations through its Subsidiaries. To the extent such Subsidiaries are not Guarantors, creditors of such Subsidiaries, including trade creditors, and preferred stockholders, if any, of such Subsidiaries generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of the Company, including Holders. The Notes, therefore, will be effectively subordinated to the claims of creditors, including trade creditors, and preferred stockholders, if any, of Subsidiaries of the 83 Company that are not Note Guarantors. For example, except under certain circumstances, the Company's Foreign Subsidiaries will not guarantee the Notes. Assuming that we had completed the Transactions and applied the net proceeds we receive from the Transactions in the manner described under the heading "Use of proceeds," as of March 30, 2002: - we would have had approximately $349.9 million of Senior Indebtedness to which the Notes and the Note Guarantees would be subordinated (which amount excludes $5.7 million of letters of credit and the remaining availability of $94.3 million under our revolving credit facility and $50.0 million of availability under our delayed draw term loan facility); - we would not have had any Senior Subordinated Indebtedness (other than the Notes); - we would not have had any Subordinated Obligations; and - our Subsidiaries that are not Note Guarantors would have had $8.5 million of liabilities, excluding liabilities owed to us. Although the Indenture will limit the Incurrence of Indebtedness by the Company and the Restricted Subsidiaries and the issuance of Preferred Stock by the Restricted Subsidiaries, such limitation is subject to a number of significant qualifications. The Company and its Subsidiaries may be able to Incur substantial amounts of additional Indebtedness in certain circumstances. Such Indebtedness may be Senior Indebtedness. In addition, the Indenture will not limit the Incurrence of Indebtedness by Holding or have any other restrictions on Holding. "Senior Indebtedness" of the Company or any Note Guarantor means Bank Indebtedness and the principal of, premium (if any) and accrued and unpaid interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company or any Note Guarantor, regardless of whether or not a claim for post-filing interest is allowed in such proceedings), and fees and other amounts owing in respect of, all other Indebtedness of the Company or any Note Guarantor, as applicable, whether outstanding on the Closing Date or thereafter Incurred, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such obligations are pari passu with or subordinated in right of payment to the Notes or such Note Guarantor's Note Guarantee, as applicable; provided, however, that Senior Indebtedness of the Company or any Note Guarantor shall not include: (1) any obligation of the Company or any Subsidiary of the Company or of such Note Guarantor to the Company or any other Subsidiary of the Company; (2) any liability for federal, state, local or other taxes owed or owing by the Company or such Note Guarantor, as applicable; (3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities); (4) any Indebtedness or obligation of the Company or such Note Guarantor, as applicable (and any accrued and unpaid interest in respect thereof) that by its terms is subordinate in right of payment to any other Indebtedness or obligation of the Company or such Note Guarantor, as applicable, including any Senior Subordinated Indebtedness and any Subordinated Obligations of the Company or such Note Guarantor, as applicable; 84 (5) any obligations with respect to any Capital Stock; or (6) any Indebtedness (or portion thereof) Incurred in violation of the Indenture. Only Indebtedness of the Company that is Senior Indebtedness will rank senior to the Notes. The Notes will rank equally in all respects with all other Senior Subordinated Indebtedness of the Company. The Company will not Incur, directly or indirectly, any Indebtedness which is subordinate in right of payment to Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security will not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. The Company may not pay principal of, premium (if any) or interest on the Notes, or make any further deposit pursuant to the provisions described under "Defeasance" below, and may not otherwise purchase, repurchase, redeem or otherwise acquire or retire for value any Notes (collectively, "pay the Notes") (except in Permitted Junior Securities or except from a previously created trust described under "Defeasance") if: (1) any Designated Senior Indebtedness of the Company is not paid when due, whether upon acceleration or otherwise, or (2) any other default on Designated Senior Indebtedness of the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded, or (y) such Designated Senior Indebtedness has been paid in full; provided, however, that the Company may pay the Notes without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to which either of the events set forth in clause (1) or (2) above has occurred and is continuing. In addition, during the continuance of any default (other than a default described in clause (1) or (2) of the immediately preceding paragraph) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, we may not pay the Notes (except in Permitted Junior Securities or except from a previously created trust described under "Defeasance") for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to us) of written notice (a "Blockage Notice") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated: (1) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (2) by repayment in full of such Designated Senior Indebtedness, or (3) because the default giving rise to such Blockage Notice is no longer continuing). 85 Notwithstanding the provisions described in the immediately preceding paragraph (but subject to the provisions contained in the second preceding and in the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Notes after the end of such Payment Blockage Period, including any missed payments. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. However, if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods (including any periods in respect of any additional Blockage Notices delivered by the Representative pursuant to the prior sentence) is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this paragraph, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days. Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under "Defeasance"): (1) the holders of Senior Indebtedness of the Company will be entitled to receive payment in full of such Senior Indebtedness before the Holders are entitled to receive any payment of principal of or interest on the Notes; and (2) until such Senior Indebtedness is paid in full any payment or distribution to which Holders would be entitled but for the subordination provisions of the Indenture will be made to holders of such Senior Indebtedness as their interests may appear. If a distribution is made to Holders that due to the subordination provisions of the Indenture should not have been made to them, such Holders will be required to hold it in trust for the holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear. If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee (provided that the Trustee shall have received written notice from the Company, on which notice the Trustee shall be entitled to conclusively rely) shall promptly notify the holders of the Designated Senior Indebtedness of the Company (or their Representative) of the acceleration. If any Designated Senior Indebtedness of the Company is outstanding, the Company may not pay the Notes until five Business Days after such holders or the Representative of such Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if the subordination provisions of the Indenture otherwise permit payment at that time. 86 By reason of the subordination provisions of the Indenture, in the event of insolvency, creditors of the Company who are holders of Senior Indebtedness of the Company may recover more, ratably, than the Holders, and creditors of the Company who are not holders of Senior Indebtedness of the Company or of Senior Subordinated Indebtedness of the Company (including the Notes) may recover less, ratably, than holders of Senior Indebtedness of the Company and may recover more, ratably, than the holders of Senior Subordinated Indebtedness of the Company. The Indenture will contain substantially identical subordination provisions relating to each Guarantor's obligations under its Note Guarantee. NOTE GUARANTEES BPC Holding Corporation, each of the Company's Domestic Subsidiaries, and certain future subsidiaries of the Company (as described below), as primary obligors and not merely as sureties, will jointly and severally irrevocably and unconditionally Guarantee on an unsecured senior subordinated basis the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Company under the Indenture (including obligations to the Trustee) and the Notes, whether for payment of principal of, interest (including Additional Interest) on, if any, in respect of the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Note Guarantors being herein called the "Guaranteed Obligations"). Such Note Guarantors will agree to pay, in addition to the amount stated above, any and all costs and expenses (including reasonable counsel fees and expenses) Incurred by the Trustee or the Holders in enforcing any rights under the Note Guarantees. Each Note Guarantee will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Note Guarantor without rendering the Note Guarantee, as it relates to such Note Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. After the Closing Date, the Company will cause (1) each Domestic Subsidiary, other than a Domestic Subsidiary the only activity of which is to participate in a Receivables Facility, and (2) each Foreign Subsidiary that enters into a Guarantee of any Senior Indebtedness (other than a Foreign Subsidiary that Guarantees Senior Indebtedness Incurred by another Foreign Subsidiary), to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary will Guarantee payment of the Notes to the extent described in "Certain covenants--Future note guarantors and release of note guarantees" below. A Note Guarantor will be released from its obligations under the Indenture, the Note Guarantee and the registration rights agreement if (x) the Company designates such Note Guarantor as an Unrestricted Subsidiary and such designation complies with the other applicable provisions of the Indenture or (y) such Subsidiary is sold in accordance with the Indenture. See "Certain covenants--Future note guarantors and release of note guarantees." The obligations of a Note Guarantor under its Note Guarantee are senior subordinated obligations. As such, the rights of Holders to receive payment by a Note Guarantor pursuant to its Note Guarantee will be subordinated in right of payment to the rights of holders of Senior Indebtedness of such Note Guarantor. The terms of the subordination provisions described above with respect to the Company's obligations under the Notes apply equally to a Note Guarantor and the obligations of such Note Guarantor under its Note Guarantee. 87 Each Note Guarantee is a continuing guarantee and shall (a) remain in full force and effect until payment in full of all the Guaranteed Obligations, (b) be binding upon each Note Guarantor and its successors and (c) inure to the benefit of, and be enforceable by, the Trustee, the Holders and their successors, transferees and assigns. CHANGE OF CONTROL Upon the occurrence of any of the following events (each a "Change of Control"), each Holder will have the right to require the Company to purchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest, including Additional Interest, if any, due on the relevant interest payment date); provided, however, that notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to purchase the Notes pursuant to this section in the event that it has mailed the notice to exercise its right to redeem all the Notes under the terms of the section titled "Optional redemption" at any time prior to the requirement to consummate the Change of Control and redeem the Notes in accordance with such notice: (1) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company or Holding, whether as a result of issuance of securities of Holding or the Company, any merger, consolidation, liquidation or dissolution of Holding or the Company, any direct or indirect transfer of securities by any Permitted Holder or otherwise; (2) the sale, lease or transfer, in one transaction or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, to a "person" (as defined above) other than one or more Permitted Holders; (3) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Company or Holding, as the case may be (together with any new directors whose election by such board of directors of the Company or Holding, as the case may be, or whose nomination for election by the shareholders of the Company or Holding, as the case may be, was approved by a vote of a majority of the directors of the Company or Holding, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), and any directors who are designees of a Principal or a Related Party of a Principal or were nominated by a Principal or a Related Party of a Principal, cease for any reason to constitute a majority of the board of directors of the Company or Holding, as the case may be, then in office; or (4) the merger or consolidation of the Company or Holding with or into another Person or the merger of another Person with or into the Company or Holding, other than, in each case, a transaction following which securities that represented at least a majority of the voting power of the Voting Stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) constitute at least a majority of the voting power of the Voting Stock of the surviving Person. 88 In the event that at the time of such Change of Control the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to this covenant, then prior to the mailing of the notice to Holders provided for in the immediately following paragraph but in any event within 30 days following any Change of Control, the Company shall: (1) repay in full all Bank Indebtedness or, if doing so will allow the purchase of Notes, offer to repay in full all Bank Indebtedness and repay the Bank Indebtedness of each lender who has accepted such offer, or (2) obtain the requisite consent under the agreements governing the Bank Indebtedness to permit the repurchase of the Notes as provided for in the immediately following paragraph. Within 30 days following any Change of Control, or, at the Company's option, prior to such Change of Control but after it is publicly announced, the Company shall mail a notice to each Holder with a copy to the Trustee (the "Change of Control Offer") stating: (1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase all or a portion of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest, including Additional Interest, if any, on the relevant interest payment date); (2) the circumstances and relevant facts and financial information regarding such Change of Control; (3) the purchase date (which shall be no earlier than the greater of (x) 30 days and (y) the Change of Control date and no later than 60 days from the date such notice is mailed); (4) that the Change of Control Offer is conditioned on the Change of Control occurring if the notice is mailed prior to a Change of Control; and (5) the instructions determined by the Company, consistent with this covenant, that a Holder must follow in order to have its Notes purchased. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the purchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof. The Change of Control purchase feature is a result of negotiations between the Company and the initial purchasers of the outstanding notes. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinanc- 89 ings or recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of indebtedness outstanding at such time or otherwise affect the Company's capital structure or credit ratings. Restrictions on the ability of the Company to Incur additional Indebtedness are contained in the covenant described under "--Limitation on indebtedness." Such restrictions can only be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenant, however, the Indenture will not contain any covenants or provisions that may afford Holders protection in the event of a highly leveraged transaction. The occurrence of certain of the events which would constitute a Change of Control would constitute a default under the Credit Agreement. Future Senior Indebtedness of the Company may contain prohibitions of certain events which would constitute a Change of Control or require such Senior Indebtedness to be repurchased or repaid upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Company to purchase the Notes could cause a default under such Senior Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company's ability to pay cash to the Holders upon a purchase may be limited by the Company's then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. The provisions under the Indenture relative to the Company's obligation to make an offer to purchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes. CERTAIN COVENANTS The Indenture will contain covenants including, among others, the following: LIMITATION ON INDEBTEDNESS. (a) The Company will not, and will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company or any Restricted Subsidiary that is a Note Guarantor may Incur Indebtedness (including any Receivables Facility) if, on the date of such Incurrence and after giving effect thereto the Consolidated Coverage Ratio would be greater than 2:1. (b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness: (1) Indebtedness in an aggregate principal amount Incurred pursuant to any Credit Facility and Indebtedness in an aggregate amount outstanding under any Receivables Facility which together do not exceed $555.0 million less the aggregate amount of all mandatory repayments of the principal of any term Indebtedness under the Credit Agreement that have been made by the Company or any of its Restricted Subsidiaries since the date of the Indenture with the Net Available Cash of an Asset Disposition pursuant to clause (a)(3)(A) of "Certain covenants--Limitation on sales of assets and subsidiary stock"; provided, however, that Indebtedness in excess of $505.0 million may be Incurred only if at the time of Incurrence (or at the time of any other Incurrence of Indebtedness pursuant to this clause (1) in excess of $505.0 million) the Company receives an amount equal to such excess in cash from the issue or sale of Capital Stock (other than Disqualified Stock) or from other capital contributions; (2) Indebtedness of the Company owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Company or any Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital 90 Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof, (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and (C) if a Restricted Subsidiary that is a Note Guarantor is the obligor on such Indebtedness and such Indebtedness is owed to and held by a Restricted Subsidiary that is not a Note Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of such Restricted Subsidiary with respect to its Note Guarantee; (3) Indebtedness (A) represented by the Notes (not including any Additional Notes) and the Note Guarantees, (B) represented by the exchange Notes to be issued in exchange for the Notes pursuant to the registration rights agreement, (C) outstanding on the Closing Date (other than the Indebtedness described in clauses (1) and (2) above), (D) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (3) or the foregoing paragraph (a) (including in any such case Indebtedness that is Refinancing Indebtedness) and (E) consisting of Guarantees of any Indebtedness permitted under the foregoing paragraph (a) or this paragraph (b); (4) Indebtedness (A) in respect of workers' compensation self-insurance obligations, indemnities, performance bonds, bankers' acceptances, letters of credit and surety, appeal or similar bonds provided by the Company and the Restricted Subsidiaries in the ordinary course of their business and in any such case any reimbursement obligations in connection therewith, (B) under Interest Rate Agreements entered into for bona fide hedging purposes of the Company in the ordinary course of business; provided, however, that such Interest Rate Agreements do not increase the Indebtedness of the Company outstanding at any time other than as a result of fluctuations in interest rates or by reason of fees, indemnities and compensation payable thereunder, (C) under any Currency Agreements; provided that such agreements are designed to protect the Company or its Subsidiaries against fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable under Currency Agreements or (D) under any Commodity Price Protection Agreements; provided that such agreements are designed to protect the Company or its Subsidiaries against fluctuations in commodity prices or by reason of fees, indemnities and compensation payable under such Commodity Price Protection Agreements; (5) Purchase Money Indebtedness and Capitalized Lease Obligations in an aggregate principal amount not in excess of $30.0 million at any time outstanding; (6) Indebtedness of any Foreign Subsidiary in an aggregate principal amount which does not exceed $15.0 million plus any Indebtedness of a Foreign Subsidiary existing at the time it is acquired by the Company and not Incurred in contemplation thereof, so long as after giving effect to such acquisition, the Company could Incur $1.00 of additional Indebtedness under paragraph (a) of this covenant; (7) obligations arising from agreements by the Company or a Restricted Subsidiary to provide for indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations or from guarantees or letters of credit, surety bonds or performance bonds securing any obligation of the Company or a Restricted Subsidiary 91 pursuant to such an agreement, in each case, Incurred in connection with the acquisition or disposition of any business, assets or Capital Stock of a Restricted Subsidiary; (8) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided that any subsequent transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of Preferred Stock; (9) Indebtedness of the Company and any Restricted Subsidiary to the extent the net proceeds thereof are promptly deposited to defease the Notes as described below under "Defeasance;" (10) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection or overdraft protection in the ordinary course of business; and (11) Indebtedness (other than Indebtedness permitted to be Incurred pursuant to the foregoing paragraph (a) or any other clause of this paragraph (b)) in an aggregate principal amount on the date of Incurrence that, when added to all other Indebtedness Incurred pursuant to this clause (11) and then outstanding, will not exceed $30.0 million. (c) The Company may not Incur any Indebtedness if such Indebtedness is subordinate in right of payment to any Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security will not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. The Company may not Incur any Secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to the Notes) such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A Note Guarantor may not Incur any Indebtedness if such Indebtedness is by its terms expressly subordinate in right of payment to any Senior Indebtedness of such Note Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of such Note Guarantor or is expressly subordinated in right of payment to Senior Subordinated Indebtedness of such Note Guarantor. Unsecured Indebtedness is not deemed to be subordinate in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security will not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. A Note Guarantor may not Incur any Secured Indebtedness that is not Senior Indebtedness of such Note Guarantor unless contemporaneously therewith effective provision is made to secure the Note Guarantee of such Note Guarantor equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to such Note Guarantee) such Secured Indebtedness for as long as such Secured Indebtedness is secured by a Lien. (d) For purposes of determining compliance with this covenant: (1) Indebtedness Incurred pursuant to the Credit Agreement prior to or on the Closing Date shall be treated as Incurred pursuant to clause (1) of paragraph (b) above; 92 (2) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; (3) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant, the Company, in its sole discretion, shall classify such Indebtedness on the date of Incurrence and shall later be permitted to reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant, and only be required to include the amount of such Indebtedness in one of such clauses; (4) for purpose of determining compliance with any dollar-denominated restriction on the Incurrence of Indebtedness, denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness Incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was Incurred, and any such foreign denominated Indebtedness may be refinanced or replaced, or subsequently refinanced or replaced, in an amount equal to the dollar-equivalent principal amount of such Indebtedness on the date of such refinancing or replacement whether or not such amount is greater or less than the dollar equivalent principal amount of the Indebtedness on the date of initial Incurrence; (5) if Indebtedness is secured by a letter of credit that serves only to secure such Indebtedness, then the total amount deemed Incurred shall be equal to the greater of (x) the principal of such Indebtedness and (y) the amount that may be drawn under such letter of credit; and (6) the amount of Indebtedness issued at a price less than the amount of the liability thereof shall be determined in accordance with GAAP. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to: (1) declare or pay any dividend, make any distribution on or in respect of its Capital Stock or make any similar payment on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any Subsidiary of the Company) to the direct or indirect holders of its Capital Stock, except (x) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock or Preferred Stock) or in options, warrants or rights to purchase such Capital Stock and (y) dividends or distributions payable to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or other Restricted Subsidiaries, to its other shareholders on a pro rata basis), (2) purchase, repurchase, redeem, retire or otherwise acquire for value any Capital Stock of Holding, the Company or any Restricted Subsidiary held by Persons other than the Company or a Restricted Subsidiary, (3) purchase, repurchase, redeem, retire, defease or otherwise acquire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment any Subordinated Obligations, except a purchase, repurchase, redemption, retirement, defeasance or acquisition within one year of the final maturity thereof, or (4) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, retirement, 93 or other acquisition or Investment set forth in these clauses (1) through (4) being herein referred to as a "Restricted Payment") if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (A) a Default will be continuing (or would result therefrom); (B) the Company could not Incur at least $1.00 of additional Indebtedness under paragraph (a) of the covenant described under "--Limitation on indebtedness"; or (C) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination will be conclusive and delivered to the Trustee and evidenced by a resolution of the Board of Directors) declared or made subsequent to the Closing Date would exceed the sum, without duplication, of: (i) 50% of the sum of Consolidated Net Income and Consolidated Step-Up Depreciation and Amortization accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter in which the Closing Date occurs to the end of the most recent fiscal quarter for which financial statements are available (or, in case such Consolidated Net Income will be a deficit, minus 100% of such deficit); (ii) 100% of the aggregate Net Cash Proceeds and Fair Market Value of property or assets (other than Indebtedness and Capital Stock, except that Capital Stock of a Person that is or becomes a Restricted Subsidiary shall be valued in accordance with the Company's interest in the Fair Market Value of such Person's property and assets, exclusive of goodwill or any similar intangible asset) received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or from other capital contributions subsequent to the Closing Date (other than an issuance or sale (x) to a Subsidiary of the Company, (y) to an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries with respect to amounts funded or guaranteed by the Company or (z) in exchange for the proceeds of loans or advances made pursuant to clause (17) under the definition "Permitted Investment"); (iii) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Closing Date of any Indebtedness of the Company or its Restricted Subsidiaries issued after the Closing Date which is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); (iv) the amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from (x) payments of dividends, repayments of the principal of loans or advances or other transfers of assets to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries or (y) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investment"); (v) the net reduction in any Investment (other than a Permitted Investment) that was made after the date of the Indenture resulting from payments of dividends, 94 repayments of the principal of loans or advances or other transfers of assets to the Company or any Restricted Subsidiary and the cash return of capital with respect to any Investment (other than a Permitted Investment); and (vi) any amount which previously qualified as a Restricted Payment on account of any Guarantee entered into by the Company or any Restricted Subsidiary; provided that such Guarantee has not been called upon and the obligation arising under such Guarantee no longer exists. (b) The provisions of the foregoing paragraph (a) will not prohibit: (1) any purchase, repurchase, redemption, retirement or other acquisition for value of Capital Stock of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries with respect to amounts funded or guaranteed by the Company); provided, however, that: (A) such purchase, repurchase, redemption, retirement or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments, and (B) the Net Cash Proceeds from such sale applied in the manner set forth in this clause (1) will be excluded from the calculation of amounts under clause (4)(C)(ii) of paragraph (a) above; (2) any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Subordinated Obligations or Capital Stock (other than Disqualified Stock) of the Company that is permitted to be Incurred pursuant to the covenant described under "--Limitation on indebtedness"; provided, however, that: (A) such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments; and (B) the Net Cash Proceeds from such sale applied in the manner set forth in this clause (2) will be excluded from the calculation of amounts under clause (4)(C)(ii) of paragraph (a) above to the extent Capital Stock is used in such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value; (3) any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations from Net Available Cash to the extent permitted by the covenant described under "--Limitation on sales of assets and subsidiary stock"; provided, however, that such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments; (4) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividends would have complied with this covenant; provided, however, that such dividends will be included in the calculation of the amount of Restricted Payments; 95 (5) any payment of dividends, other distributions or other amounts by the Company for the purposes set forth in clauses (A) through (C) below; provided, however, that such dividend, distribution or other amount set forth in clauses (A) and (B) will be excluded and in clause (C) will be included in the calculation of the amount of Restricted Payments: (A) to Holding in amounts equal to the amounts required for Holding to pay franchise taxes and other fees required to maintain its corporate existence and provide for other operating costs of up to $1.0 million per fiscal year; (B) to Holding in amounts equal to amounts required for Holding to pay federal, state, local and foreign income taxes to the extent such income taxes are attributable to the income of the Company and its Restricted Subsidiaries (and, to the extent of amounts actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries) or otherwise in accordance with the Tax Sharing Agreement as in effect on the date of the Indenture, as the same may be amended from time to time to add additional Subsidiaries or in a manner not materially less favorable to the Holders of the Notes; (C) to Holding in amounts equal to amounts expended by Holding to purchase, repurchase, redeem, retire or otherwise acquire for value Capital Stock of Holding owned by employees, former employees, directors or former directors, consultants or foreign consultants of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, directors or former directors, consultants or foreign consultants); provided, however, that the aggregate amount paid, loaned or advanced to Holding pursuant to this clause (C) will not, in the aggregate, exceed $2.5 million per fiscal year of the Company, plus any amounts contributed by Holding to the Company as a result of sales of shares of Capital Stock to employees, directors and consultants, plus the net proceeds of any key person life insurance received by the Company after the date of the Indenture; (6) the repurchase of any Subordinated Obligation or Disqualified Stock of the Company at a purchase price not greater than 101% of the principal amount or liquidation preference of such Subordinated Obligation or Disqualified Stock in the event of a Change of Control pursuant to a provision similar to "Change of Control"; provided that prior to consummating any such repurchase, the Company has made the Change of Control Offer required by the Indenture and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; provided, however, that such repurchase will be included in the calculation of the amount of Restricted Payments; (7) the repurchase of any Subordinated Obligation or Disqualified Stock of the Company at a purchase price not greater than 100% of the principal amount or liquidation preference of such Subordinated Obligation or Disqualified Stock in the event of an Asset Sale pursuant to a provision similar to the "--Limitation on sales of assets and subsidiary stock" covenant; provided that prior to consummating any such repurchase, the Company has made the Asset Sale Offer required by the Indenture and has repurchased all Notes validly tendered for payment in connection with such Asset Sale Offer; provided, however, that such repurchase will be included in the calculation of the amount of Restricted Payments; (8) repurchases of Capital Stock deemed to occur upon exercise of stock options to the extent that shares of such Capital Stock represent a portion of the exercise price of such options; provided, however, that such repurchases will be excluded in the calculation of the amount of Restricted Payments; 96 (9) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Company or Preferred Stock of its Restricted Subsidiaries issued or Incurred in accordance with the covenant "--Limitation on indebtedness"; provided, however, that such declaration and payment of dividends or distributions to holders will be excluded in the calculation of the amount of Restricted Payments; (10) any of the transactions completed in connection with the Acquisition and the financing thereof; provided, however, that such transactions will be excluded in the calculation of the amount of Restricted Payments; (11) any purchase, redemption, retirement or other acquisition for value of Disqualified Stock of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Disqualified Stock of the Company; provided that any such new Disqualified Stock is issued in accordance with paragraph (a) of the covenant "--Limitation on indebtedness" and has an aggregate liquidation preference that does not exceed the aggregate liquidation preference of the amount so refinanced; provided, however, such purchase, repurchase, redemption, retirement or other acquisition for value will be excluded in the calculation of the amount of Restricted Payments; or (12) other Restricted Payments in an aggregate amount not to exceed $15.0 million since the date of the Indenture; provided, however, that such other Restricted Payments will be included in the calculation of the amount of Restricted Payments. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the assets) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant will be determined by the Board of Directors whose resolution with respect thereto will be conclusive and delivered to the Trustee and evidenced by a resolution of the Board of Directors. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company; (2) make any loans or advances to the Company; or (3) transfer any of its property or assets to the Company, except: (A) any encumbrance or restriction pursuant to applicable law; (B) any encumbrance or restriction in any agreement with respect to Indebtedness (including the Credit Agreement) as in effect or entered into on the Closing Date, and any amendments, modifications, restatements, renewals, extensions, replacements Andre financings thereof on terms and conditions with respect to such encumbrances and restrictions that are not materially more restrictive, taken as a whole, than those encumbrances and restrictions with respect to such Indebtedness as in effect on the date of the Indenture; 97 (C) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in or in contemplation of, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company) and outstanding on such date; (D) any encumbrance or restriction pursuant to an agreement for the sale or other disposition of a Restricted Subsidiary or assets that restrict distributions by that Restricted Subsidiary or distributions of those assets pending the sale or other disposition; (E) any encumbrance or restriction existing by reason of provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements; (F) any encumbrance or restriction existing by reason of restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (G) any encumbrance or restriction existing by reason of restrictions on the transfer of assets that are the subject of a Capitalized Lease Obligation permitted under "--Limitation on indebtedness"; (H) in the case of clause (3), any encumbrance or restriction (i) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, (ii) contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or (iii) pursuant to Purchase Money Indebtedness for property acquired in the ordinary course of business that imposes restrictions on that property; (I) encumbrances or restrictions that are or were created by virtue of any transfer of, agreement to transfer, or option or right with respect to any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture; (J) encumbrances and restrictions contained in Indebtedness of Foreign Subsidiaries permitted pursuant to the covenant described under "--Limitation on indebtedness" or industrial revenue or similar bonds Incurred by the Company or any Restricted Subsidiary and permitted pursuant to the covenant described under "--Limitation on indebtedness"; (K) encumbrances or restrictions contained in indentures or other debt instruments, facilities or arrangements that are not materially more restrictive, taken as a whole, than those contained in the Indenture governing the Notes or the Credit Agreement on the date of the Indenture; (L) encumbrances and restrictions on the date of the Acquisition (and not Incurred in contemplation thereof) with respect to any assets or other property acquired by the 98 Company or any Restricted Subsidiary (including pursuant to the acquisition of the Capital Stock of a Person); (M) customary restrictions imposed on the transfer of, or in licenses related to, copyrighted or patented materials or other intellectual property and customary provisions in agreements that restrict the assignment of such agreements or any rights thereunder or the use of any such rights; (N) customary restrictions on real property interests set forth in easements and similar arrangements of the Company or any Restricted Subsidiary; (O) any encumbrance or restriction existing under or by reason of a Receivables Facility or other contractual requirements of a Receivables Facility permitted pursuant to the covenant described under "--Limitation on indebtedness"; provided that such restrictions apply only to such Receivables Facility; and (P) any encumbrance or restriction pursuant to (x) an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clauses (A) through (P) of this covenant or contained in any amendment, modification or replacement to an agreement referred to in clauses (A) through (P) of this covenant, in each case as applicable; provided, however, that the encumbrances and restrictions contained in any such Refinancing agreement or amendment, modification or replacement are no less favorable to the Holders taken as a whole than the encumbrances and restrictions contained in such predecessor agreements or (y) any Credit Facility which is no less favorable to the Holders taken as a whole than the encumbrances contained in the Credit Agreement on the date of the Indenture. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the Fair Market Value of the shares and assets subject to such Asset Disposition, (2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents, and (3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (A) first, to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, purchase, repurchase, redeem, retire, defease or otherwise acquire for value (i) Senior Indebtedness of the Company or Senior Indebtedness (other than obligations in respect of Preferred Stock) of a Restricted Subsidiary or (ii) any Indebtedness of a non-guarantor Restricted Subsidiary only if the assets sold were of a non-guarantor Restricted Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company and other than obligations in respect of Disqualified Stock), in each case, within 365 days after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (B) second, to the extent of the balance of Net Available Cash after application in accordance with clause (A), to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in 99 Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 365 days from the later of such Asset Disposition or the receipt of such Net Available Cash or pursuant to arrangements in place within the 365-day period; (C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) and (B), to make an Offer (as defined in paragraph (b) of this covenant below) to purchase Notes pursuant to and subject to the conditions set forth in paragraph (b) of this covenant; provided, however, that if the Company elects (or is required by the terms of any other Senior Subordinated Indebtedness), such Offer may be made ratably to purchase the Notes and other Senior Subordinated Indebtedness of the Company, and (D) fourth, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A), (B) and (C), for any general corporate purpose not restricted by the terms of the Indenture; provided, however that in connection with any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Indebtedness pursuant to clause (A) above, the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid, purchased, repurchased, redeemed, retired, defeased or otherwise acquired for value. Pending the final application of the Net Available Cash, the Company and its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest the Net Available Cash in any manner that is not prohibited by the Indenture. Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this covenant exceeds $5.0 million. For the purposes of this covenant, the following are deemed to be cash: - the assumption of Indebtedness of the Company (other than obligations in respect of Disqualified Stock of the Company) or any Restricted Subsidiary (other than obligations in respect of Disqualified Stock and Preferred Stock of a Restricted Subsidiary that is a Note Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; - any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in the Asset Disposition; and - securities or other obligations received by the Company or any Restricted Subsidiary from the transferee that are (subject to ordinary settlement periods) converted, sold or exchanged within 30 days of receipt by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion, sale or exchange). In the case of an Asset Swap constituting part of an Asset Disposition, the Company or any such Restricted Subsidiary shall only be required to receive cash in an amount equal to at least 75% of the proceeds of the Asset Disposition which are not received in connection with the Asset Swap. 100 (b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to clause (a)(3)(C) of this covenant, the Company will be required (i) to purchase Notes tendered pursuant to an offer by the Company for the Notes (the "Offer") at a purchase price of 100% of their principal amount plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase (subject to the right of Holders of record on the relevant date to receive interest due on the relevant interest payment date) in accordance with the procedures (including prorating in the event of oversubscription) set forth in the Indenture and (ii) to purchase other Senior Subordinated Indebtedness of the Company on the terms and to the extent contemplated thereby (provided that in no event shall the Company offer to purchase such other Senior Subordinated Indebtedness of the Company at a purchase price in excess of 100% of its principal amount, plus accrued and unpaid interest thereon). If the aggregate purchase price of Notes (and other Senior Subordinated Indebtedness) tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of the Notes (and other Senior Subordinated Indebtedness), the Company will apply the remaining Net Available Cash in accordance with clause (a)(3)(D) of this covenant. The Company will not be required to make an Offer for Notes (and other Senior Subordinated Indebtedness) pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (a)(3)(A) and (B)) is less than $5.0 million for any particular Asset Disposition (which lesser amount will be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). (c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of any covenant of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue thereof. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless such transaction is on terms: (1) that are no less favorable, taken as a whole, to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, (2) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $5.0 million, (A) are set forth in writing, and (B) have been approved in good faith by a majority of the members of the Board of Directors and, (3) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $20.0 million, (A) are set forth in writing, and (B) have either (x) been approved in good faith by a majority of the members of the Board of Directors or (y) have been determined by a recognized appraisal or investment 101 banking firm to be fair, from a financial standpoint, to the Company and its Restricted Subsidiaries. (b) The provisions of the foregoing paragraph (a) will not prohibit or restrict: (1) any Restricted Payment or Investment permitted to be made pursuant to the covenant described under "--Limitation on restricted payments," (2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors, (3) the grant of stock options or similar rights to employees, directors and consultants of the Company pursuant to plans approved by the Board of Directors, (4) loans or advances to employees in the ordinary course of business (or guarantees in respect thereof or otherwise made on their behalf (including payment on any such guarantees)), but in any event not to exceed $3.0 million in the aggregate outstanding at any one time, plus any amounts loaned pursuant to clause (17) under the definition of "Permitted Investment," (5) the payment of reasonable fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company and its Subsidiaries, (6) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries, (7) any transaction effected in connection with a Receivables Facility permitted under the covenant "--Limitation on indebtedness," (8) any redemption of Capital Stock held by current or former employees, directors or consultants upon death, disability or termination of employment at a price not in excess of the Fair Market Value thereof or pursuant to the terms of any agreement entered into in accordance with the Indenture with such Person, (9) sales or issuances of Capital Stock (other than Disqualified Stock) to Affiliates of the Company, (10) transactions involving the Company or any of its Restricted Subsidiaries, on the one hand, and J.P. Morgan Securities Inc. or Goldman Sachs & Co. or any of their respective affiliates, on the other hand, in connection with the Acquisition and transactions related thereto, Bank Indebtedness and any amendment, modification, supplement, extension, refinancing, replacement, work-out, restructuring and other transactions related thereto, or any management, financial advisory, financing, underwriting or placement services or any other investment banking, banking or similar services, which payments are approved by a majority of the Board of Directors in good faith, (11) transactions pursuant to the Stockholders' Agreement as in effect on the date of the Indenture as the same may be amended from time to time in any manner not materially less favorable taken as a whole to the Holders of the Notes, (12) transactions pursuant to any agreement disclosed in the Offering Memorandum, including any agreement entered into in connection with the Acquisition, as in effect on the date of the Indenture as the same may be amended from time to time in any manner not materially less favorable taken as a whole to the Holders of the Notes, 102 (13) any employment, compensation or indemnification agreements entered into by the Company or any of its Restricted Subsidiaries, in the ordinary course of business with employees, directors, or consultants, or (14) sales of inventory or other product to any Affiliate in the ordinary course of business. SEC REPORTS. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the SEC (unless the SEC will not accept such a filing) and provide the Trustee and Holders and prospective Holders (upon request) within 15 days after it files them with the SEC, copies of its annual report and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act. The Company also will comply with the other provisions of Section 314(a) of the TIA. FUTURE NOTE GUARANTORS AND RELEASE OF NOTE GUARANTEES. (a) The Company will cause (1) each Domestic Subsidiary, other than a Domestic Subsidiary the only activity of which is to participate in a Receivables Facility, and (2) each Foreign Subsidiary that enters into a Guarantee of any Senior Indebtedness (other than a Foreign Subsidiary that Guarantees Senior Indebtedness Incurred by another Foreign Subsidiary), to become a Note Guarantor, and if applicable, execute and deliver to the Trustee a supplemental indenture in the form set forth in the Indenture pursuant to which such Subsidiary will Guarantee payment of the Notes; provided that this covenant shall not apply to any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with the Indenture. Each Note Guarantee will be limited to an amount not to exceed the maximum amount that can be Guaranteed by that Note Guarantor, without rendering the Note Guarantee, as it relates to such Note Guarantor voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (b) The Note Guarantee of a Note Guarantor will be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Note Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with the "Asset Sale" provisions of the Indenture; (2) in connection with any sale of Capital Stock of a Note Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale complies with the "Asset Sale" provisions of the Indenture; (3) if the Company designates any Restricted Subsidiary that is a Note Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture; or (4) if the Note Guarantor participates in a Receivables Facility and such participation is such Note Guarantor's only on-going activity. MERGER AND CONSOLIDATION The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets, in one or more related transactions, to, any Person, unless: (1) the resulting, surviving or transferee Person (the "Successor Company") will be a corporation, limited liability company, trust, partnership or similar entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) will expressly assume, by a 103 supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indenture; provided that if the Successor Company is not a corporation, the Notes will also be assumed by a corporate co-obligor; (2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (3) immediately after giving effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness under paragraph (a) of the covenant described under "--Limitation on indebtedness"; and (4) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture, but the predecessor Company in the case of a lease of all or substantially all its assets will not be released from the obligation to pay the principal of and interest on the Notes. In addition, the Company will not permit any Note Guarantor to consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any Person unless: (1) the resulting, surviving or transferee Person (the "Successor Guarantor") will be a corporation, limited liability company, trust, partnership or similar entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such Person (if not such Note Guarantor) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of such Note Guarantor under its Note Guarantee; (2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Guarantor or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and (3) the Company will have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture. Notwithstanding the foregoing: (A) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or any Restricted Subsidiary and (B) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. 104 DEFAULTS Each of the following is an Event of Default: (1) a default in any payment of interest on any Note when due and payable or in any payment of Additional Interest whether or not prohibited by the provisions described under "Ranking" above, continued for 30 days, (2) a default in the payment of principal of any Note when due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise, whether or not such payment is prohibited by the provisions described under "Ranking" above, (3) the failure by the Company or any Note Guarantor to comply with its obligations under the covenant described under "Merger and consolidation" above, (4) the failure by the Company or any Restricted Subsidiary to comply for 60 days after notice with any of its obligations under the covenants described under "Change of Control" or "Certain covenants" above (in each case, other than a failure to purchase Notes), (5) the failure by the Company or any Restricted Subsidiary to comply for 60 days after notice with its other agreements contained in the Notes, the Indenture or the Note Guarantees, (6) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the total amount of such Indebtedness unpaid or accelerated exceeds $20.0 million or its foreign currency equivalent (the "cross acceleration provision"), (7) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the "bankruptcy provisions"), (8) the rendering of any judgment or decree for the payment of money in excess of $20.0 million or its foreign currency equivalent (net of any amounts covered by insurance) against the Company or a Significant Subsidiary if such judgment or decree remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the "judgment default provision") or (9) any Note Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof) or any Significant Subsidiary Note Guarantor or Person acting by or on behalf of such Significant Subsidiary Note Guarantor denies or disaffirms such Significant Subsidiary Note Guarantor's obligations under the Indenture or any Significant Subsidiary Note Guarantee and such Default continues for 10 days after receipt of the notice specified in the Indenture. The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. However, a default under clauses (4), (5) or (6) will not constitute an Event of Default until the Trustee notifies the Company or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company and the Trustee of the default and the Company or the 105 Note Guarantor, as applicable, does not cure such default within the time specified in clauses (4), (5) or (6) hereof after receipt of such notice. If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless: (1) such Holder has previously given the Trustee notice that an Event of Default is continuing, (2) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (3) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (5) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes will be given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note (including payments pursuant to the redemption provisions of such Note), the Trustee may 106 withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders. In addition, the Company will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company will also be required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Events of Default, their status and what action the Company is taking or proposes to take in respect thereof. AMENDMENTS AND WAIVERS Subject to certain exceptions, the Indenture, the Notes or the Note Guarantees may be amended with the written consent of the Holders of a majority in principal amount of the Notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. However, without the consent of each Holder of an outstanding Note affected, no amendment may, among other things: (1) reduce the amount of Notes whose Holders must consent to an amendment, (2) reduce the rate of or extend the time for payment of interest, including Additional Interest, if any, on any Note, (3) reduce the principal of or extend the Stated Maturity of any Note, (4) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under "Optional redemption" above, (5) make any Note payable in money other than that stated in the Note, (6) make any change to the subordination provisions of the Indenture that adversely affects the rights of any Holder, (7) impair the right of any Holder to receive payment of principal of, and interest, including Additional Interest, if any, on, such Holder's Notes on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes, (8) make any change in the amendment provisions which require each Holder's consent or in the waiver provisions or (9) release the Note Guarantees, other than in accordance with the Indenture, or modify the Note Guarantees in any manner adverse to the Holders. Without the consent of any Holder, the Company, the Note Guarantors and the Trustee may amend the Indenture, the Notes or the Note Guarantees to: - cure any ambiguity, omission, defect or inconsistency, - provide for the assumption by a successor of the obligations of the Company under the Indenture, - provide for uncertificated Notes in addition to or in place of certificated Notes (provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code), 107 - to make any change in the subordination provisions of the Indenture that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Note Guarantor (or any Representative thereof under such subordination provisions, - add additional Guarantees with respect to the Notes, - secure the Notes, - add to the covenants of the Company or provide any additional rights or benefits to the Holders or to surrender any right or power conferred upon the Company, - make any change that does not adversely affect the rights of any Holder, - provide for the issuance of the Exchange Notes or Additional Notes, - comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA or - to evidence and provide the acceptance of the appointment of a successor Trustee under the Indenture. However, no amendment may be made to the subordination provisions of the Indenture that adversely affects the rights of any holder of Senior Indebtedness of the Company or a Note Guarantor then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change. The consent of the Holders will not be necessary to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment. After an amendment becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment. TRANSFER AND EXCHANGE A Holder will be able to transfer or exchange Notes. Upon any transfer or exchange, the registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes required by law or permitted by the Indenture. The Company will not be required to transfer or exchange any Note selected for redemption or to transfer or exchange any Note for a period of 15 days prior to a selection of Notes to be redeemed. The Notes will be issued in registered form and the Holder will be treated as the owner of such Note for all purposes. DEFEASANCE The Company may at any time terminate all its obligations under the Notes and the Indenture ("legal defeasance"), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. 108 In addition, the Company may at any time terminate: (1) its obligations under the covenants described under "Certain covenants," (2) the operation of the covenant default provisions, cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries and the judgment default provision described under "Defaults" above and the limitations contained in clauses (3) and (4) under the first paragraph of "Merger and consolidation" above ("covenant defeasance"). In the event that the Company exercises its legal defeasance option or its covenant defeasance option, each Note Guarantor will be released from all of its obligations with respect to its Note Guarantee. The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (3), (4), (6) or (7) (with respect only to Significant Subsidiaries), (8) or (9) under "Defaults" above or because of the failure of the Company to comply with clause (3) or (4) under the first paragraph of "Merger and consolidation" above. In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the "defeasance trust") with the Trustee money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which will be sufficient, or a combination thereof sufficient, to pay the principal of, premium, if any, and interest (including Additional Interest) on, if any, in respect of the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable federal income tax law). CONCERNING THE TRUSTEE U.S. Bank Trust National Association is to be the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes. GOVERNING LAW The Indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company, as such, shall have any liability for any obligations of the Company under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and 109 release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. SATISFACTION AND DISCHARGE The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (1) either (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid, have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Note Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination of cash in U.S. dollars and non-callable U.S. Government Obligations, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued and unpaid interest (including Additional Interest), if any, to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of the deposit; (3) the Company or any Note Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and (4) the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, in the case of paragraph (b) above, (i) the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied and (ii) the Company's obligations that would survive legal defeasance will remain outstanding. CERTAIN DEFINITIONS "Acquisition" means that transaction defined in the "Acquisition" section of the Offering Memorandum. "Additional Assets" means: (1) any property or assets (other than Indebtedness and Capital Stock) acquired or constructed to be used by the Company or a Restricted Subsidiary; (2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or 110 (3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the provisions described under "Certain covenants--Limitation on transactions with affiliates" and "Certain covenantsLimitation on sales of assets and subsidiary stock" only, "Affiliate" shall also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of Holding or the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Asset Disposition" means any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a "disposition"), of: (1) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary), (2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or (3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary other than, in the case of (1), (2) and (3) above, (A) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary, (B) for purposes of the provisions described under "Certain covenants--Limitation on sales of assets and subsidiary stock" only, a disposition subject to the covenant described under "--Limitation on restricted payments," (C) a disposition of assets with a Fair Market Value of less than $3.0 million, (D) transactions permitted under "Merger and consolidation," (E) an issuance of Capital Stock by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary, (F) a sale of accounts receivable and related assets pursuant to a Receivables Facility, (G) the licensing or sublicensing of intellectual property or other general intangibles to the extent that such license does not prohibit the licensor from using the intellectual property and licenses, leases or subleases of other property in the ordinary course of business, and 111 (H) any disposition in the ordinary course of business of obsolete, worn-out, surplus or other property not useful in the conduct of the business. "Asset Swap" means the exchange by the Company or a Restricted Subsidiary of a portion of its property, business or assets, for property, businesses, assets or Capital Stock of a Person (or any combination thereof, as well as cash or cash equivalents), all or substantially all of the assets of which, are of a type used in the business of the Company or of a Restricted Subsidiary. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments (excluding, however, any amounts required to be paid by such lessee, whether or not designated as rent or additional rent, on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales or similar contingent amounts) during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing: (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or scheduled redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments. "Bank Indebtedness" means (1) any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness with respect thereto, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement and indemnification obligations, guarantees and all other amounts payable thereunder or in respect thereof and (2) any Hedging Obligations of Holding, the Company or any of its Subsidiaries in favor of any holder of Indebtedness under the Credit Agreement or any Refinancing Indebtedness with respect thereto. It is understood and agreed that Refinancing Indebtedness in respect of the Credit Agreement may be Incurred from time to time after termination of the Credit Agreement. "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of the Board of Directors of the Company. "Business Day" means each day which is not a Legal Holiday. "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 any Preferred Stock, but excluding any debt securities including those convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized 112 amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Cash Equivalents" means: (1) United States dollars; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition; (3) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months from the date of acquisition and overnight bank deposits, in each case, with any lender party to the Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500.0 million; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; and (5) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), and in each case maturing within six months after the date of acquisition. "Closing Date" means the date of the Indenture. "Code" means the Internal Revenue Code of 1986, as amended. "Commodity Price Protection Agreement" means any forward contract, commodity swap, commodity option or other similar agreement or arrangement relating to, or the value of which is dependent upon or which is designed to protect such Person against, fluctuations in commodity prices. "Consolidated Coverage Ratio" as of any date of determination means the ratio of: (1) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are available to (2) Consolidated Interest Expense for such four fiscal quarters; provided, however, that: (A) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be computed based on (i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created 113 after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (B) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness, (C) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Asset Disposition for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (D) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business (including an operating plant or other similar facility), EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and (E) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (C) or (D) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be 114 calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. Any such pro forma calculations may include operating expense reductions (net of associated expenses) for such period resulting from the acquisition or other Investment which is being given pro forma effect that (a) would be permitted pursuant to Rule 11-02 of Regulation S-X under the Securities Act or (b) have been realized or for which substantially all the steps necessary for realization have been taken or at the time of determination are reasonably expected to be taken within six months following any such acquisition or other Investment, including, but not limited to, the execution, termination, renegotiation or modification of any contracts, the termination of any personnel or the closing of any facility, or lower material costs, as applicable, provided that, in any case, such adjustments shall be calculated on an annualized basis and such adjustments are set forth in an Officers' Certificate signed by the Company's chief financial officer and another Officer which states in detail (i) the amount of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such Officers' Certificate at the time of such execution and (iii) that such adjustment or adjustments and the plan or plans related thereto have been reviewed and approved by the Board of Directors. Any such Officers' Certificate will be provided to the Trustee if the Company Incurs any Indebtedness or takes any other action under the Indenture in reliance thereon. If any Indebtedness, whenever Incurred, bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Consolidated Restricted Subsidiaries, minus any amortization of debt issuance costs, plus, to the extent Incurred by the Company and its Consolidated Restricted Subsidiaries in such period but not included in such interest expense, without duplication: (1) interest expense attributable to Capitalized Lease Obligations and the interest expense attributable to leases constituting part of a Sale/Leaseback Transaction; (2) amortization of debt discount; (3) capitalized interest; (4) noncash interest expense; (5) commissions, discounts and other fees and charges attributable to letters of credit and bankers' acceptance financing; (6) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by the Company or any Restricted Subsidiary; (7) net costs associated with Hedging Obligations (including amortization of fees); (8) dividends in respect of all Disqualified Stock of the Company and all Preferred Stock of any of the Subsidiaries of the Company, to the extent held by Persons other than the 115 Company or a Wholly Owned Subsidiary (except to the extent paid in Capital Stock (other than Disqualified Stock)); (9) interest Incurred in connection with investments in discontinued operations; and (10) commissions, discounts, yield and other financing fees and financing charges Incurred in connection with any transaction (including, without limitation, a Receivables Facility) pursuant to which the Company or any Restricted Subsidiary of the Company may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets of the type specified in the definition of "Receivables Facility." For purposes of the foregoing, total interest expense will be determined after giving effect to any net proceeds paid or received by the Company and its Subsidiaries with respect to Interest Rate Agreements. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries for such period; provided, however, that there shall not be included in such Consolidated Net Income: (1) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: (A) subject to the limitations contained in clause (4) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to a Restricted Subsidiary, to the limitations contained in clause (3) below) and (B) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent such loss has been funded in such period with cash from the Company or a Restricted Subsidiary; (2) any net income (or loss) of any Person acquired by the Company or a Subsidiary of the Company in a pooling of interests transaction for any period prior to the date of such acquisition; (3) any net income (or loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: (A) subject to the limitations contained in clause (4) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; (4) any net gain or loss realized upon the sale or other disposition of any asset of the Company or its Consolidated Subsidiaries (including pursuant to any Sale/Leaseback 116 Transaction) that is not sold or otherwise disposed of in the ordinary course of business and any net gain or loss realized upon the sale or other disposition of any Capital Stock of any Person; (5) any net extraordinary gain or loss; (6) the cumulative effect of a change in accounting principles; (7) any noncash compensation charges or other noncash expenses or charges arising from the grant of or issuance or repricing of stock, stock options or other equity-based awards or any amendment, modification, substitution or change of any such stock, stock options or other equity-based awards; and (8) any non-recurring fees, charges or other expenses (including bonus and retention payments) made or incurred in connection with the Acquisition and the transactions contemplated thereby. Notwithstanding the foregoing, for the purpose of the covenant described under "--Limitation on restricted payments" only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(4)(C)(iv) thereof. "Consolidated Step-Up Depreciation and Amortization" means, with respect to any Person for any period, the total amount of depreciation and amortization related to the write-up of assets for such period on a consolidated basis in accordance with GAAP to the extent (i) such depreciation and amortization results from purchase accounting adjustments in connection with the Acquisition and (ii) such depreciation and amortization was deducted in computing Consolidated Net Income. "Consolidation" means the consolidation of the accounts of each of the Restricted Subsidiaries with those of the Company in accordance with GAAP consistently applied; provided, however, that "Consolidation" will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will be accounted for as an investment. The term "Consolidated" has a correlative meaning. "Credit Agreement" means the credit agreement dated as of the Closing Date, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), refinanced, restructured or otherwise modified from time to time, among the Company, Holding, the lenders from time to time party thereto, Goldman Sachs Credit Partners L.P., as administrative agent, JPMorgan Chase Bank, as syndication agent, Fleet National Bank, as collateral agent, issuing bank and swing line lender, and The Royal Bank of Scotland plc and General Electric Capital Corporation, as co-documentation agents. "Credit Facility" means, one or more debt facilities (including, without limitation, the Credit Agreement), commercial paper facilities or other debt instruments, indentures or agreements, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or other debt obligations, in each case, as amended, restated, modified, renewed, refunded, restructured, supplemented, replaced or refinanced in whole or in part from time to time, including, without limitation, any 117 amendment increasing the amount of Indebtedness Incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness Incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders). "Currency Agreement" means with respect to any Person any foreign exchange contract, currency swap agreements, futures contract, options contract, synthetic cap or other similar agreement or arrangement to which such Person is a party or of which it is a beneficiary for the purpose of hedging foreign currency risk. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Noncash Consideration" means the Fair Market Value of non-cash consideration received by the Company or any of its Restricted Subsidiaries in connection with an Asset Disposition that is designated as such pursuant to an Officers' Certificate. The aggregate Fair Market Value of the Designated Noncash Consideration, taken together with the Fair Market Value at the time of receipt of all other Designated Noncash Consideration then held by the Company, may not exceed $5.0 million at the time of the receipt of the Designated Noncash Consideration (with the Fair Market Value being measured at the time received and without giving effect to subsequent changes in value). "Designated Senior Indebtedness" of the Company means (1) the Bank Indebtedness and (2) any other Senior Indebtedness of the Company that, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to at least $15.0 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of the Indenture. "Designated Senior Indebtedness" of a Note Guarantor has a correlative meaning. "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event: (1) matures or is mandatorily redeemable at the option of the holder thereof, in whole or in part, pursuant to a sinking fund obligation or otherwise, (2) is convertible or exchangeable at the option of the holder thereof, in whole or in part, for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary; provided, however, that any such conversion or exchange shall be deemed an occurrence of Indebtedness or Disqualified Stock, as applicable) or (3) is redeemable at the option of the holder thereof, in whole or in part, in the case of each of clauses (1), (2) and (3), on or prior to the 91st day after the Stated Maturity of the Notes; provided, however, that only the portion of Capital Stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is redeemable at the option of the holder thereof prior to such date will be deemed Disqualified Stock and any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the 91st day 118 after the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions of the covenants described under "Change of control" and "--Limitation on sale of assets and subsidiary stock"; provided, further that any class of Capital Stock of such Person that, by its terms, authorized such Person to satisfy in full its obligations with respect to payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or other payment obligations or otherwise by delivery of Capital Stock that is not Disqualified Stock, and that is not convertible, puttable or exchangeable for Disqualified Stock or Indebtedness, shall not be deemed Disqualified Stock so long as such Person satisfied its obligations with respect thereto solely by the delivery of Capital Stock that is not Disqualified Stock. "Domestic Subsidiary" means any Restricted Subsidiary of the Company other than a Foreign Subsidiary. "EBITDA" for any period means the Consolidated Net Income for such period, plus, without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (1) income tax expense of the Company and its Consolidated Restricted Subsidiaries; (2) Consolidated Interest Expense; (3) depreciation expense of the Company and its Consolidated Restricted Subsidiaries; (4) amortization expense of the Company and its Consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid cash item that was paid in a prior period); (5) plant shutdown costs and acquisition integration costs; and (6) all other noncash charges of the Company and its Consolidated Restricted Subsidiaries (excluding any such noncash charge to the extent it represents an accrual of or reserve for cash expenditures in any future period) less all non-cash items of income (other than accrual of revenue in the ordinary course of business) of the Company and its Restricted Subsidiary in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and noncash charges of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders. "Equity Offering" means a public or private sale for cash of Capital Stock (other than Disqualified Stock). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete 119 the transaction. Fair Market Value will be determined in good faith by the Board of Directors, whose determination will be conclusive and evidenced by a resolution of the Board of Directors; provided, however, that for purposes of clause (a)(4)(C)(ii) of the covenant described under "--Limitation on restricted payments," if the Fair Market Value of the property or assets in question is so determined to be in excess of $20.0 million, such determination must be confirmed by a recognized appraisal or investment banking firm. "Foreign Subsidiary" means any Restricted Subsidiary of the Company (x) that is not organized under the laws of the United States of America or any State thereof or the District of Columbia or (y) was organized under the laws of the United States of America or any state thereof or the District of Columbia that has no material assets other than Capital Stock of one or more foreign entities of the type described in clause (x) above and is not a guarantor of Indebtedness under the Credit Agreement. "GAAP" means generally accepted accounting principles in the United States of America as in effect (i) with respect to periodic reporting requirements, from time to time, and (ii) otherwise on the Closing Date, including those set forth in: (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) statements and pronouncements of the Financial Accounting Standards Board, (3) such other statements by such other entities as approved by a significant segment of the accounting profession, and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All ratios and computations based on GAAP contained in the Indenture shall be computed in conformity with GAAP. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing any obligation. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Price Protection Agreement. 120 "Holder" means the Person in whose name a Note is registered on the Registrar's books. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security and payment of interest on any Indebtedness in the form of additional Indebtedness or the payment on Disqualified Capital Stock in the form of additional shares of Capital Stock, shall not be deemed the Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person on any date of determination, without duplication: (1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (3) the principal component of all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation arises in the ordinary course of business and relates to a Trade Payable); (4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than one year after the date of placing such property in service or taking delivery and title thereto or the completion of such services other than earn-outs, indemnities and similar provisions; (5) all Capitalized Lease Obligations and all Attributable Debt of such Person; (6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); (7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of the Person the Indebtedness of which is being determined, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of Indebtedness of such Person shall be the lesser of: (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness of such other Persons; (8) to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations of such Person (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligations that would be payable by such Person at such time); (9) all amounts outstanding and other obligations of such Person in respect of a Receivables Facility; and 121 (10) all obligations of the type referred to in clauses (1) through (9) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Notwithstanding anything in this definition to the contrary, characterization of any Receivables Facility as Indebtedness is for purposes of the Indenture covenants only, and such characterization shall not preclude the Company or any Restricted Subsidiary from characterizing any Receivables Facility as a sale for GAAP or any other purpose. "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement to which such Person is party or of which it is a beneficiary. "Investment" in any Person means any direct or indirect advance, loan (other than advances and extensions of credit to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extension of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person; provided that none of the following will be deemed to be an Investment: (1) Hedging Obligations entered into in compliance with clause (b)(4) of "Certain Covenants--Limitation on indebtedness"; and (2) endorsements of negotiable instruments and documents in the ordinary course of business. For purposes of the definition of "Unrestricted Subsidiary" and the covenant described under "--Limitation on restricted payments": (1) "Investment" shall include the portion (proportionate to the Company's equity interest in such Restricted Subsidiary) of the Fair Market Value of the net assets of any Restricted Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to: (A) the Company's "Investment" in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and 122 (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions are not required by law or regulation to be open in the State of New York. "Lien" means any mortgage, pledge, security interest, encumbrance, lien (statutory or otherwise) or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof and any agreement to give any security interest) upon or with respect to any property of any kind, real or personal, movable or immovable. "Net Available Cash" from an Asset Disposition means payments of cash or Cash Equivalents received (including any payments of cash or Cash Equivalents received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but in each case only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition, (3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (4) appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. "Net Cash Proceeds," with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, listing fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Note Guarantee" means each Guarantee of the obligations with respect to the Notes issued by a Person pursuant to the terms of the Indenture. "Note Guarantor" means any Person that has issued a Note Guarantee. "Offering Memorandum" means the offering memorandum relating to the issuance of the Notes dated July 17, 2002. 123 "Officer" means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officer" of a Note Guarantor has a correlative meaning. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company, a Note Guarantor or the Trustee. "Permitted Holders" means Principals and Related Parties and any Person acting in the capacity of an underwriter in connection with a public or private offering of the Company's or Holding's Capital Stock. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in: (1) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; (2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; (3) Temporary Cash Investments; (4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business; (5) payroll, travel, commission and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (6) loans or advances to employees, directors and consultants not exceeding $2.0 million in the aggregate outstanding at any one time; (7) loans, deposits, prepayments and other credits or advances to customers or suppliers in the ordinary course of business; (8) stock, obligations or securities received in settlement or good faith compromise of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; (9) any Person to the extent such Investment represents the noncash portion of the consideration received for an Asset Disposition that was made pursuant to and in compliance with the covenant described under "--Limitation on sales of assets and subsidiary stock"; (10) Investments in prepaid expenses, negotiable instruments held for collection and lease utility and worker's compensation, performance and other similar deposits provided to third parties in the ordinary course of business; (11) Currency Agreements, Interest Rate Agreements and Commodity Price Protection Agreements and other Hedging Obligations permitted by the Indenture that are entered into in the ordinary course of business and not for speculative purposes; 124 (12) Investments acquired in exchange for the issuance of Capital Stock (other than Disqualified Stock) of the Company or acquired with the Net Cash Proceeds received by the Company after the date of the Indenture from the issuance and sale of Capital Stock (other than Disqualified Stock); provided that such Net Cash Proceeds are used to make such Investment within 90 days of the receipt thereof and the amount of all such Net Cash Proceeds will be excluded from clause (4)(C)(ii) of paragraph (a) of the covenant described under the caption "--Limitation on restricted payments"; (13) Investments in existence on the date of the Indenture or made pursuant to a legally binding written commitment in existence on the date of the Indenture; (14) Guarantees issued in accordance with "Certain covenants--Limitation on indebtedness"; (15) Investments in a trust, limited liability company, special purpose entity or other similar entity in connection with a Receivables Facility permitted under the covenant "--Limitation on indebtedness"; provided that such Investment is necessary or advisable to effect such Receivables Facility; (16) Investments in joint ventures or similar projects by the Company and its Restricted Subsidiaries on the date of the investment in an aggregate amount not to exceed $20.0 million; (17) loans or advances to employees, directors or consultants the proceeds of which are used to purchase Capital Stock (other than Disqualified Stock) of the Company or Holding (and, with respect to purchases of the Capital Stock of Holding, the proceeds of which are paid or contributed to the Company); and (18) Indebtedness of the Company or a Restricted Subsidiary under clause (b)(2) of the covenant "--Limitation on indebtedness." For purposes of this definition, the value of any Investment will be the Fair Market Value on the date made without any subsequent changes for any increases or decreases in the Fair Market Value of such Investment. "Permitted Junior Securities" means: (1) Equity Interests in the Company or any Guarantor; or (2) debt securities that are subordinated to all Senior Indebtedness and any debt securities issued in exchange for Senior Indebtedness to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Indebtedness under the terms of the Indenture. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. 125 "Principals" means each of GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000 L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors A, L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P. and J.P. Morgan Partners (BHCA), L.P. "Purchase Money Indebtedness" means Indebtedness: (1) consisting of the deferred purchase price of an asset (or Capital Stock of a corporation substantially all the assets of which consist of such asset), conditional sale obligations, obligations under any title retention agreement and other purchase money obligations (including obligations to a third party to finance the amount being paid to the seller), in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (2) Incurred to finance the acquisition by the Company or a Restricted Subsidiary of such asset (or such Capital Stock), including additions and improvements; provided, however, that such Indebtedness is Incurred within 180 days after the acquisition by the Company or such Restricted Subsidiary of such asset (or such Capital Stock). "Receivables Facility" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries, directly or indirectly through another Subsidiary, sells or otherwise transfers rights in its accounts receivable pursuant to arrangements customary in the industry. "Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (or the net proceeds of which are used to do any of the foregoing) any Indebtedness of the Company or any Restricted Subsidiary existing on the Closing Date or Incurred in compliance with the Indenture (including Indebtedness of the Company that Refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances Indebtedness of another Restricted Subsidiary, including Indebtedness that Refinances Refinancing Indebtedness); provided, however, that: (1) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced, (2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced, (3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being Refinanced (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums Incurred in connection therewith) and 126 (4) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes at least to the same extent as the Indebtedness being Refinanced; provided further, however, that Refinancing Indebtedness shall not include: (A) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Related Party" means, (1) any controlling stockholder or 80% (or more) owned Subsidiary of any Principal; or (2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1). "Representative" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Secured Indebtedness" means any Indebtedness of the Company or any Subsidiary secured by a Lien. "Secured Indebtedness" of a Note Guarantor has a correlative meaning. "Senior Subordinated Indebtedness" of the Company means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank equally with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of a Note Guarantor has a correlative meaning. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC in effect on the date of the Indenture. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred). 127 "Stockholders' Agreement" means the stockholders' agreement entered into in connection with the Acquisition. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement. "Subordinated Obligation" of a Note Guarantor has a correlative meaning. "Subsidiary" of any Person means 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: (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. "Tax Sharing Agreement" means the Amended and Restated Tax Sharing Agreement, made as of March 15, 2001, by and among Holding and its Subsidiaries. "Temporary Cash Investments" means any of the following: (1) United States dollars or eurodollars or any investment in direct obligations of the United States of America or any agency thereof or obligations Guaranteed or insured by the United States of America or any agency or instrumentality thereof, (2) investments in time deposit accounts, certificates of deposit and eurodollar time deposits, banker acceptances and money market deposits (or in the case of Foreign Subsidiaries, the foreign equivalent) maturing within 270 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $250,000,000 (or the foreign currency equivalent thereof) and whose long-term debt is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) or (2) above entered into with a bank meeting the qualifications described in clause (2) above, (4) investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P, (5) investments in securities with maturities of 270 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's, 128 (6) money market funds at least 95% of the assets of which constitute Temporary Cash Investments of the kinds described in clauses (1) through (5) of this definition and (7) solely in respect of the ordinary course cash management activities of the Foreign Subsidiaries, equivalents of the investments described in clause (1) above to the extent guaranteed by the United Kingdom, the European Union or the country in which the Foreign Subsidiary operates and equivalents of the investments described in clause (2) above issued, accepted or offered by (a) the local office of any commercial bank meeting the requirements of clause (4) above in the jurisdiction of organization of the applicable Foreign Subsidiary or (b) the local office of any commercial bank organized under the laws of the jurisdiction of organization of the applicable Foreign Subsidiary which commercial bank (1) has combined capital and surplus and undivided profits of not less than $250.0 million, (2) a long-term rating for Dollar-denominated obligations of at least "A-1" from S&P or the equivalent rating from Moody's or (3) is organized in the country in which the Foreign Subsidiary operates. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. sec.sec. 77aaa-77bbbb) as in effect on the Closing Date. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Transactions" means the offering and sale of these Notes, as well as certain other transactions described in the "Summary" section of the Offering Memorandum, and the application of the proceeds therefrom. "Trustee" means the party named as such in the Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Unrestricted Subsidiary" means: (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company or Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either: (A) the Subsidiary to be so designated has total Consolidated assets of $1,000 or less or (B) if such Subsidiary has Consolidated assets greater than $1,000, then such designation would be permitted under the covenant entitled "--Limitation on restricted payments." 129 The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation: (x) the Company could Incur $1.00 of additional Indebtedness under paragraph (a) of the covenant described under "--Limitation on indebtedness" and (y) no Default shall have occurred and be continuing. Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly Owned Subsidiary. 130 REGISTRATION RIGHTS; ADDITIONAL INTEREST We and the note guarantors entered into a registration rights agreement with the initial purchasers on the closing date for the outstanding notes. In that agreement, we agreed for the benefit of the holders of the notes that we will use our reasonable best efforts to file with the Commission and cause to become effective a registration statement relating to an offer to exchange the notes for an issue of Commission-registered notes with terms identical to the notes (except that the exchange notes will not be subject to restrictions on transfer or to any increase in annual interest rate as described below). When the Commission declares this exchange offer registration statement effective, we will offer the exchange notes in return for the notes. The exchange offer will remain open for at least 20 business days after the date we mail notice of the exchange offer to noteholders. For each note surrendered to us under the exchange offer, the noteholder will receive an exchange note of equal principal amount. Interest on each exchange note will accrue from the last interest payment date on which interest was paid on the notes or, if no interest has been paid on the notes, from the closing date. If applicable interpretations of the staff of the Commission do not permit us to effect the exchange offer, we will use our reasonable best efforts to cause to become effective a shelf registration statement relating to resales of the notes and to keep that shelf registration statement effective until the expiration of the time period referred to in Rule 144(k) under the Securities Act, or such shorter period that will terminate when all notes covered by the shelf registration statement have been sold. We will, in the event of such a shelf registration, provide to each noteholder copies of a prospectus, notify each noteholder when the shelf registration statement has become effective and take certain other actions to permit resales of the notes. A noteholder that sells notes under the shelf registration statement generally will be required to make certain representation to us (as described in the registration rights agreement), to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with those sales and will be bound by the provisions of the registration rights agreement that are applicable to such a noteholder (including certain indemnification obligations). Holders of notes will also be required to suspend their use of the prospects included in the shelf registration statement under specified circumstances upon receipt of notice from us. In addition, at the request of Goldman, Sachs & Co. or J.P. Morgan Securities Inc. we will file a shelf registration statement to enable them to act as a market maker in the notes. If the exchange offer is not completed (or, if required, the shelf registration statement is not declared effective) on or before the date that is 210 days after the closing date, the annual interest rate borne by the outstanding notes will be increased by .25% per annum, increasing an additional .25% per annum every 90 days thereafter, up to a maximum aggregate increase of 1.0% per annum, until the exchange offer is completed or the shelf registration statement is declared effective. Following the cure of all registration defaults, the accrual of this interest will cease. If we effect the exchange offer, we will be entitled to close the exchange offer 20 business days after its commencement, provided that we have accepted all notes validly surrendered in accordance with the terms of the exchange offer. Notes not tendered in the exchange offer shall bear interest at the rate of 10 3/4% per annum and be subject to all the terms and conditions specified in the indenture, including transfer restrictions. This summary of the 131 provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the registration rights agreement, which has been filed as an exhibit to the registration statement of which this prospectus is a part. 132 MATERIAL U.S. FEDERAL TAX CONSIDERATIONS The following summary describes the material United States federal income tax consequences and, in the case of a holder that is a non-U.S. holder (as defined below), the material United States federal estate tax consequences, of purchasing, owning and disposing of the exchange notes. This summary deals only with exchange notes held as capital assets (generally, investment property) and does not deal with special tax situations such as: - partnerships; - dealers in securities or currencies; - traders in securities; - U.S. holders (as defined below) whose functional currency is not the United States dollar; - persons holding exchange notes as part of a hedge, straddle, conversion or other integrated transaction; - certain United States expatriates; - financial institutions; - insurance companies; and - entities that are tax-exempt for United States federal income tax purposes. This summary does not discuss all of the aspects of United States federal income and estate taxation that may be relevant to you in light of your particular investment or other circumstances. In addition, this summary does not discuss any United States state or local income or foreign income or other tax consequences. This summary is based on United States federal income tax law, including the provisions of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), Treasury regulations, administrative rulings and judicial authority, all as in effect as of the date of this prospectus. Subsequent developments in United States federal tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the United States federal tax consequences of purchasing, owning and disposing of exchange notes as set forth in this summary. You should consult your own tax advisor regarding the particular United States federal, state and local and foreign income and other tax consequences of acquiring, owning and disposing of the exchange notes that may be applicable to you. U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER The exchange of the outstanding notes for the exchange notes in the exchange offer will not be a taxable exchange for U.S. federal income tax purposes and, accordingly, for such purposes you will not recognize any taxable gain or loss as a result of such exchange and you will have the same tax basis and holding period in the exchange notes as you had in your outstanding notes immediately before the exchange. 133 U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS The following summary applies to you only if you are a U.S. holder (as defined below). DEFINITION OF A U.S. HOLDER A "U.S. holder" is a beneficial owner of an exchange note or notes who or which is for United States federal income tax purposes: - an individual citizen or resident of the United States; - a corporation (or other entity classified as a corporation for these purposes) created or organized in or under the laws of the United States or of any political subdivision of the United States, including any State; - an estate, the income of which is subject to United States federal income taxation regardless of the source of that income; or - a trust, if, in general, a United States court is able to exercise primary supervision over the trust's administration and one or more United States persons (within the meaning of the Internal Revenue Code) has the authority to control all of the trust's substantial decisions. PAYMENTS OF STATED INTEREST Payments of stated interest on your exchange notes will be taxed as ordinary interest income. In addition: - if you use the cash method of accounting for United States federal income tax purposes, you will have to include the stated interest on your exchange notes in your gross income at the time you receive the interest; and - if you use the accrual method of accounting for United States federal income tax purposes, you will have to include the stated interest on your exchange notes in your gross income at the time the interest accrues. MARKET DISCOUNT AND BOND PREMIUM If you purchase an exchange note (or purchased the outstanding note for which the exchange note was exchanged, as the case may be) at a price that is less than its principal amount, the excess of the principal amount over your purchase price will be treated as "market discount." However, the market discount will be considered to be zero if it is less than 1/4 of 1% of the principal amount multiplied by the number of complete years to maturity from the date you purchased the exchange note or outstanding note, as the case may be. Under the market discount rules of the Internal Revenue Code, you generally will be required to treat any principal payment on, or any gain realized on the sale, exchange, retirement or other disposition of, an exchange note as ordinary income (generally treated as interest income) to the extent of the market discount which accrued but was not previously included in income. In addition, you may be required to defer, until the maturity of the exchange note or its earlier disposition in a taxable transaction, the deduction of all or a portion of your interest expense on any indebtedness incurred or continued to purchase or carry the exchange note (or the outstanding note for which the exchange note was exchanged, as the case may be). In general, market discount will be considered to accrue ratably during the period from the date 134 of the purchase of the exchange note (or outstanding note for which the exchange note was exchanged, as the case may be) to the maturity date of the exchange note, unless you make an irrevocable election (on an instrument-by-instrument basis) to accrue market discount under a constant yield method. You may elect to include market discount in income currently as it accrues (under either a ratable or constant yield method), in which case the rules described above regarding the treatment as ordinary income of gain upon the disposition of the exchange note and upon the receipt of certain payments and the deferral of interest deductions will not apply. The election to include market discount in income currently, once made, applies to all market discount obligations acquired on or after the first day of the first taxable year to which the election applies, and may not be revoked without the consent of the Internal Revenue Service. If you purchase an exchange note (or purchased the outstanding note for which the exchange note was exchanged, as the case may be) for an amount in excess of the amount payable at maturity of the exchange note, you will be considered to have purchased the exchange note (or outstanding note) with "bond premium" equal to the excess of your purchase price over the amount payable at maturity (or on an earlier call date if it results in a smaller amortizable bond premium). You may elect to amortize the premium using a constant yield method over the remaining term of the exchange note (or until an earlier call date, as applicable). The amortized amount of the premium for a taxable year generally will be treated first as a reduction of interest on the exchange note included in such taxable year to the extent thereof, then as a deduction allowed in that taxable year to the extent of your prior interest inclusions on the exchange note, and finally as a carryforward allowable against your future interest inclusions on the exchange note. The election, once made, is irrevocable without the consent of the Internal Revenue Service and applies to all taxable bonds held during the taxable year for which the election is made or subsequently acquired. SALE OR OTHER DISPOSITION OF THE EXCHANGE NOTES Upon the sale, exchange, retirement, redemption or other taxable disposition of an exchange note, you generally will recognize taxable gain or loss in an amount equal to the difference, if any, between the amount realized on the disposition and your adjusted tax basis in the exchange note. Your adjusted tax basis in an exchange note will generally equal the cost of the exchange note (or, in the case of an exchange note acquired in exchange for an outstanding note in the exchange offer, the basis of the outstanding note), increased by the amount of any market discount previously included in your gross income, and reduced by the amount of any amortizable bond premium applied to reduce, or allowed as a deduction against, interest with respect to your exchange note. Your gain or loss generally will be capital gain or loss (except with respect to any amount received that is attributable to accrued but unpaid interest, which will be taxable in the manner described above under "--U.S. federal income tax considerations for U.S. holders--Payments of stated interest" and except with respect to accrued market discount that has not previously been included in income, as discussed above under "--U.S. federal income tax considerations for U.S. holders--Market discount and bond premium"). Such capital gain or loss will be long-term capital gain or loss if the exchange note has been held for more than one year at the time of the disposition (taking into account for this purpose, in the case of an exchange note received in exchange for an outstanding note in the exchange offer, the period of time that the outstanding note was held). 135 Subject to limited exceptions, your capital losses cannot be used to offset your ordinary income. If you are a non-corporate U.S. holder, your long-term capital gain generally will be subject to a maximum tax rate of 20%. BACKUP WITHHOLDING AND INFORMATION REPORTING In general, backup withholding, currently at a rate of 30%, may apply: - to any payments made to you of principal of and interest on your exchange note, and - to payment of the proceeds of a sale or other disposition of your exchange note, if you are a non-corporate U.S. holder and fail to provide a correct taxpayer identification number or otherwise comply with applicable requirements of the backup withholding rules. Information reporting may also apply to payments made with respect to your exchange note. Backup withholding is not an additional tax and may be credited against your United States federal income tax liability, provided that correct information is provided to the Internal Revenue Service. U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S. HOLDERS The following summary applies to you if you are a beneficial owner of an exchange note who or which is not a U.S. holder (as defined above) (a "non-U.S. holder"). An individual may, subject to exceptions, be deemed to be a resident alien, as opposed to a non-resident alien, by among other ways being present in the United States: - for at least 31 days in the calendar year, and - for an aggregate of at least 183 days during a three-year period ending in the current calendar year, counting for such purposes all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year. Resident aliens are subject to United States federal income tax as if they were United States citizens. UNITED STATES FEDERAL WITHHOLDING TAX Under current United States federal income tax laws, and subject to the discussion below, United States federal withholding tax will not apply to payments by us or our paying agent (in its capacity as such) of principal of and interest on your exchange notes under the "portfolio interest" exception of the Internal Revenue Code, provided that you comply with the following requirements: - you do not, directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of our stock entitled to vote within the meaning of section 871(h)(3) of the Internal Revenue Code and the Treasury regulations thereunder; - you are not (i) a controlled foreign corporation for United States federal income tax purposes that is related, directly or indirectly, to us through sufficient stock ownership (as provided in the Internal Revenue Code), or (ii) a bank receiving interest described in section 881(c)(3)(A) of the Internal Revenue Code; 136 - such interest is not effectively connected with your conduct of a United States trade or business; and - you provide a properly completed Internal Revenue Service Form W-8BEN, signed under penalties of perjury, which can reliably be related to you, certifying that you are not a United States person within the meaning of the Internal Revenue Code and providing your name and address to: (A) us or our paying agent; or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and holds your exchange notes on your behalf and that certifies to us or our paying agent under penalties of perjury that it, or the bank or financial institution between it and you, has received from you your Form W-8BEN and provides us or our paying agent with a copy of this statement. Certain Treasury regulations provide alternative methods for satisfying the certification requirement described in this section. In addition, under these Treasury regulations: - if you are a foreign partnership, the certification requirement will generally apply to partners in you, and you will be required to provide certain information; - if you are a foreign trust, the certification requirement will generally be applied to you or your beneficial owners depending on whether you are a "foreign complex trust," "foreign simple trust," or "foreign grantor trust" as defined in the Treasury regulations; and - look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts. If you are a foreign partnership or a foreign trust, you should consult your own tax advisor regarding your status under these Treasury regulations and the certification requirements applicable to you. If you do not satisfy the requirements described above, payments of interest made to you will be subject to the 30% United States federal withholding tax, unless you provide us with a properly executed (1) Internal Revenue Service Form W-8BEN claiming an exemption from or reduction in withholding under the benefit of an applicable tax treaty or (2) Internal Revenue Service Form W-8ECI stating that the interest paid on an exchange note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States. UNITED STATES FEDERAL INCOME TAX Except for the possible application of United States withholding tax (see "United States federal withholding tax" above) and backup withholding tax (see "Backup withholding and information reporting" below), you generally will not have to pay United States federal income tax on payments of principal of and interest on your exchange notes, or on any gain or income realized from the sale, redemption, retirement at maturity or other disposition of your 137 exchange notes (provided that, in the case of proceeds representing accrued interest, the conditions described in "United States federal withholding tax" are met) unless: - in the case of gain, you are an individual who is present in the United States for 183 days or more during the taxable year of the sale or other disposition of your exchange notes, and specific other conditions are met; or - the gain is effectively connected with your conduct of a United States trade or business, and, if an income tax treaty applies, is generally attributable to a United States "permanent establishment" maintained by you. If you are engaged in a trade or business in the United States and interest, gain or any other income in respect of your exchange notes is effectively connected with the conduct of your trade or business, and, if an income tax treaty applies, you maintain a United States "permanent establishment" to which the interest, gain or other income is generally attributable, you generally will be subject to United States income tax on a net basis on the interest, gain or income in the same manner as if you were a U.S. holder (although interest is exempt from the withholding tax discussed in the preceding paragraphs provided that you provide a properly executed applicable Internal Revenue Service Form W-8ECI on or before any payment date to claim the exemption). In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% of your effectively connected earnings and profits for the taxable year, as adjusted for certain items, unless a lower rate applies to you under a United States income tax treaty with your country of residence. For this purpose, you must include interest, gain or income on your exchange notes in the earnings and profits subject to the branch profits tax if these amounts are effectively connected with the conduct of your United States trade or business. UNITED STATES FEDERAL ESTATE TAX If you are an individual and are not a United States citizen or a resident of the United States (as specially defined for United States federal estate tax purposes) at the time of your death, your exchange notes will generally not be subject to the United States federal estate tax, unless, at the time of your death: - you directly or indirectly, actually or constructively, own 10% or more of the total combined voting power of all classes of our stock entitled to vote within the meaning of section 871(h)(3) of the Internal Revenue Code and the Treasury regulations thereunder; or - your interest on the exchange notes is effectively connected with your conduct of a United States trade or business. BACKUP WITHHOLDING AND INFORMATION REPORTING Under current Treasury regulations, backup withholding and information reporting will not apply to payments made by us or our paying agent (in its capacity as such) to you if you have provided the required certification that you are a non-U.S. holder as described in "United States federal withholding tax" above, and provided that neither we nor our paying agent has actual knowledge that you are a U.S. holder (as described in "Definition of a U.S. holder" above). We or our paying agent may, however, report payments of interest on the exchange notes on an Internal Revenue Service Form 1042-S. 138 The gross proceeds from the disposition of your exchange notes may be subject to information reporting and backup withholding tax at a rate that is currently 30%. If you sell your exchange notes outside the United States through a non-United States office of a broker and the sales proceeds are paid to you outside the United States, then the United States backup withholding and information reporting requirements generally (except as provided in the following sentence) will not apply to that payment. However, United States information reporting, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your exchange notes through a non-United States office of a broker that: - is a United States person (as defined in the Internal Revenue Code); - derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States; - is a "controlled foreign corporation" for United States federal income tax purposes; or - is a foreign partnership, if at any time during its tax year: - one or more of its partners are United States persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or - the foreign partnership is engaged in a United States trade or business, unless the broker has documentary evidence in its files that you are a non-United States person and certain other conditions are met or you otherwise establish an exemption. If you receive payments of the proceeds of a sale of your exchange notes to or through a United States office of a broker, the payments are subject to both United States backup withholding and information reporting unless you provide a Form W-8BEN certifying that you are a non-United States person or you otherwise establish an exemption. You should consult your own tax advisor regarding application of backup withholding in your particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury regulations. Any amounts withheld under the backup withholding rules from a payment to you will be allowed as a refund or credit against your United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service. 139 ERISA CONSIDERATIONS The following is a summary of certain considerations associated with the exchange of the outstanding notes, or the purchase or holding of the exchange notes, by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), individual retirement accounts and other arrangements that are subject to Section 4975 of the Internal Revenue Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Internal Revenue Code or ERISA, and entities whose underlying assets are considered to include "plan assets" of such plans, accounts and arrangements. GENERAL FIDUCIARY MATTERS ERISA and the Code impose certain duties on persons who are fiduciaries of a plan subject to Title I of ERISA or Section 4975 of the Internal Revenue Code and prohibit certain transactions involving the assets of a plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a plan or the management or disposition of the assets of such a plan, or who renders investment advice to such a plan for a fee or other compensation, may be considered to be a fiduciary of the plan. When considering investing a portion of the assets of any plan in the exchange notes, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the plan and the applicable provisions of ERISA, the Internal Revenue Code or any similar law relating to a fiduciary's duties to the plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Internal Revenue Code and any other applicable similar laws. The prudence of a particular investment should be determined by the responsible fiduciary of a plan by taking into account the plan's particular circumstances and all of the facts and circumstances of an investment in an exchange note including, but not limited to, particular risks associated with the investment and the fact that in the future there may be no market in which such fiduciary will be able to sell or otherwise dispose of any exchange notes it may purchase. Any insurance company proposing to invest assets of its general account in the exchange notes should consider the extent to which such investment would be subject to the requirements of ERISA in light of the U.S. Supreme Court's decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any subsequent legislation or other guidance that has or may become available relating to that decision, including Section 401(c) of ERISA and any regulations thereunder published by the U.S. Department of Labor. PROHIBITED TRANSACTION ISSUES Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit plans subject to Title I of ERISA or Section 4975 of the Internal Revenue Code from engaging in specified transactions involving plan assets with persons or entities who are "parties in interest" within the meaning of ERISA, or "disqualified persons," within the meaning of Section 4975 of the Internal Revenue Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Internal Revenue Code and, in many circumstances, the transaction must be unwound. In addition, the fiduciary of the plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities 140 under ERISA and the Internal Revenue Code. The acquisition and/or holding of exchange notes by a plan with respect to which we, our affiliates or the initial purchaser is considered a party in interest or disqualified person may constitute or result in a direct or indirect prohibited transaction under ERISA and/or the Internal Revenue Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions, or "PTCEs", that may apply to the acquisition and holding of the exchange notes. These class exemptions include PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting transactions involving life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. However, there can be no assurance that all of the conditions of any such exemptions will be satisfied, or, if satisfied, that the scope of the relief will cover all acts that might be construed as prohibited transactions. Because of the foregoing, the exchange notes should not be acquired or held by any person investing "plan assets" of any plan, if such acquisition and holding will constitute a non-exempt prohibited transaction under ERISA and the Internal Revenue Code or similar violation of any applicable similar laws. Each initial investor of an exchange note and each subsequent transferee will, by its acquisition and/or holding be deemed to have represented and warranted that (1) it is not a plan, or other entity that is subject to prohibited transaction rules of ERISA, the Code or similar law or (2) its acquisition and/or holding of such note will not result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Internal Revenue Code or any similar provision of similar laws. The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering an investment in the exchange notes on behalf of, or with the assets of any plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Internal Revenue Code and any similar laws to such investment and whether an exemption would be applicable to the acquisition and holding of the exchange notes. 141 PLAN OF DISTRIBUTION Based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for the outstanding notes may be offered for resale, resold and otherwise transferred by holders thereof, other than any holder which is (A) an "affiliate" of our company within the meaning of Rule 405 under the Securities Act, (B) a broker-dealer who acquired notes directly from our company or (C) broker-dealers who acquired notes as a result of market-making or other trading activities, without compliance with the registration and prospectus delivery provisions of the Securities Act provided that such exchange notes are acquired in the ordinary course of such holders' business, and such holders are not engaged in, and do not intent to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such exchange notes. However, broker-dealers receiving the exchange notes in the exchange offer will be subject to a prospectus delivery requirement with respect to resales of such exchange notes. To date, the staff of the SEC has taken the position that these broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as the exchange pursuant to the exchange offer, other than a resale of an unsold allotment from the sale of the outstanding notes to the initial purchasers thereof, with the prospectus contained in the exchange offer registration statement. Pursuant to the registration rights agreement, we have agreed to permit these broker-dealers to use this prospectus in connection with the resale of such exchange notes. We have agreed that, for a period of 180 days after the exchange offer has been completed, we will make this prospectus, and any amendment or supplement to this prospectus, available to any broker-dealer that requests such documents in the letter of transmittal. Each holder of the outstanding notes who wishes to exchange its outstanding notes for exchange notes in the exchange offer will be required to make certain representations to us as set forth in "The exchange offer." Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market-making activities or other trading activities. We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account in the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an "underwriter" within the meaning of the Securities Act, and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will 142 deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. We have agreed to pay certain expenses incident to the exchange offer and will indemnify the holders of the exchange notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act, as set forth in the registration rights agreement. LEGAL MATTERS The validity of the exchange notes will be passed upon for us by Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional corporations), New York, New York. INDEPENDENT AUDITORS The consolidated balance sheets of BPC Holding Corporation as of December 29, 2001, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the three-year period ending December 29, 2001 included in the offering memorandum, have been audited by Ernst & Young LLP, independent auditors, as stated in their report appearing herein. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows us to "incorporate by reference" the information that we file with them in other documents, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is considered to be part of the offering memorandum, and later information that we file with the SEC will automatically update and supersede this information. This prospectus incorporates by reference all documents filed by us in the future with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the termination of the offering to which this prospectus relates. On written or oral request, we will provide at no cost to each person who receives a copy of this prospectus, a copy of any or all of the documents incorporated in this prospectus by reference. We will not provide exhibits to any of the documents listed above, however, unless those exhibits are specifically incorporated by reference into those documents. You should direct your request to: 101 Oakley Street Evansville, Indiana 47710 Attn: Mark Miles (812) 424-2904 You should rely only on the information that we incorporate by reference or provide in this prospectus. You should consider any statement contained in a document incorporated or considered incorporated by reference into this prospectus to be modified or superseded to the extent that a statement contained in this prospectus, or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference in this prospectus, modifies or conflicts with the earlier statement. You should not consider any statement modified or superseded, except as so modified or superseded, to constitute a part of this prospectus. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or the information incorporated by reference in this prospectus is accurate as of any date other than the date of this prospectus or the document from which such information is incorporated. 143 BPC HOLDING CORPORATION INDEX TO FINANCIAL STATEMENTS
PAGE ---- BPC HOLDING CORPORATION AUDITED FINANCIAL STATEMENTS Report of Independent Auditors........................... F-2 Consolidated Balance Sheets at December 29, 2001 and December 30, 2000...................................... F-3 Consolidated Statements of Operations for the three years in the period ended December 29, 2001.................. F-5 Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the three years in the period ended December 29, 2001................................ F-6 Consolidated Statements of Cash Flows for the three years in the period ended December 29, 2001.................. F-7 Notes to Consolidated Financial Statements............... F-8 BPC HOLDING CORPORATION UNAUDITED INTERIM FINANCIAL STATEMENTS Consolidated Balance Sheets at March 30, 2002 and December 29, 2001...................................... F-30 Consolidated Statements of Operations for the thirteen weeks ended March 30, 2002 and March 31, 2001.......... F-32 Consolidated Statements of Cash Flows for the thirteen weeks ended March 30, 2002 and March 31, 2001.......... F-33 Notes to Consolidated Financial Statements............... F-34
F-1 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. These financial statements and schedule are the responsibility of Holding's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with 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. Ernst & Young LLP Indianapolis, Indiana February 15, 2002 F-2 BPC HOLDING CORPORATION CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------- DECEMBER 29, DECEMBER 30, (DOLLARS IN THOUSANDS) 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-3
- ----------------------------------------------------------------------------------------- DECEMBER 29, DECEMBER 30, (DOLLARS IN THOUSANDS) 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-4 BPC HOLDING CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------ YEAR ENDED ---------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, (DOLLARS IN THOUSANDS) 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-5 BPC HOLDING CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
- ------------------------------------------------------------------------------------------------------------------------------- COMMON STOCK PREFERRED STOCK ADDI- --------------------- ----------------------------------- TREA- TIONAL CLASS CLASS CLASS CLASS CLASS CLASS CLASS SURY PAID-IN (DOLLARS IN THOUSANDS) A B C A A-1 B C STOCK CAPITAL WARRANTS - ------------------------------------------------------------------------------------------------------------------------------- Balance at January 2, 1999......... $4 $2 $ - $11,801 $ - $5,000 $ - $(280) $45,611 $3,511 ------------------------------------------------------------------------------------------ Net loss........................... - - - - - - - - - - Sale of treasury stock to management...................... - - - - - - - 40 16 - Purchase treasury stock from management...................... - - - - - - - (16) - - Translation loss................... - - - - - - - - - - Accrued dividends on preferred stock........................... - - - - - - - - (3,776) - Amortization of preferred stock discount........................ - - - 292 - - - - (292) - ------------------------------------------------------------------------------------------ Balance at January 1, 2000......... 4 2 - 12,093 - 5,000 - (256) 41,559 3,511 ------------------------------------------------------------------------------------------ Net loss........................... - - - - - - - - - - Purchase treasury stock from management...................... - - - - - - - (149) - - Translation loss................... - - - - - - - - - - Stock-based compensation........... - - - - - - - - 905 - Issuance of preferred stock........ - - - - 25,000 - - - - - Issuance of private warrants....... - - - - (5,875) - - - - 5,875 Accrued dividends on preferred stock........................... - - - - - - - - (6,655) - Amortization of preferred stock discount........................ - - - 293 475 - - - (768) - ------------------------------------------------------------------------------------------ Balance at December 30, 2000....... 4 2 - 12,386 19,600 5,000 - (405) 35,041 9,386 ------------------------------------------------------------------------------------------ Net loss........................... - - - - - - - - - - Translation loss................... - - - - - - - - - - Stock-based compensation........... - - - - - - - - 796 - Issuance of preferred stock........ - - - - - - 9,779 - - - Issuance of common stock........... - - - - - - - - 292 - Accrued dividends on preferred stock........................... - - - - - - - - (9,790) - Amortization of preferred stock discount........................ - - - 292 732 - - - (1,024) - ------------------------------------------------------------------------------------------ Balance at December 29, 2001....... $4 $2 $ - $12,678 $20,332 $5,000 $9,779 $(405) $25,315 $9,386 - ------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------- ------------------------------------------ ACCUMU- LATED OTHER COMPRE- RETAINED COMPRE- HENSIVE EARNINGS HENSIVE INCOME (DOLLARS IN THOUSANDS) (DEFICIT) LOSS TOTAL (LOSS) - ----------------------------------- ------------------------------------------ Balance at January 2, 1999......... $(185,923) $ (83) $(120,357) ------------------------------------------ Net loss........................... (9,138) - (9,138) $ (9,138) Sale of treasury stock to management...................... - - 56 - Purchase treasury stock from management...................... - - (16) - Translation loss................... - (240) (240) (240) Accrued dividends on preferred stock........................... - - (3,776) - Amortization of preferred stock discount........................ - - - - ------------------------------------------ Balance at January 1, 2000......... (195,061) (323) (133,471) (9,378) ------------------------------------------ Net loss........................... (23,107) - (23,107) (23,107) Purchase treasury stock from management...................... - - (149) - Translation loss................... - (520) (520) (520) Stock-based compensation........... - - 905 - Issuance of preferred stock........ - - 25,000 - Issuance of private warrants....... - - - - Accrued dividends on preferred stock........................... - - (6,655) - Amortization of preferred stock discount........................ - - - - ------------------------------------------ Balance at December 30, 2000....... (218,168) (843) (137,997) (23,627) ------------------------------------------ Net loss........................... (2,095) - (2,095) (2,095) Translation loss................... - (586) (586) (586) Stock-based compensation........... - - 796 - Issuance of preferred stock........ - - 9,779 - Issuance of common stock........... - - 292 - Accrued dividends on preferred stock........................... - - (9,790) - Amortization of preferred stock discount........................ - - - - ------------------------------------------ Balance at December 29, 2001....... $(220,263) $(1,429) $(139,601) $ (2,681) - -----------------------------------
See notes to consolidated financial statements. F-6 BPC HOLDING CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------- YEAR ENDED ---------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, (DOLLARS IN THOUSANDS) 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 equipment..... 93 1,666 529 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 and warrants.......................................... 9,779 25,000 - 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 equivalents....................................... (822) (492) 228 Cash and cash equivalents at beginning of year....... 2,054 2,546 2,318 ---------------------------------------- Cash and cash equivalents at end of year............. $ 1,232 $ 2,054 $ 2,546 - -----------------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-7 BPC HOLDING CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, 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 F-8 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. 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. 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 F-9 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 F-10 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. 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 item............... (2,663) (29,603) 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-11 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 F-12 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). 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 F-13 (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 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 F-14 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. 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 LEASES OPERATING 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 - --------------------------------------------------------------------------------------
F-15 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-16 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 statutory rate............................. $ (463) $ (7,557) $ (2,919) State income tax expense, net of federal benefit.................................... 795 (403) 309 Amortization of goodwill...................... 2,399 2,262 1,292 Expenses not deductible for income tax purposes................................... 36 119 248 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-17 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 F-18 the sixth anniversary of the issue date (the "Cash Dividend Date") may, at the option of Holding, be paid in cash in full or in part or accrue quarterly on a compound basis. Thereafter, all dividends are payable in cash in arrears. The dividend rate is subject to increase to a rate of (i) 16% per annum if (and for so long as) Holding fails to declare and pay dividends in cash for any quarterly period following the Cash Dividend Date and (ii) 15% per annum if (and for so long as) Holding fails to comply with its obligations relating to the rights and preferences of the Preferred Stock. If Holding fails to pay in full, in cash, (a) all accrued and unpaid dividends on or prior to the twelfth anniversary of the issue date or (b) all accrued dividends on any Dividend Payment Date following the twelfth anniversary of the issue date, the holders of Preferred Stock will be permitted to elect a majority of the Board of Directors of Holding. The Preferred Stock ranks prior to all other classes of stock of Holding upon liquidation and is entitled to receive, out of assets available for distribution, cash in the aggregate amount of $15.0 million, plus all accrued and unpaid dividends thereon. Subject to the terms of the 1996 Indenture, on any Dividend Payment Date, Holding has the option of exchanging the Preferred Stock, in whole but not in part, for Senior Subordinated Exchange Notes, at the rate of $25 in principal amount of notes for each $25 of liquidation preference of Preferred Stock held; provided, however, that no shares of Preferred Stock may be exchanged for so long as any shares of Preferred Stock are held by 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 F-19 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. 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. F-20 Information related to the Option Plan is as follows:
- ----------------------------------------------------------------------------------------- DECEMBER 29, 2001 DECEMBER 30, 2000 JANUARY 1, 2000 -------------------- -------------------- -------------------- WEIGHTED WEIGHTED WEIGHTED NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE OF EXERCISE OF EXERCISE OF EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE - ----------------------------------------------------------------------------------------- Options outstanding, beginning of year.............. 60,774 $132 51,479 $107 50,729 $ 105 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, end of year....... 60,420 155 60,774 132 51,479 107 --------- --------- --------- 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:
- ---------------------------------------------------------------------------------------- NUMBER WEIGHTED NUMBER RANGE OF OUTSTANDING AT WEIGHTED AVERAGE AVERAGE EXERCISABLE AT EXERCISE DECEMBER 29, REMAINING EXERCISE DECEMBER 29, PRICES 2001 CONTRACTUAL LIFE PRICE 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 F-21 grant using a Black Scholes option pricing model with the following weighted average assumptions:
- ---------------------------------------------------------------------------------------- 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, F-22 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. 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
F-23
- ------------------------------------------------------------------------------------------------ YEAR ENDED ---------------------------------------- DECEMBER 29, DECEMBER 30, JANUARY 1, 2001 2000 2000 - ------------------------------------------------------------------------------------------------ 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) - ------------------------------------------------------------------------------------------------
NOTE 13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION (DOLLARS 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. F-24
- ----------------------------------------------------------------------------------------------------- DECEMBER 29, 2001 ----------------------------------------------------------------------- BERRY BPC 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 ----------------------------------------------------------------------- BERRY BPC 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-25
- ----------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 29, 2001 ----------------------------------------------------------------------- BPC BERRY HOLDING PLASTICS COMBINED CORPORATION CORPORATION GUARANTOR CONSOLIDATING (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED - ----------------------------------------------------------------------------------------------------- CONSOLIDATING STATEMENT 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 on 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 - -----------------------------------------------------------------------------------------------------
F-26
- ----------------------------------------------------------------------------------------------------- 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 on 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-27
- ----------------------------------------------------------------------------------------------------- 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 on 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 - -----------------------------------------------------------------------------------------------------
F-28 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-29 BPC HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------- MARCH 30, DECEMBER 29, (DOLLARS IN THOUSANDS) 2002 2001 - ----------------------------------------------------------------------------------------- (UNAUDITED) Assets Current assets: Cash and cash equivalents................................ $ 774 $ 1,232 Accounts receivable (less allowance for doubtful accounts of $2,343 at March 30, 2002 and $2,070 at December 29, 2001).................................................. 62,943 48,623 Inventories: Finished goods........................................ 44,273 43,048 Raw materials and supplies............................ 13,318 13,009 --------------------------- 57,591 56,057 Prepaid expenses and other receivables................... 4,900 5,280 --------------------------- Total current assets............................... 126,208 111,192 Property and equipment: Land..................................................... 9,437 9,443 Buildings and improvements............................... 72,487 72,722 Machinery, equipment and tooling......................... 205,690 201,357 Construction in progress................................. 32,108 22,647 --------------------------- 319,722 306,169 Less accumulated depreciation............................ 112,778 102,952 --------------------------- 206,944 203,217 Intangible assets: Deferred financing fees, net............................. 7,800 8,475 Covenants not to compete, net............................ 1,498 1,955 Excess of cost over net assets acquired, net............. 119,693 119,923 --------------------------- 128,991 130,353 Other....................................................... 2,103 2,114 --------------------------- Total assets....................................... $ 464,246 $ 446,876 - -----------------------------------------------------------------------------------------
F-30
- ----------------------------------------------------------------------------------------- MARCH 30, DECEMBER 29, (DOLLARS IN THOUSANDS) 2002 2001 - ----------------------------------------------------------------------------------------- (UNAUDITED) Liabilities and stockholders' equity (deficit) Current liabilities: Accounts payable......................................... $ 35,146 $ 34,862 Accrued expenses and other liabilities................... 10,705 8,955 Accrued interest......................................... 13,862 7,964 Employee compensation and payroll taxes.................. 16,539 17,792 Current portion of long-term debt........................ 21,124 22,292 --------------------------- Total current liabilities.......................... 97,376 91,865 Long-term debt, less current portion........................ 471,457 463,589 Accrued dividends on preferred stock........................ 30,201 27,446 Deferred income taxes....................................... 485 489 Other liabilities........................................... 2,603 3,088 --------------------------- 602,122 586,477 Stockholders' equity (deficit): Series A Preferred Stock; 600,000 shares authorized, issued and outstanding (net of discount of $1,820 at March 30, 2002 and $1,893 at December 29, 2001)....... 12,751 12,678 Series A-1 Preferred Stock; 1,400,000 shares authorized; 1,000,000 shares issued and outstanding (net of discount of $4,485 at March 30, 2002 and $4,668 at December 29, 2001).................................... 20,515 20,332 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 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............................... 22,305 25,315 Warrants................................................. 9,386 9,386 Retained earnings (deficit).............................. (215,497) (220,263) Accumulated other comprehensive loss..................... (1,716) (1,429) --------------------------- Total stockholders' equity (deficit)............... (137,876) (139,601) --------------------------- Total liabilities and stockholders' equity (deficit)........................................ $ 464,246 $ 446,876 - -----------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-31 BPC HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED ------------------------ MARCH 30, MARCH 31, (DOLLARS IN THOUSANDS) 2002 2001 - -------------------------------------------------------------------------------------- (UNAUDITED) Net sales................................................... $ 122,934 $116,016 Cost of goods sold.......................................... 90,299 83,927 ------------------------ Gross margin....................................... 32,635 32,089 Operating expenses: Selling.................................................. 5,780 5,742 General and administrative............................... 7,108 7,242 Research and development................................. 547 401 Amortization of intangibles.............................. 477 2,751 Other expenses........................................... 1,116 1,383 ------------------------ Operating income................................... 17,607 14,570 Other expenses (income): Loss (gain) on disposal of property and equipment........ 144 (28) ------------------------ Income before interest and taxes............................ 17,463 14,598 Interest: Expense.................................................. (12,809) (13,550) Income................................................... 3 56 ------------------------ Income before income taxes.................................. 4,657 1,104 Income taxes (benefit)...................................... (109) 82 ------------------------ Net income.................................................. 4,766 1,022 Preferred stock dividends................................... (2,755) (2,116) Amortization of preferred stock discount.................... (256) (256) ------------------------ Net income (loss) attributable to common shareholders....... $ 1,755 $ (1,350) - --------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-32 BPC HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED ------------------------ MARCH 30, MARCH 31, (DOLLARS IN THOUSANDS) 2002 2001 - -------------------------------------------------------------------------------------- (UNAUDITED) Operating activities Net income.................................................. $ 4,766 $ 1,022 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation............................................. 10,358 8,665 Non-cash interest expense................................ 631 4,953 Amortization............................................. 477 2,751 Non-cash compensation expense............................ -- 150 Loss (gain) on sale of property and equipment............ 144 (28) Changes in operating assets and liabilities: Accounts receivable, net.............................. (14,424) (14,361) Inventories........................................... (1,553) 1,109 Prepaid expenses and other receivables................ 373 (2,407) Other assets.......................................... 11 (163) Payables and accrued expenses......................... 6,706 963 ------------------------ Net cash provided by operating activities.......... 7,489 2,654 Investing activities Additions to property and equipment......................... (9,801) (5,893) Proceeds from disposal of property and equipment............ 1 28 Acquisition of business..................................... (3,199) -- ------------------------ Net cash used for investing activities...................... (12,999) (5,865) Financing activities Proceeds from long-term borrowings.......................... 12,098 9,797 Payments on long-term borrowings............................ (6,489) (5,774) ------------------------ Net cash provided by financing activities................... 5,609 4,023 Effect of exchange rate changes on cash..................... (557) 491 ------------------------ Net increase (decrease) in cash and cash equivalents........ (458) 1,303 Cash and cash equivalents at beginning of period............ 1,232 2,054 ------------------------ Cash and cash equivalents at end of period.................. $ 774 $ 3,357 - --------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-33 BPC HOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT AS OTHERWISE NOTED) (UNAUDITED) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of BPC Holding Corporation and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full fiscal year. The accompanying financial statements include the results of BPC Holding Corporation ("Holding") and its wholly-owned subsidiary, Berry Plastics Corporation ("Berry"), and its wholly-owned subsidiaries: Berry Iowa Corporation, Berry Tri-Plas Corporation, Berry Sterling Corporation, AeroCon, Inc., PackerWare Corporation, Berry Plastics Design Corporation, Venture Packaging, Inc. 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 Oceisse S.r.l., and Pescor, Inc. For further information, refer to the consolidated financial statements and footnotes thereto included in Holding's and Berry's Form 10-K filed with the Securities and Exchange Commission for the year ended December 29, 2001. 2. RECENT ACQUISITIONS 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. On January 24, 2002, Berry acquired the Alcoa Flexible Packaging injection molding assets of Mt. Vernon Plastics Corporation ("Mount Vernon") for aggregate consideration of approximately $2.6 million. The purchase price was allocated to fixed assets ($2.0 million) and inventory ($0.6 million). The purchase was financed through borrowings under the Company's revolving line of credit. The operations of Mount Vernon 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. On January 31, 2002, Berry entered into a sale/leaseback arrangement with respect to the fixed assets. The difference between the sale proceeds and the sum of the purchase price of the fixed assets, moving, installation, and other related transition costs is not expected to be significant. F-34 The pro forma results listed below are unaudited and reflect purchase accounting adjustments assuming the Pescor and Mount Vernon acquisitions occurred on December 31, 2000.
- ------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED ------------------------------- MARCH 30, 2002 MARCH 31, 2001 - ------------------------------------------------------------------------------------- Pro forma net sales................................. $ 124,045 $ 128,557 Pro forma net income................................ 4,814 341 - -------------------------------------------------------------------------------------
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 (amortization through December 29, 2001), net of the applicable income tax effects. 3. LONG-TERM DEBT Long-term debt consists of the following:
- ------------------------------------------------------------------------------------ MARCH 30, DECEMBER 29, 2002 2001 - ------------------------------------------------------------------------------------ Holding 12.50% Senior Secured Notes....................... $ 135,714 $ 135,714 Berry 12.25% Senior Subordinated Notes.................... 125,000 125,000 Berry 11% Senior Subordinated Notes....................... 75,000 75,000 Term loans................................................ 48,802 54,596 Revolving lines of credit................................. 57,818 49,053 Second Lien Senior Credit Facility........................ 25,000 25,000 Nevada Industrial Revenue Bonds........................... 3,000 3,000 Capital leases............................................ 21,897 18,131 Debt premium, net......................................... 350 387 ------------------------ 492,581 485,881 Less current portion of long-term debt.................... 21,124 22,292 ------------------------ $ 471,457 $ 463,589 - ------------------------------------------------------------------------------------
The current portion of long-term debt consists of $16.6 million of monthly installments on the term loans, and $4.5 million in repayments of the industrial bonds and the monthly principal payments related to capital lease obligations. 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 March 30, 2002, 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 $2.1 million (using the March 30, 2002 exchange rate) revolving line of credit denominated in British Sterling in the U.K. ("UK Revolver"), subject to a separate borrowing F-35 base formula, (iii) a $47.2 million term loan facility, (iv) a $1.6 million (using the March 30, 2002 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. CBP Holdings S.r.l. has a revolving credit facility (the "Italy Revolver") from Bank of America for $11.8 million (using the March 30, 2002 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 March 30, 2002 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. At March 30, 2002, the Company had unused borrowing capacity under the US Revolver of approximately $19.7 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. 4. 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 the largest voting stockholder ("Adjusted EBITDA"). One-time expenses primarily represent non-recurring expenses that 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 in the Company's Form 10-K filed with the Securities and Exchange Commission for the year ended December 29, 2001. F-36
- ------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED ------------------------------- MARCH 30, 2002 MARCH 31, 2001 - ------------------------------------------------------------------------------------- Net sales: Containers....................................... $ 58,178 $ 56,402 Closures......................................... 33,463 35,082 Consumer Products................................ 31,293 24,532 Adjusted EBITDA: Containers....................................... 15,859 15,295 Closures......................................... 7,450 7,689 Consumer Products................................ 6,406 4,779 Total assets: Containers....................................... 203,799 208,879 Closures......................................... 158,846 158,891 Consumer Products................................ 101,601 54,379 Reconciliation of Adjusted EBITDA to income before income taxes: Adjusted EBITDA for reportable segments.......... $ 29,715 $ 27,763 Net interest expense............................. (12,806) (13,494) Depreciation..................................... (10,358) (8,665) Amortization..................................... (477) (2,751) Gain (loss) on disposal of property and equipment..................................... (144) 28 One-time expenses................................ (1,142) (1,415) Non-cash compensation............................ - (150) Management fees.................................. (131) (212) ------------------------------- Income before income taxes....................... $ 4,657 $ 1,104 - -------------------------------------------------------------------------------------
5. COMPREHENSIVE INCOME Comprehensive income was $4,479 and $68 for the thirteen weeks ended March 30, 2002 and March 31, 2001, respectively. 6. CONDENSED CONSOLIDATING FINANCIAL INFORMATION 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 $100.0 million aggregate principal amount of 12.25% Berry Plastics Corporation Senior Subordinated Notes due 2004 issued on April 21, 1994 (the "1994 Notes"), the $25.0 million aggregate principal amount of 12.25% Berry Plastics Corporation Series B Senior Subordinated Notes due 2004 issued on August 24, 1998 (the "1998 Notes"), and the $75.0 million aggregate principal amount of 11% Berry Plastics Corporation Senior Subordinated Notes due 2007 issued on July 6, 1999 (the "1999 Notes"). There are no nonguarantor subsidiaries with respect to the notes issued by Berry. Holding's 12.50% Series B Senior Secured Notes due 2006 (the "1996 Notes") are not guaranteed by Berry or any of Berry's wholly owned subsidiaries. The Indenture dated as of April 21, 1994 (the "1994 Indenture"), the Indenture dated August 24, 1998 (the "1998 Indenture") and the Indenture dated July 6, 1999 F-37 (the "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 March 30, 2002 and December 29, 2001 and for the thirteen weeks ended March 30, 2002 and March 31, 2001. The equity method has been used with respect to investments in subsidiaries.
- ----------------------------------------------------------------------------------------------------- MARCH 30, 2002 ----------------------------------------------------------------------- BERRY BPC HOLDING PLASTICS COMBINED CORPORATION CORPORATION GUARANTOR CONSOLIDATING (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED - ----------------------------------------------------------------------------------------------------- CONSOLIDATING BALANCE SHEET Current assets.............. $ 1 $ 39,624 $ 86,583 $ - $ 126,208 Net property and equipment.. - 75,890 131,054 - 206,944 Other noncurrent assets..... 34,691 351,736 110,174 (365,507) 131,094 ----------------------------------------------------------------------- Total assets................ $ 34,692 $ 467,250 $ 327,811 $ (365,507) $ 464,246 ----------------------------------------------------------------------- Current liabilities......... $ 4,936 $ 61,222 $ 31,218 $ - $ 97,376 Noncurrent liabilities...... 167,632 375,335 352,461 (390,682) 504,746 Equity (deficit)............ (137,876) 30,693 (55,868) 25,175 (137,876) ----------------------------------------------------------------------- Total liabilities and equity (deficit)................ $ 34,692 $ 467,250 $ 327,811 $ (365,507) $ 464,246 - -----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------- DECEMBER 29, 2001 ----------------------------------------------------------------------- BERRY BPC HOLDING PLASTICS COMBINED CORPORATION CORPORATION GUARANTOR CONSOLIDATING (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED - ----------------------------------------------------------------------------------------------------- CONSOLIDATING BALANCE SHEET 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 - -----------------------------------------------------------------------------------------------------
F-38
- ----------------------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED MARCH 30, 2002 ----------------------------------------------------------------------- BERRY BPC HOLDING PLASTICS COMBINED CORPORATION CORPORATION GUARANTOR CONSOLIDATING (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED - ----------------------------------------------------------------------------------------------------- CONSOLIDATING STATEMENT OF OPERATIONS Net sales................... $ - $ 42,003 $ 80,931 $ - $ 122,934 Cost of goods sold.......... - 26,786 63,513 - 90,299 ----------------------------------------------------------------------- Gross profit................ - 15,217 17,418 - 32,635 Operating expenses.......... 29 6,250 8,749 - 15,028 ----------------------------------------------------------------------- Operating income (loss)..... (29) 8,967 8,669 - 17,607 Other expenses.............. - 81 63 - 144 Interest expense, net....... 4,354 433 8,019 - 12,806 Income taxes (benefit)...... (155) 8 38 - (109) Equity in net (income) loss from subsidiary.......... (8,994) (549) - 9,543 - ----------------------------------------------------------------------- Net income (loss)........... $ 4,766 $ 8,994 $ 549 $ (9,543) $ 4,766 ----------------------------------------------------------------------- CONSOLIDATING STATEMENT OF CASH FLOWS Net income (loss)........... $ 4,766 $ 8,994 $ 549 $ (9,543) $ 4,766 Non-cash expenses........... 125 3,862 7,623 - 11,610 Equity in net (income) loss from subsidiary.......... (8,994) (549) - 9,543 - Changes in working capital.. 4,075 (5,036) (7,926) - (8,887) ----------------------------------------------------------------------- Net cash provided by (used for) operating activities............... (28) 7,271 246 - 7,489 Net cash used for investing activities............... - (6,152) (6,847) - (12,999) Net cash provided by (used for) financing activities............... (411) (1,050) 7,070 - 5,609 Effect on exchange rate changes on cash.......... - - (557) - (557) ----------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents.............. (439) 69 (88) - (458) Cash and cash equivalents at beginning of period...... 440 121 671 - 1,232 ----------------------------------------------------------------------- Cash and cash equivalents at end of period............ $ 1 $ 190 $ 583 $ - $ 774 - -----------------------------------------------------------------------------------------------------
F-39
- -------------------------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED MARCH 31, 2001 ----------------------------------------------------------------------- BPC BERRY HOLDING PLASTICS COMBINED CORPORATION CORPORATION GUARANTOR CONSOLIDATING (PARENT) (ISSUER) SUBSIDIARIES ADJUSTMENTS CONSOLIDATED - -------------------------------------------------------------------------------------------------------- CONSOLIDATING STATEMENT OF OPERATIONS Net sales...................... $ - $ 39,808 $ 76,208 $ - $ 116,016 Cost of goods sold............. - 26,198 57,729 - 83,927 ----------------------------------------------------------------------- Gross profit................... - 13,610 18,479 - 32,089 Operating expenses............. 179 6,173 11,167 - 17,519 ----------------------------------------------------------------------- Operating income (loss)........ (179) 7,437 7,312 - 14,570 Other expenses (income)........ - (28) - - (28) Interest expense, net.......... 4,338 2,452 6,704 - 13,494 Income taxes................... 7 5 70 - 82 Equity in net (income) loss from subsidiary............. (5,546) (538) - 6,084 - ----------------------------------------------------------------------- Net income (loss).............. $ 1,022 $ 5,546 $ 538 $ (6,084) $ 1,022 ----------------------------------------------------------------------- CONSOLIDATING STATEMENT OF CASH FLOWS Net income (loss).............. $ 1,022 $ 5,546 $ 538 $ (6,084) $ 1,022 Non-cash expenses.............. 4,491 3,371 8,629 - 16,491 Equity in net (income) loss from subsidiary............. (5,546) (538) - 6,084 - Changes in working capital..... 12 (2,793) (12,078) - (14,859) ----------------------------------------------------------------------- Net cash provided by (used for) operating activities........ (21) 5,586 (2,911) - 2,654 Net cash used for investing activities.................. - (4,786) (1,079) - (5,865) Net cash provided by (used for) financing activities........ (13) 724 3,312 - 4,023 Effect on exchange rate changes on cash..................... - - 491 - 491 ----------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents........ (34) 1,524 (187) - 1,303 Cash and cash equivalents at beginning of period......... 220 642 1,192 - 2,054 ----------------------------------------------------------------------- Cash and cash equivalents at end of period............... $ 186 $ 2,166 $ 1,005 $ - $ 3,357 - --------------------------------------------------------------------------------------------------------
F-40 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 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 adopted 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. The following table presents the quarterly results of the Company on a comparable basis:
- --------------------------------------------------------------------------------------- THIRTEEN WEEKS ENDED ------------------------------- MARCH 30, 2002 MARCH 31, 2001 - --------------------------------------------------------------------------------------- Reported net income................................... $ 4,766 $ 1,022 Goodwill amortization, net of tax..................... - 2,071 ------------------------------- Adjusted net income................................... $ 4,766 $ 3,093 - ---------------------------------------------------------------------------------------
Prior to June 29, 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 adopted this standard as of the beginning of fiscal 2002. The application of SFAS No. 144 did not have a material impact on the Company's results of operations and financial position. F-41 LOGO THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. [ALTERNATE FRONT COVER PAGE FOR MARKET-MAKER PROSPECTUS] SUBJECT TO COMPLETION. DATED , 2002 Preliminary Prospectus [BERRY PLASTICS CORPORATION LOGO] Berry Plastics Corporation $250,000,000 10 3/4% Senior Subordinated Notes due 2012 Interest payable January 15 and July 15 The 10 3/4% senior subordinated notes due 2012 offered hereby were issued on , 2002 in exchange for the 10 3/4% senior subordinated notes due 2012 originally issued on July 22, 2002. We refer to the notes issued in the exchange and the original notes collectively as the notes. The notes will mature on July 15, 2012. Interest accrues from July 22, 2002, and the first interest payment date will be January 15, 2003. We may redeem the notes, in whole or part, at any time beginning on July 15, 2007. In addition, before July 15, 2005, we may redeem up to 35% of the notes with the net cash proceeds of certain equity offerings. The redemption prices are described on page 82. If we sell certain of our assets or experience specific kinds of changes in control, we must offer to purchase the notes. The notes are guaranteed by BPC Holding Corporation, and all of our existing and future domestic subsidiaries, except as provided herein. The notes are not guaranteed by our foreign subsidiaries: Berry Plastics Acquisition Corporation II, NIM Holdings Limited, Berry Plastics U.K. Limited, Norwich Acquisition Limited, CBP Holdings S.r.l., Capsol Berry Plastics S.p.a. or Ociesse S.r.l. The notes will not be guaranteed by any foreign subsidiaries in the future unless any such foreign subsidiary guarantees any senior indebtedness of ours or any of our subsidiaries (other than that of another foreign subsidiary). The notes are subordinated in right of payment to all obligations of our non-guarantors subsidiaries. The notes are also subordinated in right of payment to all existing and future senior indebtedness, rank equally in right of payment with any existing and future senior subordinated indebtedness and are senior in right of payment to all future subordinated obligations. The notes are also effectively subordinated to all of our secured indebtedness and our subsidiaries' to the extent of the value of the assets securing such indebtedness. We do not intend to apply for listing of the notes on any securities exchange or automated quotation system. Certain private equity funds managed by affiliates of Goldman, Sachs & Co. and J.P. Morgan Securities Inc. will own a substantial majority of the equity of BPC Holding, our parent company. SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN RISKS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE NOTES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- This prospectus has been prepared for and will be used by J.P. Morgan Securities Inc. and Goldman, Sachs & Co. in connection with offers and sales of the notes in market-making transactions in the notes. These transactions may occur at prices related to prevailing market prices at the time of sales or at negotiated prices. J.P. Morgan Securities Inc. and Goldman, Sachs & Co. may act as principal or agent in these transactions. We will not receive any proceeds of such sales. JPMORGAN GOLDMAN, SACHS & CO. , 2002 [ALTERNATE TABLE OF CONTENTS FOR MARKET-MAKER PROSPECTUS] TABLE OF CONTENTS
PAGE Prospectus summary.................... 1 Risk factors.......................... 8 The acquisition....................... 19 Use of proceeds....................... 21 Capitalization........................ 22 Unaudited pro forma financial information......................... 23 Selected consolidated financial data................................ 32 Management's discussion and analysis of financial condition and results of operations....................... 34 Business.............................. 43 Management............................ 56 Principal stockholders................ 63
PAGE Related party transactions............ 64 Description of other indebtedness..... 66 Description of notes.................. 70 Registration rights; additional interest............................ 131 Material U.S. federal tax considerations...................... 133 ERISA considerations.................. 140 Plan of distribution.................. 142 Legal matters......................... 143 Independent auditors.................. 143 Incorporation of certain documents by reference........................... 143 Index to financial statements......... F-1
--------------------- Berry Plastics Corporation is a Delaware corporation. Our principal executive offices are located at 101 Oakley Street, Evansville, Indiana, 47710, and our telephone number at that address is 812-424-2904. In this prospectus, unless the context otherwise requires, "BPC Holding" or "Holding" refers to BPC Holding Corporation, "we," "our" or "us" refer to BPC Holding Corporation together with its consolidated subsidiaries, "Berry Plastics" refers to Berry Plastics Corporation, a wholly owned subsidiary of BPC Holding and the issuer of the notes, and "initial purchasers" refers to the firms listed on the cover of this prospectus. Unless otherwise indicated, all references in this prospectus to fiscal years are to the 52/53 week period ending on the Saturday closest to December 31. Unless the context requires otherwise, all references in this prospectus to "2001," "2000," "1999," "1998" and "1997," or to such periods as fiscal years, relate to the fiscal years ended December 29, 2001, December 30, 2000, January 1, 2000, January 2, 1999 and December 27, 1997, respectively. --------------------- "Outstanding notes" refers to all the 10 3/4% senior subordinated notes due 2012 that were issued on July 22, 2002 and "exchange notes" refers to the 10 3/4% senior subordinated notes due 2012 offered pursuant to this prospectus. We sometimes refer to the outstanding notes and the exchange notes collectively as the "notes." --------------------- NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY US. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER TO SELL OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. [ALTERNATE PAGE FOR MARKET-MAKER PROSPECTUS] USE OF PROCEEDS This prospectus is delivered in connection with the sale of notes by Goldman, Sachs & Co. or J.P. Morgan Securities Inc. in market-making transactions. We will not receive any of the proceeds from such transaction. [ALTERNATE PAGE FOR MARKET-MAKER PROSPECTUS] PLAN OF DISTRIBUTION This prospectus is to be used by Goldman, Sachs & Co. and J.P. Morgan Securities Inc. in connection with offers and sales of the notes in market-making transactions effected from time to time. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. may act as principal or agent in such transactions. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. We will not receive any of the proceeds from such sales. At the closing of the Acquisition,private equity funds affiliated with Goldman, Sachs & Co. owned approximately 65% of our common stock and equity funds affiliated with J.P. Morgan Securities Inc. owned approximately 30% of our common stock. See "Principal Stockholders." We have been advised by Goldman, Sachs & Co. and J.P. Morgan Securities that, subject to applicable laws and regulations, they currently intend to make a market in the notes following the completion of the exchange offer. However, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are not obligated to do so, and any such market-making may be interrupted or discontinued at any time without notice. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. and their affiliates have provided us with commercial banking, investment banking or other financial advisory services in the past and may provide such services to us in the future. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. acted as initial purchasers in connection with the original sale of the notes and received customary fees and were reimbursed expenses incurred in connection therewith. See "Related party transactions -- Goldman Sachs Capital Partners 2000 and J.P. Morgan Partners Global Investors, L.P." We, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. have entered into a registration rights agreement with respect to the use by Goldman, Sachs & Co. and J.P. Morgan Securities Inc. of this prospectus. Pursuant to such agreement, we agreed to indemnify Goldman, Sachs & Co. and J.P. Morgan Securities Inc. against certain liabilities, including liabilities under the Securities Act and to contribute to payments which Goldman, Sachs & Co. and J.P. Morgan Securities Inc. might be required to make in respect thereof. Pursuant to a stockholders' agreement entered into in connection with the Acquisition, GSCP 2000 and other private equity funds affiliated with Goldman, Sachs & Co. have the right to designate five members of our board of directors, one of which shall be a member of our management, and J.P. Morgan Partners Global Investors, L.P. and other private equity funds affiliated with J.P. Morgan Securities Inc. have the right to designate two members of our board, one of which will be designated by J.P. Morgan Partners Global Investors, L.P. See "Related party transactions -- Stockholders' agreements." PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. We are incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law ("DGCL") provides that a Delaware corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits and proceedings, whether civil, criminal, administrative or investigative (other than action by or in the right of the Corporation - a "derivative action"), if they acted in good faith an in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's certificate of incorporation, bylaws, disinterested director vote, stockholder vote, agreement, or otherwise. The DGCL further authorizes a Delaware corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145. The Company's Certificate of Incorporation and Bylaws provide for the indemnification of the Company's directors to the fullest extent permitted under Delaware law. The Company's Certificate of Incorporation limits the personal liability of a director to the corporation or its stockholders to damages for breach of the director's fiduciary duty. The Company has purchased insurance on behalf of its directors and officers. II-1 ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES (a) EXHIBITS The following is a list of all the documents filed as party of the Registration Statement
NUMBER DESCRIPTION - ------ ----------- 2.1 Agreement and Plan of Merger, dated as of May 25, 2002, among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on July 31, 2002 (the "Form 8-K") and incorporated herein by reference) 2.2 First Amendment dated as of July 17, 2002 among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots to the Agreement and Plan of Merger, dated as of May 25, 2002. (filed as Exhibit 2.2 to the Form 8-K and incorporated herein by reference) 2.3 Second Amendment dated as of July 22, 2002 among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots to the Agreement and Plan of Merger, dated as of May 25, 2002. (filed as Exhibit 2.3 to the Form 8-K and incorporated herein by reference) 3.1 Certificate of Incorporation of the Company (filed as Exhibit 3.3 to the Registration Statement on Form S-1 filed on February 24, 1994 (the "Form S-1") and incorporated herein by reference) 3.2 Bylaws of the Company (filed as Exhibit 3.4 to the Form S-1 and incorporated herein by reference) 3.3 Amended and Restated Certificate of Incorporation of BPC Holding Corporation ("Holding") (filed as Exhibit 4.1 to the Form S-8 filed on August 6, 2006 (the "Form S-8") and incorporated herein by reference) 3.4 Amended and Restated Bylaws of Holding (filed as Exhibit 4.2 to the Form S-8 and incorporated herein by reference) 4.1* The Indenture, dated as of July 22, 2002, among BPC Holding Corporation, the Company, the other guarantors listed on the signature page thereof, and U.S. Bank Trust National Association, as trustee relating to the 10 3/4% Senior Subordinated Notes due 2012
II-2
NUMBER DESCRIPTION - ------ ----------- 4.2* The Registration Rights Agreement, dated July 22, 2002, among BPC Holding, the Company, the other guarantors listed on the signature page thereof, and J.P. Morgan Securities Inc., Goldman Sachs & Co., the Royal Bank of Scotland and Credit Suisse First Boston Corporation, as Initial Purchasers relating to the 10 3/4% Senior Subordinated Notes due 2012 4.3* Supplemental Indenture, dated as of August 6, 2002, among the Company, BPC Holding Corporation, Berry Iowa Corporation, Packerware Corporation, Knight Plastics, Inc., Berry Sterling Corporation, Berry Plastic Design Corporation, Poly-Seal Corporation, Berry Plastics Acquisitions Corporation III, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding Corporation, Aerocon, Inc., Pescor, Inc., Berry Tri-Plas Corporation and Cardinal Packaging, Inc., the new guarantors listed on the signature page thereof, and U.S. Bank Trust National Association, as trustee 5.1* Opinion of Fried, Frank, Harris, Shriver & Jacobson, as to the legality of the securities 10.1* Stockholders Agreement dated as of July 22, 2002, among BPC Holding Corporation, GS Capital Partners 2000, L.P., GS Capital Partners Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P., Bridge Street Special Opportunities Fund 2000, L.P., Goldman Sachs Direct Investment Fund 2000, L.P., J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P. and J.P. Morgan Partners Global Investors A, L.P. 10.2 Stockholders Agreement dated as of July 22, 2002, among BPC Holding Corporation, and those stockholders listed on Schedule A attached thereto (filed as Exhibit 4.6 to the Form S-8 and incorporated herein by reference) 10.3* Credit and Guaranty Agreement, dated as of July 22, 2002, among Berry Plastics Corporation, BPC Holding Corporation, certain Subsidiaries of Berry Plastics Corporation, as guarantors, various lenders, Goldman Sachs Credit Partners, L.P., JP Morgan Chase Bank, Fleet National Bank, The Royal Bank of Scotland and General Electric Capital Corporation 10.4 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) 10.5 Amendment to Beeler Employment Agreement dated November 30, 1995 (filed as Exhibit 10.8 to the Annual report on Form 10-K filed on March 28, 1996 (the "1995 Form 10-K") and incorporated herein by reference) 10.6 Amendment to Beeler Employment Agreement dated June 30, 1996 (filed as Exhibit 10.7 to the Registration Statement on Form S-4 filed on July 17, 1996 (the "1996 Form S-4") and incorporated herein by reference) 10.7 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) 10.8 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) 10.9 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)
II-3
NUMBER DESCRIPTION - ------ ----------- 10.10 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) 10.11 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) 10.12 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) 10.13 Employment Agreement dated as of January 21, 1997, between the Company and Bruce J. Sims ("Sims") (filed as Exhibit 10.14 to the Form 10-K filed March 29, 2000 (the "1999 Form 10-K") and incorporated herein by reference) 10.14 Financing Agreement dated as of April 1, 1991, between the City of Henderson, Nevada Public Improvement Trust and the Company (including exhibits) (filed as Exhibit 10.17 to the Form S-1 and incorporated herein by reference) 10.15* Employment Agreement dated as of August 14, 2000, between the Company and William J. Herdrich 10.16 BPC Holding Corporation 2002 Stock Option Plan dated August 5, 2002 (filed as Exhibit 4.7 to the Form S-8 and incorporated herein by reference) 10.17 BPC Holding Corporation Key Employee Equity Investment Program dated August 6, 2002 (filed as Exhibit 4.6 to the Form S-8 and incorporated herein by reference) 10.18* Pledge and Security Agreement dated as of July 22, 2002, between Berry Plastics Corporation, and the other grantors party thereto and Fleet National Bank, as the Collateral Agent 10.19* Amendment to Beeler Employment Agreement dated as of June 30, 2001 10.20* Amendment to Boots Employment Agreement dated as of June 30, 2001 10.21* Amendment to Kratochvil Employment Agreement dated as of June 30, 2001 10.22* Amendment to Sims Employment Agreement dated as of July 16, 2002 12.1* Ratio of earnings to fixed charges 21.1* List of Subsidiaries 23.1* Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1) 23.2* Consent of Ernst & Young LLP 24.1* Powers of Attorney (included in the signature pages to this Registration Statement) 25.1* Statement of Eligibility and Qualification of Trustee on Form T-1 of U.S. Bank Trust National Association under the Trust Indenture Act of 1939 99.1* Form of Letter of Transmittal, with respect to outstanding notes and exchange notes 99.2* Form of Notice of Guaranteed Delivery, with respect to outstanding notes and exchange notes 99.3* Form of Instructions to Registered Holder and/or Book-Entry Transfer Facility Participant From Beneficial Owners 99.4* Letter to Our Clients
- --------------- * Filed herewith (b) FINANCIAL STATEMENT SCHEDULE: Schedule II Valuation and Qualifying Accounts. II-4 ITEM 22. UNDERTAKINGS The Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424Ib) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) to remove from registration means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; (4) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request; (5) to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective; and (6) to file an application for purposes of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the SEC under Section 305(b)(20) of the Trust Indenture Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer of controlling II-5 person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-6 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Berry Plastics Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Evansville, State of Indiana on August 8, 2002. Berry Plastics Corporation By: /s/ JAMES M. KRATOCHVIL ------------------------------------ James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director The undersigned directors and officers of Berry Plastics Corporation hereby constitute and appoint James M. Kratochvil and Ira G. Boots and each of them with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below this Registration Statement on Form S-4 and any and all amendments thereto, including post- effective amendments to this Registration Statement and to sign any and all additional registration statements relating to the same offering of securities as this Registration Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and hereby ratify and confirm that all such attorneys-in- fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on August 8, 2002.
SIGNATURE TITLE - --------- ----- /s/ IRA G. BOOTS President, Chief Executive Officer, and - ----------------------------------------------------- Director (Principal Executive Officer) IRA G. BOOTS /s/ JAMES M. KRATOCHVIL Executive Vice President, Chief Financial - ----------------------------------------------------- Officer, Treasurer, Secretary and Director JAMES M. KRATOCHVIL (Principal Financial Officer) /s/ JOSEPH GLEBERMAN Chairman of the Board - ----------------------------------------------------- JOSEPH GLEBERMAN /s/ CHRISTOPHER C. BEHRENS Director - ----------------------------------------------------- CHRISTOPHER C. BEHRENS
II-7
SIGNATURE TITLE - --------- ----- /s/ PATRICK J. DALTON Director - ----------------------------------------------------- PATRICK J. DALTON /s/ DOUGLAS F. LONDAL Director - ----------------------------------------------------- DOUGLAS F. LONDAL /s/ MATHEW J. LORI Director - ----------------------------------------------------- MATHEW J. LORI
II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, BPC Holding Corporation has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Evansville, State of Indiana on August 8, 2002. BPC Holding Corporation By: /s/ JAMES M. KRATOCHVIL ------------------------------------ James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer, Secretary and Director The undersigned directors and officers of BPC Holding Corporation hereby constitute and appoint James M. Kratochvil and Ira G. Boots and each of them with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below this Registration Statement on Form S-4 and any and all amendments thereto, including post- effective amendments to this Registration Statement and to sign any and all additional registration statements relating to the same offering of securities as this Registration Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and hereby ratify and confirm that all such attorneys-in- fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on August 8, 2002.
SIGNATURE TITLE - --------- ----- /s/ IRA G. BOOTS President, Chief Executive Officer and - ----------------------------------------------------- Director (Principal Executive Officer) IRA G. BOOTS /s/ JAMES M. KRATOCHVIL Executive Vice President, Chief Financial - ----------------------------------------------------- Officer, Treasurer, Secretary and Director JAMES M. KRATOCHVIL (Principal Financial Officer) /s/ JOSEPH GLEBERMAN Chairman of the Board - ----------------------------------------------------- JOSEPH GLEBERMAN /s/ CHRISTOPHER C. BEHRENS Director - ----------------------------------------------------- CHRISTOPHER C. BEHRENS
II-9
SIGNATURE TITLE - --------- ----- /s/ PATRICK J. DALTON Director - ----------------------------------------------------- PATRICK J. DALTON /s/ DOUGLAS F. LONDAL Director - ----------------------------------------------------- DOUGLAS F. LONDAL /s/ MATHEW J. LORI Director - ----------------------------------------------------- MATHEW J. LORI
II-10 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Berry Iowa Corporation, Packerware Corporation, Knight Plastics, Inc., Berry Sterling Corporation, Berry Plastics Design Corporation, Poly-Seal Corporation, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Aero Con, Inc., Berry Tri-Plas Corporation, Berry Plastics Acquisition Corporation III, Pescor, Inc., Berry Plastics Acquisition Corporation IV, Berry Plastics Acquisition Corporation V, Berry Plastics Acquisition Corporation VI, Berry Plastics Acquisition Corporation VII, Berry Plastics Acquisition Corporation VIII, Berry Plastics Acquisition Corporation IX, Berry Plastics Acquisition Corporation X, Berry Plastics Acquisition Corporation XI, Berry Plastics Acquisition Corporation XII, and Berry Plastics Acquisition Corporation XIII, each has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Evansville, State of Indiana on August 8, 2002. BERRY IOWA CORPORATION PACKERWARE CORPORATION KNIGHT PLASTICS, INC. BERRY STERLING CORPORATION BERRY PLASTICS DESIGN CORPORATION POLY-SEAL CORPORATION VENTURE PACKAGING, INC. VENTURE PACKAGING MIDWEST, INC. BERRY PLASTICS TECHNICAL SERVICES, INC. CPI HOLDING CORPORATION CARDINAL PACKAGING, INC. AERO CON, INC. BERRY TRI-PLAS CORPORATION BERRY PLASTICS ACQUISITION CORPORATION III PESCOR, INC. BERRY PLASTICS ACQUISITION CORPORATION IV BERRY PLASTICS ACQUISITION CORPORATION V BERRY PLASTICS ACQUISITION CORPORATION VI BERRY PLASTICS ACQUISITION CORPORATION VII BERRY PLASTICS ACQUISITION CORPORATION VIII BERRY PLASTICS ACQUISITION CORPORATION IX BERRY PLASTICS ACQUISITION CORPORATION X BERRY PLASTICS ACQUISITION CORPORATION XI BERRY PLASTICS ACQUISITION CORPORATION XII BERRY PLASTICS ACQUISITION CORPORATION XIII By: /s/ JAMES M. KRATOCHVIL ----------------------------------------- James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary II-11 The undersigned directors and officers of Berry Iowa Corporation, Packerware Corporation, Knight Plastics, Inc., Berry Sterling Corporation, Berry Plastics Design Corporation, Poly-Seal Corporation, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding Corporation, Cardinal Packaging, Inc., Aero Con, Inc., Berry Tri-Plas Corporation, Berry Plastics Acquisition Corporation III, Pescor, Inc., Berry Plastics Acquisition Corporation IV, Berry Plastics Acquisition Corporation V, Berry Plastics Acquisition Corporation VI, Berry Plastics Acquisition Corporation VII, Berry Plastics Acquisition Corporation VIII, Berry Plastics Acquisition Corporation IX, Berry Plastics Acquisition Corporation X, Berry Plastics Acquisition Corporation XI, Berry Plastics Acquisition Corporation XII, and Berry Plastics Acquisition Corporation XIII constitute and appoint James M. Kratochvil and Ira G. Boots and each of them with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below this Registration Statement on Form S-4 and any and all amendments thereto, including post-effective amendments to this Registration Statement and to sign any and all additional registration statements relating to the same offering of securities as this Registration Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and hereby ratify and confirm that all such attorneys-in-fact, or any of them, or their or their substitutes shall lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on August 8, 2002.
SIGNATURE TITLE - --------- ----- /s/ IRA G. BOOTS President, Chief Executive Officer, and - ----------------------------------------------------- Director (Principal Executive Officer) IRA G. BOOTS /s/ JAMES M. KRATOCHVIL Executive Vice President, Chief Financial - ----------------------------------------------------- Officer, Treasurer, Secretary and Director JAMES M. KRATOCHVIL (Principal Financial Officer)
II-12 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Berry Plastics Acquisition Corporation XIV, LLC, and Berry Plastics Acquisition Corporation XV, LLC, each has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Evansville, State of Indiana on August 8, 2002. BERRY PLASTICS ACQUISITION CORPORATION XIV, LLC BERRY PLASTICS ACQUISITION CORPORATION XV, LLC By: /s/ JAMES M. KRATOCHVIL ------------------------------------ James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary The undersigned managers and officers of Berry Plastics Acquisition Corporation XIV, LLC, and Berry Plastics Acquisition Corporation XV LLC constitute and appoint James M. Kratochvil and Ira G. Boots and each of them with full power to act without the other and with full power of substitution and resubstitution, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below this Registration Statement on Form S-4 and any and all amendments thereto, including post-effective amendments to this Registration Statement and to sign any and all additional registration statements relating to the same offering of securities as this Registration Statement that are filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and hereby ratify and confirm that all such attorneys-in-fact, or any of them, or their or their substitutes shall lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on August 8, 2002.
SIGNATURE TITLE - --------- ----- /s/ IRA G. BOOTS President, Chief Executive Officer, and - ----------------------------------------------------- Manager (Principal Executive Officer) IRA G. BOOTS /s/ JAMES M. KRATOCHVIL Executive Vice President, Chief Financial - ----------------------------------------------------- Officer, Treasurer, Secretary and Manager JAMES M. KRATOCHVIL (Principal Financial Officer)
II-13 SCHEDULE II BPC HOLDING CORPORATION SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------ CHARGED TO BALANCE AT CHARGED TO OTHER BALANCE AT BEGINNING COSTS AND ACCOUNTS-- DEDUCTIONS-- END OF DESCRIPTION OF YEAR EXPENSES DESCRIBE DESCRIBE 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. II-14 EXHIBIT INDEX
NUMBER DESCRIPTION - ------ ----------- 2.1 Agreement and Plan of Merger, dated as of May 25, 2002, among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots. (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on July 31, 2002 (the "Form 8-K") and incorporated herein by reference) 2.2 First Amendment dated as of July 17, 2002 among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots to the Agreement and Plan of Merger, dated as of May 25, 2002. (filed as Exhibit 2.2 to the Form 8-K and incorporated herein by reference) 2.3 Second Amendment dated as of July 22, 2002 among GS Berry Acquisition Corp., GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, BPC Holding Corporation, Berry Plastics Corporation, the Stockholders listed on Schedule 1 attached thereto, Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and Ira G. Boots to the Agreement and Plan of Merger, dated as of May 25, 2002. (filed as Exhibit 2.3 to the Form 8-K and incorporated herein by reference) 3.1 Certificate of Incorporation of the Company (filed as Exhibit 3.3 to the Registration Statement on Form S-1 filed on February 24, 1994 (the "Form S-1") and incorporated herein by reference) 3.2 Bylaws of the Company (filed as Exhibit 3.4 to the Form S-1 and incorporated herein by reference) 3.3 Amended and Restated Certificate of Incorporation of BPC Holding Corporation ("Holding") (filed as Exhibit 4.1 to the Form S-8 filed on August 6, 2002 (the "Form S-8") and incorporated herein by reference) 3.4 Amended and Restated Bylaws of Holding (filed as Exhibit 4.2 to the Form S-8 and incorporated herein by reference) 4.1* The Indenture, dated as of July 22, 2002, among BPC Holding Corporation, the Company, the other guarantors listed on the signature page thereof, and U.S. Bank Trust National Association, as trustee relating to the 10 3/4% Senior Subordinated Notes due 2012 4.2* The Registration Rights Agreement, dated July 22, 2002, among BPC Holding, the Company, the other guarantors listed on the signature page thereof, and J.P. Morgan Securities Inc., Goldman Sachs & Co., the Royal Bank of Scotland and Credit Suisse First Boston Corporation, as Initial Purchasers relating to the 10 3/4% Senior Subordinated Notes due 2012
NUMBER DESCRIPTION - ------ ----------- 4.3* Supplemental Indenture, dated as of August 6, 2002, among the Company BPC Holding Corporation, Berry Iowa Corporation, Packerware Corporation, Knight Plastics, Inc., Berry Sterling Corporation, Berry Plastic Design Corporation, Poly-Seal Corporation, Berry Plastics Acquisitions Corporation III, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding Corporation, Aerocon, Inc., Pescor, Inc., Berry Tri-Plas Corporation and Cardinal Packaging, Inc., the new guarantors listed on the signature page thereof, and U.S. Bank Trust National Association, as trustee 5.1* Opinion of Fried, Frank, Harris, Shriver & Jacobson, as to the legality of the securities 10.1* Stockholders Agreement dated as of July 22, 2002, among BPC Holding Corporation, GS Capital Partners 2000, L.P., GS Capital Partners Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P., Bridge Street Special Opportunities Fund 2000, L.P., Goldman Sachs Direct Investment Fund 2000, L.P., J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P. and J.P. Morgan Partners Global Investors A, L.P. 10.2 Stockholders Agreement dated as of July 22, 2002, among BPC Holding Corporation, and those stockholders listed on Schedule A attached thereto (filed as Exhibit 4.6 to the Form S-8 and incorporated herein by reference) 10.3* Credit and Guaranty Agreement, dated as of July 22, 2002, among Berry Plastics Corporation, BPC Holding Corporation, certain Subsidiaries of Berry Plastics Corporation, as guarantors, various lenders, Goldman Sachs Credit Partners, L.P., JP Morgan Chase Bank, Fleet National Bank, The Royal Bank of Scotland and General Electric Capital Corporation 10.4 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) 10.5 Amendment to Beeler Employment Agreement dated November 30, 1995 (filed as Exhibit 10.8 to the Annual report on Form 10-K filed on March 28, 1996 (the "1995 Form 10-K") and incorporated herein by reference) 10.6 Amendment to Beeler Employment Agreement dated June 30, 1996 (filed as Exhibit 10.7 to the Registration Statement on Form S-4 filed on July 17, 1996 (the "1996 Form S-4") and incorporated herein by reference) 10.7 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) 10.8 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) 10.9 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) 10.10 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) 10.11 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) 10.12 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)
NUMBER DESCRIPTION - ------ ----------- 10.13 Employment Agreement dated as of January 21, 1997, between the Company and Bruce J. Sims ("Sims")(filed as Exhibit 10.14 to the Form 10-K filed March 29, 2000 (the "1999 Form 10-K") and incorporated herein by reference) 10.14 Financing Agreement dated as of April 1, 1991, between the City of Henderson, Nevada Public Improvement Trust and the Company (including exhibits) (filed as Exhibit 10.17 to the Form S-1 and incorporated herein by reference) 10.15* Employment Agreement dated as of August 14, 2000, between the Company and William J. Herdrich 10.16 BPC Holding Corporation 2002 Stock Option Plan dated August 5, 2002 (filed as Exhibit 4.7 to the Form S-8 and incorporated herein by reference) 10.17 BPC Holding Corporation Key Employee Equity Investment Program dated August 6, 2002 (filed as Exhibit 4.6 to the Form S-8 and incorporated herein by reference) 10.18* Pledge and Security Agreement dated as of July 22, 2002, between Berry Plastics Corporation, and the other grantors party thereto and Fleet National Bank, as the Collateral Agent. 10.19* Amendment to Beeler Employment Agreement dated as of June 30, 2001 10.20* Amendment to Boots Employment Agreement dated as of June 30, 2001 10.21* Amendment to Kratochvil Employment Agreement dated as of June 30, 2001 10.22* Amendment to Sims Employment Agreement dated as of July 16, 2002 12.1* Ratio of earnings to fixed charges 21.1* List of Subsidiaries 23.1* Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1) 23.2* Consent of Ernst & Young LLP 24.1* Powers of Attorney (included in the signature pages to this Registration Statement) 25.1* Statement of Eligibility and Qualification of Trustee on Form T-1 of U.S. Bank Trust National Association under the Trust Indenture Act of 1939 99.1* Form of Letter of Transmittal, with respect to outstanding notes and exchange notes 99.2* Form of Notice of Guaranteed Delivery, with respect to outstanding notes and exchange notes 99.3* Form of Instructions to Registered Holder and/or Book-Entry Transfer Facility Participant From Beneficial Owners 99.4* Letter to Our Clients
- --------------- * Filed herewith. EX-4.1 3 y62674exv4w1.txt INDENTURE EXHIBIT 4.1 - -------------------------------------------------------------------------------- BERRY PLASTICS CORPORATION 10 3/4 % Senior Subordinated Notes due 2012 INDENTURE Dated as of July 22, 2002 U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions................................................. 1 SECTION 1.02. Other Definitions........................................... 20 SECTION 1.03. Incorporation by Reference of Trust Indenture Act........... 21 SECTION 1.04. Rules of Construction....................................... 21 ARTICLE 2 THE NOTES SECTION 2.01. Amount of Notes; Issuable in Series........................ 22 SECTION 2.02. Form and Dating............................................ 23 SECTION 2.03. Execution and Authentication............................... 23 SECTION 2.04. Registrar and Paying Agent................................. 23 SECTION 2.05. Paying Agent to Hold Money in Trust........................ 24 SECTION 2.06. Holder Lists............................................... 24 SECTION 2.07. Transfer and Exchange...................................... 25 SECTION 2.08. Replacement Notes.......................................... 25 SECTION 2.09. Outstanding Notes.......................................... 26 SECTION 2.10. Temporary Notes............................................ 26 SECTION 2.11. Cancelation................................................ 26 SECTION 2.12. Defaulted Interest......................................... 26 SECTION 2.13. CUSIP and ISIN Numbers..................................... 27 SECTION 2.14. Computation of Interest.................................... 27
ARTICLE 3 REDEMPTION SECTION 3.01. Notices to Trustee......................................... 27 SECTION 3.02. Selection of Notes To Be Redeemed.......................... 27 SECTION 3.03. Notice of Redemption....................................... 27 SECTION 3.04. Effect of Notice of Redemption............................. 28 SECTION 3.05. Deposit of Redemption Price................................ 28 SECTION 3.06. Notes Redeemed in Part..................................... 29 ARTICLE 4 COVENANTS SECTION 4.01. Payment of Notes........................................... 29 SECTION 4.02. SEC Reports................................................ 29 SECTION 4.03. Limitation of Indebtedness................................. 29 SECTION 4.04. Limitation on Restricted Payments.......................... 33 SECTION 4.05. Limitation on Restrictions on Distributions from Restricted Subsidiaries.................................. 38 SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock......... 40 SECTION 4.07. Limitation on Transactions with Affiliates................. 43 SECTION 4.08. Change of Control.......................................... 45 SECTION 4.09. Compliance Certificate..................................... 47 SECTION 4.10. Further Instruments and Acts............................... 47 SECTION 4.11. Future Note Guarantors and Release of Note Guarantors...... 47 SECTION 4.12. Trustee Has No Obligation to Monitor....................... 48 ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. When Company May Merge or Transfer Assets.................. 48
ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default.......................................... 49 SECTION 6.02. Acceleration............................................... 51 SECTION 6.03. Other Remedies............................................. 52 SECTION 6.04. Waiver of Past Defaults.................................... 52 SECTION 6.05. Control by Majority........................................ 52 SECTION 6.06. Limitation on Suits........................................ 52 SECTION 6.07. Rights of Holders to Receive Payment....................... 53 SECTION 6.08. Collection Suit by Trustee................................. 53 SECTION 6.09. Trustee May File Proofs of Claim........................... 53 SECTION 6.10. Priorities................................................. 53 SECTION 6.11. Undertaking for Costs...................................... 54 SECTION 6.12. Waiver of Stay or Extension Laws........................... 54 ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee.......................................... 54 SECTION 7.02. Rights of Trustee.......................................... 55 SECTION 7.03. Individual Rights of Trustee............................... 56 SECTION 7.04. Trustee's Disclaimer....................................... 56 SECTION 7.05. Notice of Defaults......................................... 56 SECTION 7.06. Reports by Trustee to Holders.............................. 57 SECTION 7.07. Compensation and Indemnity................................. 57 SECTION 7.08. Replacement of Trustee..................................... 58 SECTION 7.09. Successor Trustee by Merger................................ 59 SECTION 7.10. Eligibility; Disqualification.............................. 59 SECTION 7.11. Preferential Collection of Claims Against Company.......... 59
ARTICLE 8 DISCHARGE OF INDENTURE, DEFEASANCE SECTION 8.01. Discharge of Liability on Notes; Defeasance................ 59 SECTION 8.02. Conditions to Defeasance................................... 60 SECTION 8.03. Application of Trust Money................................. 61 SECTION 8.04. Repayment to Company....................................... 62 SECTION 8.05. Indemnity for Government Obligations....................... 62 SECTION 8.06. Reinstatement.............................................. 62 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders................................. 62 SECTION 9.02. With Consent of Holders.................................... 63 SECTION 9.03. Compliance with Trust Indenture Act........................ 64 SECTION 9.04. Revocation and Effect of Consents and Waivers.............. 64 SECTION 9.05. Notation on or Exchange of Notes........................... 65 SECTION 9.06. Trustee to Sign Amendments................................. 65 SECTION 9.07. Payment for Consent........................................ 65 ARTICLE 10 SUBORDINATION SECTION 10.01. Agreement to Subordinate................................... 66 SECTION 10.02. Liquidation, Dissolution, Bankruptcy....................... 66 SECTION 10.03. Default on Senior Indebtedness............................. 66
SECTION 10.04. Acceleration of Payment of Notes........................... 68 SECTION 10.05. When Distribution Must Be Paid Over........................ 68 SECTION 10.06. Subrogation................................................ 68 SECTION 10.07. Relative Rights............................................ 68 SECTION 10.08. Subrogation May Not Be Impaired by Company................. 69 SECTION 10.09. Rights of Trustee and Payment Agent........................ 69 SECTION 10.10. Distribution or Notice to Representative................... 69 SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right to Accelerate...................................... 69 SECTION 10.12. Trust Monies Not Subordinated.............................. 69 SECTION 10.13. Trustee Entitled to Rely................................... 69 SECTION 10.14. Trustee to Effectuate Subordination........................ 70 SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness............................................. 70 SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions................................. 70 ARTICLE 11 NOTE GUARANTEES SECTION 11.01. Note Guarantees............................................ 70 SECTION 11.02. Limitation on Liability.................................... 73 SECTION 11.03. Successors and Assigns..................................... 73 SECTION 11.04. No Waiver.................................................. 73 SECTION 11.05. Modification............................................... 73 SECTION 11.06. Execution of Supplemental Indenture for Future Note Guarantors.......................................... 74 SECTION 11.07. Release of Note Guarantees................................. 74 SECTION 11.08. Non-Impairment............................................. 74
ARTICLE 12 SUBORDINATION OF THE NOTE GUARANTEES SECTION 12.01. Agreement to Subordinate................................... 74 SECTION 12.02. Liquidation, Dissolution, Bankruptcy....................... 75 SECTION 12.03. Default on Designated Senior Indebtedness of a Note Guarantor........................................... 75 SECTION 12.04. Demand for Payment......................................... 76 SECTION 12.05. When Distribution Must Be Paid Over........................ 77 SECTION 12.06. Subrogation................................................ 77 SECTION 12.07. Relative Rights............................................ 77 SECTION 12.08. Subordination May Not Be Impaired by a Note Guarantor................................................ 77 SECTION 12.09. Rights of Trustee and Paying Agent......................... 77 SECTION 12.10. Distribution or Notice to Representative................... 78 SECTION 12.11. Article 12 Not To Prevent Events of Default or Limit Right To Accelerate................................ 78 SECTION 12.12. Trustee Entitled to Rely................................... 78 SECTION 12.13. Trustee To Effectuate Subordination........................ 78 SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of a Note Guarantor......................... 79 SECTION 12.15. Reliance by Holders of Senior Indebtedness of a Note Guarantor on Subordination Provisions............... 79 SECTION 12.16. Trust Monies Not Subordinated.............................. 79 ARTICLE 13 MISCELLANEOUS SECTION 13.01. Trust Indenture Act Controls............................... 79 SECTION 13.02. Notices.................................................... 80 SECTION 13.03. Communication by Holders with Other Holders................ 80 SECTION 13.04. Certificate and Opinion as to Conditions Precedent......... 81
SECTION 13.05. Statements Required in Certificate or Opinion.............. 81 SECTION 13.06. When Notes Disregarded..................................... 81 SECTION 13.07. Rules by Trustee, Paying Agent and Registrar............... 81 SECTION 13.08. Legal Holidays............................................. 81 SECTION 13.09. Governing Law.............................................. 82 SECTION 13.10. No Recourse Against Others................................. 82 SECTION 13.11. Successors................................................. 82 SECTION 13.12. Multiple Originals......................................... 82 SECTION 13.13. Table of Contents; Headings................................ 82
Appendix A - Provisions Relating to Original Notes, Additional Notes and Exchange Notes Exhibit A - Form of Initial Note Exhibit B - Form of Exchange Note Exhibit C - Form of Supplemental Indenture Exhibit D - Form of Transferee Letter of Representation INDENTURE dated as of July 22, 2002, among BERRY PLASTICS CORPORATION, a Delaware corporation (the "Company"), BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI- PLAS CORPORATION, each a Delaware corporation, and CARDINAL PACKAGING, INC., an Ohio corporation. (collectively, the "Note Guarantors") and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (a) the Company's 10 3/4% Senior Subordinated Notes due 2012 issued on the date hereof (the "Original Notes"), (b) any Additional Notes (as defined herein) that may be issued on any Issue Date (all such Notes in clauses (a) and (b) being referred to collectively as the "Initial Notes") and (c) if and when issued as provided in a Registration Rights Agreement (as defined in Appendix A hereto (the "Appendix")), the Company's 10 3/4% Senior Subordinated Notes due 2012 issued in a Registered Exchange Offer in exchange for any Initial Notes (the "Exchange Notes") (together with the Initial Notes and any Exchange Notes issued hereunder, the "Notes"). Notes in an aggregate principal amount of $250,000,000 will be initially issued on the date hereof. Subject to the conditions and in compliance with the covenants set forth herein, the Company may issue an unlimited aggregate principal amount of Additional Notes from time to time. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Acquisition" means that transaction described as such in the "Acquisition" section of the Offering Memorandum. "Additional Assets" means: (a) any property or assets (other than Indebtedness and Capital Stock) acquired or constructed to be used by the Company or a Restricted Subsidiary; (b) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (c) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary. "Additional Interest" means any additional interest payable under a Registration Rights Agreement. "Additional Notes" means any Senior Subordinated Notes issued under the terms of this Indenture subsequent to the Closing Date. "Affiliate" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of Holding or the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Asset Disposition" means any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a "disposition"), of: (a) any shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary), (b) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or (c) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary other than, in the case of (a), (b) and (c) above, (i) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a 2 Restricted Subsidiary, (ii) for purposes of Section 4.06 only, a disposition subject to Section 4.04, (iii) a disposition of assets with a Fair Market Value of less than $3.0 million, (iv) transactions permitted under Section 5.01, (v) an issuance of Capital Stock by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary, (vi) a sale of accounts receivable and related assets pursuant to a Receivables Facility, (vii) the licensing or sublicensing of intellectual property or other general intangibles to the extent that such license does not prohibit the licensor from using the intellectual property and licences, leases or subleases of other property in the ordinary course of business, and (viii) any disposition in the ordinary course of business of obsolete, worn-out, surplus or other property not useful in the conduct of the business. "Asset Swap" means the exchange by the Company or a Restricted Subsidiary of a portion of its property, business or assets for property, businesses, assets or Capital Stock of a Person (or any combination thereof, as well as cash or cash equivalents), all or substantially all of the assets of which, are of a type used in the business of the Company or of a Restricted Subsidiary. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments (excluding, however, any amounts required to be paid by such lessee, whether or not designated as rent or additional rent, on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales or similar contingent amounts) during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or scheduled redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (b) the sum of all such payments. "Bank Indebtedness" means (a) any and all amounts payable under or in respect of the Credit Agreement and any Refinancing Indebtedness with respect thereto, as amended from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement and indemnification obligations, guarantees and all other amounts payable thereunder or in respect thereof and (b) any Hedging Obligations of Holding, the Company or any of its Subsidiaries in favor of any holder of Indebtedness under the Credit Agreement or any Refinancing Indebtedness with respect thereto. It is understood and agreed that Refinancing Indebtedness in respect of the Credit Agreement may be Incurred from time to time after termination of the Credit Agreement. 3 "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of the Board of Directors of the Company or with respect to any other entity a similar meaning. "Business Day" means each day which is not a Legal Holiday. "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 any Preferred Stock, but excluding any debt securities including those convertible into such equity. "Capitalized Lease Obligations" means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Cash Equivalents" means: (a) United States dollars; (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition; (c) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months from the date of acquisition and overnight bank deposits, in each case, with any lender party to the Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500.0 million; (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; and (e) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each case maturing within six months after the date of acquisition. "Change of Control" means the occurrence of any of the following events: (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company or Holding, whether as a result of issuance of securities of Holding or the Company, any merger, consolidation, liquidation or dissolution of Holding or the Company, any 4 direct or indirect transfer of securities by any Permitted Holder or otherwise; (b) the sale, lease or transfer, in one transaction or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, to a "person" (as defined above) other than one or more Permitted Holders; (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Company or Holding, as the case may be (together with any new directors whose election by such board of directors of the Company or Holding, as the case may be, or whose nomination for election by the shareholders of the Company or Holding, as the case may be, was approved by a vote of a majority of the directors of the Company or Holding, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved), and any directors who are designees of a Principal or a Related Party of a Principal or were nominated by a Principal or a Related Party of a Principal, cease for any reason to constitute a majority of the board of directors of the Company or Holding, as the case may be, then in office; or (d) the merger or consolidation of the Company or Holding with or into another Person or the merger of another Person with or into the Company or Holding, other than, in each case, a transaction following which securities that represented at least a majority of the voting power of the Voting Stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) constitute at least a majority of the voting power of the Voting Stock of the surviving Person. "Closing Date" means the date of this Indenture. "Code" means the Internal Revenue Code of 1986, as amended. "Commodity Price Protection Agreement" means any forward contract, commodity swap, commodity option or other similar agreement or arrangement relating to, or the value of which is dependent upon or which is designed to protect such Person against, fluctuations in commodity prices. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "Consolidated Coverage Ratio" as of any date of determination means the ratio of: (a) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are available to (b) Consolidated Interest Expense for such four fiscal quarters; PROVIDED, HOWEVER, that: (i) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains 5 outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be computed based on (1) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding or (2) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period, (ii) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness, (iii) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Asset Disposition for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (iv) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business (including an operating plant or other similar facility), EBITDA 6 and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and (v) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (iii) or (iv) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations shall be determined in good faith by a responsible financial or accounting Officer of the Company. Any such pro forma calculations may include operating expense reductions (net of associated expenses) for such period resulting from the acquisition or other Investment which is being given pro forma effect that (a) would be permitted pursuant to Rule 11-02 of Regulation S-X under the Securities Act or (b) have been realized or for which substantially all the steps necessary for realization have been taken or at the time of determination are reasonably expected to be taken within six months following any such acquisition or other Investment, including, but not limited to, the execution, termination, renegotiation or modification of any contracts, the termination of any personnel or the closing of any facility or lower material costs, as applicable, PROVIDED that, in any case, such adjustments shall be calculated on an annualized basis and such adjustments are set forth in an Officers' Certificate signed by the Company's chief financial officer and another Officer which states in detail (i) the amount of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such Officers' Certificate at the time of such execution and (iii) that such adjustment or adjustments and the plan or plans related thereto have been reviewed and approved by the Board of Directors. Any such Officers' Certificate shall be provided to the Trustee if the Company Incurs any Indebtedness or takes any other action under this Indenture in reliance thereon. If any Indebtedness, whenever Incurred, bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term as at the date of determination in excess of 12 months). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its Consolidated Restricted Subsidiaries, minus any amortization of debt issuance costs, plus, to the extent Incurred by the Company and its Consolidated Restricted Subsidiaries in such period but not included in such interest expense, without duplication: (a) interest expense attributable to Capitalized Lease Obligations and the interest 7 expense attributable to leases constituting part of a Sale/Leaseback Transaction, (b) amortization of debt discount, (c) capitalized interest, (d) noncash interest expense, (e) commissions, discounts and other fees and charges attributable to letters of credit and bankers' acceptance financing, (f) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by the Company or any Restricted Subsidiary, (g) net costs associated with Hedging Obligations (including amortization of fees), (h) dividends in respect of all Disqualified Stock of the Company and all Preferred Stock of any of the Subsidiaries of the Company, to the extent held by Persons other than the Company or a Wholly Owned Subsidiary (except to the extent paid in Capital Stock (other than Disqualified Stock)) and (i) interest Incurred in connection with investments in discontinued operations, and (j) commissions, discounts, yield and other financing fees and financing charges Incurred in connection with any transaction (including, without limitation, a Receivables Facility) pursuant to which the Company or any Restricted Subsidiary of the Company may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets of the type specified in the definition of "Receivables Facility." For purposes of the foregoing, total interest expense will be determined after giving effect to any net proceeds paid or received by the Company and its Subsidiaries with respect to Interest Rate Agreements. "Consolidated Net Income" means, for any period, the net income of the Company and its Consolidated Subsidiaries for such period; PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net Income: (a) any net income of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: (i) subject to the limitations contained in clause (d) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to a Restricted Subsidiary, to the limitations contained in clause (c) below) and (ii) the Company's equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent such loss has been funded in such period with cash from the Company or a Restricted Subsidiary; (b) any net income (or loss) of any Person acquired by the Company or a Subsidiary of the Company in a pooling of interests transaction for any period prior to the date of such acquisition; (c) any net income (or loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that: (i) subject to the limitations contained in clause (d) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to another 8 Restricted Subsidiary, to the limitation contained in this clause) and (ii) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; (d) any net gain or loss realized upon the sale or other disposition of any asset of the Company or its Consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business and any net gain or loss realized upon the sale or other disposition of any Capital Stock of any Person; (e) any net extraordinary gain or loss; (f) the cumulative effect of a change in accounting principles; (g) any noncash compensation charges or other noncash expenses or charges arising from the grant of or issuance or repricing of stock, stock options or other equity-based awards or any amendment, modification, substitution or change of any such stock, stock options or other equity-based awards; and (h) any non-recurring fees, charges or other expenses (including bonus and retention payments) made or incurred in connection with the Acquisition and the transactions contemplated thereby. Notwithstanding the foregoing, for the purpose Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(iv)(3)(D) thereof. "Consolidated Step-Up Depreciation and Amortization" means, with respect to any Person for any period, the total amount of depreciation and amortization related to the write-up of assets for such period on a consolidated basis in accordance with GAAP to the extent (a) such depreciation and amortization results from purchase accounting adjustments in connection with the Acquisition and (b) such depreciation and amortization was deducted in computing Consolidated Net Income. "Consolidation" means the consolidation of the amounts of each of the Restricted Subsidiaries with those of the Company in accordance with GAAP consistently applied; PROVIDED, HOWEVER, that "Consolidation" shall not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall be accounted for as an investment. The term "Consolidated" has a correlative meaning. "Credit Agreement" means the credit agreement dated as of the Closing Date, as amended, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or otherwise), refinanced, restructured or otherwise modified from time to time, among the Company, Holding, the lenders from time to time party thereto, Goldman Sachs Credit Partners L.P., as administrative agent, JPMorgan Chase Bank, as syndication agent, Fleet National Bank, as collateral agent, issuing bank and swing line lender, and The Royal Bank of Scotland plc and GE Capital Corporation, as co-documentation agents. "Credit Facility" means, one or more debt facilities (including, without limitation, the Credit Agreement), commercial paper facilities or 9 other debt instruments, indentures or agreements, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables), letters of credit or other debt obligations, in each case, as amended, restated, modified, renewed, refunded, restructured, supplemented, replaced or refinanced in whole or in part from time to time, including, without limitation, any amendment increasing the amount of Indebtedness Incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness Incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties thereto (whether or not such added or substituted parties are banks or other institutional lenders). "Currency Agreement" means with respect to any Person any foreign exchange contract, currency swap agreements, futures contract, options contract, synthetic cap or other similar agreement or arrangement to which such Person is a party or of which it is a beneficiary for the purpose of hedging foreign currency risk. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Noncash Consideration" means the Fair Market Value of non-cash consideration received by the Company or any of its Restricted Subsidiaries in connection with an Asset Disposition that is designated as such pursuant to an Officers' Certificate. The aggregate Fair Market Value of the Designated Noncash Consideration, taken together with the Fair Market Value at the time of receipt of all other Designated Noncash Consideration then held by the Company, may not exceed $5.0 million at the time of the receipt of the Designated Noncash Consideration (with the Fair Market Value being measured at the time received and without giving effect to subsequent changes in value). "Designated Senior Indebtedness" of the Company means (a) the Bank Indebtedness and (b) any other Senior Indebtedness of the Company that, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to at least $15.0 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture. "Designated Senior Indebtedness" of a Note Guarantor has a correlative meaning. The Company and each Note Guarantor shall provide to the Trustee from time to time, and upon receipt by the Trustee of a Blockage Notice or Guarantee Blockage Notice pursuant to Articles 10 and 12 hereof, respectively, a list of its Designated Senior Indebtedness and the names and contact numbers of each Representative with respect to each issue of Designated Senior Indebtedness. Subject to Article 7 hereof, the Trustee shall be entitled to rely conclusively on any such list. 10 "Disqualified Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event: (a) matures or is mandatorily redeemable at the option of the holder thereof, in whole or in part, pursuant to a sinking fund obligation or otherwise, (b) is convertible or exchangeable at the option of the holder thereof, in whole or in part, for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary; PROVIDED, HOWEVER, that any such conversion or exchange shall be deemed an Incurrence of Indebtedness or Disqualified Stock, as applicable) or (c) is redeemable at the option of the holder thereof, in whole or in part, in the case of each of clauses (a), (b) and (c), on or prior to the 91st day after the Stated Maturity of the Notes; PROVIDED, HOWEVER, that only the portion of Capital Stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is redeemable at the option of the holder thereof prior to such date will be deemed Disqualified Stock and any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the 91st day after the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are not more favorable to the holders of such Capital Stock than the provisions under Sections 4.06 and 4.08; PROVIDED, FURTHER that any class of Capital Stock of such Person that, by its terms, authorized such Person to satisfy in full its obligations with respect to payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or other payment obligations or otherwise by delivery of Capital Stock that is not Disqualified Stock, and that is not convertible, puttable or exchangeable for Disqualified Stock or Indebtedness, shall not be deemed Disqualified Stock so long as such Person satisfied its obligations with respect thereto solely by the delivery of Capital Stock that is not Disqualified Stock. "Domestic Subsidiary" means any Restricted Subsidiary of the Company other than a Foreign Subsidiary. "EBITDA" for any period means the Consolidated Net Income for such period, plus, without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (a) income tax expense of the Company and its Consolidated Restricted Subsidiaries; (b) Consolidated Interest Expense; (c) depreciation expense of the Company and its Consolidated Restricted Subsidiaries; (d) amortization expense of the Company and its Consolidated Restricted Subsidiaries (excluding amortization expense attributable to a prepaid cash item that was paid in a prior period); (e) plant shutdown costs and acquisition integration costs; and (f) all other noncash charges of the Company and its Consolidated Restricted Subsidiaries (excluding any such noncash charge to the extent it represents an accrual of or reserve for cash expenditures in any future period) less all non-cash items of income (other than accrual of revenue in the ordinary course of business) of the Company and its Restricted Subsidiary in each case for such period. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and noncash 11 charges of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders. "Equity Offering" means a public or private sale for cash of Capital Stock (other than Disqualified Stock). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value will be determined in good faith by the Board of Directors, whose determination will be conclusive and evidenced by a resolution of the Board of Directors; PROVIDED, HOWEVER, that for purposes of Section 4.04(a)(iv)(3)(B), if the Fair Market Value of the property or assets in question is so determined to be in excess of $20.0 million, such determination must be confirmed by a recognized appraisal or investment banking firm. "Foreign Subsidiary" means any Restricted Subsidiary of the Company (x) that is not organized under the laws of the United States of America or any State thereof or the District of Columbia or (y) was organized under the laws of the United States of America or any state thereof or the District of Columbia that has no material assets other than Capital Stock of one or more foreign entities of the type described in clause (x) above and is not a guarantor of Indebtedness under the Credit Agreement. "GAAP" means generally accepted accounting principles in the United States of America as in effect (i) with respect to periodic reporting requirements, from time to time, and (ii) otherwise on the Closing Date, including those set forth in: (a) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) statements and pronouncements of the Financial Accounting Standards Board, (c) such other statements by such other entities as approved by a significant segment of the accounting profession, and (d) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP. 12 "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); PROVIDED, HOWEVER, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any Person Guaranteeing any obligation. "Hedging Obligations" of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Price Protection Agreement. "Holder" means the Person in whose name a Note is registered on the Registrar's books. "Incur" means issue, assume, Guarantee, incur or otherwise become liable for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary. The term "Incurrence" when used as a noun shall have a correlative meaning. The accretion of principal of a non-interest bearing or other discount security and payment of interest on any Indebtedness in the form of additional Indebtedness or the payment on Disqualified Capital Stock in the form of additional shares of Capital Stock, shall not be deemed the Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person on any date of determination, without duplication: (a) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (b) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) the principal component of all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation arises in the ordinary course of business and relates to a Trade Payable); (d) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than one year after the date of placing such property in service or taking delivery and title thereto or the completion of such services other than earn-outs, indemnities and similar provisions; (e) all 13 Capitalized Lease Obligations and all Attributable Debt of such Person; (f) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); (g) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of the Person the Indebtedness of which is being determined, whether or not such Indebtedness is assumed by such Person; PROVIDED, HOWEVER, that the amount of Indebtedness of such Person shall be the lesser of: (i) the Fair Market Value of such asset at such date of determination and (ii) the amount of such Indebtedness of such other Persons; (h) to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations of such Person (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such obligations that would be payable by such Person at such time); (i) all amounts outstanding and other obligations of such Person in respect of a Receivables Facility; and (j) all obligations of the type referred to in clauses (a) through (i) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Notwithstanding anything in this definition to the contrary, characterization of any Receivables Facility as Indebtedness is for purposes of the Indenture covenants only, and such characterization shall not preclude the Company or any Restricted Subsidiary from characterizing any Receivables Facility as a sale for GAAP or any other purpose. "Indenture" means this Indenture as amended or supplemented from time to time. "Interest Rate Agreement" means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement to which such Person is party or of which it is a beneficiary. "Investment" in any Person means any direct or indirect advance, loan (other than advances and extensions of credit to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extension of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person; PROVIDED that none of the following will be deemed to be an Investment: (a) Hedging Obligations entered into in 14 compliance with Section 4.03(b)(iv); and (b) endorsements of negotiable instruments and documents in the ordinary course of business. For purposes of the definition of "Unrestricted Subsidiary" and Section 4.04: (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Restricted Subsidiary) of the Fair Market Value of the net assets of any Restricted Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to: (1) the Company's "Investment" in such Subsidiary at the time of such redesignation less (2) the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. "Issue Date", with respect to any Initial Notes, means the date on which the Initial Notes are originally issued. "Legal Holiday" means a Saturday, Sunday or other day on which banking institutions are not required by law or regulation to be open in the State of New York. "Lien" means any mortgage, pledge, security interest, encumbrance, lien (statutory or otherwise) or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof and any agreement to give any security interest) upon or with respect to any property of any kind, real or personal, movable or immovable. "Net Available Cash" from an Asset Disposition means payments of cash or Cash Equivalents received (including any payments of cash or Cash Equivalents received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but in each case only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other noncash form) therefrom, in each case net of: (a) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (b) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition, (c) all distributions and other payments required to be made to minority interest holders in Subsidiaries 15 or joint ventures as a result of such Asset Disposition and (d) appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition. "Net Cash Proceeds", with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, listing fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Note Guarantee" means each Guarantee of the obligations with respect to the Notes issued by a Person pursuant to the terms of this Indenture. "Note Guarantor" means any Person that has issued a Note Guarantee. "Offering Memorandum" means the offering memorandum relating to the issuance of the Original Notes dated July 17, 2002. "Officer" means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the Company. "Officer" of a Note Guarantor has a correlative meaning. "Officers' Certificate" means a certificate signed by two Officers. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company, a Note Guarantor or the Trustee. "Permitted Holders" means Principals and Related Parties and any Person acting in the capacity of an underwriter in connection with a public or private offering of the Company's or Holding's Capital Stock. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in: (a) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; (b) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; (c) Temporary Cash Investments; (d) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business; (e) payroll, travel, commission and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (f) loans or advances to employees, directors and consultants not exceeding $2.0 million in the aggregate outstanding at any one time; (g) loans, deposits, prepayments and other credits or 16 advances to customers or suppliers in the ordinary course of business; (h) stock, obligations or securities received in settlement or good faith compromise of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor; (i) any Person to the extent such Investment represents the noncash portion of the consideration received for an Asset Disposition that was made pursuant to and in compliance with Section 4.06; (j) Investments in prepaid expenses, negotiable instruments held for collection and lease utility and worker's compensation, performance and other similar deposits provided to third parties in the ordinary course of business; (k) Currency Agreements, Interest Rate Agreements and Commodity Price Protection Agreements and other Hedging Obligations permitted by this Indenture that are entered into in the ordinary course of business and not for speculative purposes; (l) Investments acquired in exchange for the issuance of Capital Stock (other than Disqualified Stock) of the Company or acquired with the Net Cash Proceeds received by the Company after the date of this Indenture from the issuance and sale of Capital Stock (other than Disqualified Stock); PROVIDED that such Net Cash Proceeds are used to make such Investment within 90 days of the receipt thereof and the amount of all such Net Cash Proceeds shall be excluded from Section 4.04(a)(iv)(3)(B); (m) Investments in existence on the date of this Indenture or made pursuant to a legally binding written commitment in existence on the date of this Indenture; (n) Guarantees issued in accordance with Section 4.03; (o) Investments in a trust, limited liability company, special purpose entity or other similar entity in connection with a Receivables Facility permitted under Section 4.03; PROVIDED that such Investment is necessary or advisable to effect such Receivables Facility; (p) Investments in joint ventures or similar projects by the Company and its Restricted Subsidiaries on the date of the investment in an aggregate amount not to exceed $20.0 million; (q) loans or advances to employees, directors or consultants the proceeds of which are used to purchase Capital Stock (other than Disqualified Stock) of the Company or Holding (and, with respect to purchases of the Capital Stock of Holding, the proceeds of which are paid or contributed to the Company); and (r) Indebtedness of the Company or a Restricted Subsidiary under Section 4.03(b)(ii). For purposes of this definition, the value of any Investment will be the Fair Market Value on the date made without any subsequent changes for any increases or decreases in the Fair Market Value of such Investment. "Permitted Junior Securities" means: (a) Equity Interests in the Company or any Guarantor; or (b) debt securities that are subordinated to all Senior Indebtedness and any debt securities issued in exchange for Senior Indebtedness to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Indebtedness under the terms of this Indenture. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. 17 "Preferred Stock", as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "principal" of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time. "Principals" means each of GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, Bridge Street Special Opportunities Fund 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000 L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors A, L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P. and J.P. Morgan Partners (BHCA), L.P. "Purchase Money Indebtedness" means Indebtedness: (a) consisting of the deferred purchase price of an asset (or Capital Stock of a corporation substantially all the assets of which consist of such asset), conditional sale obligations, obligations under any title retention agreement and other purchase money obligations (including obligations to a third party to finance the amount being paid to the seller), in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (b) Incurred to finance the acquisition by the Company or a Restricted Subsidiary of such asset (or such Capital Stock), including additions and improvements; PROVIDED, HOWEVER, that such Indebtedness is Incurred within 180 days after the acquisition by the Company or such Restricted Subsidiary of such asset (or such Capital Stock). "Receivables Facility" means one or more receivables financing facilities, as amended from time to time, pursuant to which the Company and/or any of its Restricted Subsidiaries, directly or indirectly through another Subsidiary, sells or otherwise transfers rights in its accounts receivable pursuant to arrangements customary in the industry. "Refinance" means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings. "Refinancing Indebtedness" means Indebtedness that is Incurred to refund, refinance, replace, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (or the net proceeds of which are used to do any of the foregoing)any Indebtedness of the Company or any Restricted 18 Subsidiary existing on the Closing Date or Incurred in compliance with this Indenture (including Indebtedness of the Company that Refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances Indebtedness of another Restricted Subsidiary, including Indebtedness that Refinances Refinancing Indebtedness); PROVIDED, HOWEVER, that: (a) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced, (b) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced, (c) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being Refinanced (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums Incurred in connection therewith) and (d) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness is subordinated in right of payment to the Notes at least to the same extent as the Indebtedness being Refinanced; PROVIDED FURTHER, HOWEVER, that Refinancing Indebtedness shall not include: (i) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that Refinances Indebtedness of the Company or (ii) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary. "Related Party" means, (a) any controlling stockholder or 80% (or more) owned Subsidiary of any Principal; or (b) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (a). "Representative" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries. "SEC" means the Securities and Exchange Commission. 19 "Secured Indebtedness" means any Indebtedness of the Company or any Restricted Subsidiary secured by a Lien. "Secured Indebtedness" of a Note Guarantor has a correlative meaning. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" of the Company or any Note Guarantor means Bank Indebtedness and the principal of, premium (if any) and accrued and unpaid interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company or any Note Guarantor, regardless of whether or not a claim for post-filing interest is allowed in such proceedings), and fees and other amounts owing in respect of, all other Indebtedness of the Company or any Note Guarantor, as applicable, whether outstanding on the Closing Date or thereafter Incurred, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such obligations are PARI PASSU with or subordinated in right of payment to the Notes or such Note Guarantor's Note Guarantee, as applicable; PROVIDED, HOWEVER, that Senior Indebtedness of the Company or any Note Guarantor shall not include: (a) any obligation of the Company or any Subsidiary of the Company or of such Note Guarantor to the Company or any other Subsidiary of the Company; (b) any liability for Federal, state, local or other taxes owed or owing by the Company or such Note Guarantor, as applicable; (c) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities); (d) any Indebtedness or obligation of the Company or such Note Guarantor, as applicable (and any accrued and unpaid interest in respect thereof) that by its terms is subordinate in right of payment to any other Indebtedness or obligation of the Company or such Note Guarantor, as applicable, including any Senior Subordinated Indebtedness and any Subordinated Obligations of the Company or such Note Guarantor, as applicable; (e) any obligations with respect to any Capital Stock; or (f) any Indebtedness (or portion thereof) Incurred in violation of this Indenture. "Senior Subordinated Indebtedness" of the Company means the Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank equally with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. "Senior Subordinated Indebtedness" of a Note Guarantor has a correlative meaning. "Significant Subsidiary" means any Restricted Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC in effect on the date of this Indenture. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal 20 of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred). "Stockholders' Agreement" means the stockholders' agreement entered into in connection with the Acquisition. "Subordinated Obligation" means any Indebtedness of the Company (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement. "Subordinated Obligation" of a Note Guarantor has a correlative meaning. "Subsidiary" of any Person means 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 (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of such Person. "Tax Sharing Agreement" means the Amended and Restated Tax Sharing Agreement, made as of March 15, 2001, by and among Holding and its Subsidiaries. "Temporary Cash Investments" means any of the following: (a) United States dollars or eurodollars or any investment in direct obligations of the United States of America or any agency thereof or obligations Guaranteed or insured by the United States of America or any agency or instrumentality thereof, (b) investments in time deposit accounts, certificates of deposit and eurodollar time deposits, banker acceptances and money market deposits (or in the case of Foreign Subsidiaries, the foreign equivalent) maturing within 270 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $250,000,000 (or the foreign currency equivalent thereof) and whose longterm debt is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) or (b) above entered into with a bank meeting the qualifications described in clause (b) above, (d) investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of 21 America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. ("Moody's") or "A-1" (or higher) according to Standard and Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P"), (e) investments in securities with maturities of 270 days or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by Moody's, (f) money market funds at least 95% of the assets of which constitute Temporary Cash Investments of the kinds described in clauses (a) through (e) of this definition and (g) solely in respect of the ordinary course cash management activities of the Foreign Subsidiaries, equivalents of the investments described in clause (a) above to the extent guaranteed by the United Kingdom, the European Union or the country in which the Foreign Subsidiary operates and equivalents of the investments described in clause (b) above issued, accepted or offered by (i) the local office of any commercial bank meeting the requirements of clause (d) above in the jurisdiction of organization of the applicable Foreign Subsidiary or (ii) the local office of any commercial bank organized under the laws of the jurisdiction of organization of the applicable Foreign Subsidiary which commercial bank (1) has combined capital and surplus and undivided profits of not less than $250.0 million, (2) a long-term rating for Dollar- denominated obligations of at least "A-1" from S&P or the equivalent rating from Moody's or (3) is organized in the country in which the Foreign Subsidiary operates. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the Closing Date. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services. "Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "Unrestricted Subsidiary" means: (a) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company or Person becoming a 22 Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; PROVIDED, HOWEVER, that either: (i) the Subsidiary to be so designated has total Consolidated assets of $1,000 or less or (ii) if such Subsidiary has Consolidated assets greater than $1,000, then such designation would be permitted under Section 4.04. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving effect to such designation: (x) the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall have occurred and be continuing. Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly Owned Subsidiary. SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN TERM SECTION "Affiliate Transaction" 4.07(a) "Appendix" Preamble "Bankruptcy Law" 6.01 "Blockage Notice" 10.03 "Change of Control Offer" 4.08(b) "covenant defeasance option" 8.01(b) "Custodian" 6.01
23 "Definitive Notes" Appendix "Event of Default" 6.01 "Exchange Notes" Preamble "Global Notes" Appendix "Guarantee Blockage Notice" 12.03 "Guarantee Payment Blockage Period" 12.03 "Guaranteed Obligations" 11.01 "incorporated provision" 13.01 "Initial Notes" Preamble "judgment default provision" 6.01(h) "legal defeasance option" 8.01(b) "Legal Holiday" 13.08 "Notes Custodian" Appendix "Notice of Default" 6.01 "Offer" 4.06(b) "Original Notes" Preamble "pay its Guarantee" 12.03 "pay the Notes" 10.03 "Paying Agent" 2.04 "Payment Blockage Period" 10.03 "protected purchaser" 2.08 "Purchase Date" 4.06(c)(i) "Registered Exchange Offer" Appendix "Registrar" 2.04 "Registration Rights Agreement" Appendix "Restricted Payment" 4.04(a) "Successor Company" 5.01(a) "Successor Guarantor" 5.01(b)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the Notes and the Note Guarantees. "indenture security holder" means a Holder. 24 "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company, the Note Guarantors and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "including" means including without limitation; (d) words in the singular include the plural and words in the plural include the singular; (e) unsecured Indebtedness shall not be deemed to be subordinate or junior in right of payment to Secured Indebtedness merely because it is unsecured; and Indebtedness which has different security or different priorities in the same security and will not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. (f) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and (g) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater. 25 ARTICLE 2 THE NOTES SECTION 2.01. AMOUNT OF NOTES; ISSUABLE IN SERIES. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is unlimited. The Notes may be issued in one or more series. All Notes of any one series shall be substantially identical except as to denomination, legends and the date they are issued. With respect to any Additional Notes issued after the Closing Date (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.07, 2.08, 2.09, 2.10 or 3.06 or the Appendix), there shall be (a) established in or pursuant to a resolution of the Board of Directors and (b) (i) set forth or determined in the manner provided in an Officers' Certificate or (ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Notes: (1) whether such Additional Notes shall be issued as part of a new or existing series of Notes and the title of such Additional Notes (which shall distinguish the Additional Notes of the series from Notes of any other series); (2) the aggregate principal amount of such Additional Notes which may be authenticated and delivered under this Indenture, which may be in an unlimited aggregate principal amount; (3) the issue price and issuance date of such Additional Notes, including the date from which interest on such Additional Notes shall accrue; (4) if applicable, that such Additional Notes shall be issued in a private placement transaction with registration rights; (5) if applicable, that such Additional Notes shall be issuable in whole or in part in the form of one or more Global Notes and, in such case, the respective depositaries for such Global Notes, the form of any legend or legends which shall be borne by such Global Notes in addition to or in lieu of those set forth in Exhibit A hereto and any circumstances in addition to or in lieu of those set forth in Section 2.3 of the Appendix in which any such Global Note may be exchanged in whole or in part for Additional Notes registered, or any transfer of such Global Note in whole or in part may be registered, in the name or names of Persons other than the depositary for such Global Note or a nominee thereof; and 26 (6) if applicable, that such Additional Notes shall not be issued in the form of Initial Notes as set forth in Exhibit A, but shall be issued in the form of Exchange Notes as set forth in Exhibit B. If any of the terms of any Additional Notes are established by action taken pursuant to a resolution of the Board of Directors, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate or the indenture supplemental hereto setting forth the terms of the Additional Notes. SECTION 2.02. FORM AND DATING. Provisions relating to the Original Notes, the Additional Notes and the Exchange Notes are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The (a) Original Notes and the Trustee's certificate of authentication and (b) any Additional Notes (if issued as Transfer Restricted Notes) and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Notes and any Additional Notes issued other than as Transfer Restricted Notes and the Trustee's certificate of authentication shall each be substantially in the form of Exhibit B hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company or any Note Guarantor is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. The Notes shall be issuable only in registered form without interest coupons and only in denominations of $1,000 and integral multiples thereof. SECTION 2.03. EXECUTION AND AUTHENTICATION. Two Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Notes as set forth in the Appendix. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of 27 such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.04. REGISTRAR AND PAYING AGENT. (a) The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Notes may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The Company may change any Paying Agent or Registrar without notice to any Holder. The term "Paying Agent" includes any additional paying agent, and the term "Registrar" includes any co-registrars. The Company initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Notes and (ii) the Notes Custodian with respect to the Global Notes. (b) The Company shall enter into an appropriate agency agreement in its discretion with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically organized Wholly Owned Subsidiaries may act as Paying Agent or Registrar. (c) The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; PROVIDED, HOWEVER, that no such removal shall become effective until (i) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to each due date of the principal of and interest and Additional Interest (if any) on any Note, the Company shall deposit with the Paying Agent (or if the Company or a Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal, interest and Additional Interest (if any) when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying 28 Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of and interest and Additional Interest (if any) on the Notes, and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.06. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders. SECTION 2.07. TRANSFER AND EXCHANGE. The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer and in compliance with the Appendix. When a Note is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements therefor are met. When Notes are presented to the Registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's request. The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section. The Company shall not be required to make and the Registrar need not register transfers or exchanges of Notes selected for redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed. Prior to the due presentation for registration of transfer of any Note, the Company, the Note Guarantors, the Trustee, the Paying Agent, and the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and (subject to paragraph 2 of the Notes) interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, any Note Guarantor, the Trustee, the Paying Agent, or the Registrar shall be affected by notice to the contrary. Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interest in such Global Note may 29 be effected only through a book-entry system maintained by (a) the Holder of such Global Note (or its agent) or (b) any Holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry. All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. SECTION 2.08. REPLACEMENT NOTES. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a) satisfies the Company or the Trustee within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (b) makes such request to the Company or the Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and (c) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond or other form of indemnity sufficient in the judgment of the Trustee to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Note. In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay such Note instead of issuing a new Note in replacement thereof. Every replacement Note is an additional obligation of the Company. The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes. SECTION 2.09. OUTSTANDING NOTES. Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation and those described in this Section as not outstanding. Subject to Section 13.06, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note. If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding and interest on it ceases to accrue unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a protected purchaser. 30 If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal, interest and Additional Interest, if any, payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.10. TEMPORARY NOTES. In the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes and deliver them in exchange for temporary Notes upon surrender of such temporary Notes at the office or agency of the Company, without charge to the Holder. SECTION 2.11. CANCELATION. The Company at any time may deliver Notes to the Trustee for cancelation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancelation and shall dispose of canceled Notes in accordance with its customary procedures or deliver canceled Notes to the Company pursuant to written direction by an Officer. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancelation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture. SECTION 2.12. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.13. CUSIP AND ISIN NUMBERS. The Company in issuing the Notes may use "CUSIP" and ISIN numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" and ISIN numbers in notices of redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice 31 of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. SECTION 2.14. COMPUTATION OF INTEREST. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. ARTICLE 3 REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to paragraph 5 of the Notes, it shall notify the Trustee in writing of the redemption date and the principal amount of Notes to be redeemed. The Company shall give each notice to the Trustee provided for in this Section at least 60 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate setting forth the redemption date and the principal amount of Notes to be redeemed and, upon request by the Trustee, an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect. SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED. If fewer than all the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed pro rata or by lot or by a method that the Trustee in its sole discretion shall deem to be fair and appropriate. The Trustee shall make the selection from outstanding Notes not previously called for redemption. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1,000. Notes and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed. SECTION 3.03. NOTICE OF REDEMPTION. (a) At least 30 days but not more than 60 days before a date for redemption of Notes, the Company shall mail a notice of redemption by first-class mail to each Holder of Notes to be redeemed at such Holder's registered address. The notice shall identify the Notes to be redeemed and shall state: (i) the redemption date; 32 (ii) the redemption price and the amount of accrued interest to, but not including, the redemption date; (iii) the name and address of the Paying Agent; (iv) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (v) if fewer than all the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes to be redeemed; (vi) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date; (vii) the CUSIP or ISIN number, if any, printed on the Notes being redeemed; and (viii) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes. (b) At the Company's request (which may be revoked at any time prior to the time at which the Trustee shall have given such notice to the Holders), the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest and Additional Interest, if any, to, but not including, the redemption date; PROVIDED, HOWEVER, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest and Additional Interest, if any, shall be payable to the Holder of the redeemed Notes registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. Notice mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. 33 SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to 10:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest and Additional Interest, if any, on all Notes or portions thereof to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered by the Company to the Trustee for cancelation. The Paying Agent shall promptly return to the Company any money deposited with the Paying Agent in excess of the amounts necessary to pay the principal of, plus accrued and unpaid interest and Additional Interest, if any, on the Notes to be redeemed. On and after the redemption date, interest shall cease to accrue on Notes or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and Additional Interest, if any, on, the Notes to be redeemed, unless the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture. SECTION 3.06. NOTES REDEEMED IN PART. Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall promptly pay the principal of and interest and Additional Interest, if any, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal, interest and Additional Interest, if any, shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. SEC REPORTS. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file with the SEC (unless the SEC will not accept such filing), and provide the Trustee and Holders and prospective Holders (upon request) within 15 days after it files them with the SEC, 34 copies of its annual report and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act. The Company also shall comply with the other provisions of Section 314(a) of the TIA. SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; PROVIDED, HOWEVER, that the Company or any Restricted Subsidiary that is a Note Guarantor may Incur Indebtedness (including any Receivable Facility) if, on the date of such Incurrence and after giving effect thereto, the Consolidated Coverage Ratio would be greater than 2 to 1. (b) Notwithstanding Section 4.03(a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness: (i) Indebtedness in an aggregate principal amount Incurred pursuant to any Credit Facility and Indebtedness in an aggregate amount outstanding under any Receivables Facility which together do not exceed $555.0 million less the aggregate amount of all mandatory repayments of the principal of any term Indebtedness under the Credit Agreement that have been made by the Company or any of its Restricted Subsidiaries since the date of this Indenture with the Net Available Cash of an Asset Disposition pursuant to Section 4.06(a)(iii)(1); PROVIDED, HOWEVER, that Indebtedness in excess of $505.0 million may be Incurred only if at the time of Incurrence (or at the time of any other Incurrence of Indebtedness pursuant to this clause (i) in excess of $505.0 million) the Company receives an amount equal to such excess in cash from the issue or sale of Capital Stock (other than Disqualified Stock) or from other capital contributions; (ii) Indebtedness of the Company owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that (1) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof, (2) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and (3) if a Restricted Subsidiary that is a Note Guarantor is the obligor on such Indebtedness and such Indebtedness is owed to and held by a Restricted Subsidiary that is not a Note Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of such Restricted Subsidiary with respect to its Note Guarantee; 35 (iii) Indebtedness (1) represented by the Notes (not including any Additional Notes) and the Note Guarantees, (2) represented by the exchange Notes to be issued in exchange for the Notes pursuant to the registration rights agreement, (3) outstanding on the Closing Date (other than the Indebtedness described in clauses (i) and (ii) above), (4) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) or the foregoing paragraph (a) (including in any such case Indebtedness that is Refinancing Indebtedness) and (5) consisting of Guarantees of any Indebtedness permitted under Section 4.03(a) or this Section 4.03(b); (iv) Indebtedness (1) in respect of workers' compensation self- insurance obligations, indemnities, performance bonds, bankers' acceptances, letters of credit and surety, appeal or similar bonds provided by the Company and the Restricted Subsidiaries in the ordinary course of their business and in any such case any reimbursement obligations in connection therewith, (2) under Interest Rate Agreements entered into for bona fide hedging purposes of the Company in the ordinary course of business; PROVIDED, HOWEVER, that such Interest Rate Agreements do not increase the Indebtedness of the Company outstanding at any time other than as a result of fluctuations in interest rates or by reason of fees, indemnities and compensation payable thereunder, (3) under any Currency Agreements; PROVIDED that such agreements are designed to protect the Company or its Subsidiaries against fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable under Currency Agreements or (4) under any Commodity Price Protection Agreements; PROVIDED that such agreements are designed to protect the Company or its Subsidiaries against fluctuations in commodity prices or by reason of fees, indemnities and compensation payable under such Commodity Price Protection Agreements; (v) Purchase Money Indebtedness and Capitalized Lease Obligations in an aggregate principal amount not in excess of $30.0 million at any time outstanding; (vi) Indebtedness of any Foreign Subsidiary in an aggregate principal amount which does not exceed $15.0 million plus any Indebtedness of a Foreign Subsidiary existing at the time it is acquired by the Company and not Incurred in contemplation thereof, so long as after giving effect to such acquisition, the Company could Incur $1.00 of additional Indebtedness under Section 4.03(a); (vii) obligations arising from agreements by the Company or a Restricted Subsidiary to provide for indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations or from guarantees or letters of credit, surety bonds or performance bonds securing any obligation of the Company or a Restricted Subsidiary pursuant to such an agreement, in each case, Incurred in connection with the acquisition or disposition of any business, assets or Capital Stock of a Restricted Subsidiary; 36 (viii) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; PROVIDED that any subsequent transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of Preferred Stock; (ix) Indebtedness of the Company and any Restricted Subsidiary to the extent the net proceeds thereof are promptly deposited to defease or discharge the Notes as described in Article 8. (x) contingent liabilities arising out of endorsements of checks and other negotiable instruments for deposit or collection or overdraft protection in the ordinary course of business; and (xi) Indebtedness (other than Indebtedness permitted to be Incurred pursuant to Section 4.03(a) or any other clause of this Section 4.03(b)) in an aggregate principal amount on the date of Incurrence that, when added to all other Indebtedness Incurred pursuant to this clause (xi) and then outstanding, shall not exceed $30.0 million. (c) The Company shall not Incur any Indebtedness if such Indebtedness is subordinate in right of payment to any Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security shall not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. The Company shall not Incur any Secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to the Notes) such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien. A Note Guarantor shall not Incur any Indebtedness if such Indebtedness is by its terms expressly subordinate in right of payment to any Senior Indebtedness of such Note Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of such Note Guarantor or is expressly subordinated in right of payment to Senior Subordinated Indebtedness of such Note Guarantor. Unsecured Indebtedness is not deemed to be subordinate in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security shall not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. A Note Guarantor shall not Incur any Secured Indebtedness that is not Senior Indebtedness of such Note Guarantor unless 37 contemporaneously therewith effective provision is made to secure the Note Guarantee of such Note Guarantor equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to such Note Guarantee) such Secured Indebtedness for as long as such Secured Indebtedness is secured by a Lien. (d) Notwithstanding any other provision of this Section 4.03, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may Incur pursuant to this Section shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies. For purposes of determining the outstanding principal amount of any particular Indebtedness Incurred pursuant to this Section 4.03, (i) Indebtedness Incurred pursuant to the Credit Agreement prior to or on the Closing Date shall be treated as Incurred pursuant to Section 4.03(b)(i); (ii) Indebtedness permitted by this Section 4.03 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section permitting such Indebtedness; (iii) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this Section, the Company, in its sole discretion, shall classify such Indebtedness on the date of Incurrence and shall later be permitted to reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section, and only be required to include the amount of such Indebtedness in one of such clauses; (iv) for purpose of determining compliance with any dollar-denominated restriction on the Incurrence of Indebtedness, denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness Incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the date that such Indebtedness was Incurred, and any such foreign denominated Indebtedness may be refinanced or replaced, or subsequently refinanced or replaced, in an amount equal to the dollar-equivalent principal amount of such Indebtedness on the date of such refinancing or replacement whether or not such amount is greater or less than the dollar equivalent principal amount of the Indebtedness on the date of initial Incurrence; (v) if Indebtedness is secured by a letter of credit that serves only to secure such Indebtedness, then the total amount deemed Incurred shall be equal to the greater of (x) the principal of such Indebtedness and (y) the amount that may be drawn under such letter of credit; and (vi) the amount of Indebtedness issued at a price less than the amount of the liability thereof shall be determined in accordance with GAAP. SECTION 4.04. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not, and shall not permit any Restricted Subsidiary, directly or indirectly, to: (i) declare or pay any dividend, make any distribution on or in respect of its Capital Stock or make any similar payment on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any Subsidiary of the Company) to the direct or indirect holders of its Capital Stock, except (x) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock or 38 Preferred Stock) or in options, warrants or rights to purchase such Capital Stock and (y) dividends or distributions payable to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or other Restricted Subsidiaries, to its other shareholders on a pro rata basis), (ii) purchase, repurchase, redeem, retire or otherwise acquire for value any Capital Stock of Holding, the Company or any Restricted Subsidiary held by Persons other than the Company or a Restricted Subsidiary, (iii)purchase, repurchase, redeem, retire, defease or otherwise acquire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment any Subordinated Obligations, except a purchase, repurchase, redemption, retirement, defeasance or acquisition within one year of the final maturity thereof, or (iv) make any Investment (other than a Permitted Investment) in any Person, (any such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, retirement, or other acquisition or Investment set forth in these clauses (i) through (iv) being herein referred to as a "Restricted Payment") if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall be continuing (or would result therefrom); (2) the Company could not Incur at least $1.00 of additional Indebtedness under Section 4.03(a); or (3) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and delivered to the Trustee and evidenced by a resolution of the Board of Directors) declared or made subsequent to the Closing Date would exceed the sum, without duplication, of: (A) 50% of the sum of Consolidated Net Income and Consolidated Step-Up Depreciation and Amortization accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter in which the Closing Date occurs to the end of the most recent fiscal quarter for which financial statements are available (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit); 39 (B) 100% of the aggregate Net Cash Proceeds and Fair Market Value of property or assets (other than Indebtedness and Capital Stock, except that Capital Stock of a Person that is or becomes a Restricted Subsidiary shall be valued in accordance with the Company's interest in the Fair Market Value of such Person's property and assets, exclusive of goodwill or any similar intangible asset) received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or from other capital contributions subsequent to the Closing Date (other than an issuance or sale (x) to a Subsidiary of the Company, (y) to an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries with respect to amounts funded or guaranteed by the Company or (z) in exchange for the proceeds of loans or advances made pursuant to clause (q) under the definition "Permitted Investment" in Section 1.01); (C) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the Closing Date of any Indebtedness of the Company or its Restricted Subsidiaries issued after the Closing Date which is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange); (D) the amount equal to the net reduction in Investments in Unrestricted Subsidiaries resulting from (x) payments of dividends, repayments of the principal of loans or advances or other transfers of assets to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries or (y) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investment" in Section 1.01); (E) the net reduction in any Investment (other than a Permitted Investment) that was made after the date of this Indenture resulting from payments of dividends, repayments of the principal of loans or advances or other transfers of assets to the Company or any Restricted Subsidiary and the cash return of capital with respect to any Investment (other than a Permitted Investment); and 40 (F) any amount which previously qualified as a Restricted Payment on account of any Guarantee entered into by the Company or any Restricted Subsidiary; PROVIDED that such Guarantee has not been called upon and the obligation arising under such Guarantee no longer exists. (b) The provisions of Section 4.04(a) shall not prohibit: (i) any purchase, repurchase, redemption, retirement or other acquisition for value of Capital Stock of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or other trust established by the Company or any of its Subsidiaries with respect to amounts funded or guaranteed by the Company); PROVIDED, HOWEVER, that: (1) such purchase, repurchase, redemption, retirement or other acquisition for value shall be excluded in the calculation of the amount of Restricted Payments, and (2) the Net Cash Proceeds from such sale applied in the manner set forth in this clause (i) shall be excluded from the calculation of amounts under Section 4.04(a)(iv)(3)(B); (ii) any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Subordinated Obligations or Capital Stock (other than Disqualified Stock) of the Company that is permitted to be Incurred pursuant to Section 4.03; PROVIDED, HOWEVER, that (1) such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value shall be excluded in the calculation of the amount of Restricted Payments; and (2) the Net Cash Proceeds from such sale applied in the manner set forth in this clause (ii) shall be excluded from the calculation of amounts under clause (iv)(3)(B) of paragraph (a) above to the extent Capital Stock is used in such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value; 41 (iii) any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Obligations from Net Available Cash to the extent permitted by Section 4.06; PROVIDED, HOWEVER, that such prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value shall be excluded in the calculation of the amount of Restricted Payments; (iv) dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividends would have complied with this Section; PROVIDED, HOWEVER, that such dividends shall be included in the calculation of the amount of Restricted Payments; (v) any payment of dividends, other distributions or other amounts by the Company for the purposes set forth in clauses (1) through (3) below; PROVIDED, HOWEVER, that such dividend, distribution or other amount set forth in clauses (1) and (2) shall be excluded and in clause (3) shall be included in the calculation of the amount of Restricted Payments: (1) to Holding in amounts equal to the amounts required for Holding to pay franchise taxes and other fees required to maintain its corporate existence and provide for other operating costs of up to $1.0 million per fiscal year; (2) to Holding in amounts equal to amounts required for Holding to pay Federal, state, local and foreign income taxes to the extent such income taxes are attributable to the income of the Company and its Restricted Subsidiaries (and, to the extent of amounts actually received from its Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries) or otherwise in accordance with the Tax Sharing Agreement as in effect on the date of this Indenture, as the same may be amended from time to time in a manner not materially less favorable to the Holders of the Notes; (3) to Holding in amounts equal to amounts expended by Holding to purchase, repurchase, redeem, retire or otherwise acquire for value Capital Stock of Holding owned by employees, former employees, directors or former directors, consultants or foreign consultants of the Company or any of its Subsidiaries (or permitted 42 transferees of such employees, former employees, directors or former directors, consultants or foreign consultants); PROVIDED, HOWEVER, that the aggregate amount paid, loaned or advanced to Holding pursuant to this clause (3) shall not, in the aggregate, exceed $2.5 million per fiscal year of the Company, plus any amounts contributed by Holding to the Company as a result of sales of shares of Capital Stock to employees, directors and consultants, plus the net proceeds of any key person life insurance received by the Company after the date of this Indenture; (vi) the repurchase of any Subordinated Obligation or Disqualified Stock of the Company at a purchase price not greater than 101% of the principal amount or liquidation preference of such Subordinated Obligation or Disqualified Stock in the event of a Change of Control pursuant to a provision similar to Section 4.08; PROVIDED that prior to consummating any such repurchase, the Company has made the Change of Control Offer required by this Indenture and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; PROVIDED, HOWEVER, that such repurchase shall be included in the calculation of the amount of Restricted Payments; (vii) the repurchase of any Subordinated Obligation or Disqualified Stock of the Company at a purchase price not greater than 100% of the principal amount or liquidation preference of such Subordinated Obligation or Disqualified Stock in the event of an Asset Sale pursuant to a provision similar to Section 4.06; PROVIDED that prior to consummating any such repurchase, the Company has made the Asset Sale Offer required by this Indenture and has repurchased all Notes validly tendered for payment in connection with such Asset Sale Offer; PROVIDED, HOWEVER, that such repurchase shall be included in the calculation of the amount of Restricted Payments; (viii) repurchases of Capital Stock deemed to occur upon exercise of stock options to the extent that shares of such Capital Stock represent a portion of the exercise price of such options; PROVIDED, HOWEVER, that such repurchases shall be excluded in the calculation of the amount of Restricted Payments; (ix) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Company or Preferred Stock of its Restricted Subsidiaries issued or Incurred in accordance with Section 4.03; PROVIDED, HOWEVER, that such declaration and payment of dividends or 43 distributions to holders shall be excluded in the calculation of the amount of Restricted Payments; (x) any of the transactions completed in connection with the Acquisition and the financing thereof; PROVIDED, HOWEVER, that such transactions shall be excluded in the calculation of the amount of Restricted Payments; (xi) any purchase, redemption, retirement or other acquisition for value of Disqualified Stock of the Company made by exchange for, or out of the proceeds of the sale within 30 days of, Disqualified Stock of the Company; PROVIDED that any such new Disqualified Stock is issued in accordance with Section 4.03(a) and has an aggregate liquidation preference that does not exceed the aggregate liquidation preference of the amount so refinanced; PROVIDED, HOWEVER, such purchase, repurchase, redemption, retirement or other acquisition for value shall be excluded in the calculation of the amount of Restricted Payments; or (xii) other Restricted Payments in an aggregate amount not to exceed $15.0 million since the date of this Indenture; PROVIDED, HOWEVER, that such other Restricted Payments shall be included in the calculation of the amount of Restricted Payments. The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.04 shall be determined by the Board of Directors whose resolution with respect thereto shall be conclusive and be delivered to the Trustee and evidenced by a resolution of the Board of Directors. SECTION 4.05. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (a) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company; (b) make any loans or advances to the Company; or 44 (c) transfer any of its property or assets to the Company, except, in the case of clauses (a), (b) and (c): (i) any encumbrance or restriction pursuant to applicable law; (ii) any encumbrance or restriction in any agreement with respect to Indebtedness (including the Credit Agreement) as in effect or entered into on the Closing Date, and any amendments, modifications, restatements, renewals, extensions, replacements and refinancings thereof on terms and conditions with respect to such encumbrances and restrictions that are not materially more restrictive, taken as a whole, than those encumbrances and restrictions with respect to such Indebtedness as in effect on the date of this Indenture; (iii) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in or in contemplation of, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company) and outstanding on such date; (iv) any encumbrance or restriction pursuant to an agreement for the sale or other disposition of a Restricted Subsidiary or assets that restrict distributions by that Restricted Subsidiary or distributions of those assets pending the sale or other disposition; (v) any encumbrance or restriction existing by reason of provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements; (vi) any encumbrance or restriction existing by reason of restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; (vii) any encumbrance or restriction existing by reason of restrictions on the transfer of assets that are the subject of a Capitalized Lease Obligation permitted under Section 4.03; (viii) in the case of clause (c), any encumbrance or restriction 45 (1) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, (2) contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or (3) pursuant to Purchase Money Indebtedness for property acquired in the ordinary course of business that imposes restrictions on that property; (ix) encumbrances or restrictions that are or were created by virtue of any transfer of, agreement to transfer, or option or right with respect to any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by this Indenture; (x) encumbrances and restrictions contained in Indebtedness of Foreign Subsidiaries permitted pursuant to Section 4.03 or industrial revenue or similar bonds Incurred by the Company or any Restricted Subsidiary and permitted pursuant to Section 4.03; (xi) encumbrances or restrictions contained in indentures or other debt instruments, facilities or arrangements that are not materially more restrictive, taken as a whole, than those contained in this Indenture governing the Notes or the Credit Agreement on the date of this Indenture; (xii) encumbrances and restrictions on the date of acquisition (and not Incurred in contemplation thereof) with respect to any assets or other property acquired by the Company or any Restricted Subsidiary (including pursuant to the acquisition of the Capital Stock of a Person); (xiii) customary restrictions imposed on the transfer of, or in licenses related to, copyrighted or patented materials or other intellectual property and customary provisions in agreements that restrict the assignment of such agreements or any rights thereunder or the use of any such rights; 46 (xiv) customary restrictions on real property interests set forth in easements and similar arrangements of the Company or any Restricted Subsidiary; (xv) any encumbrance or restriction existing under or by reason of a Receivables Facility or other contractual requirements of a Receivables Facility permitted pursuant to Section 4.03; PROVIDED that such restrictions apply only to such Receivables Facility; and (xvi) any encumbrance or restriction pursuant to (x) an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in Section 4.05(c)(i) through (xvi) or contained in any amendment, modification or replacement to an agreement referred to in Section 4.05(c)(i) through (xvi), in each case as applicable; PROVIDED, HOWEVER, that the encumbrances and restrictions contained in any such Refinancing agreement or amendment, modification or replacement are no less favorable to the Holders taken as a whole than the encumbrances and restrictions contained in such predecessor agreements or (y) any Credit Facility which is no less favorable to the Holders taken as a whole than the encumbrances contained in the Credit Agreement on the date of this Indenture. SECTION 4.06. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, make any Asset Disposition unless: (i) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the Fair Market Value of the shares and assets subject to such Asset Disposition, (ii) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents, and (iii) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (1) FIRST, to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, purchase, repurchase, redeem, retire, defease or otherwise acquire for value (A) Senior Indebtedness of the Company or Senior 47 Indebtedness (other than obligations in respect of Preferred Stock) of a Restricted Subsidiary or (B) any Indebtedness of a non-guarantor Restricted Subsidiary only if the assets sold were of a non-guarantor Restricted Subsidiary (in each case other than Indebtedness owed to the Company or an Affiliate of the Company and other than obligations in respect of Disqualified Stock), in each case, within 365 days after the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (2) SECOND, to the extent of the balance of Net Available Cash after application in accordance with clause (1), to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 365 days from the later of such Asset Disposition or the receipt of such Net Available Cash or pursuant to arrangements in place within the 365-day period; (3) THIRD, to the extent of the balance of such Net Available Cash after application in accordance with clauses (1) and (2), to make an Offer (as defined in Section 4.06(b)) to purchase Notes pursuant to and subject to the conditions set forth in Section 4.06(b); PROVIDED, HOWEVER, that if the Company elects (or is required by the terms of any other Senior Subordinated Indebtedness), such Offer may be made ratably to purchase the Notes and other Senior Subordinated Indebtedness of the Company, and (4) FOURTH, to the extent of the balance of such Net Available Cash after application in accordance with clauses (1), (2) and (3), for any general corporate purpose not restricted by the terms of this Indenture; PROVIDED, HOWEVER that in connection with any prepayment, repayment, purchase, repurchase, redemption, retirement, defeasance or other acquisition for value of Indebtedness pursuant to clause (1) above, the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid, purchased, repurchased, redeemed, retired, defeased or otherwise acquired for value. Pending the final application of the Net Available Cash, the Company and its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest the Net Available Cash in any manner that is not prohibited by this Indenture. 48 Notwithstanding the foregoing provisions of this Section 4.06, the Company and the Restricted Subsidiaries shall not be required to apply any Net Available Cash in accordance with this Section except to the extent that the aggregate Net Available Cash from all Asset Dispositions that is not applied in accordance with this Section exceeds $5.0 million. For the purposes of this Section 4.06, the following are deemed to be cash: (A) the assumption of Indebtedness of the Company (other than obligations in respect of Disqualified Stock of the Company) or any Restricted Subsidiary (other than obligations in respect of Disqualified Stock and Preferred Stock of a Restricted Subsidiary that is Note Guarantor) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition; (B) any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in the Asset Disposition; and (C) securities or other obligations received by the Company or any Restricted Subsidiary from the transferee that are (subject to ordinary settlement periods) converted, sold or exchanged within 30 days of receipt by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion, sale or exchange). In the case of an Asset Swap constituting part of an Asset Disposition, the Company or any such Restricted Subsidiary shall only be required to receive cash in an amount equal to at least 75% of the proceeds of the Asset Disposition which are not received in connection with the Asset Swap. (b) In the event of an Asset Disposition that requires the purchase of Notes pursuant to Section 4.06(a)(iii)(3), the Company shall be required (i) to purchase Notes tendered pursuant to an offer by the Company for the Notes (the "Offer") at a purchase price of 100% of their principal amount plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the date of purchase (subject to the right of Holders of record on the relevant date to receive interest due on the relevant interest payment date) in accordance with the procedures (including prorating in the event of oversubscription), set forth in this Indenture and (ii) to purchase other Senior Subordinated Indebtedness of the Company on the terms and to the extent contemplated thereby (provided that in no event shall the Company offer to purchase such other Senior Subordinated Indebtedness of the Company at a purchase price in excess of 100% of its principal amount, plus accrued and unpaid interest thereon). If the aggregate purchase price of Notes (and other Senior Subordinated Indebtedness) tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of the Notes (and other Senior Subordinated Indebtedness), the Company shall apply the remaining Net Available Cash in accordance with Section 4.06(a)(iii)(4). The Company shall not be required to make an Offer for Notes (and other Senior Subordinated Indebtedness) pursuant to this Section 4.06 if the Net Available Cash available therefor (after application of the proceeds as provided in clauses (1) and (2) of Section 4.06(a)(iii)) is less than $5.0 million for any particular Asset 49 Disposition (which lesser amount will be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). (c) (i) Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall be obligated to deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Notes purchased by the Company either in whole or in part (subject to prorating as hereinafter described in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the "Purchase Date") and shall contain such information concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed decision (which at a minimum shall include (1) the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent to such Quarterly Report, other than Current Reports describing Asset Dispositions otherwise described in the offering materials (or corresponding successor reports), (2) a description of material developments in the Company's business subsequent to the date of the latest of such reports, and (3) if material, appropriate pro forma financial information) and all instructions and materials necessary to tender Notes pursuant to the Offer, together with the address referred to in clause (iii). (ii) Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided above, the Company shall deliver to the Trustee an Officers' Certificate as to (1) the amount of the Offer (the "Offer Amount"), (2) the allocation of the Net Available Cash from the Asset Dispositions pursuant to which such Offer is being made and (3) the compliance of such allocation with the provisions of Section 4.06(a). On such date, the Company shall also irrevocably deposit with the Trustee or with a paying agent (or, if the Company is acting as its own paying agent, segregate and hold in trust) an amount equal to the Offer Amount to be invested in Temporary Cash Investments and to be held for payment in accordance with the provisions of this Section. Upon the expiration of the period for which the Offer remains open (the "Offer Period"), the Company shall deliver to the Trustee for cancelation the Notes or portions thereof that have been properly tendered to and are to be accepted by the Company. The Trustee (or the Paying Agent, if not the Trustee) shall, on the date of purchase, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the Offer Amount delivered by the Company to the Trustee is greater than the purchase price of the Notes (and other Senior Subordinated Indebtedness) tendered, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 4.06. 50 (iii) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered by the Holder for purchase and a statement that such Holder is withdrawing his election to have such Note purchased. If at the expiration of the Offer Period the aggregate principal amount of Notes and any other Senior Subordinated Indebtedness included in the Offer surrendered by holders thereof exceeds the Offer Amount, the Company shall select the Notes and other Senior Subordinated Indebtedness to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes and other Senior Subordinated Indebtedness in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose Notes are purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. (iv) At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section. A Note shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder. (v) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof. SECTION 4.07. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an "Affiliate Transaction") unless such transaction is on terms: (i) that are no less favorable, taken as a whole, to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm's-length dealings with a Person who is not such an Affiliate, 51 (ii) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $5.0 million, (1) are set forth in writing, and (2) have been approved in good faith by a majority of the members of the Board of Directors and, (iii) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $20.0 million, (1) are set forth in writing, and (2) have either (x) been approved in good faith by a majority of the members of the Board of Directors or (y) have been determined by a recognized appraisal or investment banking firm to be fair, from a financial standpoint, to the Company and its Restricted Subsidiaries. (b) The provisions of Section 4.07(a) shall not prohibit or restrict: (i) any Restricted Payment or Investment permitted to be made pursuant to Section 4.04, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors, (iii) the grant of stock options or similar rights to employees, directors and consultants of the Company pursuant to plans approved by the Board of Directors, (iv) loans or advances to employees in the ordinary course of business (or guarantees in respect thereof or otherwise made on their behalf (including payment on any such guarantees)), but in any event not to exceed $3.0 million in the aggregate outstanding at any one time, plus any amounts loaned pursuant to clause (q) under the definition of "Permitted Investment" in Section 1.01, (v) the payment of reasonable fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company and its Subsidiaries, 52 (vi) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries, (vii) any transaction effected in connection with a Receivables Facility permitted under Section 4.03, (viii) any redemption of Capital Stock held by current or former employees, directors or consultants upon death, disability or termination of employment at a price not in excess of the Fair Market Value thereof or pursuant to the terms of any agreement entered into in accordance with this Indenture with such Person, (ix) sales or issuances of Capital Stock (other than Disqualified Stock) to Affiliates of the Company, (x) transactions involving the Company or any of its Restricted Subsidiaries, on the one hand, and JPMorgan Securities Inc. or Goldman, Sachs & Co. or any of their respective Affiliates, on the other hand, in connection with the Acquisition and transactions related thereto, Bank Indebtedness and any amendment, modification, supplement, extension, refinancing, replacement, work-out, restructuring and other transactions related thereto, or any management, financial advisory, financing, underwriting or placement services or any other investment banking, banking or similar services, which payments are approved by a majority of the Board of Directors in good faith, (xi) transactions pursuant to the Stockholders' Agreement as in effect on the date of this Indenture as the same may be amended from time to time in any manner not materially less favorable taken as a whole to the Holders of the Notes, (xii) transactions pursuant to any agreement disclosed in the Offering Memorandum, including any agreement entered into in connection with the Acquisition, as in effect on the date of this Indenture as the same may be amended from time to time in any manner not materially less favorable taken as a whole to the Holders of the Notes, (xiii) any employment, compensation or indemnification agreements entered into by the Company or any of its Restricted Subsidiaries, in the ordinary course of business with employees, directors, or consultants, or (xiv) sales of inventory or other product to any Affiliate in the ordinary course of business. 53 SECTION 4.08. CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, each Holder shall have the right to require the Company to purchase all or any part of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest, including Additional Interest, if any, due on the relevant interest payment date); PROVIDED, HOWEVER, that notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to purchase the Notes pursuant to this Section 4.08 in the event that it has mailed the notice to exercise its right to redeem all the Notes under the terms of paragraph 5 of the Notes at any time prior to the requirement to consummate the Change of Control and redeem the Notes in accordance with such notice. In the event that at the time of such Change of Control the terms of the Bank Indebtedness restrict or prohibit the repurchase of Notes pursuant to this Section 4.08, then prior to the mailing of the notice to Holders provided for in Section 4.08(b) below but in any event within 30 days following any Change of Control, the Company shall (i) repay in full all Bank Indebtedness or, if doing so will allow the purchase of Notes, offer to repay in full all Bank Indebtedness and repay the Bank Indebtedness of each lender who has accepted such offer, or (ii) obtain the requisite consent under the agreements governing the Bank Indebtedness to permit the repurchase of the Notes as provided for in Section 4.08(b). (b) Within 30 days following any Change of Control, or, at the Company's option, prior to such Change of Control but after it is publicly announced, the Company shall mail a notice to each Holder with a copy to the Trustee (the "Change of Control Offer") stating: (i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase all or a portion of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest, including Additional Interest, if any, on the relevant interest payment date); (ii) the circumstances and relevant facts and financial information regarding such Change of Control; (iii) the purchase date (which shall be no earlier than the greater of (x) 30 days and (y) the Change of Control date and no later than 60 days from the date such notice is mailed); 54 (iv) that the Change of Control Offer is conditioned on the Change of Control occurring if the notice is mailed prior to a Change of Control; and (v) the instructions determined by the Company, consistent with this Section, that a Holder must follow in order to have its Notes purchased. (c) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased. Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. (d) On the purchase date, all Notes purchased by the Company under this Section shall be delivered to the Trustee for cancelation, and the Company shall pay the purchase price plus accrued and unpaid interest and Additional Interest, if any, to the Holders entitled thereto. (e) The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. (f) At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers' Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section 4.08. A Note shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder. (g) Prior to any Change of Control Offer, the Company shall deliver to the Trustee an Officers' Certificate stating that all conditions precedent contained herein to the right of the Company to make such offer have been complied with. (h) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities 55 laws or regulations in connection with the purchase of Notes pursuant to this Section. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof. SECTION 4.09. COMPLIANCE CERTIFICATE. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA to the extent required. SECTION 4.10. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 4.11. FUTURE NOTE GUARANTORS AND RELEASE OF NOTE GUARANTORS. (a) The Company shall cause (1) each Domestic Subsidiary, other than a Domestic Subsidiary the only activity of which is to participate in a Receivables Facility, and (2) each Foreign Subsidiary that enters into a Guarantee of any Senior Indebtedness (other than a Foreign Subsidiary that Guarantees Senior Indebtedness Incurred by another Foreign Subsidiary), to become a Note Guarantor, and if applicable, execute and deliver to the Trustee a supplemental indenture in the form of Exhibit C pursuant to which such Subsidiary shall Guarantee payment of the Notes; PROVIDED that this Section shall not apply to any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with this Indenture. Each Note Guarantee shall be limited to an amount not to exceed the maximum amount that can be Guaranteed by that Note Guarantor, without rendering the Note Guarantee, as it relates to such Note Guarantor voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (b) The Note Guarantee of a Note Guarantor shall be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Note Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with Section 4.06; (2) in connection with any sale of Capital Stock of a Note Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale complies with Section 4.06; (3) if the Company designates any Restricted Subsidiary that is a Note Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of 56 this Indenture; or (4) if the Note Guarantor participates in a Receivables Facility and such participation is such Note Guarantor's only on-going activity. SECTION 4.12. TRUSTEE HAS NO OBLIGATION TO MONITOR. Notwithstanding anything to the contrary, but subject to Article 7 hereof, the Trustee has no obligation or duty to monitor, determine or inquire as to compliance with any of the covenants in this Article or in Article 5 hereof. ARTICLE 5 SUCCESSOR COMPANY SECTION 5.01. (a) WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. The Company shall not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets, in one or more related transactions, to, any Person, unless: (i) the resulting, surviving or transferee Person (the "Successor Company") shall be a corporation, limited liability company, trust, partnership or similar entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by a supplemental indenture hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and this Indenture; PROVIDED that if the Successor Company is not a corporation, the Notes will also be assumed by a corporate co-obligor; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a); and (iv) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. The Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, but the predecessor Company in the case of a lease of all or substantially all its assets shall not be released from the obligation to pay the principal of and interest on the Notes. 57 (b) In addition, the Company shall not permit any Note Guarantor to consolidate with or merge with or into, or convey, transfer or lease all or substantially all of its assets to any Person unless: (i) the resulting, surviving or transferee Person (the "Successor Guarantor") will be a corporation, limited liability company, trust, partnership or similar entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such Person (if not such Note Guarantor) shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of such Note Guarantor under its Note Guarantee; (ii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Guarantor or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and (iii) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture. (c) Notwithstanding the foregoing: (i) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or any Restricted Subsidiary and (ii) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: 58 (a) the Company defaults in any payment of interest on any Note when the same becomes due and payable or in any payment of Additional Interest, whether or not such payment shall be prohibited by Article 10, and such default continues for a period of 30 days; (b) the Company defaults in the payment of the principal of any Note when the same becomes due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise, whether or not such payment shall be prohibited by Article 10; (c) the Company fails to comply with its obligations under Section 5.01, (d) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08 or 4.11 (other than a failure to purchase Notes when required under any such Section) and such failure continues for 60 days after the notice specified below; (e) the Company or any Restricted Subsidiary fails to comply with any of its agreements in the Notes or this Indenture (other than those referred to in (a), (b), (c) or (d) above) and such failure continues for 60 days after the notice specified below; (f) Indebtedness of the Company or any Subsidiary is not paid within any applicable grace period after final maturity or the acceleration by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $20.0 million or its foreign currency equivalent at the time and such failure continues for 10 days after the notice specified below; (g) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (i) commences a voluntary case; (ii) consents to the entry of an order for relief against it in an involuntary case; (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; or (iv) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; 59 (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any Significant Subsidiary in an involuntary case; (ii) appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or (iii) orders the winding up or liquidation of the Company or any Significant Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (i) any judgment or decree for the payment of money in excess of $20.0 million or its foreign currency equivalent (net of any amounts covered by insurance) against the Company or any Significant Subsidiary and there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed; or (j) any Note Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof) or any Significant Subsidiary Note Guarantor or Person acting by or on behalf of such Significant Subsidiary Note Guarantor denies or disaffirms such Significant Subsidiary Note Guarantor's obligations under this Indenture or any Significant Subsidiary Note Guarantee and such Default continues for 10 days after receipt of the notice specified in this Indenture. The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, UNITED STATES CODE, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. A Default under clause (d), (e), (f) or (j) above is not an Event of Default until the Trustee notifies the Company or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company 60 and the Trustee of the Default and the Company or the Note Guarantor, as applicable, does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers' Certificate of any event which is, or with the giving of notice or the lapse of time or both would become, an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto. Except for monitoring payment of scheduled interest or principal on any Note, subject to Article 7 hereof, the Trustee shall have no obligation or duty to monitor, determine or inquire as to the occurrence of a Default or an Event of Default. SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in Section 6.01(g) or (h) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(g) or (h) with respect to the Company occurs, the principal of and interest on all the Notes shall IPSO FACTO become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in principal amount of the Notes by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Notes by notice to the Trustee may 61 waive an existing Default and its consequences except (a) a Default in the payment of the principal of or interest on a Note, (b) a Default arising from the failure to redeem or purchase any Note when required pursuant to the terms of this Indenture or (c) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in principal amount of the Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Holders or would involve the Trustee in personal liability; PROVIDED, HOWEVER, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. LIMITATION ON SUITS. (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless: (i) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (ii) the Holders of at least 25% in principal amount of the Notes make a written request to the Trustee to pursue the remedy; (iii) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (v) the Holders of a majority in principal amount of the Notes do not give the Trustee a direction inconsistent with the request during such 60-day period. (b) A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and Additional Interest and 62 interest on the Notes held by such Holder, on or after the respective due dates expressed or provided for in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount then due and owing (together with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in the Notes) and the amounts provided for in Section 7.07. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, any Subsidiary or Note Guarantor, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. PRIORITIES. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to holders of Senior Indebtedness of the Company to the extent required by Article 10 and to holders of Senior Indebtedness of the Note Guarantors to the extent required by Article 12; THIRD: to Holders for amounts due and unpaid on the Notes for principal, interest and Additional Interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, interest and any Additional Interest, respectively; and FOURTH: to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section. At least 15 days before such 63 record date, the Trustee shall mail to each Holder and the Company a notice that states the record date, the payment date and amount to be paid. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Notes. SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. Neither the Company nor any Note Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Note Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements 64 of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05; and (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee 65 shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute wilful misconduct or negligence. (e) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, any Note Guarantee or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company or any Note Guarantor in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication. The Trustee shall not be charged with knowledge of any Default or Event of Default under Sections 6.01(c), (d), (e), (f), (g), (h), (i) or (j) or of the identity of any Significant Subsidiary unless either (a) a Trust Officer shall have actual knowledge thereof (and that such constitutes a Default or Event of Default hereunder) or (b) the 66 Trustee shall have received notice thereof (and such notice specifies that such constitutes a Default or Event of Default hereunder) in accordance with Section 13.02 hereof from the Company, any Note Guarantor or any Holder. SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note (including payments pursuant to the redemption provisions of such Note), the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as practicable after each July 15 beginning with the July 15 following the date of this Indenture, and in any event prior to September 15 in each year, the Trustee shall mail to each Holder a brief report dated as of such July 15 that complies with Section 313(a) of the TIA if and to the extent required thereby. The Trustee shall also comply with Section 313(b) of the TIA. A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time such compensation for its services as the Trustee and the Company shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services, except any such expense as may arise from its negligence, wilful misconduct or bad faith. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Trustee shall provide the Company reasonable notice of any expenditure not in the ordinary course of business. The Company and each Note Guarantor, jointly and severally shall indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by or in connection with the administration of this trust and the performance of its duties hereunder, except as provided in the last sentence of this paragraph. The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; PROVIDED, HOWEVER, that any failure to notify the Company shall not relieve the Company or any Note Guarantor of its indemnity obligations hereunder. The Company shall defend 67 the claim and the Trustee shall provide reasonable cooperation at the Company's expense in the defense. The Trustee may have separate counsel and the Company and the Note Guarantors, as applicable, shall pay the reasonable fees and expenses of such counsel; PROVIDED, HOWEVER, that the Company shall not be required to pay such fees and expenses if it assumes Trustee's defense, and, in Trustee's reasonable judgment, there is no conflict of interest between the Company and the Note Guarantors, as applicable, and the Trustee in connection with such defense. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through its own wilful misconduct, negligence or bad faith. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest and Additional Interest, if any, on particular Notes. The Company's payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(g) or (h) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. (a) The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (i) the Trustee fails to comply with Section 7.10; (ii) the Trustee is adjudged bankrupt or insolvent; (iii) a receiver or other public officer takes charge of the Trustee or its property; or (iv) the Trustee otherwise becomes incapable of acting. (b) If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists 68 in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. (c) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07. (d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. (e) If the Trustee fails to comply with Section 7.10, unless the Trustee's duty to resign is stayed as provided in Section 310(b) of the TIA, any Holder who has been a bona fide holder of a Note for at least six months may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA. The 69 Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 310(b) of the TIA, subject to its right to apply for a stay of its duty to resign under the penultimate paragraph of Section 310(b) of the TIA; PROVIDED, HOWEVER, that there shall be excluded from the operation of Section 310(b)(1) of the TIA any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met. SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated. ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE. (a) When (i) either (1) all outstanding Notes (other than Notes replaced or paid pursuant to Section 2.08) have been canceled or delivered to the Trustee for cancelation; or (2) all outstanding Notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof, or otherwise will become due and payable within one year and the Company or any Note Guarantor irrevocably deposits with the Trustee funds in an amount sufficient or U.S. Government Obligations, the principal of and interest on which will be sufficient, or a combination thereof sufficient, in the written opinion of a nationally recognized firm of independent public accountants or reputable investment banking firm delivered to the Trustee (which delivery shall only be required if U.S. Government Obligations have been so deposited), to pay the principal of and interest and Additional Interest, if any, on the outstanding Notes when due at maturity or upon redemption thereof, including interest thereon to maturity or such redemption date (other than Notes replaced or paid pursuant to Section 2.08) and Additional Interest, if any, (ii) no Default or Event of Default has occurred and is continuing on the date of the deposit; (iii) the Company or any Note Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect. 70 In the case of clause (2) above, the Company must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all of its obligations under the Notes and this Indenture ("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08 and 4.11 and the operation of Section 5.01 (a)(ii), 5.01(a)(iii), 5.01(a)(iv), 5.01(b)(iii), 6.01(d), 6.01(e), 6.01(f), 6.01(g) (with respect to Significant Subsidiaries of the Company only), 6.01(h) (with respect to Significant Subsidiaries of the Company only) and 6.01(i) ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company discharges its liability on the Notes or exercises its legal defeasance option or its covenant defeasance option, each Guarantor shall be released from all its obligations under the Note Guarantees and the obligations under the Note Guarantees shall each be terminated simultaneously with the termination of such obligations. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.01(c), 6.01(d), 6.01(e), 6.01(f), 6.01(g) (with respect to Significant Subsidiaries only), 6.01(h) (with respect to Significant Subsidiaries only) or 6.01(i) or because of the failure of the Company to comply with clauses (ii), (iii) and (iv) of Section 5.01(a). Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (c) Notwithstanding clauses (a) and (b) above, the Company's obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in this Article 8 shall survive until the Notes have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.05 and 8.06 shall survive. SECTION 8.02. (a) CONDITIONS TO DEFEASANCE. The Company may exercise its legal defeasance option or its covenant defeasance option only if: (i) the Company irrevocably deposits in trust with the Trustee money in an amount sufficient or U.S. Government Obligations, the principal of and interest on which will be sufficient, or a combination thereof sufficient, to pay the principal of, and premium (if any), interest and Additional Interest (if any), on the Notes when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date; 71 (ii) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants or a reputable investment banking firm expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without interest will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, interest and Additional Interest, if any, when due on all the Notes to maturity or redemption, as the case may be; (iii) 91 days pass after the deposit is made and during the 91-day period no Default specified in Section 6.01(g) or (h) with respect to the Company occurs which is continuing at the end of the period; (iv) the deposit does not constitute a default under any other agreement binding on the Company and is not prohibited by Article 10; (v) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified or is exempt as, a regulated investment company under the Investment Company Act of 1940; (vi) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (1) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (2) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (vii) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; and (viii) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes as contemplated by this Article 8 have been complied with. 72 (b) Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article 3. SECTION 8.03. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest and Additional Interest, if any, on the Notes. Money and securities so held in trust are not subject to Article 10 or 12. SECTION 8.04. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any money or U.S. Government Obligations held by it as provided in this Article which, in the written opinion of nationally recognized firm of independent public accountants or reputable investment banking firm delivered to the Trustee (which delivery shall only be required if U.S. Government Obligations have been so deposited), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent discharge or defeasance in accordance with this Article. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal, interest or Additional Interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors, and the Trustee and the Paying Agent shall have no further liability with respect to such monies. SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; PROVIDED, HOWEVER, that, if the Company has made any payment of principal of or 73 interest or Additional Interest on, any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01. (a) WITHOUT CONSENT OF HOLDERS. The Company, the Note Guarantors and the Trustee may amend this Indenture, the Notes or the Note Guarantees without notice to or consent of any Holder: (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Section 4.11 or Article 5; (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; (iv) to make any change in Article 10 or 12 that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Note Guarantor (or any Representative thereof) under Article 10 or 12 respectively; (v) to add additional Guarantees with respect to the Notes or to secure the Notes; (vi) to comply with any requirement of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; (vii) to add to the covenants of the Company or provide any additional rights or benefits to the Holders or to surrender any right or power conferred upon the Company; (viii) to make any change that does not adversely affect the rights of any Holder; (ix) to provide for the issuance of the Exchange Notes or Additional Notes, which shall have terms substantially identical in all material respects to the Original Notes (except that the transfer 74 restrictions contained in the Original Notes shall be modified or eliminated, as appropriate), and which shall be treated, together with any outstanding Original Notes, as a single issue of securities; (x) to evidence and provide the acceptance of the appointment of a successor Trustee under this Indenture. (b) An amendment under this Section 9.01 may not make any change to Article 10 or Article 12 that adversely affects the rights of any holder of Senior Indebtedness of the Company or a Note Guarantor then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change. After an amendment under this Section 9.01 becomes effective,the Company shall mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01. SECTION 9.02. WITH CONSENT OF HOLDERS. (a) The Company, the Note Guarantors and the Trustee may amend this Indenture or the Notes without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes). However, without the consent of each Holder affected, an amendment may not: (i) reduce the amount of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or extend the time for payment of interest, including Additional Interest, if any, on any Note; (iii) reduce the principal of or extend the Stated Maturity of any Note; (iv) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed in accordance with Article 3; (v) make any Note payable in money other than that stated in the Note; (vi) make any change in Article 10 or Article 12 that adversely affects the rights of any Holder under Article 10 or Article 12; (vii) impair the right of any Holder to receive payment of principal of, and interest, including Additional Interest, if any, on, such 75 Holder's Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes, (viii) make any change in Section 6.04 or 6.07 or the second sentence of this Section 9.02; or (ix) release the Note Guarantees, other than in accordance with Section 11.07, or modify the Note Guarantees in any manner adverse to the Holders. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section 9.02 may not make any change to Article 10 or Article 12 that adversely affects the rights of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or Representative thereof authorized to give a consent) consent to such change. After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect. SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. (a) A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Note or portion of the Note if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers' Certificate from the Company certifying that the requisite number of consents have been received. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by the Company or the Trustee of the requisite number of consents, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Company and the Trustee. (b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their 76 consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company and the Note Guarantors enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03). SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. 77 ARTICLE 10 SUBORDINATION SECTION 10.01. AGREEMENT TO SUBORDINATE. The Company agrees, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment in full of all existing and future Senior Indebtedness of the Company and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness. The Notes shall in all respects rank equally in right of payment with any existing and future Senior Subordinated Indebtedness of the Company and shall be senior in right of payment to all future Subordinated Obligations of the Company. The Notes also shall be effectively subordinated to all Secured Indebtedness of the Company and its Subsidiaries to the extent of the value of the assets securing such Indebtedness. However, payment from the money or the proceeds of U.S. Government Obligations held in any trust described in Article 8 will not be subordinated to any Senior Indebtedness or subject to the restrictions described herein. For purposes of this Article 10, the Indebtedness evidenced by the Notes shall be deemed to include any Additional Interest payable pursuant to the provisions set forth in the Notes and the Registration Rights Agreement. All provisions of this Article 10 shall be subject to Section 10.12. Only Indebtedness of the Company that is Senior Indebtedness will rank senior to the Notes. The Notes will rank equally in all respects with all other Senior Subordinated Indebtedness of the Company. The Company will not Incur, directly or indirectly, any Indebtedness which is subordinate in right of payment to Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness shall not be deemed to be subordinate or junior in right of payment to Secured Indebtedness merely because it is unsecured and Indebtedness which has different security or different priorities in the same security will not be deemed subordinate in right of payment to Secured Indebtedness due to such differences. SECTION 10.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under Article 8): (a) the holders of Senior Indebtedness of the Company shall be entitled to receive payment in full of such Senior Indebtedness before the Holders are entitled to receive any payment of principal of or interest on the Notes; and 78 (b) until such Senior Indebtedness is paid in full any payment or distribution to which Holders would be entitled but for the subordination provisions of this Indenture shall be made to holders of such Senior Indebtedness as their interests may appear. SECTION 10.03. DEFAULT ON SENIOR INDEBTEDNESS. The Company may not pay principal of, premium (if any) or interest on the Notes, or make any further deposit pursuant to Section 8.01, and may not otherwise purchase, repurchase, redeem or otherwise acquire or retire for value any Notes (collectively, "pay the Notes") (except in Permitted Junior Securities or except from a previously created trust under Article 8) if: (a) any Designated Senior Indebtedness of the Company is not paid when due, whether upon acceleration or otherwise, or (b) any other default on Designated Senior Indebtedness of the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded, or (y) such Designated Senior Indebtedness has been paid in full; PROVIDED, HOWEVER, that the Company may pay the Notes without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to which either of the events set forth in clause (a) or (b) of this sentence has occurred and is continuing. In addition, during the continuance of any default (other than a default described in clause (a) or (b) of the immediately preceding paragraph) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Notes (except in Permitted Junior Securities or except from a previously created trust under Article 8) for a period (a "Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to the Company) of written notice (a "Blockage Notice") of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated: 79 (a) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (b) by repayment in full of such Designated Senior Indebtedness, or (c) because the default giving rise to such Blockage Notice is no longer continuing). Subject to Article 7 hereof, if the Trustee receives a Blockage Notice from a Representative of such Designated Senior Indebtedness, the Trustee can conclusively rely as to the occurrence of clauses (b) and (c) of the preceding paragraph upon notice from such Representative. Notwithstanding the provisions described in the immediately preceding paragraph (but subject to the provisions contained in the second preceding and in the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Notes after the end of such Payment Blockage Period, including any missed payments. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period; PROVIDED HOWEVER, that if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Blockage Notice within such period; PROVIDED, FURTHER, HOWEVER, that in no event may the total number of days during which any Payment Blockage Period or Periods (including any periods in respect of any additional Blockage Notices delivered by the Representative pursuant to the prior sentence) is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this Section, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days. SECTION 10.04. ACCELERATION OF PAYMENT OF NOTES. If payment of the Notes is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Designated Senior Indebtedness of the Company (or their Representative) of the acceleration. If any Designated Senior Indebtedness of the Company is outstanding, the Company may not pay the Notes until five Business Days after such holders or the Representative 80 of such Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if this Article 10 otherwise permits payment at that time. SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a distribution is made to Holders that because of this Article 10 should not have been made to them, the Holders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear. SECTION 10.06. SUBROGATION. After all Senior Indebtedness of the Company is paid in full and until the Notes are paid in full, Holders shall be subrogated to the rights of holders of such Senior Indebtedness to receive distributions applicable to Senior Indebtedness. A distribution made under this Article 10 to holders of such Senior Indebtedness which otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company on such Senior Indebtedness. SECTION 10.07. RELATIVE RIGHTS. This Article 10 defines the relative rights of Holders and holders of Senior Indebtedness of the Company. Nothing in this Indenture shall: (a) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest and Additional Interest, if any, on the Notes in accordance with their terms; or (b) prevent the Trustee or any Holder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness of the Company to receive distributions otherwise payable to Holders. SECTION 10.08. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any holder of Senior Indebtedness of the Company to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture. SECTION 10.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it in its sole discretion that payments may not be made under this Article 10. The Company, the Registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of the Company may give the notice; PROVIDED, HOWEVER, that, if an issue of Senior Indebtedness of the Company has a Representative, only the Representative may give the notice. 81 The Trustee in its individual or any other capacity may hold Senior Indebtedness of the Company with the same rights it would have if it were not Trustee. The Registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness of the Company which may at any time be held by it, to the same extent as any other holder of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07 or any other Section of this Indenture. SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of the Company, the distribution may be made and the notice given to their Representative (if any). SECTION 10.11. ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE. The failure to make a payment pursuant to the Notes by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 10 shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of the Notes. SECTION 10.12. TRUST MONIES NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest and Additional Interest, if any, on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article 10, and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. SECTION 10.13. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 10, the Trustee and the Holders shall be entitled to conclusively rely (a) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders or (c) upon the Representatives for the holders of Senior Indebtedness of the Company for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Company to participate in any payment or 82 distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10. SECTION 10.14. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder by accepting a Note authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness of the Company as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.15. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS. Notwithstanding anything that may be interpreted to the contrary, the Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Company and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the Company or any other Person, money or assets to which any holders of Senior Indebtedness of the Company shall be entitled by virtue of this Article 10 or otherwise. SECTION 10.16. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS ON SUBORDINATION PROVISIONS. Each Holder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of the Company, whether such Senior Indebtedness was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of such Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. ARTICLE 11 NOTE GUARANTEES 83 SECTION 11.01. (a) NOTE GUARANTEES. Each Note Guarantor hereby jointly and severally irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Company under this Indenture (including obligations to the Trustee) and the Notes, whether for payment of principal of, interest on or Additional Interest, if any, in respect of the Notes and all other monetary obligations of the Company under this Indenture and the Notes and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Company whether for fees, expenses, indemnification or otherwise under this Indenture and the Notes (all the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Note Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Note Guarantor, and that each such Note Guarantor shall remain bound under this Article 11 notwithstanding any extension or renewal of any Guaranteed Obligation. (b) Each Note Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Note Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Note Guarantor hereunder shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Notes or any other agreement or otherwise; (ii) any extension or renewal of any thereof; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (v) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in the ownership of such Note Guarantor, except as provided in Section 11.02(b). (c) Each Note Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the Note Guarantors, such that such Note Guarantor's obligations would be less than the full amount claimed. Each Note Guarantor hereby waives any right to which it may be entitled to have the assets of the Company first be used and depleted as payment of the Company's or such Note Guarantor's obligations hereunder prior to any amounts being claimed from or paid by such Note Guarantor hereunder. Each Note Guarantor hereby waives any right to which it may be entitled to require that the Company be sued prior to an action being initiated against such Note Guarantor. (d) Each Note Guarantor further agrees that its Note Guarantee herein constitutes a guarantee of payment, performance and compliance when 84 due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any Note held for payment of the Guaranteed Obligations. (e) The Note Guarantee of each Note Guarantor is, to the extent and in the manner set forth in Article 12, subordinated and subject in right of payment to the prior payment in full of the principal of and premium, if any, and interest on all Senior Indebtedness of the relevant Note Guarantor and is made subject to such provisions of this Indenture. (f) Except as expressly set forth in Sections 4.11, 8.01, 11.02, 11.06 and 11.07, the obligations of each Note Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Note Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Note Guarantor or would otherwise operate as a discharge of any Note Guarantor as a matter of law or equity. (g) Each Note Guarantor agrees that its Note Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations. Each Note Guarantor further agrees that its Note Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest or Additional Interest, if any, on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. (h) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Note Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest or Additional Interest, if any, on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Note Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed 85 Obligations (but only to the extent not prohibited by law) and (iii) all other monetary obligations of the Company to the Holders and the Trustee. (i) Each Note Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations and all obligations to which the Guaranteed Obligations are subordinated as provided in Article 12. Each Note Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Note Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Note Guarantor for the purposes of this Section 11.01. (j) Each Note Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 11.01. (k) Upon request of the Trustee, each Note Guarantor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 11.02. LIMITATION ON LIABILITY. (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Note Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Note Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. (b) A Note Guarantee as to any Note Guarantor shall terminate and be of no further force or effect and such Note Guarantor shall be deemed to be released from all obligations under this Article 11 upon (i) the merger or consolidation of such Note Guarantor with or into any Person other than the Company or a Subsidiary or Affiliate of the Company where such Note Guarantor is not the surviving entity of such consolidation or merger, (ii) the sale by the Company or any Subsidiary of the Company (or any pledgee of the Company) of the Capital Stock of such Note Guarantor, where, after such sale, such Note Guarantor is no longer a Subsidiary of the Company; PROVIDED, HOWEVER, that each such merger, consolidation or sale (or, in the case of a sale by such a pledgee, the disposition of the proceeds of such sale) shall comply with Section 4.06 and Section 5.01(b) or (iii) otherwise permitted under Section 4.11(b). At 86 the request of the Company, the Trustee shall execute and deliver an appropriate instrument evidencing such release (in the form provided by the Company). SECTION 11.03. SUCCESSORS AND ASSIGNS. This Article 11 shall be binding upon each Note Guarantor and its successors and assigns 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 conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 11.04. NO WAIVER. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 11 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 11 at law, in equity, by statute or otherwise. SECTION 11.05. MODIFICATION. No modification, amendment or waiver of any provision of this Article 11, nor the consent to any departure by any Note Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Note Guarantor in any case shall entitle such Note Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 11.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE NOTE GUARANTORS. Each Subsidiary which is required to become a Note Guarantor pursuant to Section 4.11 shall execute and deliver to the Trustee a supplemental indenture in the form of Exhibit C hereto pursuant to which such Subsidiary shall become a Note Guarantor under this Article 11 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Company shall deliver to the Trustee an Opinion of Counsel and an Officers' Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Subsidiary and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors' rights generally and to the principles of equity, and other customer exceptions, whether considered in a proceeding at law or in equity, the Note Guarantee of such Note Guarantor is a legal, valid and binding obligation of such Note Guarantor, enforceable against such Note Guarantor in accordance with its terms and or to such other matters as the Trustee may reasonably request. 87 SECTION 11.07. RELEASE OF NOTE GUARANTEES. Any term or provision of this Indenture to the contrary notwithstanding, the Note Guarantee of a Note Guarantor shall be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Note Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with Section 4.06; (2) in connection with any sale of Capital Stock of a Note Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale complies with Section 4.06; (3) if the Company designates any Restricted Subsidiary that is a Note Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture; or (4) if the Note Guarantor participates in a Receivables Facility and such participation is such Note Guarantor's only on-going activity. SECTION 11.08. NON-IMPAIRMENT. The failure to endorse a Note Guarantee on any Note shall not affect or impair the validity thereof. ARTICLE 12 SUBORDINATION OF THE NOTE GUARANTEES SECTION 12.01. AGREEMENT TO SUBORDINATE. Each Note Guarantor agrees, and each Holder by accepting a Note agrees, that the obligations of a Note Guarantor hereunder are subordinated in right of payment, to the extent and in the manner provided in this Article 12, to the prior payment in full of all existing and future Senior Indebtedness of such Note Guarantor and that the subordination is for the benefit of and enforceable by the holders of such Senior Indebtedness of such Note Guarantor. The obligations hereunder with respect to a Note Guarantor shall in all respects rank equally in right of payment with any existing and future Senior Subordinated Indebtedness of such Note Guarantor and shall be senior in right of payment to all future Subordinated Obligations of such Note Guarantor; and only Indebtedness of such Note Guarantor that is Senior Indebtedness of such Note Guarantor shall rank senior to the obligations of such Note Guarantor in accordance with the provisions set forth herein. SECTION 12.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any payment or distribution of the assets of a Note Guarantor to creditors upon a total or partial liquidation or a total or partial dissolution of such Note Guarantor or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Note Guarantor or its property (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under Article 8): (a) the holders of Senior Indebtedness of such Note Guarantor shall be entitled to receive payment in full of such Senior 88 Indebtedness before the Holders are entitled to receive any payment of principal of or interest on the Notes; and (b) until such Senior Indebtedness is paid in full any payment or distribution to which Holders would be entitled but for this Article 12 shall be made to holders of such Senior Indebtedness as their interests may appear. SECTION 12.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS OF A NOTE GUARANTOR. A Note Guarantor may not pay principal of, premium (if any) or interest on the Notes, or make any further deposit pursuant to the provisions of Article 8, and may not otherwise purchase, repurchase, redeem or otherwise acquire or retire for value any Notes (collectively, "pay its Guarantee") (except in Permitted Junior Securities or except from a previously created trust under Article 8) if: (a) any Designated Senior Indebtedness of such Note Guarantor is not paid when due, whether upon acceleration or otherwise, or (b) any other default on Designated Senior Indebtedness of such Note Guarantor occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (x) the default has been cured or waived and any such acceleration has been rescinded, or (y) such Designated Senior Indebtedness has been paid in full; PROVIDED, HOWEVER, that such Note Guarantor may pay the Notes without regard to the foregoing if such Note Guarantor and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to which either of the events set forth in clause (a) or (b) of this sentence has occurred and is continuing. In addition, during the continuance of any default (other than a default described in clause (a) or (b) of the immediately preceding paragraph) with respect to any Designated Senior Indebtedness of such Note Guarantor pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Notes (except in Permitted Junior Securities or except from a previously created trust under Article 8) for a period (a "Guarantee Payment Blockage Period") commencing upon the receipt by the Trustee (with a copy to such Note Guarantor and the Company) of written 89 notice (a "Guarantee Blockage Notice") of such default from the Representative of the holders of the Designated Senior Indebtedness of such Note Guarantor specifying an election to effect a Guarantee Payment Blockage Period and ending 179 days thereafter (or earlier if such Guarantee Payment Blockage Period is terminated: (a) by written notice to the Trustee and such Note Guarantor and the Company from the Person or Persons who gave such Blockage Notice, (b) by repayment in full of such Designated Senior Indebtedness, or (c) because the default giving rise to such Guarantee Blockage Notice is no longer continuing). Subject to Article 7 hereof, if the Trustee receives a Guarantee Blockage Notice, from a Representative of such Designated Senior Indebtedness, the Trustee can conclusively rely as to the occurrence of clauses (b) and (c) of the preceding paragraph upon notice from such Representative. Notwithstanding the provisions described in the immediately preceding paragraph (but subject to the provisions contained in the second preceding and in the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness, such Note Guarantor may resume paying its Note Guarantee after such Guarantee Payment Blockage Period, including any missed payments. Not more than one Guarantee Blockage Notice may be given with respect to a Note Guarantor in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of such Note Guarantor during such period; PROVIDED, HOWEVER, that if any Guarantee Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness of such Note Guarantor other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Guarantee Blockage Notice within such period; PROVIDED, FURTHER, HOWEVER, that in no event may the total number of days during which any Guarantee Payment Blockage Period or Periods (including any periods in respect of any additional Guarantee Blockage Notices delivered by the Representative pursuant to the prior sentence) is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this Section 12.03, no default or event of default that existed or was continuing on the date of the commencement of any Guarantee Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Guarantee Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Guarantee Payment 90 Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days. SECTION 12.04. DEMAND FOR PAYMENT. If payment of the Notes is accelerated because of an Event of Default and a demand for payment is made on a Note Guarantor pursuant to Article 11, the Trustee (PROVIDED that the Trustee shall have received written notice from the Company or such Note Guarantor, on which notice the Trustee shall be entitled to conclusively rely) shall promptly notify the holders of the Designated Senior Indebtedness of such Note Guarantor (or the Representative of such holders) of such demand. If any Designated Senior Indebtedness of such Note Guarantor is outstanding, such Note Guarantor may not pay its Guarantee until five Business Days after such holders or the Representative of the holders of Designated Senior Indebtedness of such Note Guarantor receive notice of such demand and, thereafter, may pay its Guarantee only if this Article 12 otherwise permits payment at that time. SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a payment or distribution is made to Holders that because of this Article 12 should not have been made to them, the Holders who receive the payment or distribution shall hold such payment or distribution in trust for holders of the Senior Indebtedness of the relevant Note Guarantor and pay it over to them as their respective interests may appear. SECTION 12.06. SUBROGATION. After all Senior Indebtedness of a Note Guarantor is paid in full and until the Notes are paid in full in cash, Holders shall be subrogated to the rights of holders of Senior Indebtedness of such Note Guarantor to receive distributions applicable to Designated Senior Indebtedness of such Note Guarantor. A distribution made under this Article 12 to holders of Senior Indebtedness of such Note Guarantor which otherwise would have been made to Holders is not, as between such Note Guarantor and Holders, a payment by such Note Guarantor on Senior Indebtedness of such Note Guarantor. SECTION 12.07. RELATIVE RIGHTS. This Article 12 defines the relative rights of Holders and holders of Senior Indebtedness of a Note Guarantor. Nothing in this Indenture shall: (a) impair, as between a Note Guarantor and Holders, the obligation of a Note Guarantor which is absolute and unconditional, to make payments with respect to the Guaranteed Obligations to the extent set forth in Article 11; or (b) prevent the Trustee or any Holder from exercising its available remedies upon a default by a Note Guarantor under its 91 obligations with respect to the Guaranteed Obligations, subject to the rights of holders of Senior Indebtedness of such Note Guarantor to receive distributions otherwise payable to Holders. SECTION 12.08. SUBORDINATION MAY NOT BE IMPAIRED BY A NOTE GUARANTOR. No right of any holder of Senior Indebtedness of a Note Guarantor to enforce the subordination of the obligations of such Note Guarantor hereunder shall be impaired by any act or failure to act by such Guarantor or by its failure to comply with this Indenture. SECTION 12.09. RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding Section 12.03, the Trustee or the Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it in its sole discretion that payments may not be made under this Article 12. A Note Guarantor, the Registrar or co-registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness of a Note Guarantor may give the notice; PROVIDED, HOWEVER, that if an issue of Senior Indebtedness of a Note Guarantor has a Representative, only the Representative may give the notice. The Trustee in its individual or any other capacity may hold Senior Indebtedness of a Note Guarantor with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 12 with respect to any Senior Indebtedness of a Note Guarantor which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness of such Note Guarantor; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07 or any other Section of this Indenture. SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of a Note Guarantor, the distribution may be made and the notice given to their Representative (if any). SECTION 12.11. ARTICLE 12 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT RIGHT TO ACCELERATE. The failure of a Note Guarantor to make a payment on any of its obligations by reason of any provision in this Article 12 shall not be construed as preventing the occurrence of a default by such Note Guarantor under such obligations. Nothing in this Article 12 shall have any effect on the right of the Holders or the Trustee to make a demand for payment on a Note Guarantor pursuant to Article 11. 92 SECTION 12.12. TRUSTEE ENTITLED TO RELY. Upon any payment or distribution pursuant to this Article 12, the Trustee and the Holders shall be entitled to conclusively rely (a) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 12.02 are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders or (c) upon the Representatives for the holders of Senior Indebtedness of a Note Guarantor for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness of a Note Guarantor and other Indebtedness of a Note Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 12. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of a Note Guarantor to participate in any payment or distribution pursuant to this Article 12, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of such Note Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 12, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 12. SECTION 12.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder by accepting a Note authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness of each of the Note Guarantors as provided in this Article 12 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 12.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS OF A NOTE GUARANTOR. Notwithstanding anything that may be interpreted to the contrary, the Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of a Note Guarantor and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the relevant Note Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of such Note Guarantor shall be entitled by virtue of this Article 12 or otherwise. SECTION 12.15. RELIANCE BY HOLDERS OF SENIOR INDEBTEDNESS OF A NOTE GUARANTOR ON SUBORDINATION PROVISIONS. Each Holder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of a Note Guarantor, whether such Senior Indebtedness was created or acquired before or after the issuance of the 93 Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. SECTION 12.16. TRUST MONIES NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of, and interest and Additional Interest on, the Notes shall not be subordinated to the prior payment of any Senior Indebtedness of any Note Guarantor or subject to the restrictions set forth in this Article 12, and none of the Holders shall be obligated to pay over any such amount to a Note Guarantor or any holder of Senior Indebtedness of Note Guarantor or any other creditor of a Note Guarantor. ARTICLE 13 MISCELLANEOUS SECTION 13.01. TRUST INDENTURE ACT CONTROLS. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such imposed duties or incorporated provision shall control. SECTION 13.02. NOTICES. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company: Berry Plastics Corporation 101 Oakley Street Evansville, Indiana 47710 Attention of: James M. Kratochvil with a copy to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, NY 10004 94 Attention of: Valerie Jacob if to the Trustee: U.S. Bank Trust National Association 100 Wall Street, 16th Floor New York, NY 10005 Attention of: Corporate Trust Department The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed, first class mail, to the Holder at the Holder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 13.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA. SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel in form reasonably satisfactory to the Trustee (except that in the case of any such request or application as to which the furnishing of such documents, certificates and/or opinions is specifically required by any provision of this Indenture relating to such particular request or application, no additional certificates or opinions shall be required) stating that, in the opinion of such counsel, all such conditions precedent have been complied with. 95 SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 4.09) shall include: (a) a statement that the individual making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 13.06. WHEN NOTES DISREGARDED. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Note Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Note Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination. SECTION 13.07. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 13.08. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, a Sunday or other day on which banking institutions are not required by law or regulation to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. 96 SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 13.10. NO RECOURSE AGAINST OTHERS. A director, officer, employee or stockholder, as such, of the Company or any of the Note Guarantors, shall not have any liability for any obligations of the Company or any of the Note Guarantors under the Notes or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Notes. SECTION 13.11. SUCCESSORS. All agreements of the Company and each Note Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 13.12. MULTIPLE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 13.13. TABLE OF CONTENTS; HEADINGS. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. 97 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. BERRY PLASTICS CORPORATION, by_____________________________ Name: Title: BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION, CARDINAL PACKAGING, INC. by_____________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee by_____________________________ Name: Title: 98 APPENDIX A PROVISIONS RELATING TO ORIGINAL NOTES, ADDITIONAL NOTES AND EXCHANGE NOTES 1. DEFINITIONS 1.1 DEFINITIONS For the purposes of this Appendix A the following terms shall have the meanings indicated below: "Applicable Procedures" means, with respect to any transfer or transaction involving a Regulation S Global Note or beneficial interest therein, the rules and procedures of the Depositary for such Global Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time. "Clearstream" means Clearstream Banking, societe anonyme, or any successor securities clearing agency. "Definitive Note" means a certificated Initial Note or Exchange Note (bearing the Restricted Notes Legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend. "Depositary" means The Depository Trust Company, its nominees and their respective successors. "Euroclear" means the Euroclear Clearance System or any successor securities clearing agency. "Global Notes Legend" means the legend set forth under that caption in Exhibit A to this Indenture. "IAI" means an institutional "accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Initial Purchasers" means JPMorgan Securities Inc., Goldman, Sachs & Co., Credit Suisse First Boston Corporation and The Royal Bank of Scotland plc. "Notes Custodian" means the custodian with respect to a Global Note (as appointed by the Depositary) or any successor person thereto, who shall initially be the Trustee. "Purchase Agreement" means (a) the Purchase Agreement dated July 17, 2002, among the Company, the Note Guarantors and the Initial Purchasers and (b) any other similar Purchase Agreement relating to Additional Notes. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Registered Exchange Offer" means an offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for their Initial Notes, a like aggregate principal amount of Exchange Notes registered under the Securities Act. "Registration Rights Agreement" means (a) the Registration Rights Agreement dated July 22, 2002, among the Company, the Note Guarantors and the Initial Purchasers and (b) any other similar Registration Rights Agreement relating to Additional Notes. "Regulation S" means Regulation S under the Securities Act. "Regulation S Notes" means all Initial Notes offered and sold outside the United States in reliance on Regulation S. "Restricted Period", with respect to any Notes, means the period of 40 consecutive days beginning on and including the later of (a) the day on which such Notes are first offered to persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S, notice of which day shall be promptly given by the Company to the Trustee, and (b) the Issue Date with respect to such Notes. "Restricted Notes Legend" means the legend set forth in Section 2.3(e)(i) herein. "Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Rule 144A" means Rule 144A under the Securities Act. "Rule 144A Notes" means all Initial Notes offered and sold to QIBs in reliance on Rule 144A. "Securities Act" means the Securities Act of 1933, as amended. "Shelf Registration Statement" means a registration statement filed by the Company in connection with the offer and sale of Initial Notes pursuant to the Registration Rights Agreement. "Transfer Restricted Notes" means Definitive Notes and any other Notes that bear or are required to bear the Restricted Notes Legend. 2 1.2 OTHER DEFINITIONS
TERM: DEFINED IN SECTION: "Agent Members"..........................................2.1(c) "IAI Global Note"........................................2.1(b) "Global Note"............................................2.1(b) "Regulation S Global Note"...............................2.1(b) "Rule 144A Global Note"..................................2.1(b)
2. THE NOTES 2.1 FORM AND DATING (a) The Initial Notes issued on the date hereof will be (i) offered and sold by the Company pursuant to the Purchase Agreement and (ii) resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S. Such Initial Notes may thereafter be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501. Additional Notes offered after the date hereof may be offered and sold by the Company from time to time pursuant to one or more Purchase Agreements in accordance with applicable law. (b) GLOBAL NOTES. Rule 144A Notes shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the "Rule 144A Global Note") and Regulation S Notes shall be issued initially in the form of one or more global Notes (collectively, the "Regulation S Global Note"), in each case without interest coupons and bearing the Global Notes Legend and Restricted Notes Legend, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Notes Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. One or more global notes in definitive, fully registered form without interest coupons and bearing the Global Notes Legend and the Restricted Notes Legend (collectively, the "IAI Global Note") shall also be issued on the Closing Date, deposited with the Notes Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Company and authenticated by the Trustee as provided in this Indenture to accommodate transfers of beneficial interests in the Notes to IAIs subsequent to the initial distribution. Beneficial ownership interests in the Regulation S Global Note shall not be exchangeable for interests in the Rule 144A Global Note, the IAI Global Note or any other Note without a Restricted Notes Legend until the expiration of the Restricted Period. The Rule 144A Global Note, the IAI Global Note and the Regulation S Global Note are each referred to herein as a "Global Note" and are collectively referred 3 to herein as "Global Notes", PROVIDED that the term "Global Note" when used in Sections 2.1(b), 2.1(c), 2.3(g)(i), 2.3(h)(i) and 2.4 shall also include any Note in global form issued in connection with a Registered Exchange Offer. The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee and on the schedules thereto as hereinafter provided. (c) BOOK-ENTRY PROVISIONS. This Section 2.1(c) shall apply only to a Global Note deposited with or on behalf of the Depositary. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(c) and Section 2.2 and pursuant to an order of the Company signed by two Officers, authenticate and deliver initially one or more Global Notes that (i) shall be registered in the name of the Depositary for such Global Note or Global Notes or the nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions or held by the Trustee as Notes Custodian. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as Notes Custodian or under such Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note. (d) DEFINITIVE NOTES. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of certificated Notes. 2.2 AUTHENTICATION. The Trustee shall authenticate and make available for delivery upon a written order of the Company signed by two Officers (a) Original Notes for original issue on the date hereof in an aggregate principal amount of $250,000,000; (b) subject to the terms of this Indenture, Additional Notes and (c) the Exchange Notes for issue only in a Registered Exchange Offer pursuant to a Registration Rights Agreement and for a like principal amount of Initial Notes exchanged pursuant thereto. Such order shall specify the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes or Exchange Notes. Notwithstanding anything to the contrary in this Appendix or otherwise in this Indenture, any issuance of Additional Notes after the Closing Date shall be in a principal amount of at least $1.0 million, whether such Additional Notes are of the same or a different series than the Original Notes. 4 2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes are presented to the Registrar with a request: (i) to register the transfer of such Definitive Notes; or (ii) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; PROVIDED, HOWEVER, that the Definitive Notes surrendered for transfer or exchange: (1) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and (2) in the case of Transfer Restricted Notes, are accompanied by the following additional information and documents, as applicable: (A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Note); or (B) if such Definitive Notes are being transferred to the Company, a certification to that effect (in the form set forth on the reverse side of the Initial Note); or (C) if such Definitive Notes are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (x) a certification to that effect (in the form set forth on the reverse side of the Initial Note) and (y) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i). 5 (b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, together with: (i) certification (in the form set forth on the reverse side of the Initial Note) that such Definitive Note is being transferred (1) to a QIB in accordance with Rule 144A, (2) to an IAI that has furnished to the Trustee a signed letter substantially in the form of Exhibit D or (3) outside the United States in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act; and (ii) written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Notes Custodian, the aggregate principal amount of Notes represented by the Global Note to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Definitive Note so canceled. If no Global Notes are then outstanding and the Global Note has not been previously exchanged for certificated Notes pursuant to Section 2.4, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Global Note in the appropriate principal amount. 6 (c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Note shall deliver a written order given in accordance with the Depositary's procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Note or another Global Note and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred. Transfers by an owner of a beneficial interest in the Rule 144A Global Note or the IAI Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, whether before or after the expiration of the Restricted Period, shall be made only upon receipt by the Trustee of a certification in the form provided on the reverse of the Initial Notes from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the Restricted Period, the interest transferred shall be held immediately thereafter through Euroclear or Clearstream. In the case of a transfer of a beneficial interest in either the Regulation S Global Note or the Rule 144A Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of Global Note from which such interest is being transferred. (iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. (iv) In the event that a Global Note is exchanged for Definitive Notes pursuant to Section 2.4 prior to the consummation of the Registered Exchange Offer or the effectiveness of the Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that 7 such transfers comply with Rule 144A, Regulation S or such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company. (d) RESTRICTIONS ON TRANSFER OF REGULATION S GLOBAL NOTE. (i) Prior to the expiration of the Restricted Period, interests in the Regulation S Global Note may only be held through Euroclear or Clearstream. During the Restricted Period, beneficial ownership interests in the Regulation S Global Note may only be sold, pledged or transferred through Euroclear or Clearstream in accordance with the Applicable Procedures and only (1) to the Company, (2) so long as such Note is eligible for resale pursuant to Rule 144A, to a person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (3) in an offshore transaction in accordance with Regulation S, (4) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act, (5) to an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of Notes of $250,000 or (6) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of such interest through the Rule 144A Global Note or the IAI Global Note shall be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Note to the effect that such transfer is being made to (1) a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (2) an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of the Notes of $250,000. Such written certification shall no longer be required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in the Regulation S Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit D to the Trustee. (ii) Upon the expiration of the Restricted Period, beneficial ownership interests in the Regulation S Global Note shall be transferable in accordance with applicable law and the other terms of this Indenture. 8 (e) LEGEND. (i) Except as permitted by the following paragraphs (ii), (iii) or (iv), each Note certificate evidencing the Global Notes and the Definitive Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only): "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE." 9 Each Definitive Note shall bear the following additional legend: "IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS." (ii) Upon any sale or transfer of a Transfer Restricted Note that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Note if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Note). (iii) After a transfer of any Original or Additional Notes during the period of the effectiveness of a Shelf Registration Statement with respect to such Original or Additional Notes, as the case may be, all requirements pertaining to the Restricted Notes Legend on such Original or Additional Notes shall cease to apply and the requirements that any such Original or Additional Notes be issued in global form shall continue to apply. (iv) Upon the consummation of a Registered Exchange Offer with respect to the Original or Additional Notes pursuant to which Holders of such Original or Additional Notes are offered Exchange Notes in exchange for their Original or Additional Notes, all requirements pertaining to Original or Additional Notes that Original or Additional Notes be issued in global form shall continue to apply, and Exchange Notes in global form without the Restricted Notes Legend shall be available to Holders that exchange such Initial Notes in such Registered Exchange Offer. (v) Upon a sale or transfer after the expiration of the Restricted Period of any Initial Note acquired pursuant to Regulation S, all requirements that such Initial Note bear the Restricted Notes Legend shall cease to apply and the requirements requiring any such Initial Note be issued in global form shall continue to apply. (vi) Any Additional Notes sold in a registered offering shall not be required to bear the Restricted Notes Legend. 10 (f) CANCELATION OR ADJUSTMENT OF GLOBAL NOTE. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancelation or retained and canceled by the Trustee. At any time prior to such cancelation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction. (g) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF NOTES. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate, Definitive Notes and Global Notes at the Registrar's request. (ii) No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchanges pursuant to Sections 2.07, 3.06, 4.06, 4.08 and 9.05 of this Indenture). (iii) Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary. (iv) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange. (h) NO OBLIGATION OF THE TRUSTEE. 11 (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 DEFINITIVE NOTES (a) A Global Note deposited with the Depositary or with the Trustee as Notes Custodian pursuant to Section 2.1 or issued in connection with a Registered Exchange Offer shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Note or if at any time the Depositary ceases to be a "clearing agency" registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days of such notice or after the Company becomes aware of such cessation, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Notes under this Indenture. (b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to 12 the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct. Any certificated Initial Note in the form of a Definitive Note delivered in exchange for an interest in the Global Note shall, except as otherwise provided by Section 2.3(e), bear the Restricted Notes Legend. (c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. (d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Company shall promptly make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons. 13 EXHIBIT A [FORM OF FACE OF INITIAL NOTE] [Global Notes Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Notes Legend] THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. Each Definitive Note shall bear the following additional legend: IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS. 2 No. $__________ 10 3/4% Senior Subordinated Note due 2012 CUSIP No. ______ ISIN No. BERRY PLASTICS CORPORATION, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] listed on the Schedule of Increases or Decreases in Global Note attached hereto on July 15, 2012. Interest Payment Dates: January 15 and July 15. Record Dates: January 1 and July 1. Additional provisions of this Note are set forth on the other side of this Note. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. BERRY PLASTICS CORPORATION, by ----------------------- Name: Title: by ----------------------- Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, certifies that this is one of the Notes referred to in the Indenture. By: ------------------------- Authorized Signatory 2 */ If the Note is to be issued in global form, add the Global Notes Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL NOTES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE". 3 [FORM OF REVERSE SIDE OF INITIAL NOTE] 10 3/4% Senior Subordinated Note due 2012 1. INTEREST (a) BERRY PLASTICS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company shall pay interest semiannually on January 15 and July 15 of each year. Interest on the Notes shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 22, 2002 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. (b) ADDITIONAL INTEREST. The Holder of this Note is entitled to the benefits of a Registration Rights Agreement, dated as of July 22, 2002, among the Company, BPC Holding Corporation, Berry Iowa Corporation, Packerware Corporation, Knight Plastics, Inc., Berry Sterling Corporation, Berry Plastics Design Corporation, Poly-Seal Corporation, Berry Plastics Acquisitions Corporation III, Venture Packaging, Inc., Venture Packaging Midwest, Inc., Berry Plastics Technical Services, Inc., CPI Holding Corporation, Aerocon, Inc., Pescor, Inc., Berry Tri-Plas Corporation and Cardinal Packaging, Inc., (the "Note Guarantors") and the Initial Purchasers named therein (the "Registration Rights Agreement"). Capitalized terms used in this paragraph (b) but not defined herein have the meanings assigned to them in the Registration Rights Agreement. The Registration Rights Agreement shall provide that in the event that either the Exchange Offer is not completed or the Shelf Registration Statement, if required thereby, is not declared effective on or prior to April 22, 2003 (the "Target Registration Date"), the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required thereby, is declared effective by the SEC or the Securities become freely tradable under the Securities Act, up to a maximum aggregate increase of 1.00% per annum of Additional Interest. If the Shelf Registration Statement has been declared effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 45 consecutive days or more than 60 days (whether or not consecutive) in any 12-month period, then the interest rate on the Registrable Securities will be increased by 0.25% per annum commencing on the 46th or 61st day in such 12-month period, with further increases, subject to a maximum of 1.00% per annum of Additional Interest, in accordance with the schedule in this paragraph (b), and ending on such date that the Shelf Registration Statement has again been declared effective or the Prospectus again becomes usable or the Securities become freely tradable under the Securities Act. 4 All accrued Additional Interest shall be paid to Holders in the same manner as interest payments on the Notes on semi-annual payment dates which correspond to interest payment dates for the Notes. Following the cure of all Registration Defaults, the accrual of Additional Interest shall cease. The Trustee shall have no responsibility with respect to the determination of the amount of any such Additional Interest. For purposes of the foregoing, "Transfer Restricted Notes" means (i) each Initial Note until the date on which such Initial Note has been exchanged for a freely transferable Exchange Note in the Registered Exchange Offer, (ii) each Initial Note or until the date on which such Initial Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement or (iii) each Initial Note until the date on which such Initial Note is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. 2. METHOD OF PAYMENT The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 1 or July 1 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, Additional Interest, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium, if any, Additional Interest, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Note (including principal, premium, if any, interest and Additional Interest, if any), at the office of the Paying Agent, except that, at the option of the Company, payment of interest or Additional Interest may be made by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on the Notes may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 5 3. PAYING AGENT AND REGISTRAR Initially, U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar. 4. INDENTURE The Company issued the Notes under an Indenture dated as of July 22, 2002 (the "Indenture"), among the Company, the Note Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all terms and provisions of the Indenture, and Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions. The Notes are senior subordinated unsecured obligations of the Company. This Note is one of the [Original][Additional] Notes referred to in the Indenture. The Notes include the Original Notes, the Additional Notes and any Exchange Notes issued in exchange for Initial Notes pursuant to the Indenture. The Original Notes, the Additional Notes and any Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates and make asset sales. The Indenture also imposes limitations on the ability of the Company and each Note Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all its property. To guarantee the due and punctual payment of the principal, interest and Additional Interest, if any, on the Notes and all other amounts payable by the Company under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Note Guarantors have jointly and severally unconditionally guaranteed the Guaranteed Obligations on a senior subordinated basis pursuant to the terms of the Indenture. 6 5. OPTIONAL REDEMPTION Except as set forth in the following paragraph, the Notes shall not be redeemable at the option of the Company prior to July 15, 2007. Thereafter, the Notes shall be redeemable at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest and Additional Interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 15 of the years set forth below:
REDEMPTION YEAR PRICE ------------------------------------------------------------------ 2007 105.375% 2008 103.583% 2009 101.792% 2010 and thereafter 100.000%
In addition, prior to July 15, 2005, the Company may redeem up to a maximum of 35% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) with the Net Cash Proceeds of one or more Equity Offerings (i) by the Company or (ii) by Holding to the extent the Net Cash Proceeds thereof are contributed to the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from the Company, at a redemption price equal to 110.75% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest and Additional Interest, if any, due on the relevant interest payment date); PROVIDED, HOWEVER, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) remains outstanding. Any such redemption by the Company shall be made within 60 days of such Equity Offering upon and otherwise in accordance with the procedures set forth in the Indenture. 6. SINKING FUND The Notes are not subject to any sinking fund. 7 7. NOTICE OF REDEMPTION Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his or her registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest and Additional Interest, if any, on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption. 8. REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL AND ASSET DISPOSITIONS In accordance with Section 4.08, upon a Change of Control, any Holder of Notes will have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due and Additional Interest, if any, on the relevant interest payment date that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. In accordance with Section 4.06 of the Indenture, the Company shall be required to offer to purchase Notes upon the occurrence of certain events. 9. SUBORDINATION The Notes and Note Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes and Note Guarantees may be paid. The Company and each Note Guarantor agrees, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 10. DENOMINATIONS; TRANSFER; EXCHANGE 8 The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed. 11. PERSONS DEEMED OWNERS Except as provided in paragraph 2 hereof, the registered Holder of this Note may be treated as the owner of it for all purposes. 12. UNCLAIMED MONEY If money for the payment principal, interest or Additional Interest, if any, remains unclaimed for two years, the Trustee and the Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and the Paying Agent shall have no further liability with respect to such monies. 13. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal of, and interest and Additional Interest, if any, on, the Notes to redemption or maturity, as the case may be. 9 14. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes or the Note Guarantees may be amended without prior notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes and (ii) any default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Notes. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Note Guarantors and the Trustee may amend the Indenture or the Notes (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; (iv) to make any change in Article 10 or 12 that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Note Guarantor (or any Representative thereof) under Article 10 or 12 respectively; (v) to add additional Guarantees with respect to the Notes or to secure the Notes; (vi) to comply with any requirement of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; (vii) to add to the covenants of the Company or provide any additional rights or benefits to the Holders or to surrender any right or power conferred upon the Company; (viii) to make any change that does not adversely affect the rights of any Holder; (ix) to provide for the issuance of the Exchange Notes or Additional Notes in accordance with the provisions of this Indenture; (x) to evidence and provide the acceptance of the appointment of a successor Trustee under the Indenture. 15. DEFAULTS AND REMEDIES If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such 10 Holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 16. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company or any Subsidiary Note Guarantor shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 18. AUTHENTICATION This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 11 19. ABBREVIATIONS Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 20. GOVERNING LAW THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 21. CUSIP AND ISIN NUMBERS The Company has caused CUSIP and ISIN numbers to be printed on the Notes and has directed the Trustee to use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE COMPANY SHALL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS NOTE. 12 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: Your Signature: ------------------------ ------------------------------ - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Note. 13 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER RESTRICTED NOTES This certificate relates to $_________ principal amount of Notes held in (check applicable space) ____ book-entry or _____ definitive form by the undersigned. The undersigned (check one box below): ( ) has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Note or Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above); ( ) has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that such Notes are being transferred in accordance with its terms: CHECK ONE BOX BELOW (1) ( ) to the Company; or (2) ( ) to the Registrar for registration in the name of the Holder, without transfer; or (3) ( ) pursuant to an effective registration statement under the Securities Act of 1933; or (4) ( ) inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (5) ( ) outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and such Note shall be held immediately after the transfer through Euroclear or Clearstream until the expiration of the Restricted Period (as defined in the Indenture); or 14 (6) ( ) to an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or (7) ( ) pursuant to another available exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; PROVIDED, HOWEVER, that if box (5), (6) or (7) is checked, the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. ---------------------------------- Your Signature Signature Guarantee: Date: ------------------- ---------------------------------- Signature must be guaranteed Signature of Signature Guarantee by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee - -------------------------------------------------------------------------------- 15 TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ---------------- ------------------------------ NOTICE: To be executed by an executive officer 16 [TO BE ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE The initial principal amount of this Global Note is $[ ]. The following increases or decreases in this Global Note have been made:
Date of Amount of Amount of Principal amount of Signature of Exchange decrease in increase in this Global Note authorized signatory Principal Amount Principal Amount following such of Trustee or Notes of this of this decrease or increase Custodian Global Global Note Note
17 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF CONTROL) OF THE INDENTURE, CHECK THE BOX: ASSET DISPOSITION ( ) CHANGE OF CONTROL ( ) IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF): $ DATE: YOUR SIGNATURE: ----------------------- ------------------------------- (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE NOTE) SIGNATURE GUARANTEE: ------------------------------------------------------------ SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE 18 EXHIBIT B [FORM OF FACE OF EXCHANGE NOTE] [Global Notes Legend] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. No. $__________ 10 3/4% Senior Subordinated Note due 2012 CUSIP No. ______ ISIN No. BERRY PLASTICS CORPORATION, a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] listed on the Schedule of Increases or Decreases in Global Note attached hereto on July 15, 2012. Interest Payment Dates: January 15 and July 15. Record Dates: January 1 and July 1. 2 Additional provisions of this Note are set forth on the other side of this Note. IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed. BERRY PLASTICS CORPORATION, by ------------------------------- Name: Title: by ------------------------------- Name: Title: Dated: TRUSTEE'S CERTIFICATE OF AUTHENTICATION U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, certifies that this is one of the Notes referred to in the Indenture. by ----------------------------- Authorized Signatory */ If the Note is to be issued in global form, add the Global Notes Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL NOTES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE". 3 [FORM OF REVERSE SIDE OF EXCHANGE NOTE] 10 3/4% Senior Subordinated Note due 2012 1. INTEREST. BERRY PLASTICS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company shall pay interest semiannually on January 15 and July 15 of each year. Interest on the Notes shall accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from July 22, 2002 until the principal hereof is due. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT The Company shall pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders at the close of business on the January 1 or July 1 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) shall be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company shall make all payments in respect of a certificated Note (including principal, premium, if any, and interest), at the office of the Paying Agent, except that, at the option of the Company, payment of interest may be made by mailing a check to the registered address of each Holder thereof; PROVIDED, HOWEVER, that payments on the Notes may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion). 4 3. PAYING AGENT AND REGISTRAR Initially, U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association (the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent or Registrar. 4. INDENTURE The Company issued the Notes under an Indenture dated as of July 22, 2002 (the "Indenture"), among the Company, the Note Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all terms and provisions of the Indenture, and Holders (as defined in the Indenture) are referred to the Indenture and the TIA for a statement of such terms and provisions. The Notes are senior subordinated unsecured obligations of the Company. This Note is one of the [Exchange] [Additional] Notes referred to in the Indenture. The Notes include the Original Notes, the Additional Notes and any Exchange Notes issued in exchange for the Initial Notes pursuant to the Indenture. The Original Notes, the Additional Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens and make Asset Sales. The Indenture also imposes limitations on the ability of the Company and each Note Guarantor to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of its property. To guarantee the due and punctual payment of the principal and interest, if any, on the Notes and all other amounts payable by the Company under the Indenture and the Notes when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Note Guarantors have, jointly and severally, unconditionally guaranteed the Guaranteed Obligations on a senior basis subordinated pursuant to the terms of the Indenture. 5 5. OPTIONAL REDEMPTION Except as set forth in the following paragraph, the Notes shall not be redeemable at the option of the Company prior to July 15, 2007. Thereafter, the Notes shall be redeemable at the option of the Company, in whole or in part, on not less than 30 nor more than 60 days prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest and Additional Interest, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 15 of the years set forth below:
REDEMPTION YEAR PRICE ----------------------------------------------------------------- 2007 105.375% 2008 103.583% 2009 101.792% 2010 and thereafter 100.000%
In addition, prior to July 15, 2005, the Company may redeem up to a maximum of 35% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) with the Net Cash Proceeds of one or more Equity Offerings (i) by the Company or (ii) by Holding to the extent the Net Cash Proceeds thereof are contributed to the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from the Company, at a redemption price equal to 110.75% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to, but not including, the redemption date (subject to the right of Holders of record on the relevant record date to receive interest and Additional Interest, if any, due on the relevant interest payment date); PROVIDED, HOWEVER, that after giving effect to any such redemption, at least 65% of the original aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) remains outstanding. Any such redemption by the Company shall be made within 60 days of such Equity Offering upon and otherwise in accordance with the procedures set forth in the Indenture. 6. SINKING FUND The Notes are not subject to any sinking fund. 6 7. NOTICE OF REDEMPTION Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his or her registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued and unpaid interest and Additional Interest, if any, on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption. 8. REPURCHASE OF NOTES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL AND ASSET DISPOSITIONS In accordance with Section 4.08, upon a Change of Control, any Holder of Notes will have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture. In accordance with Section 4.06 of the Indenture, the Company shall be required to offer to purchase Notes upon the occurrence of certain events. 9. SUBORDINATION The Notes and Note Guarantees are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. The Company and each Note Guarantor agrees, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give it effect and appoints the Trustee as attorney-in-fact for such purpose. 7 10. DENOMINATIONS; TRANSFER; EXCHANGE The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed or 15 days before an interest payment date. 11. PERSONS DEEMED OWNERS Except as provided in paragraph 2 hereof, the registered Holder of this Note may be treated as the owner of it for all purposes. 12. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look to the Company for payment as general creditors and the Trustee and the Paying Agent shall have no further liability with respect to such monies. 13. DISCHARGE AND DEFEASANCE Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be. 8 14. AMENDMENT, WAIVER Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes or the Note Guarantees may be amended without prior notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Notes and (ii) any default or compliance with any provisions may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Notes. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Note Guarantors and the Trustee may amend the Indenture or the Notes (i) to cure any ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; PROVIDED, HOWEVER, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; (iv) to make any change in Article 10 or 12 that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Note Guarantor (or any Representative thereof) under Article 10 or 12 respectively; (v) to add additional Guarantees with respect to the Notes or to secure the Notes; (vi) to comply with any requirement of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; (vii) to add to the covenants of the Company or provide any additional rights or benefits to the Holders or to surrender any right or power conferred upon the Company; (viii) to make any change that does not adversely affect the rights of any Holder; (ix) to provide for the issuance of the Exchange Notes or Additional Notes in accordance with the provisions of the Indenture; (x) to evidence and provide the acceptance of the appointment of a successor Trustee under the Indenture. 15. DEFAULTS AND REMEDIES If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences. If an Event of Default occurs and is continuing, the Trustee shall be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the Holders unless such Holders have offered to 9 the Trustee reasonable indemnity or security against any loss, liability or expense and certain other conditions are complied with. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the Indenture or the Notes unless (i) such Holder has previously given the Trustee notice that an Event of Default is continuing, (ii) Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee in writing to pursue the remedy, (iii) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, (iv) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and (v) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. 16. TRUSTEE DEALINGS WITH THE COMPANY Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company or any Note Guarantor shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 18. AUTHENTICATION This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 10 19. ABBREVIATIONS Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 20. GOVERNING LAW THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 21. CUSIP AND ISIN NUMBERS The Company has caused CUSIP and ISIN numbers to be printed on the Notes and has directed the Trustee to use CUSIP and ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE COMPANY SHALL FURNISH TO ANY HOLDER OF NOTES UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS NOTE. 11 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to (Print or type assignee's name, address and zip code) (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: Your Signature: --------------------- ---------------------------------- - -------------------------------------------------------------------------------- Sign exactly as your name appears on the other side of this Note. Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee. 12 OPTION OF HOLDER TO ELECT PURCHASE IF YOU WANT TO ELECT TO HAVE THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 (ASSET DISPOSITION) OR 4.08 (CHANGE OF CONTROL) OF THE INDENTURE, CHECK THE BOX: ASSET DISPOSITION ( ) CHANGE OF CONTROL ( ) IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS NOTE PURCHASED BY THE COMPANY PURSUANT TO SECTION 4.06 OR 4.08 OF THE INDENTURE, STATE THE AMOUNT ($1,000 OR AN INTEGRAL MULTIPLE THEREOF): $ DATE: YOUR SIGNATURE: --------------------- ---------------------------------- (SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE NOTE) SIGNATURE GUARANTEE: ------------------------------------------------------------ SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE GUARANTOR ACCEPTABLE TO THE TRUSTEE. 13 [TO BE ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL Note The initial principal amount of this Global Note is $[ ]. The following increases or decreases in this Global Note have been made:
Date of Amount of Amount of Principal amount of Signature of Exchange decrease in increase in this Global Note authorized signatory Principal Amount Principal Amount following such of Trustee or Notes of this of this decrease or increase Custodian Global Global Note Note
14 EXHIBIT C [FORM OF SUPPLEMENTAL INDENTURE] SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of , among [GUARANTOR] (the "New Guarantor"), a subsidiary of BERRY PLASTICS CORPORATION (or its successor), a Delaware corporation (the "Company"), BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION, each a Delaware corporation, and CARDINAL PACKAGING, INC., an Ohio corporation, and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H : WHEREAS the Company and BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION and CARDINAL PACKAGING, INC. (the "Existing Guarantors") has heretofore executed and delivered to the Trustee an Indenture (the "Indenture") dated as of July 22, 2002, providing for the issuance of an aggregate principal amount of up to $250,000,000 of 10 3/4% Senior Subordinated Notes due 2012 (the "Notes"); WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantor to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantor shall unconditionally guarantee all the Company's obligations under the Notes pursuant to a Note Guarantee on the terms and conditions set forth herein; and WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Existing Guarantors are authorized to execute and deliver this Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company, the Existing Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows: 1. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees, jointly and severally with all the Existing Guarantors, to unconditionally guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Articles 11 and 12 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes. 2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF INDENTURE. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. 3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not effect the construction thereof. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. [NEW GUARANTOR], by ------------------------------ Name: Title: 2 BERRY PLASTICS CORPORATION, by ----------------------------- Name: Title: BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION, CARDINAL PACKAGING, INC. by ----------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, by ----------------------------- Name: Title: 3 EXHIBIT D Form of Transferee Letter of Representation [Company] In care of [ ] [ ] [ ] Ladies and Gentlemen: This certificate is delivered to request a transfer of $[ ] principal amount of the [ ]% Senior Subordinated Notes due 2012 (the "Notes") of Berry Plastics Corporation (the "Company"). Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: Name:________________________ Address:_____________________ Taxpayer ID Number:__________ The undersigned represents and warrants to you that: 1. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act")), purchasing for our own account or for the account of such an institutional "accredited investor" at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we invest in or purchase Notes similar to the Notes in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment. 2. We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act ("Rule 144A"), to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB") that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional "accredited investor," in each case in a minimum principal amount of Notes of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale shall not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Notes pursuant to clause (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Company and the Trustee. TRANSFEREE:_________________, by:___________________________ 2 EX-4.2 4 y62674exv4w2.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT DATED JULY 22, 2002 (THE "AGREEMENT") is entered into by and among Berry Plastics Corporation, a Delaware corporation (the "COMPANY"), BPC Holding Corporation, a Delaware corporation ("HOLDING"), the other guarantors listed on the signature page hereof (together with Holding, the "GUARANTORS"), and J.P. Morgan Securities Inc. ("JPMORGAN"), Goldman, Sachs & Co. ("GOLDMAN, SACHS"), The Royal Bank of Scotland ("ROYAL BANK") and Credit Suisse First Boston Corporation ("CSFB" and, together with JPMorgan, Goldman, Sachs and Royal Bank, the "INITIAL PURCHASERS"). The Company, Holding, the other Guarantors and the Initial Purchasers are parties to the Purchase Agreement dated July 17, 2002 (the "PURCHASE AGREEMENT"), which provides for the sale by the Company to the Initial Purchasers of $250,000,000 aggregate principal amount of the Company's 10 3/4 % Senior Subordinated Notes due 2012 (the "SECURITIES"), which will be guaranteed on an unsecured senior subordinated basis by each of the Guarantors. As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide to the Initial Purchasers, the Market-Makers (as defined herein) and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: "BUSINESS DAY" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed. "CLOSING DATE" shall mean the Closing Date as defined in the Purchase Agreement. "COMPANY" shall have the meaning set forth in the preamble and shall also include the Company's successors. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "EXCHANGE DATES" shall have the meaning set forth in Section 2(a)(ii) hereof. "EXCHANGE OFFER" shall mean the exchange offer by the Company and the Guarantors of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION" shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "EXCHANGE SECURITIES" shall mean senior subordinated notes issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. "GOLDMAN, SACHS" shall have the meaning set forth in the preamble. "GUARANTORS" shall have the meaning set forth in the preamble and shall also include any Guarantor's successors. "HOLDERS" shall mean the Initial Purchasers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; PROVIDED that for purposes of Sections 4 and 6 of this Agreement, the term "Holders" shall include Participating Broker-Dealers; and PROVIDED, FURTHER, that for the purposes of Section 6 of this Agreement, the term "Holders" shall include the Market-Makers. "INITIAL PURCHASERS" shall have the meaning set forth in the preamble. "INDENTURE" shall mean the Indenture relating to the Securities dated as of July 22, 2002, among the Company, Holding, the other Guarantors and U.S. Bank Trust National Association, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. "JPMORGAN" shall have the meaning set forth in the preamble. 2 "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities; PROVIDED that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities owned directly or indirectly by Holding or any of its affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; PROVIDED, FURTHER, HOWEVER, that the foregoing proviso shall not apply to Section 5 hereof. "MARKET-MAKER" shall have the meaning set forth in Section 5(a) hereof. "MARKET-MAKER'S INFORMATION" shall have the meaning set forth in Section 5(e) hereof. "MARKET-MAKING REGISTRATION STATEMENT" shall have the meaning set forth in Section 5(a)(i) hereof. "PARTICIPATING BROKER-DEALERS" shall have the meaning set forth in Section 4(a) hereof. "PERSON" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein. "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble. "REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has been declared effective under the Securities Act and such Securities have been exchanged or disposed of 3 pursuant to such Registration Statement, (ii) when such Securities are eligible to be sold pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the Securities Act, (iii) when such securities are sold pursuant to Rule 144 under circumstances in which any legend borne by such Securities relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Company or pursuant to the Indenture in accordance with the Securities Act or (iv) when such Securities cease to be outstanding. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities, in any case, not to exceed $10,000), (iii) all expenses relating to preparing, printing and distributing any Registration Statement, any Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the reasonable fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers), (viii) the reasonable fees and disbursements of one counsel in connection with a Market-Making Registration Statement (which counsel shall be mutually agreeable to the Market-Makers) and (ix) the fees and disbursements of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or "comfort" letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. 4 "REGISTRATION STATEMENT" shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement, including, without limitation, any Market-Making Registration Statement, and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended from time to time. "SHELF EFFECTIVENESS PERIOD" shall have the meaning set forth in Section 2(b) hereof. "SHELF REGISTRATION" shall mean a registration effected pursuant to Section 2(b) hereof. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Company and the Guarantors that covers all the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are to be covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and any document incorporated by reference therein. "STAFF" shall mean the staff of the SEC. "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, as amended from time to time. "TRUSTEE" shall mean the trustee with respect to the Securities under the Indenture. "UNDERWRITER" shall have the meaning set forth in Section 3 hereof. 5 "UNDERWRITTEN OFFERING" shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public. 2. REGISTRATION UNDER THE SECURITIES ACT. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff, the Company and the Guarantors shall use their reasonable best efforts to (i) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (ii) have such Registration Statement remain effective until 180 days after the closing of the Exchange Offer. The Company and the Guarantors shall commence the Exchange Offer reasonably promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their reasonable best efforts to complete the Exchange Offer not later than 60 days after such effective date. The Company and the Guarantors shall commence the Exchange Offer by mailing the related Prospectus, appropriate letters of transmittal and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the "EXCHANGE DATES"); (iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement; (iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the appropriate letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) and in the manner specified in the notice, prior to the close of business on the last Exchange Date; and 6 (v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged. As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantors that (i) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (iii) it is not an "affiliate" (within the meaning of Rule 405 under Securities Act) of the Company or any Guarantor and (iv) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus in connection with any resale of such Exchange Securities. As soon as practicable after the last Exchange Date, the Company and the Guarantors shall: (i) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder. The Company and the Guarantors shall use their reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other 7 applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff of the SEC. (b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be completed as soon as practicable after the last Exchange Date because it would violate any applicable law or applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason completed by April 22, 2003 or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Initial Purchasers a Registration Statement must be filed and a Prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Registrable Securities originally purchased and still held by the Initial Purchasers, the Company and the Guarantors shall use their reasonable best efforts to cause to be filed as soon as practicable after such determination, date or notice of such opinion of counsel is given to the Company, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement declared effective by the SEC. To the extent a Shelf Registration Statement is required to be filed pursuant to clause (ii) but the Exchange Offer is completed on a date later than April 22, 2003, upon completion of the Exchange Offer the Company and the Guarantors will no longer be required to file, make effective or continue the effectiveness of the Shelf Registration Statement. In the event that the Company and the Guarantors are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantors shall use their reasonable best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Initial Purchasers after completion of the Exchange Offer. The Company and the Guarantors agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) under the 8 Securities Act with respect to the Registrable Securities or such shorter period that will terminate when the Exchange Offer has been consummated or all the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or are no longer outstanding (the "SHELF EFFECTIVENESS PERIOD"). The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement and the related Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company and the Guarantors for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder for shelf registration or if reasonably and timely requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their reasonable best efforts to cause any such amendment to become effective and such Shelf Registration Statement and Prospectus to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. In the event that either the Exchange Offer is not completed or the Shelf Registration Statement, if required hereby, is not declared effective on or prior to April 22, 2003 (the "TARGET REGISTRATION DATE"), the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Exchange Offer is completed or the Shelf Registration Statement, if required hereby, is declared effective by the SEC or the Securities become freely tradable under the Securities Act, up to a maximum aggregate increase of 1.00% per annum of additional interest. 9 If the Shelf Registration Statement has been declared effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 45 consecutive days or more than 60 days (whether or not consecutive) in any 12-month period, then the interest rate on the Registrable Securities will be increased by 0.25% per annum commencing on the 46th or 61st day in such 12-month period, with further increases, subject to a maximum of 1.00% per annum of additional interest, in accordance with the schedule in the prior paragraph, and ending on such date that the Shelf Registration Statement has again been declared effective or the Prospectus again becomes usable. (e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company and the Guarantors acknowledge that any failure by the Company or the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, although any monetary damages will be limited to the amounts specified in Section 2(d) hereof, in the event of any such failure, the Initial Purchasers or any Holder may obtain such other relief as may be required to specifically enforce the Company's and the Guarantors' obligations under Section 2(a) and Section 2(b) hereof. 3. REGISTRATION PROCEDURES. In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall use commercially reasonable efforts to: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and the Guarantors, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their commercially reasonable efforts to cause such Registration Statement to become effective within the timeframe required under this Agreement and remain effective for the applicable period in accordance with Section 2 hereof; 10 (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for such Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus as reasonably requested, including each preliminary Prospectus, and any amendment or supplement thereto, in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and the Company and the Guarantors consent to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; (d) endeavor to register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC; cooperate with the Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc.; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Holder; PROVIDED that neither the Company nor any Guarantor shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not so subject; 11 (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities and counsel for such Holders promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or any Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or any Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of any determination by the Company or any Guarantor that a post-effective amendment to a Registration Statement would be appropriate; (f) use their reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and 12 delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as the selling Holders may reasonably request at least one Business Day prior to the closing of any sale of Registrable Securities; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use their reasonable best efforts to prepare and file with the SEC a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company and the Guarantors shall notify the Holders of Registrable Securities to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and such Holders hereby agree to suspend use of the Prospectus until the Company and the Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; (j) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or of any document that is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, to the Holders of Registrable Securities and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities or their counsel) available for discussion of such document; and the Company and the Guarantors shall not, at any time after initial filing of a Registration Statement, file any Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus, or any document that is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders of Registrable Securities and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall object; 13 (k) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; (l) cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (m) in the case of a Shelf Registration, make available for inspection by an appropriate representative of the Holders of the Registrable Securities (an "INSPECTOR") who is not a direct or indirect competitor of the Company or any Guarantor, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and the Guarantors, and cause the respective officers, directors and employees of the Company and the Guarantors to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; PROVIDED that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, prior to being given such information, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information, including executing a customary confidentiality agreement that is not inconsistent with the rights and interests of any Inspector, Holder or Underwriter; (n) in the case of a Shelf Registration, use their reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued or guaranteed by the Company or any Guarantor are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; 14 (o) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company and the Guarantors have received notification of the matters to be incorporated in such filing; and (p) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority in principal amount of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of Holding and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "comfort" letters from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other certified public accountant of any subsidiary of the Company or any Guarantor, or of any business acquired by the Company or any Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities to the extent permitted by appropriate accounting standards, such letters to be in customary form and covering matters of the type customarily covered in "comfort" letters in connection with underwritten offerings and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal 15 amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. In the case of a Shelf Registration Statement, the Company or any Guarantor may require each Holder of Registrable Securities to furnish to the Company and the Guarantors such information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing. In the case of a Shelf Registration Statement, each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company and the Guarantors of the happening of any event of the kind described in Section 3(e)(iii) or 3(e)(v) hereof or a notice pursuant to the last sentence of this paragraph, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Shelf Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof and, if so directed by the Company and the Guarantors, such Holder will deliver to the Company and the Guarantors all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities that is current at the time of receipt of such notice. In addition, the Company may give notice of the suspension of the offering and sale under the Shelf Registration Statement for a period or periods the Board of Directors of the Company reasonably determines to be necessary, if the Board of Directors determines in good faith that such action is in the best interests of the Company. If the Company and the Guarantors shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Company and the Guarantors may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 45 days for each suspension and there shall not be more than two suspensions in effect during any 365-day period. 16 The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "UNDERWRITERS") that will administer the offering will be selected by the Majority Holders of the Registrable Securities included in such offering, subject to the consent of the Company, not to be unreasonably withheld. 4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER. (a) The Staff of the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "PARTICIPATING BROKER-DEALER") may be deemed to be an "underwriter" within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities. The Company and the Guarantors understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker- Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act. (b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period of up to 180 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement), if requested by the Initial Purchasers or by one or more Participating Broker-Dealers, 17 in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantors further agree that Participating Broker-Dealers shall be authorized to deliver such Prospectus during such period in connection with the resales contemplated by this Section 4. (c) The Initial Purchasers shall have no liability to the Company, any Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) above. 5. MARKET-MAKING. (a) For so long as any of the Securities or Exchange Securities are outstanding and Goldman, Sachs or JPMorgan (each, a "MARKET-MAKER" and, together, the "MARKET-MAKERS") or any of their respective affiliates are an affiliate of the Company, Holding or the Guarantors and proposes to make a market in the Securities or Exchange Securities as part of their business in the ordinary course, the following provisions shall apply for the sole benefit of the Market-Makers: 18 (i) The Company and the Guarantors shall (A) on the date that the Exchange Offer Registration Statement is filed with the SEC, file a registration statement (the "MARKET-MAKING REGISTRATION STATEMENT") (which may be the Exchange Offer Registration Statement or the Shelf Registration Statement if permitted by the rules and regulations of the SEC) and use its commercially reasonable efforts to cause such Market-Making Registration Statement to be declared effective by the SEC on or prior to the consummation of the Exchange Offer; (B) periodically amend such Market-Making Registration Statement to the extent required so that the information contained therein complies with the requirements of Section 10(a) under the Securities Act; (C) within 45 days following the end of each of Holding's and its subsidiaries' fiscal quarters (or within 90 days following the end of their fiscal year), file a supplement to the prospectus contained in the Market-Making Registration Statement that sets forth the financial results of Holding and its subsidiaries for such quarter, unless such information is incorporated by reference in the prospectus; (D) amend the Market-Making Registration Statement or supplement the related prospectus when necessary to reflect any material changes in the information provided therein in order to comply with applicable laws; and (E) amend the Market-Making Registration Statement when required to do so in order to comply with Section 10(a)(3) of the Securities Act; PROVIDED, HOWEVER, that (1) prior to filing the Market-Making Registration Statement, any amendment thereto or any supplement to the related prospectus (other than a supplement filed pursuant to clause (C) of this paragraph), the Company and the Guarantors will furnish to each Market-Maker copies of all such documents proposed to be filed, which documents will be subject to the review of each Market-Maker and its respective counsel, (2) the Company and the Guarantors will not file the Market-Making Registration Statement, any amendment thereto or any supplement to the related prospectus (other than a supplement filed pursuant to clause (C) of this paragraph) to which either Market-Maker and its respective counsel shall reasonably object unless the Company and the Guarantors are advised by counsel that such Market-Making Registration Statement, amendment or supplement is required to be filed and (3) the Company and the Guarantors will provide each Market-Maker and its respective counsel with copies of the Market-Making Registration Statement and each amendment and supplement filed. 19 (ii) The Company and the Guarantors shall notify each Market-Maker and, if requested by either Market-Maker, confirm such advice in writing, (A) when any post-effective amendment to the Market-Making Registration Statement or any amendment or supplement to the related prospectus has been filed, and, with respect to any post-effective amendment, when the same has become effective; (B) of any request by the SEC for any post-effective amendment to the Market-Making Registration Statement, any supplement or amendment to the related prospectus or for additional information; (C) the issuance by the SEC of any stop order suspending the effectiveness of the Market-Making Registration Statement or the initiation of any proceedings for that purpose; (D) of the receipt by the Company or any Guarantor of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and (E) of the happening of any event that makes any statement made in the Market-Making Registration Statement, the related prospectus or any amendment or supplement thereto untrue or that requires the making of any changes in the Market-Making Registration Statement, such prospectus or any amendment or supplement thereto, in order to make the statements therein not misleading. (iii) If any event contemplated by Section 5(a)(ii)(B) through (E) occurs during the period for which the Company and the Guarantors are required to maintain an effective Market-Making Registration Statement, the Company and the Guarantors shall promptly prepare and file with the SEC a post-effective amendment to the Market-Making Registration Statement or a supplement to the related prospectus or file any other required document so that the prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iv) In the event of the issuance of any stop order suspending the effectiveness of the Market-Making Registration Statement or of any order suspending the qualification of the Securities or Exchange Securities for sale in any jurisdiction, the Company and the Guarantors shall use promptly their commercially reasonable efforts to obtain its withdrawal. 20 (v) The Company and the Guarantors shall furnish to each Market-Maker, without charge, (i) at least one conformed copy of the Market-Making Registration Statement and any post-effective amendment thereto; and (ii) as many copies of the related prospectus and any amendment or supplement thereto as each Market-Maker may reasonably request. (vi) The Company and the Guarantors shall consent to the use of the prospectus contained in the Market-Making Registration Statement or any amendment or supplement thereto by either Market-Maker in connection with the offering and sale of the Securities or Exchange Securities. (vii) Notwithstanding the foregoing provisions of this Section 5, the Company and the Guarantors may for valid business reasons, including without limitation, a potential acquisition, divestiture of assets or other material corporate transaction, issue a notice that the Market-Making Registration Statement is no longer effective or the prospectus included therein is no longer usable for offers and sales of the Securities or Exchange Securities and may issue any notice suspending use of the Market-Making Registration Statement required under applicable securities laws to be issued; PROVIDED that the use of the Market-Making Registration Statement shall not be suspended for more than 60 days in the aggregate in any consecutive 12 month period. Each Market-Maker agrees that upon receipt of any notice from the Company pursuant to this Section 5(a)(vii), it will discontinue use of the Market-Making Registration Statement until receipt of copies of the supplemented or amended prospectus relating thereto or until advised in writing by the Company that the use of the Market-Making Registration Statement may be resumed and will not disclose the existence of the notice or the facts related thereto. (b) In connection with the Market-Making Registration Statement, the Company and the Guarantors shall make reasonably available for inspection, at reasonable times and in a reasonable manner by a representative of, and counsel acting for, each Market-Maker all relevant financial and other records, pertinent corporate documents and properties of the Company and the Guarantors and (ii) use their reasonable best efforts to have their officers, directors, employees, accountants and 21 counsel supply all relevant information reasonably requested by such representative or counsel or either Market-Maker; PROVIDED that if any such information is identified by the Company or any Guarantor as being confidential or proprietary, prior to being given such information, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information, including executing a customary confidentiality agreement that is not inconsistent with the rights and interests of any Market-Maker, representative thereof or counsel thereto; (c) Prior to the effective date of the Market-Making Registration Statement, the Company and the Guarantors will endeavor to register or qualify, or cooperate with each Market-Maker and its counsel in connection with the registration or qualification of, such Securities or Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions as each Market-Maker reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by the Market-Making Registration Statement; PROVIDED that neither the Company nor any Guarantor shall be required to (i) qualify as a foreign corporation or other entity or as a dealer of securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not so subject. (d) Each of the Company and the Guarantors represents that the Market- Making Registration Statement, any post-effective amendments thereto, any amendments or supplements to the related prospectus and any documents filed by it under the Exchange Act will, when they become effective or are filed with the SEC, as the case may be, conform in all material respects to the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC thereunder and will not, as of the effective date of such Market-Making Registration Statement or post-effective amendments and as of the filing date of amendments or supplements to such prospectus or filings under the Exchange Act, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; PROVIDED that no representation or warranty is made as to information contained in or omitted from the Market-Making Registration Statement or the related prospectus in reliance upon and in conformity with written information furnished to the Company and the Guarantors by either Market-Maker 22 specifically for inclusion therein, which information the parties hereto agree will be limited to the statements concerning the Market-Making activities of such Market-Maker to be set forth on the cover page and in the "Plan of Distribution" section of the prospectus (the "MARKET-MAKER'S INFORMATION"). (e) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company and the Guarantors shall (if requested in writing by either Market-Maker) furnish each Market-Maker and its respective counsel with a certificate of its Chairman of the Board of Directors or Chief Financial Officer to the effect that: (i) the Market-Making Registration Statement has been declared effective; (ii) in the case of an amendment or supplement, such amendment has become effective under the Securities Act as of the date and time specified in such certificate, if applicable; such amendment or supplement to the prospectus was filed with the SEC pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such certificate on the date specified therein; (iii) to the knowledge of such officers, no stop order suspending the effectiveness of the Market-Making Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the SEC; and (iv) such officers have examined the Market-Making Registration Statement and the prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and as of the date of such Market-Making Registration Statement, amendment or supplement, as applicable, the Market-Making Registration Statement and the prospectus, as amended or supplemented, if applicable, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 23 (f) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented, the Company and the Guarantors shall (if requested in writing by either Market-Maker) furnish each Market-Maker and its respective counsel with the written opinion of counsel for the Company and the Guarantors satisfactory to each Market-Maker to the effect that: (i) the Market-Making Registration Statement has been declared effective; (ii) in the case of an amendment or supplement, such amendment has become effective under the Securities Act as of the date and time specified in such opinion, if applicable; such amendment or supplement to the prospectus was filed with the SEC pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion on the date specified therein; (iii) to the knowledge of such counsel, no stop order suspending the effectiveness of the Market- Making Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the SEC; and (iv) such counsel has reviewed the Market-Making Registration Statement and the prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and participated with officers of the Company and the Guarantors and independent public accountants for the Company and the Guarantors in the preparation of such Market-Making Registration Statement and prospectus (and, in the case of an amendment or supplement, such amendment or supplement) and has no reason to believe that (except for the financial statements and other financial data contained therein as to which no belief is required) as of the date of such Market-Making Registration Statement, amendment or supplement, as applicable, the Market-Making Registration Statement and the prospectus, as amended or supplemented, if applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Such opinion shall be consistent with the form of opinion delivered in connection with the Purchase Agreement. (g) At the time of effectiveness of the Market-Making Registration Statement and concurrently with each time the Market-Making Registration Statement or the related prospectus shall be amended or such prospectus shall be supplemented to include audited annual financial 24 information, the Company and the Guarantors shall (if requested in writing by either Market-Maker) furnish each Market-Maker and its respective counsel with a letter of Ernst & Young, LLP (or other independent public accountants for the Company and the Guarantors of nationally recognized standing), in form satisfactory to each Market-Maker, addressed to each Market-Maker and dated the date of delivery of such letter, (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the SEC and, (ii) in all other respects, substantially in the form of the letter delivered to the Initial Purchasers pursuant to Section 5(e) of the Purchase Agreement, with, in the case of an amendment or supplement to include audited financial information, such changes as may be necessary to reflect the amended or supplemented financial information. (h) The Company and the Guarantors, on the one hand, and the Market- Makers, on the other hand, hereby agree to indemnify each other, and, if applicable, contribute to the other, in accordance with Section 6 of this Agreement. (i) The Company and the Guarantors will comply with the provisions of this Section 5 at their own expense and will reimburse the Market-Makers for their documented Registration Expenses associated with this Section 5. (j) For purposes of this Section 5, any reference to the terms "amend", "amendment" or "supplement" with respect to the Market-Making Registration Statement or the prospectus contained therein shall be deemed to refer to and include the filing under the Exchange Act of any document deemed to be incorporated therein by reference. 6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and each Guarantor, jointly and severally, agree to indemnify and hold harmless (x) each Initial Purchaser and each Holder (including each Market-Maker), their respective affiliates, directors and officers and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based 25 upon, any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (including any Market-Making Registration Statement) or any Prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser or any Holder furnished to the Company in writing through JPMorgan or such selling Holder expressly for use therein; PROVIDED that with respect to any such untrue statement in or omission from any preliminary prospectus, the indemnity agreement contained in this paragraph (a) shall not inure to the benefit of any Initial Purchaser or any Holder (including any Market-Maker) from whom the person asserting any such loss, claim, damage or liability received Securities or Exchange Securities to the extent that any such loss, claim, damage or liability of or with respect to such Initial Purchaser or Holder results from the fact that both (i) a copy of the final prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities or Exchange Securities to such person and (ii) the untrue statement in or omission from such preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final prospectus was a result of non-compliance by the Company or any Guarantor with the provisions of Section 3 or 5 hereof; and (y) the Market- Makers from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several that arise out of, or are based upon, any breach by the Company or the Guarantors of their representations, warranties and agreements contained in Section 5 of this Agreement. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantors, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. 26 (b) Each Holder (including each Market-Maker) agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Initial Purchasers and the other selling Holders, their respective affiliates, the directors of the Company and the Guarantors, each officer of the Company and the Guarantors who signed the Registration Statement or Market-Making Registration Statement, as the case may be, and each Person, if any, who controls the Company, the Guarantors, any Initial Purchaser and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (including any Market-Making Registration Statement) and any Prospectus. (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to paragraph (a) or (b) above, such Person (the "INDEMNIFIED PERSON") shall promptly notify the Person against whom such indemnification may be sought (the "INDEMNIFYING PERSON") in writing; PROVIDED that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this Section 6. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 6 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time 27 to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred after receipt by the Company of appropriate documentation specifically identifying this Section 6 of this Agreement. Any such separate firm (w) for any Initial Purchaser, its affiliates, directors and officers and any control Persons of such Initial Purchaser shall be designated in writing by JPMorgan, (x) for any Market-Maker, its affiliates, directors and officers and any control Persons of such Market-Maker shall be designated in writing by such Market-Maker, (y) for any other Holder, its affiliates, directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested in writing, with such request specifically identifying this Section 6 of this Agreement, that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement, except with respect to amounts reasonably challenged. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such 28 settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person. (d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and the Holders on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors or by the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (e) The Company, the Guarantors, the Holders agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in 29 connection with any such action or claim. Notwithstanding the provisions of this Section 6, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, nor shall the Market-Makers be required to contribute any amount in excess of its commission from the market-making transactions at issue. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (f) The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. (g) The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers, the Market-Makers or any Holder, their respective affiliates or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company or the Guarantors, their respective affiliates or the officers or directors of or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement or a Market-Making Registration Statement. 7. GENERAL. (a) NO INCONSISTENT AGREEMENTS. The Company and the Guarantors represent, warrant and agree that (i) the rights granted to the Holders or the Market-Makers hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company or any Guarantor under any other agreement and (ii) neither the Company nor any Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities or the Market-Makers in this Agreement or otherwise conflicts with the provisions hereof. 30 (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent or, with respect to the provisions of Section 5, the written consent of each Market-Maker; PROVIDED that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 6 hereof shall be effective as against any Holder of Registrable Securities or either Market-Maker unless consented to in writing by such Holder or such Market-Maker, as applicable. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 7(b) shall be by a writing executed by each of the parties hereto. (c) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder or a Market-Maker, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 7(c), which address initially is, with respect to the Initial Purchasers and the Market-Makers, the address of the Initial Purchasers (including the Market-Makers) set forth in the Purchase Agreement; (ii) if to the Company and the Guarantors, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 7(c); and (iii) to such other persons at their respective addresses as provided in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 7(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. 31 (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; PROVIDED that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company or the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement. (e) PURCHASES AND SALES OF SECURITIES. The Company and the Guarantors shall not, and shall use their reasonable best efforts to cause their affiliates (as defined in Rule 405 under the Securities Act) not to, purchase and then resell or otherwise transfer any Registrable Securities. (f) THIRD PARTY BENEFICIARIES. Each Holder shall be a third party beneficiary to the agreements made hereunder (excluding those agreements made in Section 5 herein) between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) HEADINGS. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof. 32 (i) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (j) MISCELLANEOUS. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantors and the Initial Purchasers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions. 33 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. BPC HOLDING CORPORATION By:___________________________ Name: Title: BERRY PLASTICS CORPORATION By:___________________________ Name: Title: BERRY IOWA CORPORATION PACKERWARE CORPORATION KNIGHT PLASTICS, INC. BERRY STERLING CORPORATION BERRY PLASTICS DESIGN CORPORATION POLY-SEAL CORPORATION VENTURE PACKAGING, INC. VENTURE PACKAGING MIDWEST BERRY PLASTICS TECHNICAL SERVICES, INC. CPI HOLDING CORPORATION CARDINAL PACKAGING, INC. AERO CON, INC. BERRY TRI-PLAS CORPORATION BERRY PLASTICS ACQUISITION CORPORATION III PESCOR, INC. By:___________________________ Name: Title: 34 Confirmed and accepted as of the date first above written: J.P. MORGAN SECURITIES INC. For itself and on behalf of the Initial Purchasers, and for itself and on behalf of Goldman, Sachs & Co. as Market-Makers By___________________________ Authorized Signatory 35 EX-4.3 5 y62674exv4w3.txt SUPPLEMENTAL INDENTURE Exhibit 4.3 SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of August 6, 2002, among BERRY PLASTICS ACQUISITION CORPORATION IV, BERRY PLASTICS ACQUISITION CORPORATION V, BERRY PLASTICS ACQUISITION CORPORATION VI, BERRY PLASTICS ACQUISITION CORPORATION VII, BERRY PLASTICS ACQUISITION CORPORATION VIII, BERRY PLASTICS ACQUISITION CORPORATION IX, BERRY PLASTICS ACQUISITION CORPORATION X, BERRY PLASTICS ACQUISITION CORPORATION XI, BERRY PLASTICS ACQUISITION CORPORATION XII, BERRY PLASTICS ACQUISITION CORPORATION XIII, each a Delaware corporation, BERRY PLASTICS ACQUISITION CORPORATION XIV, LLC and BERRY PLASTICS ACQUISITION CORPORATION XV, LLC, each a Delaware limited liability company (each, a "New Guarantor" and, collectively, the "New Guarantors"), each a subsidiary of BERRY PLASTICS CORPORATION (or its successor), a Delaware corporation (the "Company"), BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION, each a Delaware corporation, and CARDINAL PACKAGING, INC., an Ohio corporation, and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as trustee under the indenture referred to below (the "Trustee"). W I T N E S S E T H : WHEREAS the Company and BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES, INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION and CARDINAL PACKAGING, INC. (the "Existing Guarantors") has heretofore executed and delivered to the Trustee an Indenture (the "Indenture") dated as of July 22, 2002, providing for the issuance of an aggregate principal amount of up to $250,000,000 of 10 3/4% Senior Subordinated Notes due 2012 (the "Notes"); WHEREAS Section 4.11 of the Indenture provides that under certain circumstances the Company is required to cause the New Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which the New Guarantors shall unconditionally guarantee all the Company's obligations under the Notes pursuant to Note Guarantees on the terms and conditions set forth herein; and WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Existing Guarantors are authorized to execute and deliver this Supplemental Indenture; NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantors, the Company, the Existing Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows: 1. AGREEMENT TO GUARANTEE. The New Guarantors hereby agree, jointly and severally with all the Existing Guarantors, to unconditionally guarantee the Company's obligations under the Notes on the terms and subject to the conditions set forth in Articles 11 and 12 of the Indenture and to be bound by all other applicable provisions of the Indenture and the Notes. 2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF INDENTURE. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. 3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. 5. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not effect the construction thereof. 2 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. BERRY PLASTICS ACQUISITION CORPORATION IV, BERRY PLASTICS ACQUISITION CORPORATION V, BERRY PLASTICS ACQUISITION CORPORATION VI, BERRY PLASTICS ACQUISITION CORPORATION VII, BERRY PLASTICS ACQUISITION CORPORATION VIII, BERRY PLASTICS ACQUISITION CORPORATION IX, BERRY PLASTICS ACQUISITION CORPORATION X, BERRY PLASTICS ACQUISITION CORPORATION XI, BERRY PLASTICS ACQUISITION CORPORATION XII, BERRY PLASTICS ACQUISITION CORPORATION XIII, BERRY PLASTICS ACQUISITION CORPORATION XIV, LLC, BERRY PLASTICS ACQUISITION CORPORATION XV, LLC, by ______________________________ Name: Title: BERRY PLASTICS CORPORATION, by ______________________________ Name: Title: 3 BPC HOLDING CORPORATION, BERRY IOWA CORPORATION, PACKERWARE CORPORATION, KNIGHT PLASTICS, INC., BERRY STERLING CORPORATION, BERRY PLASTICS DESIGN CORPORATION, POLY-SEAL CORPORATION, BERRY PLASTICS ACQUISITIONS CORPORATION III, VENTURE PACKAGING, INC., VENTURE PACKAGING MIDWEST, INC., BERRY PLASTICS TECHNICAL SERVICES,INC., CPI HOLDING CORPORATION, AEROCON, INC., PESCOR, INC., BERRY TRI-PLAS CORPORATION, CARDINAL PACKAGING, INC., by ______________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, by ______________________________ Name: Title: 4 EX-5.1 6 y62674exv5w1.txt OPINION OF FRIED FRANK HARRIS SHRIVER & JACOBSON Exhibit 5.1 [FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LETTERHEAD] 212-859-8000 (FAX: 212-859-4000) August 8, 2002 Berry Plastics Corporation 101 Oakley Street Evansville, IN 47710 Ladies and Gentlemen: We have acted as special counsel to Berry Plastics Corporation, a Delaware corporation (the "Company"), BPC Holding Corporation ("Holding") and each of the guarantors listed on Schedule A hereto (the "Guarantors") in connection with the Company's offer to exchange up to $250,000,000 in aggregate principal amount of its 10 -3/4 % Senior Subordinated Notes due 2012 (the "Exchange Notes") which are being registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like principal amount of its 10 -3/4 % Senior Subordinated Notes due 2012 (the "Outstanding Notes" and together with the Exchange Notes, the "Notes") pursuant to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on August 8, 2002. Pursuant to the Indenture (as defined below) the Outstanding Notes are, and the Exchange Notes will be, unconditionally guaranteed, jointly and severally, on the terms and subject to the conditions set forth in the Indenture. All capitalized terms used herein that are defined in, or by reference in, the Indenture have the meanings assigned to such terms therein or by reference therein, unless otherwise defined herein. With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy of such assumptions or items relied upon. In connection with this opinion, we have (i) investigated such questions of law, (ii) examined originals or certified, conformed or reproduction copies of such agreements, instruments, documents and records of the Company and the Guarantors, such certificates of public officials and such other documents and (iii) received such information from officers and representatives of the Company and the Guarantors and others, as we have deemed necessary or appropriate for the purposes of this opinion. We have examined, among other documents, the following: (a) the Indenture dated July 22, 2002 (as supplemented by the Supplemental Indenture (defined below), the "Indenture") among the Company, Holding; the Guarantors and U.S. Bank Trust National Association, as trustee; (b) the Supplemental Indenture dated August 6, 2002 (the "Supplemental Indenture") among the Company, Holding, the guarantors listed on the signature page attached thereto and U.S. Bank Trust National Association, as trustee; and (c) the Notes. The documents referred to in items (a) through (c) above, inclusive, are collectively referred to as the "Documents." In all such examinations, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of original or certified documents and the conformity to original or certified documents of all copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have relied upon, and assume the accuracy of, representations and warranties contained in the Documents and certificates and oral or written statements and other information of or from representatives of the Company, the Guarantors and others and assume compliance on the part of all parties to the Documents with their covenants and agreements contained therein. To the extent it may be relevant to the opinions expressed herein, we have assumed (i) that the Exchange Notes have been duly authenticated and delivered by the Trustee, (ii) that all of the parties to the Documents (other than the Company and Holding) are validly existing and in good standing under the laws of their respective jurisdictions of organization and have the power and authority to (a) execute and deliver the Documents, (b) perform their obligations thereunder and (c) consummate the transactions contemplated thereby, (iii) that the Documents have been duly authorized, executed and delivered by all of the parties thereto (other than the Company and Holding) and constitute valid and binding obligations of all the parties thereto (other than the Company and Holding ) enforceable against such parties in accordance with their respective terms, and (iv) that all of the parties to the Documents will comply with all laws applicable thereto. Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that: -2- 1. The Exchange Notes have been duly authorized, and when executed, authenticated, issued and delivered in accordance with the terms of the Indenture in exchange for the Outstanding Notes, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms and will be entitled to the benefits of the Indenture. 2. The guarantees in the Indenture with respect to the Exchange Notes have been duly authorized, and when the Exchange Notes have been duly executed, authenticated, issued and delivered in accordance with the terms of the Indenture in exchange for the Outstanding Notes, will constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms and entitled to the benefits of the Indenture. The opinions set forth above are subject to the following qualifications: (A) We express no opinion as to the validity, binding effect or enforceability of any provision of the Documents relating to indemnification, contribution or exculpation. (B) We express no opinion as to the validity, binding effect or enforceability of any provision of the Documents: (i) containing any purported waiver, release, variation, disclaimer, consent or other agreement of similar effect (all of the foregoing, collectively, a "Waiver") by the Company or the Guarantors under any of such Documents to the extent limited by provisions of applicable law (including judicial decisions), or to the extent that such a Waiver applies to a right, claim, duty, defense or ground for discharge otherwise existing or occurring as a matter of law (including judicial decisions), except to the extent that such a Waiver is effective under, and is not prohibited by or void or invalid under provisions of applicable law (including judicial decisions); (ii) related to (I) forum selection or submission to jurisdiction (including, without limitation, any waiver of any objection to venue in any court or of any objection that a court is an inconvenient forum) to the extent the validity, binding effect or enforceability of any provision is to be determined by any court other than a court of the State of New York, or (II) choice of governing law to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a court of the State of New York or a federal district court sitting in the State of New York, in each case, applying the law and choice of law principles of the State of New York; (iii) specifying that provisions thereof may be waived only in writing, to the extent that an oral agreement or an implied agreement by trade practice or course of conduct has been created that modifies any provision of such agreement; and -3- (iv) purporting to give any person or entity the power to accelerate obligations without any notice to the obligor. (C) Our opinions are subject to the following: (i) bankruptcy, insolvency, reorganization, moratorium and other laws now or hereafter in effect affecting creditors' rights generally; (ii) general equitable principles (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness, equitable defenses and limits on the availability of equitable remedies) whether such principles are considered in a proceeding in equity or at law; and (iii) the application of any applicable fraudulent conveyance, fraudulent transfer, fraudulent obligation, or preferential transfer law or any law governing the distribution of assets of any person now or hereafter in effect affecting creditors' rights and remedies generally. (D) Provisions in the Indenture that provide that the Guarantors' liability thereunder shall not be affected by (i) amendments to, or waivers of, provisions of documents governing the guaranteed obligations, (ii) other actions, events or circumstances that make more burdensome or otherwise change the obligations and liabilities of the Guarantors, or (iii) actions or failures to act on the part of the holders or Trustee, might not be enforceable if such amendments, waivers, actions, events or circumstances change the essential nature of the terms and conditions of the obligation and guarantee of the Guarantors under the Indenture. (E) We have assumed that consideration that is fair and sufficient to support the guarantees of each Guarantor under the Indenture, including the Supplemental Indenture, and has been, and would be deemed by a court of competent jurisdiction to have been, duly received by each Guarantor. The opinions expressed herein are limited to the laws of the United States of America and the laws of the State of New York and, to the extent relevant, the General Corporation Law of the State of Delaware, each as currently in effect, together with applicable provisions of the Constitution of Delaware and relevant decisional law. The opinions expressed herein are given as of the date hereof, and we undertake no obligation to supplement this letter if any applicable laws change after the date hereof or if we become aware of any facts that might change the opinions expressed herein or for any other reason. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus that is included in the Registration Statement. In giving this consent, we do -4- not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. The opinions expressed herein are solely for your benefit in connection with the transaction covered in the first paragraph of this letter and may not be relied upon in any manner or for any purpose by any other person or entity and may not be quoted in whole or in part without our prior written consent. Very truly yours, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON By: /s/ Stuart H. Gelfond ------------------------------------- Stuart H. Gelfond -5- SCHEDULE A BPC Holding Corporation Berry Iowa Corporation Packerware Corporation Knight Plastics, Inc. Berry Sterling Corporation Berry Plastics Design Corporation Poly-Seal Corporation Venture Packaging, Inc. Venture Packaging Midwest Berry Plastics Technical Services, Inc. CPI Holding Corporation Cardinal Packaging, Inc. Aero Con, Inc. Berry Tri-Plas Corporation Berry Plastics Acquisition Corporation III Pescor, Inc. Berry Plastics Acquisition Corporation IV Berry Plastics Acquisition Corporation V Berry Plastics Acquisition Corporation VI Berry Plastics Acquisition Corporation VII Berry Plastics Acquisition Corporation VIII Berry Plastics Acquisition Corporation IX Berry Plastics Acquisition Corporation X Berry Plastics Acquisition Corporation XI Berry Plastics Acquisition Corporation XII Berry Plastics Acquisition Corporation XIII Berry Plastics Acquisition Corporation XIV, LLC Berry Plastics Acquisition Corporation XV, LLC -6- EX-10.1 7 y62674exv10w1.txt STOCKHOLDERS AGREEMENT EXHIBIT 10.1 - --------------------------------------------------------------------------- STOCKHOLDERS' AGREEMENT by and among BPC HOLDING CORPORATION, GS CAPITAL PARTNERS 2000, L.P., GS CAPITAL PARTNERS 2000 OFFSHORE, L.P., GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG, GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P., STONE STREET FUND 2000, L.P., BRIDGE STREET SPECIAL OPPORTUNITIES FUND 2000, L.P., GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P., J.P. MORGAN PARTNERS (BHCA), L.P., J.P. MORGAN PARTNERS GLOBAL INVESTORS, L.P., J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN), L.P., J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN) II, L.P. and J.P. MORGAN PARTNERS GLOBAL INVESTORS A, L.P. Dated as of July 22, 2002 - --------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ---- Section 1. Definitions................................................. 1 Section 2. Methodology for Calculations................................ 5 Section 3. Restrictions on Sales of Stock by Stockholders.............. 6 Section 4. Rights of First Offer....................................... 6 Section 5. Tag-Along Rights............................................ 8 Section 6. Bring-Along Rights.......................................... 9 Section 7. Preemptive Rights........................................... 11 Section 8. Corporation Governance...................................... 13 Section 9. Major Transactions.......................................... 15 Section 10. Right to Cause IPO......................................... 17 Section 11. Overcall Reserve........................................... 17 Section 12. Certain Covenants.......................................... 18 Section 13. Fees....................................................... 20 Section 14. Legend..................................................... 20 Section 15. Representations and Warranties............................. 21 Section 16. Regulatory Matters; Cooperation............................ 22 Section 17. Duration of Agreement...................................... 23 Section 18. Further Assurances......................................... 23 Section 19. Amendment and Waiver....................................... 24 Section 20. Severability............................................... 24 Section 21. Entire Agreement........................................... 24 Section 22. Successors and Assigns..................................... 24 Section 23. Counterparts............................................... 24
i Section 24. Remedies................................................... 24 Section 25. Notices.................................................... 25 Section 26. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..................................... 26 Section 27. Descriptive Headings....................................... 27 Section 28. Construction............................................... 27 Section 29. Survival of Representations and Warranties................. 27 Section 30. No Inconsistent Agreements................................. 27 Section 31. Conflicting Agreements..................................... 27
ii STOCKHOLDERS' AGREEMENT THIS AGREEMENT (this "AGREEMENT") is made as of July 22, 2002 among BPC HOLDING CORPORATION, a Delaware corporation (the "CORPORATION"), GS CAPITAL PARTNERS 2000, L.P., a Delaware limited partnership ("GSCP"), GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. ("GSCP OFFSHORE"), GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG ("GS GERMANY"), STONE STREET FUND 2000, L.P. ("STONE STREET"), BRIDGE STREET SPECIAL OPPORTUNITIES FUND 2000, L.P. ("BRIDGE STREET"), GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. ("GSDI"), and GS CAPITAL PARTNERS 2000 EMPLOYEES FUND, L.P. ("GS EMPLOYEES", collectively with GSCP, GSCP Offshore, GS Germany, Stone Street, Bridge Street and GSDI, the "GSCP PARTIES"), J.P. MORGAN PARTNERS (BHCA), L.P. ("JPMP (BHCA)"), J.P. MORGAN PARTNERS GLOBAL INVESTORS, L.P. ("GLOBAL INVESTORS"), J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN), L.P. ("GLOBAL INVESTORS CAYMAN"), J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN) II, L.P. ("GLOBAL INVESTORS CAYMAN II") and J.P. MORGAN PARTNERS GLOBAL INVESTORS A, L.P. ("GLOBAL INVESTORS A", collectively with JPMP (BHCA), Global Investors, Global Investors Cayman, Global Investors Cayman II, the "JPMP PARTIES"). W I T N E S S E T H : WHEREAS, the Corporation, the GSCP Parties and various other parties entered into an Agreement and Plan of Merger dated May 25, 2002 (the "MERGER AGREEMENT"), pursuant to which GS Berry Acquisition Corp., a Delaware corporation, ("ACQUISITION CORP") shall merge with and into the Corporation (the "MERGER"); WHEREAS, the parties hereto deem it to be in their best interests to enter into an agreement establishing and setting forth their agreement with respect to certain rights and obligations associated with ownership of shares of capital stock of the Corporation; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows: DEFINITIONS. As used herein, the following terms shall have the following meanings: "AFFILIATE" means (i) with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (ii) with respect to any individual, shall also mean the spouse, parent, sibling, child, step-child, grandchild, niece or nephew of such Person, or the spouse thereof; provided, however, that neither the Corporation nor any Person controlled by the Corporation shall be deemed to be an Affiliate of any Stockholder. "BERRY BOARD" means the board of directors of Berry Plastics Corporation. -1- "BOARD" means the board of directors of the Corporation. "CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation of the Corporation. "COMMON STOCK" means the shares of Common Stock, par value $.01 per share, of the Corporation. "COMMON STOCK EQUIVALENTS" means securities convertible into, or exchangeable or exercisable for, shares of Common Stock, including without limitation any options, warrants or rights to acquire such convertible securities. "CORPORATION VALUE" shall mean with respect to any public offering of Common Stock, the amount obtained by multiplying the total number of shares of Common Stock outstanding immediately prior to such public offering by the gross offering price per share of Common Stock sold in such offering. "DOCUMENTS" means this Agreement, the Registration Rights Agreement, the Merger Agreement, the subscription agreement between the GSCP Parties and Acquisition Corp, dated 22, 2002 and the subscription agreement between the JPMP Parties and Acquisition Corp, dated 22, 2002. "EXCLUDED SECURITIES" means (a) options issued by the Corporation pursuant to any stock option or similar plan (and any shares of Common Stock issuable thereunder) (including, without limitation, any shares of Common Stock subject to options forfeited under such plan which become subject to new options reissued by the Corporation pursuant to such plan) and stock issued by the Corporation to any employee or director at the Company or its Subsidiaries pursuant to any stock purchase plan, in each case as approved by the Board where the primary purpose of such issuance is not to raise additional equity capital for the Corporation, (b) shares of Stock issued upon exercise or conversion of any Common Stock Equivalents or any security with respect to which the provisions of Section 7 apply, (c) shares of the Corporation's capital stock or Common Stock Equivalents issued in connection with business acquisitions, strategic partnerships and alliances, and financing transactions (other than shares of Stock issued to parties unrelated to such transactions, in exchange for cash, to provide equity financing for such transactions), (d) shares of Common Stock issued in connection with a public offering of Common Stock, and (e) any capital stock issued as a stock dividend or upon any stock split or other subdivision or combination of shares of the Corporation's capital stock, (f) shares of Common Stock issued pursuant to Section 11 hereof, (g) shares of Common Stock issued pursuant to the exercise of preemptive rights granted by the Management Stockholders Agreement, and (h) shares of Common Stock issued to employees to the Corporation and its Subsidiaries pursuant to letter agreements entered into between such employees and the Corporation prior to or as of the date hereof. "GROUP" means two or more Persons who agree to act together for the purpose of acquiring, holding, voting or disposing of Stock. -2- "IPO" means the closing of the sale of shares of Common Stock in a bona fide, firm commitment, underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "SECURITIES ACT"). "MANAGEMENT STOCKHOLDERS AGREEMENT" means the stockholders agreement, dated as of the date hereof, among the Corporation and those employees of the Corporation or its Subsidiaries who hold Stock. "OTHER STOCKHOLDERS" means, for purposes of Section 4, with respect to any selling Stockholder, all Stockholders other than such selling Stockholder and its Affiliates and, for purposes of Section 6, all Stockholders other than the GSCP Parties. "PERSON" means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivisions thereof. "PROPORTIONATE PERCENTAGE" means, as to each Other Stockholder, the quotient obtained (expressed as a percentage) by dividing (A) the number of shares of Common Stock owned by such Other Stockholder on the first day of the Section 4(b) Acceptance Period (as defined in Section 4(b) below) by (B) the aggregate number of shares of Common Stock owned on the first day of the Section 4(b) Acceptance Period by all Other Stockholders who exercise their option to purchase Refused Stock (as defined in Section 4(b) below). "PUBLIC SALE" means a Sale of Stock pursuant to a bona fide underwritten public offering pursuant to an effective registration statement filed under the Securities Act or pursuant to Rule 144 under the Securities Act (other than in a privately negotiated Sale). "QUALIFIED IPO" means any underwritten public offering of Common Stock (pursuant to an effective registration statement filed under the Securities Act), (a) resulting in at least $100,000,000 of gross proceeds to the Corporation and (b) reflecting a Corporation Value of $500,000,000 or more. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the date hereof, among the Corporation, the GSCP Parties and the JPMP Parties. "SELL" means to sell, or in any other way directly or indirectly transfer, assign, distribute, pledge, encumber or otherwise dispose of, either voluntarily or involuntarily; and the terms Sale, Selling and Sold shall have meanings correlative to the foregoing. "STOCK" means (i) any shares of Common Stock and (ii) any Common Stock Equivalents, in each case, whether owned on the date hereof or acquired hereafter. "STOCKHOLDERS" means the parties to this Agreement (other than the Corporation) and any other subsequent holder of Stock who agrees to be bound by the terms of this Agreement. -3- "SUBSIDIARY" means with respect to any Person, (i) any corporation, partnership or other entity of which shares of capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other similar managing body of such corporation, partnership or other entity are at the time owned or controlled by such Person, or (ii) the management of which is otherwise controlled, directly or indirectly, through one or more intermediaries by such Person. ADDITIONAL DEFINED TERMS. The following terms have the respective meanings set forth in the relevant Section referred to below throughout this Agreement.
TERM SECTION Accepting Holder 7(c)(i) Acquisition Corp Recitals Agreement Preamble All or Nothing Sale 4(a) Available Amount 7(c)(i) Available Securities 7(c)(iii) Banking Regulations 16(e) Corporation Preamble Delay Period 7(d) Delayed Notice 7(d) Director 8.4 Exit Sale 6(a) First Offer Shares 4(b) GAAP 12.2(a) Global Investors A Preamble Global Investors Cayman II Preamble Global Investors Cayman Preamble Global Investors Preamble GS Employees Preamble GS Germany Preamble GSCP Directors 8.1(a) GSCP Offshore Preamble GSCP Parties Preamble GSCP Preamble HSR Act 4(d) Institutional Investor 7(c)(i) Issuance 7(a) Issue 7(a) JPMP (BHCA) Preamble JPMP Directors 8.1(b) JPMP Parties Preamble Law 16(e) Litigation 25
-4- Management Director 8.1(a) Management Letter 12.2(a) Merger Recitals Merger Agreement Recitals Monthly Financials 12.2(a) Objected Reserve Call 11 Offered Securities 7(a) Other Buyers 7(c)(iii) Overcall Notice 11 Overcall Percentage 11 Overcall Reserve Amount 11 Overcall Reserve 11 Preemptive Holder 7(a) Preemptive Offer 7(a) Prior Purchase Amounts 11 Pro Rata Share 7(a) Quarterly Financials 12.2(b) Refused Stock 4(b) Regulatory Problem 16(e) Remaining Securities 7(c) Remaining Shares 4(b) Sale Period 4(c) Sale Process 6(e) SBA 16(e) SBA Regulations 16(e) SEC 12.2(b) Section 4 Offer Notice 4(a) Section 4 Offer 4(a) Section 4(a) Acceptance Period 4(a) Section 4(b) Acceptance Period 4(b) Section 5 Acceptance Period 5(a)(i) Section 5 Notice 5(a)(i) Section 5 Offer 5(a)(i) Section 5 Other Stockholder 5(a)(i) Section 5 Purchaser 5(a)(i) Section 5 Seller 5(a)(i) Section 6 Buyer 6(a) Section 6 Notice 6(b) Section 7 Notice of Acceptance 7(b) Section 7 Offer Notice 7(a) Subject Stock 4(a)
SECTION 2. METHODOLOGY FOR CALCULATIONS. For all purposes of this Agreement, the proposed Sale or the Sale of a Common Stock Equivalent shall be treated as the proposed Sale or the Sale of the shares of Common Stock into which such Common Stock Equivalent can be converted, exchanged or exercised. Except -5- as otherwise expressly provided in this Agreement, for purposes of calculating (i) the amount of outstanding Common Stock as of any date and (ii) the amount of Common Stock owned by a Person hereunder (and the percentage of the outstanding Common Stock owned by a Person), all Common Stock Equivalents shall be treated as having been converted, exchanged or exercised. All holdings of Common Stock by Persons who are Affiliates of each other shall be aggregated for purposes of meeting any threshold tests under this Agreement. SECTION 3. RESTRICTIONS ON SALES OF STOCK BY STOCKHOLDERS. (a) Prior to a Qualified IPO, no Stockholder shall Sell any Stock, whether owned on the date hereof or acquired hereafter, other than: (i) Sales of Stock in accordance with Sections 4, 5 and 6 hereof; (ii) Sales to an Affiliate; or (iii) upon the prior written consent of the Board including, with respect to any Sale of Stock by any of the GSCP Parties, at least one JPMP Director. (b) Notwithstanding anything contained in this Agreement to the contrary, any transferee of Stock pursuant to a Sale under Section 3(a) who is not a Stockholder shall upon consummation of, and as a condition to, such Sale (i) execute, and agree to be bound by the terms of, this Agreement and shall thereafter be deemed a Stockholder, with the same rights and obligations, subject to Section 8.9, of the Stockholder which is the transferor of the Stock, for all purposes of this Agreement, and (ii) execute and deliver a certificate and such other materials as shall be necessary to establish to the reasonable satisfaction of the GSCP Parties and, with respect to any Sale of Stock by any of the GSCP Parties, the JPMP Parties that (A) the transferee is purchasing the Stock for its own account, for investment and not with a view to the distribution thereof, and (B) that such Sale is otherwise being made in compliance with all federal and state law (including, without limitation, federal and state securities laws and blue sky laws). (c) Any Sale or attempted Sale of Stock in violation of any provision of this Agreement shall be void, and the Corporation shall not record such Sale on its books or treat any purported transferee of such Stock as the owner of such Stock for any purpose. SECTION 4. RIGHTS OF FIRST OFFER. Subject to Section 4(e) and prior to a Qualified IPO, in addition to and not in limitation of any other restrictions on Sales of Stock contained in this Agreement, any Sale of Stock by each Stockholder shall be consummated only in accordance with the following procedures: (a)The selling Stockholder shall first deliver to the Corporation and the Other Stockholders a written notice (a "SECTION 4 OFFER NOTICE"), which shall (i) state the selling Stockholder's intention to sell Stock to one or more Persons, the amount and type of Stock to be sold (the "SUBJECT -6- STOCK"), the purchase price therefor and a summary of the other material terms of the proposed Sale and (ii) offer the Corporation and the Other Stockholders the option to acquire all or a portion of such Subject Stock upon the terms and subject to the conditions of the proposed Sale as set forth in the Section 4 Offer Notice (the "SECTION 4 OFFER"), provided that such Section 4 Offer may provide that it must be accepted by the Corporation and the Other Stockholders on an all or nothing basis (an "ALL OR NOTHING SALE"). The Section 4 Offer shall remain open and irrevocable for the periods set forth below (and, to the extent the Section 4 Offer is accepted during such periods, until the consummation of the sale contemplated by the Section 4 Offer). The Corporation shall have the right and option, for a period of 30 days after delivery of the Section 4 Offer Notice (the "SECTION 4(A) ACCEPTANCE PERIOD"), to accept all or any part of the Subject Stock at the purchase price and on the terms stated in the Section 4 Offer Notice. Such acceptance shall be made by delivering a written notice to the selling Stockholder and the Other Stockholders within the Section 4(a) Acceptance Period. (b) If the Corporation shall fail to accept all of the Subject Stock offered for Sale pursuant to, or shall reject in writing, the Section 4 Offer (the Corporation being required to notify in writing the selling Stockholder and the Other Stockholders of its rejection or failure to accept in the event of the same), then, upon the earlier of the expiration of the Section 4(a) Acceptance Period or the giving of such written notice of rejection or failure to accept such offer by the Corporation, the Other Stockholders shall have the right and option, for a period of 30 days thereafter (the "SECTION 4(B) ACCEPTANCE PERIOD"), to accept all or any part of the Subject Stock so offered and not accepted by the Corporation (the "REFUSED STOCK") at the purchase price and on the terms stated in the Section 4 Offer Notice; provided, however, that, if the Section 4 Offer contemplated an All or Nothing Sale, the Other Stockholders may accept, during the Section 4(b) Acceptance Period, all, but not less than all, of the Refused Stock, at the purchase price and on the terms stated in the Section 4 Offer Notice. Such acceptance shall be made by delivering a written notice to the Corporation and the selling Stockholder within the Section 4(b) Acceptance Period specifying the maximum number of shares such Other Stockholder will purchase (the "FIRST OFFER SHARES"). If, upon the expiration of the Section 4(b) Acceptance Period, the aggregate amount of First Offer Shares exceeds the amount of Refused Stock, the Refused Stock shall be allocated among the Other Stockholders as follows: (i) First, each other Stockholder shall be entitled to purchase no more than its Proportionate Percentage of Refused Stock; (ii) Second, if any shares of Refused Stock have not been allocated for purchase pursuant to (i) above (the "REMAINING SHARES"), each Other Stockholder which had offered to purchase a number of shares of Refused Stock in excess of the amount of stock allocated for purchase to it in accordance with previous allocations of such shares of Refused Stock, shall be entitled to purchase an amount of Remaining Shares equal to no more than its Proportionate Percentage of the Remaining Shares; and (iii) Third, the process set forth in (ii) above shall be repeated with respect to any shares of Refused Stock not allocated for purchase until all shares of Refused Stock are allocated for purchase. (c) If effective acceptance shall not be received pursuant to Sections 4(a) and/or 4(b) above with respect to all of the Subject Stock offered for sale pursuant to the Section 4 Offer Notice, then the selling Stockholder may Sell all or any portion of the Stock so offered for sale and not so accepted (or, in the case of an All or Nothing Sale, all of the Subject -7- Stock offered for sale pursuant to the Section 4 Offer Notice), at a price not less than the price, and on terms not more favorable to the purchaser thereof than the terms, stated in the Section 4 Offer Notice at any time within 90 days after the expiration of the Section 4(b) Acceptance Period (the "SALE PERIOD"). To the extent the selling Stockholder Sells all or any portion of the Stock so offered for Sale during the Sale Period, the selling Stockholder shall promptly notify the Corporation, and the Corporation shall promptly notify each Other Stockholder, as to (i) the number of shares of Stock, if any, that the selling Stockholder then owns, (ii) the number of shares of Stock that the selling Stockholder has sold, (iii) the terms of such Sale and (iv) the name of the owner(s) of any shares of Stock sold. In the event that all of the Subject Stock is not sold by the selling Stockholder during the Sale Period, the right of the selling Stockholder to Sell such unsold Subject Stock shall expire and the obligations of this Section 4 shall be reinstated; provided, however, that, in the event that the selling Stockholder determines, at any time during the Sale Period, that the sale of all of the Stock on the terms set forth in the Section 4 Offer Notice is impractical, the selling Stockholder may terminate the offer and reinstate the procedure provided in this Section 4 without waiting for the expiration of the Sale Period. (d) All Sales of Subject Stock to the Corporation and/or the Other Stockholders subject to any Section 4 Offer Notice shall be consummated contemporaneously at the offices of the Corporation on the later of (i) a mutually satisfactory business day within 30 days after the expiration of the Section 4(a) Acceptance Period or the Section 4(b) Acceptance Period, as applicable, and (ii) the fifth business day following the expiration or termination of all waiting periods, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT") or receipt of such other regulatory approvals, applicable to such Sales, or at such other time and/or place as the parties to such Sales may agree. The delivery of certificates or other instruments evidencing such Subject Stock duly endorsed for transfer shall be made on such date against payment of the purchase price for such Subject Stock. (e) The requirements of this Section 4 shall not apply to (i) any Sale of Stock pursuant to clause (ii) of Section 3(a) hereof, (ii) any Sale of Stock pursuant to Section 6 of this Agreement, (iii) any other Sale of Stock as to which the Corporation and the Other Shareholders waive compliance or (iv) a Sale of 50% or more of the outstanding shares of Stock of the Corporation. SECTION 5. TAG-ALONG RIGHTS. Subject to Section 5(c) and prior to a Qualified IPO, and except for any Sale of Stock (i) pursuant to clause (ii) of Section 3(a) hereof, (ii) pursuant to the exercise of piggyback registration rights granted by the Registration Rights Agreement or (iii) to the Corporation and/or any Stockholder pursuant to Section 4, each Stockholder shall not, alone or in concert with any other Stockholders, in any transaction or series of transactions, Sell any Stock to another Person or Group, except in accordance with the following procedures: (a) Any Stockholder or Stockholders proposing to Sell Stock (for purposes of this Section, the "SECTION 5 SELLER") shall first deliver to each other Stockholder (a "SECTION 5 OTHER STOCKHOLDER") a written notice (the "SECTION 5 NOTICE"), which shall specifically identify the proposed transferee (the "SECTION 5 PURCHASER"), the amount and type of Stock proposed to be sold, the purchase price therefor, and a summary of the -8- other material terms and conditions of the proposed sale, and shall contain an offer (the "SECTION 5 OFFER") by the Section 5 Purchaser to each Section 5 Other Stockholder, which shall be irrevocable for a period of seven days after the delivery thereof (the "SECTION 5 ACCEPTANCE PERIOD") (and, to the extent the Section 5 Offer is accepted during such seven day period, until the closing of the Sale contemplated by the Section 5 Offer), to purchase the Stock (as calculated below) of such Section 5 Other Stockholder at the same price per share (and, in the case of Common Stock Equivalents, such price per share multiplied by the number of shares of Common Stock issuable upon the conversion, exchange or exercise of such Common Stock Equivalent subject to reduction, if appropriate, for the amount per share of the exercise or purchase price (if any) of such Common Stock Equivalent) to be paid to, and upon the same terms and conditions as, the Section 5 Seller. A copy of the Section 5 Notice shall promptly be sent to the Corporation. Notice of a Section 5 Other Stockholder's intention to accept a Section 5 Offer, in whole or in part, shall be evidenced by a writing signed by such Section 5 Other Stockholder and delivered to the Section 5 Purchaser and the Corporation prior to the end of the Section 5 Acceptance Period, setting forth the number of shares of Stock that such Section 5 Other Stockholder elects to Sell; provided, however, that such Section 5 Other Stockholder may only sell up to that number of shares of Stock (calculated in accordance with Section 2) as shall equal the product of (x) a fraction, the numerator of which is the number of shares of Stock owned by the Section 5 Other Stockholder as of the date of such proposed sale and the denominator of which is the aggregate number of outstanding shares of Stock as of the date of such proposed sale, and (y) the aggregate number of shares of Stock proposed to be purchased by the Section 5 Purchaser. The number of shares of Stock proposed to be sold by the Section 5 Seller shall be reduced if and to the extent necessary to provide for such sale of Stock by such Section 5 Other Stockholders electing to exercise their right to Sell Stock under this Section 5. If effective acceptance by any Section 5 Other Stockholders has been received pursuant to this paragraph (a), then the Section 5 Seller shall not consummate such Sale of Stock without participation of such Section 5 Other Stockholders. (b) All Sales of Stock to the Section 5 Purchaser shall be consummated contemporaneously at the offices of the Corporation on a mutually satisfactory business day as soon as practicable, but in no event more than 30 days after the expiration of the Section 5 Acceptance Period, or, if later, the fifth business day following the receipt of all regulatory approvals, if any applicable to such Sales. The delivery of certificates or other instruments evidencing such Stock duly endorsed for transfer shall be made on such date against payment of the purchase price for such Stock. (c) Notwithstanding anything to the contrary contained herein, any Section 5 Seller shall, prior to complying with the provisions of this Section 5, shall have first complied with the provisions of Section 4 hereof. SECTION 6. BRING-ALONG RIGHTS. (a) Subject to Section 6(e), if the GSCP Parties (i) propose to Sell substantially all of the then-outstanding shares of Stock held by the GSCP Parties to a Person that is not an Affiliate of any GSCP Party, (ii) request that the Corporation consolidate or merge with any Person that is not an Affiliate of any GSCP Party (in a consolidation or merger in which stockholders of the Corporation receive cash or securities of any other -9- person upon such consolidation or merger) or (iii) request that the Corporation Sell all or substantially all of the assets of the Corporation and its Subsidiaries, to a Person that is not an Affiliate of any GSCP Party (the Person referred to in clause (i), clause (ii) or this clause (iii) being referred to herein as the "SECTION 6 BUYER" and any of the transactions referred to in clause (i), clause (ii) or this clause (iii) being referred to herein as an "EXIT SALE") then the Other Stockholders shall be obligated to Sell all, but not less than all, of their Stock, at the same price per share to be paid to, and upon the same terms and conditions as, the GSCP Parties, to the Section 6 Buyer (in the case of clause (i) of Section 6(a)) and/or to vote (or consent in writing, as the case may be) in favor of the merger or consolidation or sale of assets (in the case of clause (ii) or (iii) of Section 6(a)), and shall in all other respects support the transaction contemplated by the Exit Sale and shall be obligated to cooperate in the consummation of the transaction contemplated thereby and shall execute all documents reasonably requested by the Corporation or the GSCP Parties containing the terms and conditions of the Exit Sale; provided, however, that no Stockholder shall be required to make any representations or warranties in any agreement relating to an Exit Sale other than representations and warranties relating to such Stockholder and the ownership of its Common Stock that are customary in similar transactions including, without limitation, representations and warranties relating to title, authorization and execution and delivery, nor shall any Stockholder be required to provide indemnification with respect to any representations or warranties made by any other Stockholder. In addition, the Other Stockholders shall not exercise any rights of appraisal or dissenters rights that such Stockholder may have (whether under applicable law or otherwise) or could potentially have or acquire in connection with any Exit Sale or any proposal that is necessary or desirable to consummate the Exit Sale. (b) The rights set forth in Section 6(a) shall be exercised by giving written notice (the "SECTION 6 NOTICE") to each Stockholder setting forth in detail the terms of the proposed Exit Sale and the proposed closing date of the Exit Sale. (c) All Sales of Stock to the Section 6 Buyer (in the case of clause (i) of Section 6(a)) pursuant to this Section 6 shall be consummated contemporaneously at the offices of the Corporation on the later of (i) a business day not less than 15 or more than 60 days after the Section 6 Notice is delivered to the Stockholders or (ii) the fifth business day following the expiration or termination of all waiting periods under the HSR Act or receipt of other regulatory approvals applicable to such Sales, or at such other time and/or place as the parties to such Sales may agree. The delivery of certificates or other instruments evidencing such Stock duly endorsed for transfer shall be made on such date against payment of the purchase price for such Stock. (d) Notwithstanding anything to the contrary contained herein, any Sale of Stock effected as an Exit Sale shall be exempt from the provisions of Sections 4 and 5 hereof. (e) Any Exit Sale shall be conducted on an arms-length basis and, prior to effecting an Exit Sale, except for an Exit Sale in response to a bona fide unsolicited offer, the Corporation shall engage in a sale process customary for similar transactions (a "SALE PROCESS"), the manner of which (and only the manner of which) shall be subject, so long as JPMP owns at least 15% of the Common Stock it owns as of the date hereof, to the reasonable prior -10- approval of the JPMP Parties, which approval shall not be unreasonably withheld or delayed. For purposes of clarity, the JPMP Parties' approval shall not be required to initiate a Sale Process, select an investment banking firm to conduct the Sale Process (so long as such investment banking firm is a nationally recognized investment banking firm with experience in such transactions), select the Section 6 Buyer, negotiate, or agree to, the terms of, or execute definitive documentation relating to, an Exit Sale or otherwise consummate an Exit Sale. SECTION 7. PREEMPTIVE RIGHTS. (a) Subject to Section 7(d), prior to a Qualified IPO, and except for Excluded Securities, the Corporation shall not issue, Sell or exchange, or agree to issue, Sell or exchange (collectively, "ISSUE," and any issuance, sale or exchange resulting therefrom, an "ISSUANCE") any Stock, unless the Corporation shall have first given written notice (the "SECTION 7 OFFER NOTICE") to each Stockholder (each a "PREEMPTIVE HOLDER") which shall (a) state the Corporation's intention to Issue the Stock, the amount to be Issued, the terms of such securities, the purchase price therefor and a summary of the other material terms of the proposed Issuance and (b) offer (a "PREEMPTIVE OFFER") to Issue to each Preemptive Holder up to such Preemptive Holder's Pro Rata Share (as defined below) of such securities (with respect to each Preemptive Holder, the "OFFERED SECURITIES") upon the terms and subject to the conditions set forth in the Section 7 Offer Notice, which Preemptive Offer by its terms shall remain open for a period of 30 days from the date it is delivered by the Corporation to the Preemptive Holder (and, to the extent the Preemptive Offer is accepted during such 30-day period, until the closing of the Sales contemplated by the Preemptive Offer). "PRO RATA SHARE," for purposes of this Section, shall mean the quotient obtained by dividing (i) the number of shares of Stock, as determined in accordance with Section 2, owned by that Preemptive Holder on the date of the Preemptive Offer, by (ii) the total number of shares of Stock outstanding, as determined by Section 2 hereof, on the date of the Preemptive Offer. (b) Notice of a Preemptive Holder's intention to accept a Preemptive Offer, in whole or in part, shall be evidenced by a writing signed by the Preemptive Holder and delivered to the Corporation prior to the end of the 30-day period of such Preemptive Offer (each, a "SECTION 7 NOTICE OF ACCEPTANCE"), setting forth such portion of the Offered Securities that the Preemptive Holder elects to purchase. (c)(i) In the event that a Section 7 Notice of Acceptance is not given by a Preemptive Holder accepting all the Offered Securities, the Corporation shall have 45 days (or the completion of all required regulatory approvals, including, without limitation, pursuant to the HSR Act, so long as an agreement with respect to such Issuance is entered into within such 45-day period) following the earlier of (A) delivery of the Section 7 Notice of Acceptance and (B) the expiration of the 30-day period referred to in clause (b) above if no Section 7 Notice of Acceptance is delivered, to Issue all or any part of such remaining Offered Securities not covered by the Section 7 Notice of Acceptance (the "REMAINING SECURITIES") to any other Person or Persons, but only upon terms and conditions, including, without limitation, unit price and interest rates, which are no more favorable, in the aggregate, to such other Person or Persons or less favorable to the Corporation than those set forth in the Preemptive Offer; provided, however, that if the proposed Issuance is for Stock with a purchase price in excess of $30,000,000 (the excess of the purchase price -11- for the proposed Issuance over $30,000,000, the "AVAILABLE AMOUNT") and is to a private equity fund, hedge fund or similar institutional holder (an "INSTITUTIONAL INVESTOR"), then, prior to Issuing any of the Remaining Securities to any other Person or Persons, the Corporation shall offer the Remaining Securities, or, if the purchase price of the Remaining Securities is greater than the Available Amount, a portion of the Remaining Securities with a purchase price equal to the Available Amount, to each Preemptive Holder who has elected to purchase all of its Offered Securities (each, an "ACCEPTING HOLDER") pro rata, based upon the number of shares of Common Stock held by each Accepting Holder in relation to the total number of shares of Common Stock held by all Accepting Holders. By way of example, in the case of a proposed Issuance of Stock with a purchase price of $31,000,000, to an Institutional Investor, if the purchase price of the Remaining Securities were $10,000,000, the Corporation would offer stock with a purchase price of $1,000,000 to the Accepting Holders. (ii) If the Corporation does not consummate the Issuance of all or part of the Remaining Securities to such other Person or Persons within the 45-day period referred to in clause (c) above, the right provided hereunder shall be deemed to be revived and such securities shall not be offered unless first reoffered to the Preemptive Holders in accordance with this Section 7. (iii) Upon the closing of the Issuance to such other Person or Persons (the "OTHER BUYERS") of all or part of the Remaining Securities, the Preemptive Holder shall purchase from the Corporation, and the Corporation shall Issue to the Preemptive Holder, the Offered Securities covered by the Section 7 Notice of Acceptance delivered to the Corporation by the Preemptive Holder, together with any securities to be purchased pursuant to the proviso in the next to last sentence of Section 7(c)(i) ("AVAILABLE SECURITIES"), on the terms specified in the Preemptive Offer. The purchase by the Preemptive Holder of any Offered Securities and Available Securities, as the case may be, is subject in all cases to the execution and delivery by the Corporation and the Preemptive Holder of a purchase agreement relating to such Offered Securities and Available Securities, as the case may be, in form and substance similar in all material respects to the extent applicable to that executed and delivered between the Corporation and the Other Buyers and the Corporation shall deliver certificates or other instruments evidencing such Stock duly endorsed for transfer on such date against payment of the purchase price for such Stock. (d) The Corporation shall not be required to provide the Section 7 Offer Notice, and instead may complete the Issuance, provided that the Corporation sets aside the number of shares of Stock as would be purchasable by the Preemptive Holders under this Section 7 if the Section 7 Offer Notice had been given with respect to such Issuance for the Delay Period (as defined below). In such event, prior to or after (but no later than 15 days after) the closing of such transaction, the Corporation shall notify (a "DELAYED NOTICE") the Stockholders that they may exercise preemptive rights under this Section 7 for Offered Securities, in an amount calculated in accordance with Section 7(a) as if such notice had been delivered 15 days prior to the Closing of the Issuance, for a 15-day period after the giving of such notice (the "DELAY PERIOD"). If such rights are exercised all other provisions of this Section 7 shall apply to such Stockholder's purchase of such Stock, provided that the closing of such -12- Offered Securities shall take place, on such date as is set by the Corporation within 25 days after the Delayed Notice. (e) The Corporation shall, as a condition to the Issuance, require the recipient of the newly Issued Stock to execute, and agree to be bound by the terms of this Agreement and shall thereafter be deemed a Stockholder. SECTION 8. CORPORATION GOVERNANCE. 8.1 BOARD REPRESENTATION. From and after the date hereof, the Board and the Berry Board shall consist of seven directors or such greater number as may be approved by the Board in accordance with Section 9. (a) Prior to a Qualified IPO, GSCP shall have the right to designate five persons to serve on each of the Board and the Berry Board (such members, the "GSCP DIRECTORS"), one of which shall be a member of management of the Corporation or Berry (such member, the "MANAGEMENT DIRECTOR"). (b) Prior to a Qualified IPO, the JPMP Parties shall have the right to designate two persons to serve on each of the Board and the Berry Board (such members, the "JPMP DIRECTORS"), one of which shall be designated by Global Investors; provided that (i) if the JPMP Parties shall sell 40% of the shares of Stock owned by them in the aggregate on the date hereof, the JPMP Parties shall thereafter have the right to designate only one person to serve on each of the Board and the Berry Board and (ii) if the JPMP Parties shall sell 80% of the shares of Stock owned by them in the aggregate on the date hereof, the JPMP Parties shall no longer have any right to designate any persons to serve on either of the Board or the Berry Board. (c) Each Stockholder shall vote all of its shares entitled to vote for members of the Board and shall take all other necessary or desirable actions within his or its control (including, without limitation, attending all meetings in person or by proxy for purposes of obtaining a quorum and executing all written consents in lieu of meetings, as applicable), and the Corporation shall take all necessary and desirable actions within its control (including, without limitation, calling special Board and stockholder meetings), to effectuate the provisions of this Section 8 including, but not limited to, the election of the GSCP Directors and the JPMP Directors. 8.2 COMMITTEES. (a) The Corporation shall take all actions necessary to cause (i) to the extent designated by GSCP, at least two GSCP Directors (other than the Management Director), (ii) to the extent designed by the JPMP Parties, one JPMP Director to be appointed to each committee of the Board and the Berry Board and (iii) to the extent designated by GSCP, the Management Director to be appointed to each committee (other than the audit and compensation committees) of the Board and the Berry Board. -13- (b) If any GSCP Director serving on any committee of the Board or the Berry Board shall cease for any reason to serve as a member of, or shall otherwise be unable to fulfill his duties on, any such committee, he or she shall be succeeded by another Person designated by GSCP. If any JPMP Director serving on any committee of the Board or the Berry Board shall cease for any reason to serve as a member of, or shall otherwise be unable to fulfill his duties on, any such committee he or she shall be succeeded by another Person designated by the JPMP Parties. 8.3 VACANCIES; REMOVAL. (a) Subject to Section 8.3(b), each GSCP Director and each JPMP Director shall hold his office until his death or until his successor shall have been duly elected and qualified. If any GSCP Director shall cease to serve as a director of the Corporation for any reason, the vacancy resulting thereby shall be filled by another Person designated by GSCP. If any of the JPMP Directors shall cease to serve as a director of the Corporation for any reason, the vacancy resulting thereby shall be filled by another Person designated by the JPMP Parties. (b) The GSCP Directors or the JPMP Directors shall not be removed from office without the consent of the GSCP Parties or the JPMP Parties, as applicable. Any GSCP Director shall be removed from office at any time, with or without cause, at the request of the GSCP Parties; and any JPMP Director shall be removed from office at any time, with or without cause, at the request of the JPMP Parties. 8.4 EXPENSES. The Corporation shall pay the reasonable out-of-pocket expenses incurred by each director on the Board and the Berry Board (any such director, a "DIRECTOR") in connection with performing his duties as a member of the Board and the Berry Board, including without limitation the reasonable out-of-pocket expenses incurred by such person for attending meetings of the Board and the Berry Board or any committee thereof. 8.5 BOARD MEETINGS. (a) The Corporation shall take all necessary actions, including, without limitation, causing its by-laws to be duly amended, to allow any Director to telephonically attend any meeting of the Board and the Berry Board (and any committee thereof). (b) The Corporation shall call, and shall use its reasonable best efforts to have, regular meetings of the Board or the Berry Board, as the case may be, not less frequently than quarterly. 8.6 DIRECTORS' INDEMNIFICATION. (a) The Corporation shall obtain and cause to be maintained in effect, with financially sound insurers, a policy of directors' and officers' liability insurance covering each of the Directors in an amount of $5,000,000 or more and upon such terms as are reasonably acceptable to the GSCP Parties and the JPMP Parties. -14- (b) The Certificate of Incorporation, by-laws and other organizational documents of the Corporation and each of its Subsidiaries shall at all times, to the fullest extent permitted by law, provide for indemnification of, advancement of expenses to, and limitation of the personal liability of, the members of the Board and the Berry Board and such other persons, if any, who, pursuant to a provision of such Certificate of Incorporation, by-laws or other organizational documents, exercise or perform any of the powers or duties otherwise conferred or imposed upon members of the Board and the Berry Board. Such provisions may not be amended, repealed or otherwise modified in any manner adverse to any member of the Board or the Berry Board, until at least six years following the later of the date that the GSCP Parties are no longer entitled to designate or nominate any GSCP Director, and the date that the JPMP Parties are no longer entitled to designate or nominate a JPMP Director. (c) Each Director is intended to be a third-party beneficiary of the obligations of the Corporation pursuant to this Section 8.6, and the obligations of the Corporation pursuant to this Section 8.6 shall be enforceable by each Director. 8.7 COOPERATION. Each Stockholder shall vote all of its Stock and shall take all other necessary or desirable actions within his or its control (including, without limitation, attending all meetings in person or by proxy for purposes of obtaining a quorum and executing all written consents in lieu of meetings, as applicable), and the Corporation shall take all necessary and desirable actions within its control (including, without limitation, calling special Board and stockholder meetings), to effectuate the provisions of this Section 8. 8.8 MANAGEMENT RIGHTS. The Corporation and each of the Stockholders acknowledge that the provisions of this Agreement, including this Section 8, are intended, among other things, to provide the GSCP Parties and the JPMP Parties with "contractual management rights" within the meaning of the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder. 8.9 NON-TRANSFERABILITY OF RIGHTS. Notwithstanding anything to the contrary contained herein, the rights granted to the JPMP Parties under this Section 8 are non-transferable, other than to an Affiliate of the JPMP Parties in connection with a Sale of Stock by the JPMP Parties to such Affiliate. SECTION 9. MAJOR TRANSACTIONS. (a) To the fullest extent permitted by law, from and after the date hereof, the Corporation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly take any of the following actions without obtaining the prior approval of a majority of the entire Board at a duly called meeting of the Board or pursuant to a written consent (except as otherwise expressly permitted by this Agreement); provided, however, that, so long as the JPMP Parties are entitled to designate a JPMP Director pursuant to Section 8.1(b), at least one JPMP Director shall have approved of the following actions: (i)engage in any business, activities or operations substantially unrelated to the Corporation's existing line of businesses, except to the extent that -15- all such unrelated businesses, activities or operations do not have aggregate revenues exceeding 10% of the aggregate revenues of the Corporation and its subsidiaries, taken as a whole; (ii) make any material change in any accounting policy or tax method policies, procedures or elections; (iii) commence any bankruptcy, insolvency or similar proceeding in respect of the company or any of its Subsidiaries; (iv) pay, or set aside any sums for the payment of, any dividends, or make any distribution on, any shares of its capital stock or redeem, repurchase or otherwise acquire any outstanding shares of its capital stock or any other of its outstanding securities (other than pursuant to any agreements with management); (v) amend, modify or waive the Certificate of Incorporation or the by-laws, or the certificate of incorporation of Berry or the by-laws of Berry, in any manner that adversely affects the rights of any of the Stockholders thereunder or disproportionately benefits any particular Stockholder or Stockholders (it being understood that any increase in the number of authorized shares of capital stock of the Corporation shall neither adversely affect the rights of any of the Stockholders hereunder nor disproportionately benefit any particular Stockholder or Stockholders), including, without limitation, any change in the number of directors comprising the Board or the Berry Board, or become a party to any agreement which is inconsistent with the rights of any of the Stockholders under the Documents or otherwise conflicts with the Documents; (vi)change the Corporation's independent public accountants; or (vii) enter into any transaction with any Affiliate of any Stockholder that is not a bona fide arm's length transaction. (b) To the fullest extent permitted by law, from and after the date hereof, the Corporation shall not, and shall not permit any of its subsidiaries to, directly or indirectly take any of the following actions without first consulting with the JPMP Directors (it being understood that any such actions may be taken without the approval of any JPMP Director): (i) except for any transaction or series of transactions involving only wholly- owned subsidiaries of the Corporation as of the date hereof, (A) consolidate or merge into or with any other Person, (B) enter into any other similar business combination transaction or (C) effect any transaction or series of transactions in which more than fifty percent (50%) of the shares of Stock are transferred to another Person; (ii) voluntarily or involuntarily liquidate, dissolve or wind up; (iii) purchase, acquire or obtain any capital stock or other proprietary interest, directly or indirectly, in any other entity, except for (A) any -16- transaction or series of transactions involving only wholly-owned Subsidiaries of the Corporation as of the date hereof, or (B) the purchase of all or substantially all of the capital stock or other proprietary interest of other entities for an aggregate purchase price, including without limitation, any liabilities of the acquired entities, of less than $20,000,000; (iv) purchase, acquire or obtain assets of any third party in an aggregate amount (as to the Corporation and all of its Subsidiaries), including without limitation, any liabilities of the acquired entities, in any fiscal year in excess of $20,000,000; (v) enter into or commit to enter into any joint ventures or any partnerships, establish any non-wholly-owned Subsidiaries or form any joint venture; (vi) sell, lease, transfer or otherwise dispose of any assets in an aggregate amount (as to the Corporation and all of its subsidiaries) in any fiscal year in excess of $20,000,000; (vii) create, incur, assume or suffer to exist any indebtedness for borrowed money (including any capital leases) in an aggregate amount (as to the Corporation and all of its Subsidiaries) in excess of $20,000,000 other than indebtedness incurred in connection with the Merger; or (viii) issue or sell any capital stock or other securities except for (A) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (B) the issuance of shares of Common Stock or the issuance of options to purchase Common Stock approved by the Board to employees, advisors, consultants or outside directors of the Corporation directly or pursuant to an employee benefit plan of the Corporation; or (ix) approve the annual budget of the Corporation. SECTION 10. RIGHT TO CAUSE IPO. Following the seventh anniversary of the date hereof, the Corporation shall, and the GSCP Parties shall cause the Corporation to upon the written demand of the JPMP Parties, if no IPO has occurred prior thereto or if no sale of all of the outstanding stock of the Corporation, merger or sale of substantially all of the assets of the Corporation has occurred prior thereto, take such necessary steps as to cause an IPO to occur at the Corporation's expense. SECTION 11. OVERCALL RESERVE. Subject to the terms of this Section 11, each Stockholder hereby agrees that it intends to make available (the "OVERCALL RESERVE") the amounts set forth next to each Stockholder's name on Exhibit A hereto (the "OVERCALL RESERVE AMOUNT") to purchase additional shares of Common Stock. Each Stockholder agrees, subject to the last sentence of this Section 11, that it intends to purchase shares of Common Stock pursuant to the Overcall Reserve upon the terms set forth in a written notice from the Board (an "OVERCALL NOTICE"), which shall set forth (i) the number of shares of Common Stock to be purchased by each Stockholder, (ii) the price per share of Common Stock, which shall be the fair market value of a share of Common Stock at the time of the Overcall Notice as determined by the Board, (iii) the aggregate price of the shares of Common Stock to be -17- purchased by each Stockholder, which shall not exceed such Stockholder's Overcall Reserve Amount less any amounts previously paid for shares of Common Stock purchased pursuant to the Overcall Reserve (such amounts, including amounts paid for shares of Common Stock purchased with respect to Objected Reserve Calls (as defined below), "PRIOR PURCHASE AMOUNTS") and (iv) the closing date for the purchase, which shall be at least 15 days following the date of the Overcall Notice. Any purchases of Common Stock pursuant to the Overcall Reserve will be made by wire transfer of immediately available funds and shall be made pro rata by the Stockholders based upon each Stockholder's Overcall Percentage as determined as of the date of such Overcall Notice; provided, however, that it is understood that the JPMP Parties will not purchase Common Stock with respect to any Overcall Notice unless at least one JPMP Director shall have approved issuing such Overcall Notice. In the event that no JPMP Director shall have approved the issuance of a particular Overcall Notice (an "OBJECTED RESERVE CALL"), the GSCP Parties may, but will not be obligated to, purchase any or all of the shares of Common Stock set forth in such Overcall Notice that might otherwise be purchased by the GSCP Parties and the JPMP Parties, and the amount of such purchases shall be included in the Prior Purchase Amounts of the GSCP Parties with respect to any Overcall Notices made thereafter. Each Stockholder's "OVERCALL PERCENTAGE" as of the date of any Overcall Notice shall be determined by dividing such Stockholder's Overcall Reserve Amount (less such Stockholder's Prior Purchase Amounts) by the sum of all the Stockholders' Overcall Reserve Amounts (less the sum of all the Stockholders' Prior Purchase Amounts). The Overcall Reserve shall remain effective until the earlier of (x) the second anniversary of the date hereof, (y) a Qualified IPO or (z) the consummation of an Exit Sale. Notwithstanding anything contained in this Section 11, no Stockholder shall have any obligation to purchase shares of Common Stock pursuant to the Overcall Reserve unless and until it has obtained the prior approval of its investment committee or similar body. SECTION 12. CERTAIN COVENANTS. 12.1 ACCESS TO RECORDS. From and after the date hereof and so long as any of the GSCP Parties or the JPMP Parties or their permitted successors or assigns hold any shares of Stock, the Company shall, and shall cause each of its subsidiaries to, afford each GSCP Party or the JPMP Parties or its permitted successors or assigns (as applicable) and their respective employees, counsel and other authorized representatives access, during normal business hours, upon reasonable advance notice, with due regard to its ongoing operations, to all of its books, records and properties, and to all of its officers and employees for any reasonable purpose whatsoever. 12.2 FINANCIAL REPORTS. From and after the date hereof and provided any of the GSCP Parties or the JPMP Parties or its permitted successors or assigns holds any shares of Common Stock, the Corporation agrees to furnish to each GSCP Party and each JPMP Party or their permitted assigns (as applicable) the following: (a) Within 30 days after the end of each fiscal month, (i) internal summary financial and operating statements for such month ("MONTHLY FINANCIALS"), prepared by management for the Chief Executive Officer of the Corporation and a letter or memorandum discussing the summary financial information for such period and setting forth a comparison by reasonable categories of such -18- financial information to the applicable budget and the comparable figures for the prior year and a reasonable explanation of any differences (a "MANAGEMENT LETTER") plus (ii) a statement certified by the Chief Financial Officer of the Corporation, certifying that the financial position and results of operations of the Corporation for such period as presented in the Monthly Financials are presented fairly and have been prepared in accordance with United States generally accepted accounting principles ("GAAP") (subject to normal year-end adjustments and the absence of footnotes) consistently applied. (b) Within 30 days after the end of each quarterly fiscal period, (i) unaudited balance sheets and an income statement as of the end of such period, together with statements of retained earnings and cash flow for such period ("QUARTERLY FINANCIALS") and a Management Letter (with the Management's Discussion and Analysis of Financial Condition and Results of Operation section of any Form 10-Q or Form 10-K or similar document filed with the Securities and Exchange Commission ("SEC") for such quarter being sufficient to satisfy this requirement), plus (ii) a statement certified by the Chief Financial Officer of the Corporation, certifying that the financial position and results of operations of the Corporation for such period as presented in the Quarterly Financials are presented fairly and have been prepared in accordance with GAAP (subject to normal year-end adjustments and the absence of footnotes) consistently applied. (c) Within 90 days (or such lesser period as is either (x) required under applicable laws for similar disclosure to any security holders of the Corporation or (y) in which similar disclosure is provided to other financing sources of the Corporation, including, without limitation, any banks) after the end of each fiscal year, commencing with the first fiscal year ending after the date hereof, (i) audited balance sheets and an income statement as of the end of such fiscal year, together with statements of retained earnings and cash flow for such fiscal year, all in reasonable detail and certified by a recognized national firm of independent accountants selected by the Board as presenting fairly the financial position and results of operations of the Corporation and as having been prepared in accordance with GAAP consistently applied, including their opinion thereon, (ii) the accounting firm's management letter and (iii) a Management Letter (with the Management's Discussion and Analysis of Financial Condition and Results of Operation section of any Form 10-Q or Form 10-K or similar document filed with the SEC for such quarter being sufficient to satisfy this requirement). (d) Promptly upon becoming available, (i) copies of all financial statements, reports, press releases, notices, proxy statements and other documents sent by the Corporation to its Stockholders or released to the public and copies of all regular and periodic reports, if any, filed by the Corporation with any securities regulatory agency or any securities exchange and (ii) any other financial or other information, reports or other documents available to management of the Corporation as any Stockholders shall have reasonably requested on a timely basis. (e) If for any period the Corporation shall have any Subsidiary or Subsidiaries whose accounts are consolidated with those of the Corporation, then, in respect of such period, the financial statements and information delivered -19- pursuant to the foregoing paragraphs (a), (b) and (c) of this Section 12.2 shall be the consolidated and consolidating financial statements of the Corporation and all such consolidated Subsidiaries. (f) As soon as practicable and in any event no later than 30 days following the beginning of each fiscal year, an annual budget prepared on a monthly basis for the Corporation for such fiscal year (displaying anticipated statements of income and cash flows and balance sheets), and promptly upon preparation thereof any other significant budgets prepared by the Corporation and any revisions of such annual or other budgets, and, provided that an Stockholder make request therefor, within 30 days after any monthly period in which there is a material adverse deviation from the annual budget, a statement explaining the deviation and what actions the Corporation has taken and proposes to take with respect thereto. (g) Promptly (but in any event within seven business days) after the discovery or receipt of notice of (i) any default under any material agreement to which the Corporation and/or any of its Subsidiaries is a party, (ii) any other event which could reasonably be expected to have a material adverse effect (including, without limitation, the filing of any material litigation against the Corporation or any of its Subsidiaries or the existence of any dispute with any Person which involves a reasonable likelihood of such litigation being commenced) a statement describing the foregoing in reasonable detail. 12.3 CONSULTATION. The JPMP Parties shall have the right to consult with and advise the management of the Corporation and its subsidiaries, upon reasonable notice at reasonable times from time to time, on all matters related to the operation of the Corporation and its subsidiaries. SECTION 13. FEES. Immediately following the date hereof, the Corporation shall pay Goldman, Sachs & Co. or its affiliates a transaction fee of $6,000,000. In the event that the Corporation becomes obligated to pay any management fees to any Stockholder (other than fees incurred in bona fide arm's length transaction which are to be paid to advisors of the Corporation), such fees shall be split pro rata among the Stockholders. In addition, immediately following the date hereof, the Corporation shall pay to Goldman, Sachs & Co. an advisory fee of $2,000,000. SECTION 14. LEGEND. Each Stockholder and the Corporation shall take all such action necessary (including exchanging with the Corporation certificates representing shares of Stock issued prior to the date hereof) to cause each certificate representing outstanding shares of Stock owned by a Stockholder to bear a legend containing the following words: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT." -20- "IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND VOTING SET FORTH IN THE STOCKHOLDERS' AGREEMENT DATED AS OF [ ], 2002 BY THE COMPANY AND THE PARTIES THERETO, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE COMPANY." The requirement that the above securities legend be placed upon certificates evidencing shares of Stock shall cease and terminate upon the earliest of the following events: (i) when such shares are transferred in an underwritten public offering, (ii) when such shares are transferred pursuant to Rule 144 under the Securities Act or (iii) when such shares are transferred in any other transaction if the seller delivers to the Corporation an opinion of its counsel, which counsel and opinion shall be reasonably satisfactory to the Corporation, or a "no-action" letter from the staff of the SEC, in either case to the effect that such legend is no longer necessary in order to protect the Corporation against a violation by it of the Securities Act upon any sale or other disposition of such shares without registration thereunder. The requirement that the above legend regarding this Agreement be placed upon certificates evidencing shares of Stock shall cease and terminate upon the Sale of such shares of Stock pursuant to a Public Sale. Upon the consummation of any event requiring the removal of a legend hereunder, the Corporation, upon the surrender of certificates containing such legend, shall, at its own expense, deliver to the holder of any such shares as to which the requirement for such legend shall have terminated, one or more new certificates evidencing such shares not bearing such legend. SECTION 15. REPRESENTATIONS AND WARRANTIES. (a) Each party hereto represents and warrants to the other parties hereto as follows: (i) It has full power and authority to execute, deliver and perform its obligations under this Agreement. (ii) This Agreement has been duly and validly authorized, executed and delivered by it, and constitutes a valid and binding obligation of it, enforceable against it in accordance with its terms except to the extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally. (iii) The execution, delivery and performance of this Agreement by it does not (x) violate, conflict with, or constitute a breach of or default under its organizational documents, if any, or any material agreement to which it is a party or by which it is bound or (y) violate any law, regulation, order, writ, judgment, injunction or decree applicable to it. (iv) No consent or approval of, or filing with, any governmental or regulatory body is required to be obtained or made by it in connection with the -21- transactions contemplated hereby, except for the HSR Act approval, approval of the German Federal Cartel Office and the approvals specified in Section 11. (v) It is not a party to any agreement which is inconsistent with the rights of any party hereunder or otherwise conflicts with the provisions hereof. (b) Each Stockholder represents and warrants to each other Stockholder that except as set forth on Schedule 15(b) hereto and other than this Agreement, it is not a party to any contract or agreement, written or oral, (i) with respect to the Stock of the Corporation (including, without limitation, any voting agreement, voting trust, stockholder's agreement, registration rights agreement, etc.) or (ii) otherwise with or relating to the Corporation. SECTION 16. REGULATORY MATTERS; COOPERATION. (a) In the event that a JPMP Party reasonably determines that it has a Regulatory Problem (as defined below), the Corporation agrees to take such actions as may be reasonably requested by a JPMP Party in order (A) to effectuate and facilitate any transfer by such JPMP Party of any securities of the Corporation then held by such JPMP Party to any Person designated by such JPMP Party, PROVIDED, HOWEVER, that any such transfer shall be subject to the terms of this Agreement, (B) to permit such JPMP Party (or any of its Affiliates) to exchange all or any portion of the voting securities then held by such Person on a share-for-share basis for shares of a class of non-voting securities of the Corporation, which non-voting securities shall be identical in all respects to such voting securities, except that such new securities shall be non-voting and shall be convertible into voting securities on such terms as are requested by such JPMP Party in light of regulatory considerations then prevailing and reasonably acceptable to the Corporation, and (C) to the extent reasonably practicable and as agreed to by the Corporation (which agreement will not be unreasonably withheld or delayed), to grant such JPMP Party or its designee the reasonable equivalent of any voting rights arising out of such JPMP Party's ownership of voting securities and/or provided for in this Agreement that were diminished as a result of the transfers and amendments referred to above. If, as provided above, such JPMP Party elects to transfer securities of the Corporation in order to avoid a Regulatory Problem to an Affiliate subject to limitations on its voting or total ownership interest in the Corporation, the Corporation and such Affiliate shall use commercially reasonable efforts to enter into such mutually acceptable agreements as such Affiliate may reasonably request in order to assist such Affiliate in complying with Laws (as defined below) to which it is subject. (b) In the event a JPMP Party has the right to acquire any of the Corporation's securities from the Corporation or any other Person as provided in this Agreement, and such JPMP Party reasonably determines that, as a result of such acquisition, it could have a Regulatory Problem, upon the reasonable request of such JPMP Party, the Corporation will offer to Sell to such JPMP Party non-voting securities (or, if the Corporation is not the proposed seller, will arrange for the exchange of any voting securities for non-voting securities immediately prior to or simultaneous with such Sale) on the same terms as would have existed had such JPMP -22- Party acquired the securities so offered and immediately requested their exchange for non-voting securities pursuant to subsection (a) above. (c) In the event that any Subsidiary of the Corporation offers to Issue any of its securities to a JPMP Party, then the Corporation will cause such Subsidiary to enter into an agreement with such JPMP Party containing provisions substantially similar to this Section 16. (d) The other Stockholders agree to use commercially reasonable best efforts to cooperate with the Corporation and such JPMP Party to effect the foregoing. (e) DEFINITIONS. For purposes of this Section 16: (i) "BANKING REGULATIONS" means all federal, state and foreign Laws applicable to banks, bank holding companies and their Affiliates, including without limitation, the Bank Holding Company Act and the Federal Reserve Act. (ii) "LAW," with respect to any Person, means (i) all provisions of all laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any governmental authority applicable to such Person or any of its assets or property or to which such Person or any of its assets or property is subject relating to or in connection with Banking Regulations or SBA Regulations, and (ii) all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which such Person is a party or by which it or any of its assets or properties is or may be bound or subject relating to or in connection with Banking Regulations or SBA Regulations. (iii) "REGULATORY PROBLEM" means any set of facts or circumstances in which a JPMP Party's ownership of securities issued by the Corporation (i) gives rise to a material violation of Law by such JPMP Party or any of its Affiliates, or gives rise to a reasonable belief by such JPMP Party that such a violation is likely to occur or (ii) gives rise to a limitation in Law that will impair materially the ability of such JPMP Party or any Affiliate to conduct its business or gives rise to a reasonable belief by such JPMP Party that such a limitation is likely to arise. (iv) "SBA" means the United States Small Business Administration. (v) "SBA REGULATIONS" means the Small Business Investment Act and the rules and regulations promulgated by the SBA. SECTION 17. DURATION OF AGREEMENT. The rights and obligations of a Stockholder under this Agreement shall terminate at such time as such Stockholder no longer is the beneficial owner of any shares of Stock, except for those obligations set forth in Section 11, which shall survive until terminated in accordance with Section 11. This Agreement shall terminate upon the consummation of a Qualified IPO. SECTION 18. FURTHER ASSURANCES. At any time or from time to time after the date -23- hereof, the parties agree to cooperate with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder. SECTION 19. AMENDMENT AND WAIVER. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Corporation or any Stockholder unless such modification, amendment or waiver is approved in writing by all the parties hereto. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. SECTION 20. SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. SECTION 21. ENTIRE AGREEMENT. This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. SECTION 22. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Corporation and its successors and assigns and each Stockholder and their respective successors, assigns, heirs and personal representatives, so long as they hold Stock. Except pursuant to a Sale of Stock in compliance with Section 3 and subject to Section 8.9, no Stockholder shall have the right to assign its rights and obligations under this Agreement, without the consent of each of the other Stockholders. Upon any such assignment, such assignee shall have and be able to exercise all rights of the assigning Stockholder. SECTION 23. COUNTERPARTS. This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. SECTION 24. REMEDIES. Each Stockholder shall be entitled to enforce its rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that each party may in its sole discretion apply to any -24- court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement. SECTION 25. NOTICES. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or by telecopy (with a confirmatory copy sent by a different means within three business days of such notice), nationally-recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties: (i)if to the Corporation or Berry, to: c/o Berry Plastics Corporation 101 Oakley Street Evansville, Indiana Telephone: (812) 424-2904 Telecopier: (812) 421-9604 Attention: Ira G. Boots; with a copy to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Telephone: (212) 859-8000 Telecopy: (212) 859-8586 Attention: Paul M. Reinstein, Esq. (ii)if to the GSCP Parties, to: GS Capital Partners 2000, L.P. c/o Goldman, Sachs & Co. 85 Broad Street, 10th Floor New York, New York 10004 Telephone: (212) 902-5761 Telecopier: (212) 902-3000 Attention: Joseph Gleberman Ben Adler -25- with copies to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Telephone: (212) 859-8000 Telecopy: (212) 859-8586 Attention: Paul M. Reinstein, Esq. (iii)if to the JPMP Parties, to: J.P. Morgan Partners Global Investors, L.P. c/o J.P. Morgan Partners, LLC 1221 Avenue of the Americas 39th Floor New York, NY 10020-1080 Telephone: (212) 899-3400 Telecopy: (212) 899-3401 Attention: Christopher Behrens Mathew Lori with copies to: Mayer, Brown, Rowe & Maw 1675 Broadway New York, NY 10019 Telephone: (212) 506-2500 Telecopy: (212) 262-1910 Attention: Mark S. Wojciechowski, Esq. All such notices, requests, consents and other communications shall be deemed to have been given when received. SECTION 26. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of law. Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America, in each case located in the County of New York, for any action, proceeding or investigation in any court or before any governmental authority ("LITIGATION") arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any Litigation relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to its respective address set forth in this Agreement shall be effective service of process for any Litigation brought against it in any such court. Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any Litigation arising out of this Agreement or the transactions contemplated hereby in the courts of the State of New York or the United -27- States of America, in each case located in the County of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Litigation brought in any such court has been brought in an inconvenient forum. Each of the parties irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Litigation arising out of or relating to this Agreement or the transactions contemplated hereby. SECTION 27. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. SECTION 28. CONSTRUCTION. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. SECTION 29. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained in this Agreement or made in writing by any party in connection herewith shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby regardless of any investigation made by, or on behalf of, any Stockholder. SECTIN 30. NO INCONSISTENT AGREEMENTS. Neither the Corporation nor any Stockholder shall take any action or enter into any agreement which is inconsistent with the rights of any party hereunder or otherwise conflicts with the provisions hereof. SECTION 31. CONFLICTING AGREEMENTS. Each Stockholder represents and warrants that such Stockholder has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with any provision of this Agreement, and no holder of Stock shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with any provision of this Agreement. -28- IN WITNESS WHEREOF, the parties hereto have executed this Stockholders' Agreement on the day and year first above written. BPC HOLDING CORPORATION By:_______________________________ Name: Title: GSCP PARTIES: GS CAPITAL PARTNERS 2000, L.P. By: GS Advisors 2000, L.L.C., its general partner By:_______________________________ Name: Title: GS CAPITAL PARTNERS 2000 OFFSHORE, L.P. By: GS Advisors 2000, L.L.C., its general partner By:______________________________ Name: Title: GS CAPITAL PARTNERS 2000 GMBH & CO. BETEILIGUNGS KG By: Goldman Sachs Management GPGmbH, its general partner By:_______________________________ Name: Title: BRIDGE STREET SPECIAL OPPORTUNITIES FUND 2000, L.P. By: Bridge Street Special Opportunities 2000, L.L.C., its general partner By:___________________________________ Name: Title: GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P., By: GS Employee Funds 2000 G.P., L.L.C., its general partner By:____________________________________ Name: Title: GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P By: GS Employee Funds 2000, L.L.C., its general partner By:_________________________________ Name: Title: STONE STREET FUND 2000, L.P. By: Stone Street 2000, L.L.C., its general partner By:__________________________________ Name: Title: J.P. MORGAN PARTNERS (BHCA), L.P. By: JPMP Master Fund Manager, L.P., its general partner By: JPMP Capital Corp., its general partner By:___________________________________ Name: Title: J.P. MORGAN PARTNERS GLOBAL INVESTORS, L.P. By: JPMP Global Investors, L.P., its general partner By: JPMP Capital Corp., its general partner By:___________________________________ Name: Title: J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN), L.P. By: JPMP Global Investors, L.P., a general partner By: JPMP Capital Corp., its general partner By:___________________________________ Name: Title: J.P. MORGAN PARTNERS GLOBAL INVESTORS A, L.P. By: JPMP Global Investors, L.P., a general partner By:___________________________________ Name: Title: J.P. MORGAN PARTNERS GLOBAL INVESTORS (CAYMAN) II, L.P. By: JPMP Global Investors, L.P., a general partner By: JPMP Capital Corp., its general partner By:__________________________________ Name: Title: Exhibit A
STOCKHOLDER OVERCALL RESERVE AMOUNT GS Capital Partners 2000, L.P. $37,770,211.33 GS Capital Partners 2000 Offshore, L.P. 13,724,232.39 GS Capital Partners 2000 GmbH & Co. Beteiligungs KG 1,578,697.76 GS Capital Partners 2000 Employee Fund, L.P. 11,993,345.88 Stone Street Fund 2000, L.P. 1,179,452.94 Bridge Street Special Opportunities Fund 2000, L.P. 589,726.47 Goldman Sachs Direct Investment Fund 2000, L.P. 1,965,754.91 J.P. Morgan Partners (BHCA), L.P. 25,114,475.23 J.P. Morgan Partners Global Investors, L.P. 3,822,977.38 J.P. Morgan Partners Global Investors (Cayman), L.P. 1,895,338.28 J.P. Morgan Partners Global Investors (Cayman) II, L.P. 140,681.25 J.P. Morgan Partners Global Investors A, L.P. 225,106.17 -------------- Total: $100,000,000
EX-10.3 8 y62674exv10w3.txt CREDIT AND GUARANTY AGREEMENT EXHIBIT 10.3 CREDIT AND GUARANTY AGREEMENT DATED AS OF JULY 22, 2002 AMONG BERRY PLASTICS CORPORATION, BPC HOLDING CORPORATION, CERTAIN SUBSIDIARIES OF BERRY PLASTICS CORPORATION AS GUARANTORS, VARIOUS LENDERS, GOLDMAN SACHS CREDIT PARTNERS L.P., AS ADMINISTRATIVE AGENT, JPMORGAN CHASE BANK, AS SYNDICATION AGENT, FLEET NATIONAL BANK, AS COLLATERAL AGENT, ISSUING BANK AND SWING LINE LENDER, AND THE ROYAL BANK OF SCOTLAND AND GENERAL ELECTRIC CAPITAL CORPORATION, AS CO-DOCUMENTATION AGENTS -------------------------------------------------------- $480,000,000 SENIOR SECURED CREDIT FACILITIES -------------------------------------------------------- -i- TABLE OF CONTENTS
Page SECTION 1. DEFINITIONS AND INTERPRETATION........................... 2 1.1. Definitions.............................................. 2 1.2. Accounting Terms......................................... 36 1.3. Interpretation, Etc...................................... 37 SECTION 2. LOANS AND LETTERS OF CREDIT.............................. 37 2.1. Term Loans............................................... 37 2.2. Delayed Draw Loans....................................... 38 2.3. Revolving Loans.......................................... 39 2.4. Issuance of Letters of Credit and Purchase of Participations Therein.................................. 40 2.5. Swing Line Loans......................................... 45 2.6. Pro Rata Shares; Availability of Funds................... 47 2.7. Use of Proceeds.......................................... 48 2.8. Evidence of Debt; Register; Lenders' Books and Records; Notes.................................................... 48 2.9. Interest on Loans........................................ 49 2.10. Conversion/Continuation.................................. 51 2.11. Default Interest......................................... 52 2.12. Fees..................................................... 52 2.13. Scheduled Payments/Commitment Reductions................. 53 2.14. Voluntary Prepayments/Commitment Reductions.............. 56 2.15. Mandatory Prepayments/Commitment Reductions.............. 57 2.16. Application of Prepayments/Reductions.................... 59 2.17. General Provisions Regarding Payments.................... 61 2.18. Ratable Sharing.......................................... 62 2.19. Making or Maintaining Eurodollar Rate Loans.............. 63 2.20. Increased Costs; Capital Adequacy........................ 65 2.21. Taxes; Withholding, Etc.................................. 67 2.22. Obligation to Mitigate................................... 69 2.23. Defaulting Lenders....................................... 70 2.24. Removal or Replacement of a Lender....................... 71 SECTION 3. CONDITIONS PRECEDENT..................................... 72 3.1. Closing Date............................................. 72 3.2. Conditions to Each Credit Extension...................... 78 SECTION 4. REPRESENTATIONS AND WARRANTIES........................... 80 4.1. Organization; Requisite Power and Authority; Qualification............................................ 80 4.2. Capital Stock and Ownership.............................. 80 4.3. Due Authorization........................................ 80 4.4. Guarantor Subsidiaries................................... 81 4.5. No Conflict.............................................. 81
-i- 4.6. Governmental Consents.................................... 81 4.7. Binding Obligation....................................... 81 4.8. Historical Financial Statements.......................... 82 4.9. Projections.............................................. 82 4.10. No Material Adverse Change............................... 82 4.11. Adverse Proceedings, Etc................................. 82 4.12. Payment of Taxes......................................... 82 4.13. Properties............................................... 83 4.14. Environmental Matters.................................... 83 4.15. No Defaults.............................................. 84 4.16. Governmental Regulation.................................. 84 4.17. Margin Stock............................................. 84 4.18. Employee Matters......................................... 84 4.19. Employee Benefit Plans................................... 85 4.20. Solvency................................................. 85 4.21. Related Agreements....................................... 85 4.22. Compliance with Statutes, Etc............................ 86 4.23. Disclosure............................................... 86 SECTION 5. AFFIRMATIVE COVENANTS.................................... 86 5.1. Financial Statements and Other Reports................... 86 5.2. Existence................................................ 90 5.3. Payment of Taxes and Claims.............................. 90 5.4. Maintenance of Properties................................ 90 5.5. Insurance................................................ 90 5.6. Inspections.............................................. 91 5.7. Lenders Meetings......................................... 91 5.8. Compliance with Laws..................................... 91 5.9. Environmental............................................ 92 5.10. Subsidiaries............................................. 93 5.11. Additional Material Real Estate Assets................... 93 5.12. Interest Rate Protection................................. 94 5.13. Further Assurances....................................... 94 5.14. Certain Post-Closing Matters............................. 94 SECTION 6. NEGATIVE COVENANTS....................................... 95 6.1. Indebtedness............................................. 95 6.2. Liens.................................................... 98 6.3. Equitable Lien........................................... 100 6.4. No Further Negative Pledges.............................. 100 6.5. Restricted Junior Payments............................... 100 6.6. Restrictions on Subsidiary Distributions................. 101 6.7. Investments.............................................. 102 6.8. Financial Covenants...................................... 103 6.9. Fundamental Changes; Disposition of Assets; Acquisitions. 107
-ii- 6.10. Disposal of Subsidiary Interests......................... 108 6.11. Sales and Lease-Backs.................................... 109 6.12. Transactions with Shareholders and Affiliates............ 109 6.13. Conduct of Business...................................... 109 6.14. Permitted Activities of Holdings......................... 110 6.15. Amendments or Waivers of Certain Related Agreements...... 110 6.16. Amendments or Waivers of or with respect to Subordinated Indebtedness............................................. 110 6.17. Fiscal Year.............................................. 111 6.18. Derivative Transactions.................................. 111 SECTION 7. GUARANTY................................................. 111 7.1. Guaranty of the Obligations.............................. 111 7.2. Contribution by Guarantors............................... 111 7.3. Payment by Guarantors.................................... 112 7.4. Liability of Guarantors Absolute......................... 112 7.5. Waivers by Guarantors.................................... 115 7.6. Guarantors' Rights of Subrogation, Contribution, Etc..... 115 7.7. Subordination of Other Obligations....................... 116 7.8. Continuing Guaranty...................................... 116 7.9. Authority of Guarantors or Company....................... 116 7.10. Financial Condition of Company........................... 116 7.11. Bankruptcy, Etc.......................................... 117 7.12. Discharge of Guaranty Upon Sale of Guarantor............. 118 SECTION 8. EVENTS OF DEFAULT........................................ 118 8.1. Events of Default........................................ 118 SECTION 9. AGENTS................................................... 121 9.1. Appointment of Agents.................................... 121 9.2. Powers and Duties........................................ 122 9.3. General Immunity......................................... 122 9.4. Agents Entitled to Act as Lender......................... 123 9.5. Lenders' Representations, Warranties and Acknowledgment.. 123 9.6. Right to Indemnity....................................... 124 9.7. Sub-Agents............................................... 124 9.8. Successor Administrative Agent, Collateral Agent and Swing Line Lender........................................ 125 9.9. Collateral Documents and Guaranty........................ 126 SECTION 10. MISCELLANEOUS............................................ 126 10.1. Notices.................................................. 126 10.2. Expenses................................................. 127 10.3. Indemnity................................................ 127 10.4. Set-Off.................................................. 128
-iii- 10.5. Amendments and Waivers.................................. 129 10.6. Successors and Assigns; Participations.................. 131 10.7. Independence of Covenants............................... 134 10.8. Survival of Representations, Warranties and Agreements.. 134 10.9. No Waiver; Remedies Cumulative.......................... 134 10.10. Marshalling; Payments Set Aside......................... 135 10.11. Severability............................................ 135 10.12. Obligations Several; Independent Nature of Lenders' Rights.................................................. 135 10.13. Headings................................................ 135 10.14. APPLICABLE LAW.......................................... 135 10.15. CONSENT TO JURISDICTION................................. 136 10.16. WAIVER OF JURY TRIAL.................................... 136 10.17. Confidentiality......................................... 137 10.18. Usury Savings Clause.................................... 137 10.19. Counterparts............................................ 138 10.20. Effectiveness........................................... 138
-iv-
APPENDICES: A-1 Term Loan Commitments A-2 Delayed Draw Commitments A-3 Revolving Commitments B Notice Addresses SCHEDULES: 1.1 Redemption of Certain Existing Notes 3.1(l) Closing Date Mortgaged Properties 4.1 Jurisdictions of Organization and Qualification 4.2 Capital Stock and Ownership 4.4 Guarantors 4.13 Real Estate Assets 4.14 Environmental Matters 6.1(g) Surviving Indebtedness 6.2(l) Certain Liens 6.7 Existing Investments 6.8(d)(iii) Historical Quarters EXHIBITS: A-1 Funding Notice A-2 Conversion/Continuation Notice A-3 Issuance Notice B-1 Term Loan Note B-2 Delayed Draw Loan Note B-3 Revolving Loan Note B-4 Swing Line Note C Compliance Certificate D Opinions of Counsel E Assignment Agreement F Certificate Re Non-bank Status G-1 Closing Date Certificate G-2 Solvency Certificate H Counterpart Agreement I Pledge and Security Agreement J Mortgage K Landlord's Consent, Estoppel Certificate and Amendment L Intercompany Subordination Agreement M Joinder Agreement
-v- CREDIT AND GUARANTY AGREEMENT This CREDIT AND GUARANTY AGREEMENT, dated as of July 22, 2002, is entered into by and among BERRY PLASTICS CORPORATION, a Delaware corporation ("COMPANY"), BPC HOLDING CORPORATION, a Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Administrative Agent, (together with its permitted successors in such capacity, "ADMINISTRATIVE AGENT"), JPMORGAN CHASE BANK ("JPMCB"), as Syndication Agent, FLEET NATIONAL BANK, as Collateral Agent (together with its permitted successors in such capacity, "COLLATERAL AGENT"), Issuing Bank (together with its permitted successors in such capacity, "ISSUING BANK") and Swing Line Lender (together with its permitted successors in such capacity, "SWING LINE LENDER") and THE ROYAL BANK OF SCOTLAND and GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agents (together with their permitted successors in such capacity, "CO-DOCUMENTATION AGENTS"). RECITALS: WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof; WHEREAS, Lenders have agreed to extend certain credit facilities to Company, in an aggregate amount not to exceed $480,000,000, consisting of up to $330,000,000 aggregate principal amount of Term Loans, up to $50,000,000 aggregate principal amount of Delayed Draw Commitments and up to $100,000,000 aggregate principal amount of Revolving Commitments, the proceeds of which will be used only as provided in this Agreement; WHEREAS, Company has agreed to secure all of its Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of its assets, including a pledge of all of the Capital Stock of each of its Domestic Subsidiaries (except for any stock held by, or pledged for the benefit of third parties), 65% of all the Capital Stock of each of its Foreign Subsidiaries that is directly owned by Company or any Domestic Subsidiary and all indebtedness for borrowed money owed to Company by any Subsidiary; and WHEREAS, Guarantors have agreed to guarantee the Obligations of Company hereunder and to secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on substantially all of their respective assets, including a pledge of all of the Capital Stock of each of their respective Domestic Subsidiaries (except for any stock held by, or pledged for the benefit of third parties), and 65% of all the Capital Stock of each of their respective Foreign Subsidiaries that is directly owned by Company or any Domestic Subsidiary, and all indebtedness for borrowed money owed to any Guarantor by Company or any other Guarantors. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings: "2004 NOTES" means Company's 12-1/4% Senior Subordinated Notes due 2004 and Company's 12-1/4% Series B Senior Subordinated Notes due 2004. "2006 NOTES" means Holdings' 12-1/2% Senior Secured Notes due 2006. "ADDITIONAL ISSUING BANK" as defined in Section 2.4(i). "ADDITIONAL NET SALES" means, for any Fiscal Year, the sum of (a) for each Person directly or indirectly acquired by the Company in a Permitted Acquisition during such Fiscal Year, the product of (i) 7.5% multiplied by (ii) the historical net sales of such Person during its most recent four full Fiscal Quarters immediately preceding the Permitted Acquisition for which quarterly financial statements have been delivered to the Lenders pursuant to Section 5.1(b), multiplied by (iii) a fraction, the denominator of which is 365 and the numerator of which is the number of days from (but excluding) the date of such Permitted Acquisition to (and including) the last day of such Fiscal Year, and (b) for each Person directly or indirectly acquired by the Company in a Permitted Acquisition during any prior Fiscal Year, the product of (i) 7.5% multiplied by (ii) the historical net sales of such Person during its most recent four full Fiscal Quarters immediately preceding the Permitted Acquisition for which quarterly financial statements have been delivered to the Lenders pursuant to Section 5.1(b). "ADDITIONAL SPONSOR EQUITY" means Cash proceeds received by Holdings from the issuance of its Capital Stock to, or other capital contributions by one or more Sponsors for their own account on any day after the Closing Date, in an aggregate amount not to exceed $100,000,000 during the term of this Agreement. "ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the page of the Dow Jones Telerate Service which displays an average British Bankers Association Interest Settlement Rate (such page currently being page number 3740 or 3750, as applicable) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such -2- page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by JPMCB for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan of Administrative Agent, in its capacity as a Lender, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one MINUS (b) the Applicable Reserve Requirement. "ADMINISTRATIVE AGENT" as defined in the preamble hereto. "ADVERSE PROCEEDING" means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Holdings or any of its Subsidiaries) at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Holdings or any of its Subsidiaries, threatened against or affecting Holdings or any of its Subsidiaries or any property of Holdings or any of its Subsidiaries. "AFFECTED LENDER" as defined in Section 2.19(b). "AFFECTED LOANS" as defined in Section 2.19(b). "AFFILIATE" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person, PROVIDED no Person shall be an Affiliate of Holdings, Company or any of its Subsidiaries solely because such Person controls, or is under common control with, one or more of the entities constituting the Sponsors. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "AGENT" means each of Syndication Agent, Administrative Agent, Collateral Agent and Co-Documentation Agents and, solely for the purposes of Sections 9.3, 9.6, 10.2 and 10.3, the Issuing Bank and Swing Line Lender. -3- "AGGREGATE AMOUNTS DUE" as defined in Section 2.18. "AGGREGATE PAYMENTS" as defined in Section 7.2. "AGREEMENT" means this Credit and Guaranty Agreement, dated as of July 22, 2002, as it may be amended, supplemented or otherwise modified from time to time. "APPLICABLE DELAYED DRAW COMMITMENT FEE PERCENTAGE" means 0.75% per annum. "APPLICABLE MARGIN" and "APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE" mean (i) with respect to Delayed Draw Loans and Revolving Loans that are Eurodollar Rate Loans and the Applicable Revolving Commitment Fee Percentage, (a) from the Closing Date until the date of delivery of the Compliance Certificate and the financial statements for the Fiscal Quarter ending on or near March 30, 2003, a percentage, per annum, determined by reference to the following table as if the Leverage Ratio then in effect were in excess of 4.5:1.00; and (b) thereafter, a percentage, per annum, determined by reference to the Leverage Ratio in effect from time to time as set forth below:
LEVERAGE APPLICABLE MARGIN APPLICABLE REVOLVING RATIO FOR DELAYED DRAW LOANS COMMITMENT AND REVOLVING LOANS FEE PERCENTAGE > or Equal to 4.50 : 1.00 2.75% 0.50 % <4.50 : 1.00 2.50% 0.50 % > or Equal to 4.00 : 1.00 <4.00 : 1.00 2.25% 0.375 % > or Equal to 3.50 : 1.00 <3.50 : 1.00 2.00% 0.375 %
and (ii) with respect to Swing Line Loans, Delayed Draw Loans and Revolving Loans that are Base Rate Loans, an amount equal to (a) the Applicable Margin for Eurodollar Rate Loans as set forth in clause (i)(a) or (i)(b) above, as applicable, minus (b) 1.00% per annum. No change in the Applicable Margin or the Applicable Revolving Commitment Fee Percentage shall be effective until three Business Days after the date on which Administrative Agent shall have received the applicable financial statements and a Compliance Certificate pursuant to Section 5.1(d) calculating the Leverage Ratio. At any time Company has not submitted to Administrative Agent the applicable information as and when required under Section 5.1(d), the Applicable Margin and the Applicable Revolving Commitment Fee Percentage shall be determined as if the Leverage Ratio were -4- in excess of 4.5:1.00. Within one Business Day of receipt of the applicable information under Section 5.1(d), Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Margin and the Applicable Revolving Commitment Fee Percentage in effect from such date. "APPLICABLE RESERVE REQUIREMENT" means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of the Board of Governors of the Federal Reserve System) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities consisting of deposits by reference to which the applicable Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets consisting of Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement. "ASSET SALE" means a sale, lease or sub-lease (as lessor or sublessor), assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Holdings, Company or any Guarantor Subsidiary), in one transaction or a series of transactions, of all or any part of Holdings' or any of its Subsidiaries' businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the Capital Stock of any of Holdings' Subsidiaries, other than (i) inventory sold or leased in the ordinary course of business of Company and its Subsidiaries (excluding any such sales by operations or divisions discontinued or to be discontinued), (ii) Cash Equivalents sold for Cash or Cash Equivalents in the ordinary course of business of Company and its Subsidiaries, (iii) the sale or discount without recourse of accounts receivable only in connection with the compromise thereof or the assignment of past-due accounts receivable for collection, (iv) sale and lease-back transactions permitted under Section 6.11, and (v) sales of other assets for aggregate consideration of less than $2,000,000 with respect to any transaction or series of related transactions, PROVIDED, all sales pursuant to clause (v) during any Fiscal Year do not exceed $5,000,000 in the aggregate. "ASSIGNMENT AGREEMENT" means an Assignment and Assumption Agreement in the form of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent. -5- "AUTHORIZED OFFICER" means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president or one of its vice presidents (or the equivalent thereof), and such Person's chief financial officer, controller or treasurer. "BANKRUPTCY CODE" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute. "BASE RATE" means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "BASE RATE LOAN" means a Loan bearing interest at a rate determined by reference to the Base Rate. "BENEFICIARY" means each Agent, Issuing Bank, Lender and Lender Counterparty. "BUDGETED AMOUNT" as defined in Section 6.8(c). "BUSINESS DAY" means any day excluding (i) Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) solely with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, also any day which is not a day for trading by and between banks in Dollar deposits in the London interbank market. "CAPITAL LEASE" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "CAPITAL STOCK" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing. "CASH" means money, currency or a credit balance in any demand or Deposit Account. "CASH EQUIVALENTS" means, as at any date of determination, (i) marketable securities (A) issued or directly and unconditionally guaranteed as to interest and principal by the United States of America or (B) issued by any agency of the United States of America the obligations of -6- which are backed by the full faith and credit of the United States of America, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or the District of Columbia or any political subdivision or instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances maturing within one year after such date and issued or accepted by, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that has combined capital and surplus and undivided profits of not less than $500,000,000; (v) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (i) or (ii) above and entered into with any commercial bank satisfying the requirements of clause (iv) above; (vi) solely in respect of the ordinary course cash management activities of the Foreign Subsidiaries, equivalents of the investments described in clauses (i) and (ii) above to the extent guaranteed by the United Kingdom or the European Union and equivalents of the investments described in clause (iv) above issued, accepted or offered by (a) the local office of any commercial bank meeting the requirements of clause (iv) above in the jurisdiction of organization of the applicable Foreign Subsidiary or (b) the local office of any commercial bank organized under the laws of the jurisdiction of organization of the applicable Foreign Subsidiary which commercial bank (1) has combined capital and surplus and undivided profits of not less than $1,000,000,000 and (2) a long-term rating for Dollar-denominated obligations of at least A-1 from S&P or the equivalent rating from Moody's; and (vii) shares of any money market mutual fund that (a) complies with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in the form of Exhibit F. "CHANGE OF CONTROL" means, at any time, (i) at least 51% on a fully-diluted basis of the outstanding voting power of the Voting Stock of Holdings shall cease to be beneficially owned and controlled by one or more of the Sponsors; (ii) any person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than one or more of the Sponsors (A) shall beneficially own a percentage of the economic interests in the Voting Stock of Holdings on a fully-diluted basis that is greater than the percentage of the economic interests in the Voting Stock of Holdings on a fully-diluted basis then held by the Sponsors, taken together, or (B) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Holdings; (iii) Holdings shall cease to beneficially own -7- and control 100% on a fully-diluted basis of the outstanding economic and voting interest in the Capital Stock of Company; (iv) the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of Holdings cease to be occupied by Persons who either (a) were members of the board of directors of the Holdings on the Closing Date or (b) were either (x) nominated for election by the board of directors of Holdings, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors or (y) designated or appointed by Sponsor; or (v) any "change of control" or similar event under the Senior Subordinated Note Documents shall occur. "CLASS" means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having Delayed Draw Loan Exposure, (b) Lenders having Term Loan Exposure and (c) Lenders having Revolving Exposure (including Swing Line Lender), (ii) with respect to Loans, each of the following classes of Loans: (a) Delayed Draw Loans, (b) Term Loan, and (c) Revolving Loans and (iii) with respect to Commitments, each of the following classes of Commitments: (a) Delayed Draw Commitments, (b) Term Loan Commitments and (c) Revolving Commitments. "CLOSING DATE" means the date on or before August 31, 2002 on which the Term Loans are made. "CLOSING DATE CERTIFICATE" means a Closing Date Certificate substantially in the form of Exhibit G-1. "CLOSING DATE MORTGAGED PROPERTY" as defined in Section 3.1(l). "CO-DOCUMENTATION AGENTS" as defined in the preamble hereto. "COLLATERAL" means, collectively, all of the real, personal and mixed property (including Capital Stock) whether now owned or hereafter acquired in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations. "COLLATERAL AGENT" as defined in the preamble hereto. "COLLATERAL DOCUMENTS" means the Pledge and Security Agreement, the Mortgages, the Landlord's Consent, Estoppel Certificate and Amendments, if any, and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Lenders, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations. "COLLATERAL QUESTIONNAIRE" means a certificate in form satisfactory to the Collateral Agent that provides information with respect to the personal or mixed property of each Credit Party. -8- "COMPANY" as defined in the preamble hereto. "COMMITMENT" means any Revolving Commitment, Term Loan Commitment or Delayed Draw Commitment. "COMMITMENT PERIOD" means the Delayed Draw Commitment Period or the Revolving Commitment Period. "COMMITMENT TERMINATION DATE" means the Delayed Draw Commitment Termination Date or the Revolving Commitment Termination Date. "COMPLIANCE CERTIFICATE" means a Compliance Certificate substantially in the form of Exhibit C. "CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount determined for Holdings and its Subsidiaries on a consolidated basis equal to the sum, without duplication, of the amounts for such period of (i) Consolidated Net Income, PLUS (ii) to the extent reducing Consolidated Net Income, (a) Consolidated Interest Expense, (b) provisions for taxes based on income, (c) total depreciation expense, (d) total amortization expense, (e) other non-Cash items (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period) and (f) Transaction Costs payable in Cash by Holdings and Company with respect to such period, MINUS (iii) non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period). "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the aggregate of all expenditures of Holdings and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are included in "purchase of property and equipment" or similar items reflected in the consolidated statement of cash flows of Holdings and its Subsidiaries, other than any amount of such expenditures that constitute Permitted Acquisition Expenses or the permitted application of Net Insurance/Condemnation Proceeds in accordance with Section 2.15(b). "CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated Interest Expense for such period, excluding any amount not payable in Cash. "CONSOLIDATED CURRENT ASSETS" means, as at any date of determination, the total assets of Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents. "CONSOLIDATED CURRENT LIABILITIES" means, as at any date of determination, the total liabilities of Holdings and its Subsidiaries on a -9- consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt. "CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount (if positive) equal to: (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) the Consolidated Working Capital Adjustment, MINUS (ii) the sum, without duplication, of the amounts for such period of (a) voluntary and scheduled repayments of Consolidated Total Debt (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments), (b)(x) Consolidated Capital Expenditures and (y) Permitted Acquisition Expenses (excluding any Permitted Acquisition Expenses paid in respect of Cash or Cash Equivalents of an acquired Person), in each of cases (x) and (y) except to the extent financed with the proceeds of Additional Sponsor Equity, other financings or Asset Sales, (c) Consolidated Cash Interest Expense, (d) provisions for current taxes based on income of Holdings and its Subsidiaries and payable in Cash with respect to such period and (e) Transaction Costs payable in Cash by Holdings and Company with respect to such period. "CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Holdings and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Holdings and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in Section 2.12(e) payable on or before the Closing Date. "CONSOLIDATED NET INCOME" means, for any period, (i) the net income (or loss) of Holdings and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, MINUS (ii) (a) the income (or loss) of any Person (other than a Subsidiary of Holdings) in which any other Person (other than Holdings or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Holdings or any of its Subsidiaries by such Person during such period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Holdings or is merged into or consolidated with Holdings or any of its Subsidiaries or that Person's assets are acquired by Holdings or any of its Subsidiaries, (c) the income of any Subsidiary of Holdings to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent not included in clauses (a) through (d) above) any non-Cash net extraordinary gains or non-Cash net extraordinary losses. -10- "CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Holdings and its Subsidiaries determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED WORKING CAPITAL" means, as at any date of determination, the excess of Consolidated Current Assets over Consolidated Current Liabilities. "CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any period, the amount (which may be a negative number) of the following, without duplication, (i) Consolidated Working Capital as of the beginning of such period, MINUS (ii) Consolidated Working Capital as of the end of such period, excluding from such calculation the Net Current Assets of any Subsidiary acquired in a Permitted Acquisition during such period, determined at the time of such acquisition. "CONTRACTUAL OBLIGATION" means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, written undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "CONTRIBUTING GUARANTORS" as defined in Section 7.2. "CONVERSION/CONTINUATION DATE" means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice. "CONVERSION/CONTINUATION NOTICE" means a Conversion/Continuation Notice substantially in the form of Exhibit A-2. "COUNTERPART AGREEMENT" means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Credit Party pursuant to Section 5.10. "CREDIT DATE" means the date of a Credit Extension. "CREDIT DOCUMENT" means any of this Agreement, the Notes, if any, the Collateral Documents, any documents or certificates executed by Company in favor of Issuing Bank relating to Letters of Credit, and all other documents, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, Issuing Bank or any Lender in connection herewith. "CREDIT EXTENSION" means the making of a Loan or the issuing of a Letter of Credit. "CREDIT PARTY" means Company, the Guarantors and each other Person (other than any Agent, Issuing Bank or any Lender or any other representative thereof) from time to time party to a Credit Document. -11- "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Holdings' and its Subsidiaries' operations and not for speculative purposes. "DEFAULT" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. "DEFAULT EXCESS" means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender's Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender. "DEFAULT PERIOD" means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.14 or Section 2.15 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to Company and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on which Company, Administrative Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing. "DEFAULTING LENDER" as defined in Section 2.23. "DEFAULTED LOAN" as defined in Section 2.23. "DELAYED DRAW COMMITMENT" means the commitment of a Lender to make or otherwise fund a Delayed Draw Loan and "DELAYED DRAW COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Delayed Draw Commitment, if any, is set forth in Appendix A-1 or in the applicable Assignment Agreement subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Delayed Draw Commitments as of the Closing Date is $50,000,000. "DELAYED DRAW COMMITMENT PERIOD" means the period from the Closing Date to but excluding the Delayed Draw Commitment Termination Date. "DELAYED DRAW COMMITMENT TERMINATION DATE" means the earliest to occur of (i) August 31, 2002, if the Term Loans are not made on or before -12- that date, (ii) the date that is 18 calendar months after the Closing Date, (iii) the date the Delayed Draw Commitments are permanently reduced to zero pursuant to Section 2.14(b) or 2.15 and (iv) the date of termination of the Delayed Draw Commitments pursuant to Section 8.1. "DELAYED DRAW INSTALLMENT" as defined in Section 2.13(b). "DELAYED DRAW INSTALLMENT DATE" as defined in Section 2.13(b). "DELAYED DRAW LOAN" means a Loan made by a Lender to Company pursuant to Section 2.2. "DELAYED DRAW LOAN EXPOSURE" means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Delayed Draw Loans of such Lender; PROVIDED, at any time prior to the making of the Delayed Draw Loans, the Delayed Draw Loan Exposure of any Lender shall be equal to such Lender's Delayed Draw Commitment. "DELAYED DRAW LOAN MATURITY DATE" means the earlier of (i) the sixth anniversary of the Closing Date, and (ii) the date that all Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise. "DELAYED DRAW LOAN NOTE" means a promissory note in the form of Exhibit B-2, as it may be amended, supplemented or otherwise modified from time to time. "DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "DOLLARS" and the sign "$" mean the lawful money of the United States of America. "DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia, other than any such Subsidiary that has no material assets other than Capital Stock of or other Investments in one or more Foreign Subsidiaries. "ELIGIBLE ASSIGNEE" means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an "accredited investor" (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; PROVIDED, no Affiliate of Holdings shall be an Eligible Assignee. -13- "EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" (as defined in Section 3(3) of ERISA) which is or was sponsored, maintained or contributed to by, or required to be contributed by, Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates. "EMPLOYEE LEVERAGE PROGRAM" means the Holdings 2002 Stock Option Plan, the Holdings Key Employee Equity Investment Plan and the agreements relating to the investments by members of management of Holdings and its subsidiaries in GS Berry Acquisition Corporation, including the contribution and subscription agreements, management stockholders agreement and promissory notes. "ENVIRONMENTAL CLAIM" means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any governmental authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment. "ENVIRONMENTAL LAWS" means any and all current or future foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health in any manner applicable to Holdings or any of its Subsidiaries or any Facility. "EQUITY FINANCING" means the issuance for Cash by Holdings to Sponsors and/or other investors acceptable to the Administrative Agent and the Syndication Agent of not less than $245,000,000 of common equity in connection with the Merger. "EQUITY PROCEEDS" as defined in Section 6.8(d). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto. "ERISA AFFILIATE" means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is -14- a member. Any former ERISA Affiliate of Holdings or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Holdings or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Holdings or such Subsidiary and with respect to liabilities arising after such period for which Holdings or such Subsidiary could be liable under the Internal Revenue Code or ERISA. "ERISA EVENT" means (i) a "reportable event" within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Holdings, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which could reasonably be likely to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore, or the receipt by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could reasonably be expected to give rise to the imposition on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the -15- failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan. "EURODOLLAR RATE LOAN" means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate. "EVENT OF DEFAULT" means each of the conditions or events set forth in Section 8.1. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "EXCLUDED FOREIGN SUBSIDIARIES" means one or more Foreign Subsidiaries which, together with all their Subsidiaries, have either assets, combined revenues from operations or combined income from continuing operations that exceeded 5% of the combined assets, combined revenues from operations or combined income from continuing operations of Holdings and its Subsidiaries, taken as a whole, for any Fiscal Year. "EXCLUDED TAX" means, with respect to Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any Obligation, (i) any Tax imposed as a result of a connection or former connection between any Lender and the jurisdiction imposing such tax, including without limitation, any connection arising from such Lender being or having been a citizen, domiciliary, or resident of such jurisdiction, being organized in such jurisdiction, or having had a permanent establishment or fixed place of business therein, but excluding any such connection arising from the activities of such Lender pursuant to or in respect of this Agreement or any other Credit Document, including executing, delivering or performing its obligations or receiving a payment under or enforcing this agreement or any other loan document, and (ii) in the case of a U.S. Lender or Non-U.S. Lender (other than a Replacement Lender that is an assignee pursuant to a request by Company under Section 2.24), any withholding tax that (a) is imposed on amounts payable to any such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this Agreement or designates a new lending office, or (b) is attributable to such U.S. Lender or Non-U.S. Lender's failure to comply with Section 2.21(c), except to the extent that such U.S. Lender or Non-U.S. Lender (or its assignor, if any) was entitled, at the time of assignment or designation of a new lending office, as the case may be, to receive additional amounts from Company with respect to such withholding tax pursuant to Section 2.21(c). "FACILITY" means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Holdings or any of its Subsidiaries or any of their respective predecessors or Affiliates. -16- "FAIR SHARE" as defined in Section 7.2. "FAIR SHARE CONTRIBUTION AMOUNT" as defined in Section 7.2. "FAIR SHARE SHORTFALL" as defined in Section 7.2. "FEDERAL FUNDS EFFECTIVE RATE" means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED, (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Administrative Agent, in its capacity as a Lender, on such day on such transactions as determined by Administrative Agent. "FINANCIAL HEDGE AGREEMENT" means an Interest Rate Agreement or a Currency Agreement entered into with a Lender Counterparty in order to satisfy the requirements of this Agreement or otherwise in the ordinary course of business of Company or any of its Subsidiaries. "FINANCIAL OFFICER CERTIFICATION" means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer of Holdings that such financial statements fairly present, in all material respects, the financial condition of Holdings and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments. "FINANCIAL PLAN" as defined in Section 5.1(i). "FIRST PRIORITY" means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than Permitted Liens described in clauses (a) through (n) of Section 6.2. "FISCAL QUARTER" means a fiscal quarter of any Fiscal Year. "FISCAL YEAR" means the fiscal year of Company, which shall be a period of 52 or 53 weeks, as applicable, ending on the Saturday nearest the end of each calendar year. "FLOOD HAZARD PROPERTY" means any Real Estate Asset subject to a mortgage in favor of Collateral Agent, for the benefit of Lenders, and -17- located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards. "FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic Subsidiary. "FUNDING DEFAULT" as defined in Section 2.23. "FUNDING GUARANTORS" as defined in Section 7.2. "FUNDING NOTICE" means a notice substantially in the form of Exhibit A-1. "GAAP" means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles. "GOVERNMENTAL ACTS" means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority. "GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government. "GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority. "GRANTOR" as defined in the Pledge and Security Agreement. "GSCP" as defined in the preamble hereto. "GUARANTEED OBLIGATIONS" as defined in Section 7.1. "GUARANTOR" means each of Holdings and each Domestic Subsidiary of Holdings (other than Company) from time to time. "GUARANTOR SUBSIDIARY" means each Guarantor other than Holdings. "GUARANTY" means the guaranty of each Guarantor set forth in Section 7. "HAZARDOUS MATERIALS" means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental -18- Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment. "HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. "HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. "HISTORICAL FINANCIAL STATEMENTS" means as of the Closing Date, (i) the audited financial statements of Holdings and its Subsidiaries, for the immediately preceding three Fiscal Years, consisting of balance sheets and the related consolidated statements of income, stockholders' equity and cash flows for such Fiscal Years, and (ii) the unaudited financial statements of Holdings and its Subsidiaries as at the most recently ended Fiscal Quarter, consisting of a balance sheet and the related consolidated statements of income, stockholders' equity and cash flows for the three-, six- or nine-month period, as applicable, ending on such date, and, in the case of clauses (i) and (ii), certified by the Chief Financial Officer of Holdings that they fairly present, in all material respects, the financial condition of Holdings and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments. "HISTORICAL QUARTER" as defined in Section 6.8(d)(iii). "HOLDINGS" as defined in the preamble hereto. "INCREASED-COST LENDERS" as defined in Section 2.24. "INDEBTEDNESS", as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA or any purchase price adjustment under Section 3.7 of the Merger Agreement), which purchase price is (a) due more than six months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness secured by any Lien on any property or -19- asset owned or held by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business of Company and its Subsidiaries), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; and (ix) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) net obligations of such Person to a counterparty in respect of any exchange traded or over the counter derivative transaction, including, without limitation, Financial Hedge Agreements, whether entered into for hedging or speculative purposes; PROVIDED, in no event shall obligations under any Financial Hedge Agreements be deemed "Indebtedness" for any purpose under Section 6.8. "INDEMNIFIED LIABILITIES" means, collectively, any and all liabilities, obligations, losses, damages, penalties, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including Lenders' agreement to make Credit Extensions or the use or intended use of the proceeds thereof, any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or the Issuing Bank's issuance of any Letter of Credit or its failure to honor a drawing under any such Letter of Credit as a result of any Governmental Act); (ii) the -20- statements contained in the commitment letter delivered by any Lender to Sponsors with respect to the transactions contemplated by this Agreement; or (iii) any (a) Hazardous Materials Activity which can reasonably be expected to result in non-compliance with, or liability under, Environmental Laws, or (b) Environmental Claim relating to or arising from any past or present activity, operation, land ownership, or practice of Holdings or any of its Subsidiaries. "INDEMNITEE" as defined in Section 10.3. "INTERCOMPANY SUBORDINATION AGREEMENT" means an agreement in the form of Exhibit L. "INTEREST COVERAGE RATIO" means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period then ended, to (ii) Consolidated Cash Interest Expense for such four-Fiscal Quarter period. "INTEREST PAYMENT DATE" means with respect to (i) any Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; PROVIDED, in the case of each Interest Period of longer than three months "Interest Payment Date" shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period. "INTEREST PERIOD" means, in connection with a Eurodollar Rate Loan, an interest period of one-, two-, three- or six-months, as selected by Company in the applicable Funding Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; PROVIDED, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to any portion of any Term Loans shall extend beyond the Term Loan Maturity Date; (d) no Interest Period with respect to any portion of any Delayed Draw Loan shall extend beyond the Delayed Draw Loan Maturity Date; and (e) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date. "INTEREST RATE AGREEMENT" means any interest rate swap agreement (including any fixed rate or floating rate swap agreement), interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for -21- the purpose of hedging the interest rate exposure associated with Holdings' and its Subsidiaries' operations and not for speculative purposes. "INTEREST RATE DETERMINATION DATE" means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute. "INVESTMENT" means any (i) purchase or other acquisition (including pursuant to any merger) of the Capital Stock or other Securities of any Person, or any beneficial interest therein or (ii) loan, advance, capital contribution to, or any other investment in, any Person (other than the purchase of current accounts receivable arising in the ordinary course of business of Company and its Subsidiaries). The amount of any Investment shall be equal to the sum of (a) the original cost of such Investment, PLUS (b) the cost of all additions thereto, MINUS (c) any cash proceeds from the disposition of or other cash distributions on such Investment to the extent such proceeds or distributions do not constitute Consolidated Net Income, without any adjustments for increases or decreases in value or write-ups, write-downs or write-offs with respect to such Investment, PROVIDED that the amount of any Investment shall not be less than zero. "ISSUANCE NOTICE" means an Issuance Notice substantially in the form of Exhibit A-3. "ISSUING BANK" as defined in the preamble. "JOINDER AGREEMENT" means an agreement substantially in the form of Exhibit M. "JOINT VENTURE" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; PROVIDED, in no event shall any Subsidiary of any Person be considered a Joint Venture to which such Person is a party. "JPMCB" as defined in the preamble hereto. "LANDLORD'S CONSENT, ESTOPPEL CERTIFICATE AND AMENDMENT" means an agreement substantially in the form of Exhibit K with such amendments or modifications as may be approved by Collateral Agent. "LEASEHOLD PROPERTY" means any leasehold interest of any Credit Party as lessee under any lease of real property. "LENDER" means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto -22- pursuant to an Assignment Agreement or a Joinder Agreement, including any Lender in its capacity as Swing Line Lender and Issuing Bank. "LENDER COUNTERPARTY" means each Lender or any Affiliate of a Lender counterparty to a Financial Hedge Agreement including, without limitation, each such Affiliate that enters into a Joinder Agreement with the Collateral Agent. "LENDER EFFECTIVE DATE" means (i) in the case of each Lender listed on the signature pages hereof, the Closing Date, and (ii) in the case of each other Lender, the effective date of the Assignment Agreement pursuant to which such Lender became a Lender. "LETTER OF CREDIT" means a commercial or standby letter of credit issued or to be issued by Issuing Bank pursuant to this Agreement. "LETTER OF CREDIT DISBURSEMENT" means a payment made by Issuing Bank pursuant to a Letter of Credit. "LETTER OF CREDIT EXPOSURE" means the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations by Lenders in such Letters of Credit. "LETTER OF CREDIT SUBLIMIT" means the lesser of (i) $15,000,000 and (ii) the aggregate unused amount of the Revolving Commitments then in effect. "LETTER OF CREDIT USAGE" means, as at any date of determination, the sum of (i) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Company. "LEVERAGE RATIO" means the ratio as of the last day of any Fiscal Quarter or other date of determination of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period ending on such date (or if such date of determination is not the last of a Fiscal Quarter, for the four-Fiscal Quarters period ending as of the most recently concluded Fiscal Quarter). "LIEN" means (i) any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities. "LOAN" means a Delayed Draw Loan, a Term Loan, a Swing line Loan, and a Revolving Loan. -23- "MARGIN STOCK" as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "MATERIAL ADVERSE EFFECT" means a material adverse effect on and/or material adverse developments with respect to (i) the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings and its Subsidiaries, taken as a whole; (ii) the ability of the Credit Parties, taken as a whole, to fully and timely perform the Obligations; (iii) the legality, validity, binding effect or enforceability of any Credit Document against the Credit Parties, taken as a whole, or the Collateral; or (iv) the rights, remedies and benefits available to, or conferred upon, any Agent, Lender or Secured Party under any Credit Document. "MATERIAL REAL ESTATE ASSET" means (i) (a) any fee-owned Real Estate Asset having a fair market value in excess of $1,000,000 as of the date of the acquisition thereof and (b) all Leasehold Properties (x) used in the operation of material production facilities of Company or any of its Subsidiaries or (y) with respect to which the aggregate rental payments under the term of the applicable lease exceed $1,000,0000 per annum or (ii) any Real Estate Asset that the Requisite Lenders have determined is material to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings and its Subsidiaries, taken as a whole. "MERGER" means the acquisition by Sponsors of substantially all the outstanding Capital Stock of Holdings. "MERGER AGREEMENT" means the Agreement and Plan of Merger, dated as of May 25, 2002, among GS Berry Acquisition Corp., Sponsors, Holdings, Company, Sellers (as defined therein) and Sellers' Representatives (as defined therein), as in effect on the date hereof. "MERGER FINANCING REQUIREMENTS" means the aggregate amount necessary to pay (i) the cash portion of the consideration due to shareholders of Holdings under the Merger Agreement, (ii) the costs of prepaying, redeeming or purchasing the Indebtedness of Holdings and Company to be paid on the Closing Date and thereafter pursuant to redemption notices to be delivered on the Closing Date and (iii) all other Transaction Costs, in each of cases (i), (ii) and (iii) in accordance with the Merger Agreement and Schedule 1.1. "MOODY'S" means Moody's Investor Services, Inc. "MORTGAGE" means a mortgage substantially in the form of Exhibit J, as it may be amended, supplemented or otherwise modified from time to time. "MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a "multiemployer plan" as defined in Section 3(37) of ERISA. -24- "NAIC" means The National Association of Insurance Commissioners, and any successor thereto. "NARRATIVE REPORT" means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Holdings and its Subsidiaries in the form prepared for presentation to senior management thereof for the applicable month, Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate. "NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Holdings or any of its Subsidiaries from such Asset Sale, MINUS (ii) any bona fide direct costs and expenses incurred in connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller's indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Holdings or any of its Subsidiaries in connection with such Asset Sale, and (d) reasonable brokerage or selling commissions and fees and expenses of professional advisors and any title and recordation expenses. "NET CURRENT ASSETS" means, for any Person as at any date of determination, the difference (which may be a negative number) between (i) the total assets of such Person that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents, MINUS (ii) the total liabilities of such Person that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt. "NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i) any Cash payments or proceeds received by Holdings or any of its Subsidiaries (a) under any insurance policy insuring against loss or damage to assets and property used in the business of Holdings or its Subsidiaries (other than proceeds of business interruption insurance or any other insurance policy to the extent such coverage compensates Company or its Subsidiaries for lost revenue or profits) or (b) as a result of the taking of any assets of Holdings or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, MINUS (ii) (a) bona fide direct reasonable costs and expenses incurred by Holdings or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Holdings or such Subsidiary in respect thereof (including reasonable fees and expenses of professional -25- advisors), (b) contractually required payments of Surviving Capital Leases, Surviving IRBs and Indebtedness incurred under Sections 6.1(g), 6.1(h), 6.1(j) and 6.1(k), in each case, to the extent incurred to finance the acquisition of property subject to such loss, taking or sale, and (c) any bona fide direct costs and expenses incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith, reasonable fees and expenses of professional advisors, title and recordation expenses and reasonable indemnification reserves. "NON-CONSENTING LENDER" as defined in Section 2.24. "NON-US LENDER" as defined in Section 2.21(c). "NOTE" means a Delayed Draw Loan Note, a Term Loan Note, a Swing Line Note, or a Revolving Loan Note. "NOTICE" means a Funding Notice, an Issuance Notice, or a Conversion/Continuation Notice. "OBLIGATIONS" means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), the Lenders or any Lender Counterparties, under any Credit Document or Financial Hedge Agreement (including, without limitation, with respect to a Financial Hedge Agreement, obligations owed thereunder to any person who was a Lender or an Affiliate of a Lender at the time such Financial Hedge Agreement was entered into), whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Financial Hedge Agreements, fees, expenses, indemnification or otherwise. "OBLIGEE GUARANTOR" as defined in Section 7.7. "ORGANIZATIONAL DOCUMENTS" means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such "Organizational Document" shall only be to a document of a type customarily certified by such governmental official. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. -26- "PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA. "PERMITTED ACQUISITION" means any acquisition by Company or any of its Wholly-Owned Guarantor Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets or Capital Stock of, or of a business line or unit or a division of, any Person; PROVIDED, (i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations; (iii) in the case of the acquisition of Capital Stock of any Person, (A) at least 80% on a fully-diluted basis of each class of the Capital Stock acquired or otherwise issued by such Person or any newly formed Subsidiary of Company in connection with such acquisition shall be owned beneficially and as of record by Company or a Wholly-Owned Guarantor Subsidiary thereof, and all other such Capital Stock shall be owned beneficially and as of record by one or more officers, directors, employees or founders of such Person, and (B) Company shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable; (iv) Holdings and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 as of the later of (x) March 30, 2002 and (y) the last day of the most recent Fiscal Quarter for which quarterly financial statements have been delivered to the Lenders pursuant to Section 5.1(b), on a pro forma basis after giving effect to the Permitted Acquisition as a Subject Transaction in accordance with Section 6.8; (v) Company shall have delivered to Administrative Agent (for distribution to each Lender upon request) at least ten Business Days prior to such proposed acquisition: (A) solely in the case of an acquisition (x) financed in whole or in part with the proceeds of Delayed Draw Loans or (y) in respect of which the aggregate amount of Permitted Acquisition Expenses exceed, $20,000,000, a Compliance Certificate evidencing compliance with Section 6.8 as required under clause (iv) above; -27- (B) a certificate of the Chief Financial Officer of Holdings certifying that the unused and available portion of Revolving Commitments will exceed $30,000,000 as of the date of the consummation of such acquisition, after giving effect thereto; (C) all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate compliance with this Agreement; and (D) such information and due diligence materials relating to environmental matters as may be required under Section 5.9(a)(iv) or as may be otherwise reasonably requested by the Administrative Agent; and (vi) any Person, assets or business line, unit or division as acquired in accordance herewith shall be in a business or lines of business permitted for Company under Section 6.13; and (vii) in the case of a direct or indirect acquisition of a Foreign Subsidiary or any assets, business line, unit or division located outside the United States of America, on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter recently ended, Domestic Subsidiaries account for (A) at least 80% of the consolidated assets of Holdings and its Subsidiaries of Holdings (including Company) as of the last day of the Fiscal Quarter recently ended and (B) at least 80% of the consolidated revenues of Holdings and its Subsidiaries for the last four full Fiscal Quarters recently ended; PROVIDED, no acquisition of assets, Capital Stock, a business line or unit or a division of any Person shall constitute a Permitted Acquisition unless made with the consent of such Person's board of directors or similar governing body. "PERMITTED ACQUISITION EXPENSES" means Cash (a) consideration paid by Company or any of its wholly-owned Subsidiaries to acquire assets, Capital Stock or a business line or unit or division in connection with a Permitted Acquisition made in accordance with Section 6.9(d), (b) bona fide direct costs and expenses incurred as a result of a Permitted Acquisition (including costs and expenses related to the shutdown of facilities and employee severance) to the extent such costs and expenses (i) are capitalized as part of the cost of the Permitted Acquisition in the consolidated financial statements of Holdings and (ii) are paid by Company or its Subsidiaries no more than 180 days from the date of such Permitted Acquisition, and (c) bona fide direct costs and expenses paid in connection with such Permitted Acquisition, including reasonable brokerage or selling commissions and fees and expenses of professional advisors and any title and recordation expenses, PROVIDED, no Restricted Junior Payment shall constitute a Permitted Acquisition Expense. -28- "PERMITTED ADJUSTMENTS" means, in respect to any Subject Transactions, pro forma adjustments arising out of events which are directly attributable to such Subject Transactions, are factually supportable and are expected to have a continuing impact, which would include cost savings resulting from head count reduction, closure of facilities and similar restructuring charges and raw material and other cost savings, which pro forma adjustments are certified by the Chief Financial Officer of Holdings and which are determined (i) on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act and as interpreted by the staff of the Securities and Exchange Commission or (ii) solely in the case of additional pro forma adjustments to Consolidated Adjusted EBITDA in an aggregate amount (for all Subject Transactions during the period of determination) not to exceed 7.5% of pro forma Consolidated Adjusted EBITDA (as reformulated) for the period of determination, on such other basis as may be certified by the Chief Financial Officer of Holdings to be in compliance with the requirements of this definition. "PERMITTED LIENS" means each of the Liens permitted pursuant to Section 6.2. "PERSON" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities. "PLEDGE AND SECURITY AGREEMENT" means the Pledge and Security Agreement to be executed by Company and each Guarantor substantially in the form of Exhibit I, as it may be amended, supplemented or otherwise modified from time to time. "PRIME RATE" means the rate of interest per annum that GSCP announces from time to time as its prime lending rate, as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. GSCP or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "PRINCIPAL OFFICE" means, for each of Administrative Agent, Swing Line Lender and Issuing Bank, such Person's "Principal Office" as set forth on Appendix B, or such other office as such Person may from time to time designate in writing to Company, Administrative Agent and each Lender. "PROJECTIONS" as defined in Section 4.9. "PRO RATA SHARE" means (i) with respect to all payments, computations and other matters relating to the Delayed Draw Loan of any Lender, the percentage obtained by dividing (a) the Delayed Draw Loan Exposure of that Lender by (b) the aggregate Delayed Draw Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to the Term Loan of any Lender, the percentage obtained by -29- dividing (a) the Term Loan Exposure of that Lender by (b) the aggregate Term Loan Exposure of all Lenders; and (iii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure of all Lenders. For all other purposes with respect to each Lender, "Pro Rata Share" means the percentage obtained by dividing (A) an amount equal to the sum of the Delayed Draw Loan Exposure, the Term Loan Exposure and the Revolving Exposure of that Lender, by (B) an amount equal to the sum of the aggregate Delayed Draw Loan Exposure, the aggregate Term Loan Exposure and the aggregate Revolving Exposure of all Lenders. "REAL ESTATE ASSET" means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property. "RECORD DOCUMENT" means, with respect to any Leasehold Property, (i) the lease evidencing such Leasehold Property or a memorandum thereof, executed and acknowledged by the owner of the affected real property, as lessor, or (ii) if such Leasehold Property was acquired or subleased from the holder of a Recorded Leasehold Interest, the applicable assignment or sublease document, executed and acknowledged by such holder, in each case in form sufficient to give such constructive notice upon recordation and otherwise in form reasonably satisfactory to Collateral Agent. "RECORDED LEASEHOLD INTEREST" means a Leasehold Property with respect to which a Record Document has been recorded in all places necessary or desirable, in Administrative Agent's reasonable judgment, to give constructive notice of such Leasehold Property to third-party purchasers and encumbrancers of the affected real property. "REFUNDED SWING LINE LOANS" as defined in Section 2.5(b)(iv). "REGISTER" as defined in Section 2.8(b). "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "RELATED AGREEMENTS" means, collectively, the Merger Agreement and the Senior Subordinated Note Documents. "RELATED FUND" means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. -30- "RELEASE" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the migration of any Hazardous Material through the air, soil, surface water or groundwater. "REPLACEMENT LENDER" as defined in Section 2.24. "REQUIRED PREPAYMENT DATE" as defined in Section 2.16(c). "REQUISITE CLASS LENDERS" means, at any time of determination, (i) for the Class of Lenders having Delayed Draw Loan Exposure, Lenders holding more than 50% of the aggregate Delayed Draw Loan Exposure of all Lenders; (ii) for the Class of Lenders having Term Loan Exposure, Lenders holding more than 50% of the aggregate Term Loan Exposure of all Lenders; and (iii) for the Class of Lenders having Revolving Exposure, Lenders holding more than 50% of the aggregate Revolving Exposure of all Lenders. "REQUISITE LENDERS" means one or more Lenders having or holding Delayed Draw Loan Exposure, Term Loan Exposure and/or Revolving Exposure and representing more than 50% of the sum of (i) the aggregate Delayed Draw Loan Exposure of all Lenders, (ii) the aggregate Term Loan Exposure of all Lenders and (iii) the aggregate Revolving Exposure of all Lenders. "RESTRICTED JUNIOR PAYMENT" means, in respect of any Person (i) any dividend or other distribution, direct or indirect, on account of any Capital Stock of such Person now or hereafter outstanding; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Capital Stock of such Person now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any Capital Stock of such Person now or hereafter outstanding; (iv) management or similar fees payable to Sponsors or any of its Affiliates and (v) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to any Subordinated Indebtedness, in each of cases (i) through (v) except a dividend, distribution, payment or prepayment payable solely in Capital Stock of such Person. "REVOLVING COMMITMENT" means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Letters of Credit hereunder and "REVOLVING COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Revolving Commitment, if any, is set forth on Appendix A-3 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Closing Date is $100,000,000. -31- "REVOLVING COMMITMENT PERIOD" means the period from the Closing Date to but excluding the Revolving Commitment Termination Date. "REVOLVING COMMITMENT TERMINATION DATE" means the earliest to occur of (i) August 31, 2002, if the Term Loans are not made on or before that date; (ii) the sixth anniversary of the Closing Date, (iii) the date the Revolving Commitments are permanently reduced to zero pursuant to Section 2.14(b) or 2.15, and (iv) the date of the termination of the Revolving Commitments pursuant to Section 8.1. "REVOLVING EXPOSURE" means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Revolving Commitments, that Lender's Revolving Commitment; and (ii) after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (b) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit, (c) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (d) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans. "REVOLVING LOAN" means a Loan made by a Lender to Company pursuant to Section 2.3. "REVOLVING LOAN NOTE" means a promissory note in the form of Exhibit B-3, as it may be amended, supplemented or otherwise modified from time to time. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Corporation. "SECURED PARTIES" has the meaning assigned to that term in the Pledge and Security Agreement. "SECURITIES" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, and any successor statute. -32- "SELLERS" means Atlantic Equity Partners International II, L.P., J.P. Morgan Partners (SBIC), LLC, BPC Equity, LLC and certain members of Company's management. "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Note Indenture and the Senior Subordinated Notes, as each such document may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. "SENIOR SUBORDINATED NOTE INDENTURE" means the indenture pursuant to which the Senior Subordinated Notes will be issued, in the form delivered to the Agents and Lenders prior to the Closing Date, as any such indenture may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. "SENIOR SUBORDINATED NOTES" means the Senior Subordinated Notes of Company in the aggregate principal amount not to exceed $350,000,000 at any time outstanding (plus (i) any such notes issued as payment of interest on Senior Subordinated Notes and (ii) any additional subordinated notes issued as permitted by clause (ii) or (iii) of Section 6.1(c)) and issued pursuant to the Senior Subordinated Note Indenture, with such changes thereto when executed as are permitted under Section 6.16 and as such notes may thereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. "SOLVENCY CERTIFICATE" means a Solvency Certificate of the Chief Financial Officer of Holdings substantially in the form of Exhibit G-2. "SOLVENT" means, with respect to any Credit Party, that as of the date of determination both (i) (a) the sum of such Credit Party's debt (including contingent liabilities) does not exceed the present fair saleable value of all of such Credit Party's assets; (b) such Credit Party's capital is not unreasonably small in relation to its business or with respect to any transaction then contemplated; and (c) such Person has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5). "SPONSORS" means any of GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co., Beteiligungs KG, GS Capital Partners 2000 Employee Fund, L.P., Stone Street Fund 2000, L.P., J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors -33- (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P., J.P. Morgan Partners Global Investors A, L.P. and other strategic investors acceptable to Syndication Agent. "STOCKHOLDER AGREEMENTS" means (i) a stockholders agreement, dated as of the Closing Date, among Holdings and the Sponsors and (ii) a stockholders agreement, dated as of the Closing Date, among Holdings and certain employees of Holdings and its Subsidiaries parties thereto. "SUBJECT TRANSACTION" as defined in Section 6.8(d). "SUBORDINATED INDEBTEDNESS" means the Senior Subordinated Notes and any other Indebtedness that is subordinate in right of payment and all other respects to the Obligations on subordination terms that are no less favorable to the Agents or Lenders in any respect than the subordination and related terms set forth in the Senior Subordinated Note Documents as in effect on the date hereof. "SUBSIDIARY" means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; PROVIDED, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a "qualifying share" of the former Person shall be deemed to be outstanding. "SURVIVING CAPITAL LEASES" mean the Capital Leases of Company that survive the consummation of the Merger in an aggregate amount not to exceed $16,900,000 as designated in Schedule 6.1(g). "SURVIVING INDEBTEDNESS" means the Surviving Capital Leases, the Surviving IRBs, and any of the 2004 Notes and the 2006 Notes that remain outstanding as of the Closing Date, in each case as disclosed in and subject to the terms and conditions of Schedule 6.1(g). "SURVIVING IRBS" means the Nevada Industrial Revenue Bonds (the "IRBS") of Company that survive the consummation of the Merger in an aggregate amount not to exceed $3,000,000 as designated in Schedule 6.1(g). "SWING LINE LENDER" as defined in the preamble.. "SWING LINE LOAN" means a Loan made by Swing Line Lender to Company pursuant to Section 2.3. -34- "SWING LINE NOTE" means a promissory note in the form of Exhibit B-4, as it may be amended, supplemented or otherwise modified from time to time. "SWING LINE SUBLIMIT" means the lesser of (i) $10,000,000, and (ii) the aggregate unused amount of Revolving Commitments then in effect. "SYNDICATION AGENT" as defined in the preamble. "TAX" means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, by any Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or assessed; PROVIDED, "Tax on the overall net income" of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person's applicable principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office). "TERM LOAN" means a Loan made by a Lender to Company pursuant to Section 2.1. "TERM LOAN COMMITMENT" means the commitment of a Lender to make or otherwise fund any Term Loan hereunder, and "TERM LOAN COMMITMENTS" means such commitments of all Lenders in the aggregate. The amount of each Lender's Term Loan Commitment, if any, is set forth in Appendix A-1. The aggregate Term Loan Commitments shall equal the difference between (i) $330,000,000 and (ii) the aggregate principal amount outstanding, as of the Closing Date, of Company's 11% Senior Subordinated Notes Due 2007. "TERM LOAN EXPOSURE" means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Term Loan of such Lender; PROVIDED, at any time prior to the making of the Term Loan, the Term Loan Exposure of any Lender shall be equal to such Lender's Term Loan Commitment. "TERM LOAN INSTALLMENT" as defined in Section 2.13(a). "TERM LOAN INSTALLMENT DATE" as defined in Section 2.13(a). "TERM LOAN MATURITY DATE" means the earlier of (i) the eighth anniversary of the Closing Date,{ }and (ii) the date that all Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise. "TERM LOAN NOTE" means a promissory note in the form of Exhibit B-1, as it may be amended, supplemented or otherwise modified from time to time. -35- "TERMINATED LENDER" as defined in Section 2.24. "TOTAL UTILIZATION OF REVOLVING COMMITMENTS" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans and (iii) the Letter of Credit Usage. "TRANSACTION COSTS" means the fees, costs and expenses payable by Holdings, Company or any of Company's Subsidiaries on or before the Closing Date in connection with the transactions contemplated by the Credit Documents and the Related Agreements. "TYPE OF LOAN" means (i) with respect to either Term Loans, Delayed Draw Loans or Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base Rate Loan. "UCC" means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction. "UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of the interest costs to Company in respect of a Eurodollar Rate Loan that is based upon the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate. "US LENDER" means each Lender that is a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes. "VOTING STOCK" of a Person means all classes of Capital Stock or other interests of such Person then outstanding which are normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. "WAIVABLE MANDATORY PREPAYMENT" as defined in Section 2.16(c). "WHOLLY-OWNED" means, in respect of any Subsidiary of any Person, that all Capital Stock of such Subsidiary (other than Capital Stock in the nature of directors' qualifying shares required by applicable law) is owned beneficially and as of record by such Person or one more Wholly-Owned Subsidiaries of such Person. 1.2. ACCOUNTING TERMS. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP as in effect from time to time; PROVIDED, if Company notifies Administrative Agent that Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof to -36- the operation of such provisions, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements. 1.3.INTERPRETATION, ETC. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. Except as otherwise specifically provided, all reference herein to any Person shall mean such Person and its permitted successors and assigns and all references herein to any document, instrument or agreement shall mean such document, instrument or agreement as amended, supplemented or modified from time to time, to the extent not prohibited by this Agreement. SECTION 2. LOANS AND LETTERS OF CREDIT 2.1. TERM LOANS. (a) LOAN COMMITMENTS. Subject to the terms and conditions hereof, each Lender severally agrees to make, on the Closing Date, a Term Loan to Company in an amount equal to such Lender's Term Loan Commitment. Company may make only one borrowing under each Lender's Term Loan Commitment which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.14(a) and 2.15, all amounts owed hereunder with respect to the Term Loans shall be paid in full no later than the Term Loan Maturity Date. Each Lender's Term Loan Commitment shall terminate immediately and without further action on the Closing Date after giving effect to the funding of such Lender's Term Loan Commitment on such date. (b) BORROWING MECHANICS FOR TERM LOANS. (i) Company shall deliver to Administrative Agent a fully executed Funding Notice no later than 11:00 a.m. (New York City time) on (A) in the case of Base Rate Loans, the day prior to the Closing Date and (B) in the case of -37- Eurodollar Loans, the third day prior to the Closing Date. Promptly upon receipt by Administrative Agent of such certificate, Administrative Agent shall notify each Lender of the proposed borrowing. (ii) Each Lender shall make its Term Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the Closing Date, by wire transfer of same day funds in Dollars, at Administrative Agent's Principal Office. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Term Loans available to Company on the Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Company at Administrative Agent's Principal Office or to such other account as may be designated in writing to Administrative Agent by Company. 2.2. DELAYED DRAW LOANS (a) DELAYED DRAW COMMITMENTS. During the Delayed Draw Commitment Period, each Lender severally agrees to make one or more Delayed Draw Loans in an amount up to but not exceeding such Lender's Delayed Draw Commitment. Any amount borrowed under this Section 2.2(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.14(a) and 2.15, all amounts owed hereunder with respect to the Delayed Draw Loans shall be paid in full no later than the Delayed Draw Loan Maturity Date. Each Lender's Delayed Draw Commitment shall expire on the Delayed Draw Commitment Termination Date. (b) BORROWING MECHANICS FOR DELAYED DRAW LOANS. (i) Delayed Draw Loans shall be made in an aggregate minimum amount of $5,000,000 and integral multiples of $500,000 in excess of that amount. (ii) Whenever Company desires that Lenders make Delayed Draw Loans, Company shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 11:00 a.m. (New York City time) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Delayed Draw Loan that is a Base Rate Loan. For purposes of this Section 2.2(b)(ii), no Funding Notice shall be deemed to be fully executed and delivered unless such Funding Notice includes certification that the proceeds of the drawing shall be used only to pay Permitted Acquisition Expenses on the date of such drawing. Except as otherwise provided herein, a Funding Notice for a Delayed Draw Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith. -38- (iii) Notice of receipt of each Funding Notice in respect of Delayed Draw Loans, together with the amount of each Lender's Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by telefacsimile with reasonable promptness, but (provided Administrative Agent shall have received such notice by 11:00 a.m. (New York City time)) not later than 3:00 p.m. (New York City time) on the same day as Administrative Agent's receipt of such Funding Notice from Company. (iv) Each Lender shall make the amount of its Delayed Draw Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent's Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Delayed Draw Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Delayed Draw Loans received by Administrative Agent from Lenders to be credited to an account designated in writing to Administrative Agent by Company. 2.3. REVOLVING LOANS. (a) REVOLVING COMMITMENTS. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans to Company in the aggregate amount up to but not exceeding such Lender's Revolving Commitment; PROVIDED, after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.3(a) may be repaid and reborrowed during the Revolving Commitment Period. Each Lender's Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date. (b) BORROWING MECHANICS FOR REVOLVING LOANS. (i) Except pursuant to Section 2.4(d) and 2.5(b)(iv), Revolving Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount, and Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount. (ii) Whenever Company desires that Lenders make Revolving Loans, Company shall deliver (subject to 3.2(b)) to Administrative Agent a fully executed and delivered Funding Notice no later than 11:00 a.m. (New York City time) at -39- least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan. Except as otherwise provided herein, a Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith. (iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender's Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by telefacsimile with reasonable promptness, but (provided Administrative Agent shall have received such notice by 11:00 a.m. (New York City time)) not later than 3:00 p.m. (New York City time) on the same day as Administrative Agent's receipt of such Funding Notice from Company. (iv) Each Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent's Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Revolving Loans received by Administrative Agent from Lenders to be credited to an account designated in writing to Administrative Agent by Company. 2.4 ISSUANCE OF LETTERS OF CREDIT AND PURCHASE OF PARTICIPATIONS THEREIN. (a) GENERAL. Subject to the terms and conditions set forth herein, Company (or any other Credit Party, so long as Company is a co-obligor or co-applicant in respect of each Letter of Credit issued for the account of such other Credit Party on terms reasonably acceptable to Administrative Agent and Issuing Bank) may request the issuance of Letters of Credit for its own account, such Letter of Credit to be in a form reasonably acceptable to Administrative Agent and Issuing Bank, at any time and from time to time during the Revolving Commitment Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by Company to, or entered into by Company with, Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), Company shall hand deliver -40- or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by Issuing Bank) to Issuing Bank and Administrative Agent (reasonably, but in any case at least two Business Days, in advance of the requested date of issuance, amendment, renewal or extension) a fully executed Issuance Notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section 2.4), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by Issuing Bank, Company also shall submit a letter of credit application on Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit Company shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the Letter of Credit Usage shall not exceed the Letter of Credit Sublimit and (ii) the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect. All Letters of Credit shall be denominated in Dollars and the stated amount of each Letter of Credit shall not be less than $100,000 or such lesser amount as is acceptable to Issuing Bank in its sole discretion. (c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Commitment Termination Date. (d) PARTICIPATIONS. By the issuance, renewal or extension of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of Issuing Bank or the Lenders, Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from Issuing Bank, a participation in such Letter of Credit equal to such Lender's Pro Rata Share (with respect to the Revolving Commitments) of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to Administrative Agent, for the account of Issuing Bank, such Lender's Pro Rata Share (with respect to the Revolving Commitments) of each Letter of Credit Disbursement made by Issuing Bank and not reimbursed by Company on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to Company for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. -41- (e) REIMBURSEMENT. If Issuing Bank shall make any Letter of Credit Disbursement in respect of a Letter of Credit, Company shall reimburse such Letter of Credit Disbursement by paying to Administrative Agent an amount equal to such Letter of Credit Disbursement not later than 2:30 p.m., New York City time, on the date that such Letter of Credit Disbursement is made, if Company shall have received notice of such Letter of Credit Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by Company prior to such time on such date, then not later than 2:30 p.m., New York City time, on (i) the Business Day that Company receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that Company receives such notice, if such notice is not received prior to such time on the day of receipt; PROVIDED, Company may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.3 or Section 2.5 that such payment be financed with a Revolving Loan that is a Base Rate Loan or a Swing Line Loan in an equivalent amount and, to the extent so financed, Company's obligation to make such payment shall be discharged and replaced by the resulting Revolving Loan or Swing Line Loan. If Company fails to make such payment when due, Administrative Agent shall notify each Lender of the applicable Letter of Credit Disbursement, the payment then due from Company in respect thereof and such Lender's Pro Rata Share thereof. Following receipt of such notice, each Lender shall pay to Administrative Agent its Pro Rata Share of the payment then due from Company, in the same manner as provided in Section 2.5 with respect to Loans made by such Lender (and Section 2.5 shall apply, MUTATIS MUTANDIS, to the payment obligations of the Lenders), and Administrative Agent shall promptly pay to Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by Administrative Agent of any payment from Company pursuant to this paragraph, Administrative Agent shall distribute such payment to Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse Issuing Bank, then to such Lenders and Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse Issuing Bank for any Letter of Credit Disbursement (other than the funding of Revolving Loans as contemplated above) shall not constitute a Loan and shall not relieve Company of its obligation to reimburse such Letter of Credit Disbursement. (f) OBLIGATIONS ABSOLUTE. The Company's obligation to reimburse Letter of Credit Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right -42- of setoff against, Company's obligations hereunder. Neither Administrative Agent, the Lenders nor Issuing Bank, nor any of their Affiliates, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the reasonable control of Issuing Bank; PROVIDED, the foregoing shall not be construed to excuse Issuing Bank from liability to Company to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by Company to the extent permitted by applicable law) suffered by Company that are caused by Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of Issuing Bank (as finally determined by a court of competent jurisdiction), Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) DISBURSEMENT PROCEDURES. Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Issuing Bank shall promptly notify Administrative Agent and Company by telephone (confirmed by telecopy) of such demand for payment and whether Issuing Bank has made or will make a Letter of Credit Disbursement thereunder; PROVIDED, any failure to give or delay in giving such notice shall not relieve Company of its obligation to reimburse Issuing Bank and the Lenders with respect to any such Letter of Credit Disbursement. (h) INTERIM INTEREST. If Issuing Bank shall make any Letter of Credit Disbursement, then, unless Company shall reimburse such Letter of Credit Disbursement in full on the date such Letter of Credit Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such Letter of Credit Disbursement is made to but excluding the date that Company reimburses such Letter of Credit Disbursement, at the rate per annum then applicable to Revolving Loans that are Base Rate Loans; PROVIDED, if Company fails to reimburse such Letter of Credit Disbursement when due pursuant to paragraph (e) of this Section, then such unpaid amount shall bear interest at a rate which is 2% per annum in excess of the rate of interest otherwise applicable to Revolving Loans that are Base Rate Loans. Interest accrued pursuant to this paragraph -43- shall be for the account of Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) REPLACEMENT OF ISSUING BANK; ADDITIONAL ISSUING BANKS. (i) Issuing Bank may be replaced at any time by written agreement among Company, Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. Administrative Agent shall notify the Lenders of any such replacement of Issuing Bank. At the time any such replacement shall become effective, Company shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From and after the effective date of any such replacement, (A) the successor Issuing Bank shall have all the rights and obligations of Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (B) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. A Revolving Lender may become an Issuing Bank pursuant to a written agreement among Company, Administrative Agent and such Revolving Lender (an "ADDITIONAL ISSUING BANK"), but only if the Issuing Bank has an insufficiently high credit rating for the issuance of the requested Letter of Credit, whereupon Administrative Agent shall notify other Revolving Lenders of such Additional Issuing Bank. Upon becoming an Additional Issuing Bank, all references to "Issuing Bank" herein shall be deemed to include such Additional Issuing Bank for the purposes of such Letters of Credit. (j) CASH COLLATERALIZATION. If any Event of Default shall occur and be continuing, on the Business Day that Company receives notice from Administrative Agent or the Requisite Class Lenders (or, if the maturity of the Loans has been accelerated, Issuing Bank) demanding the deposit of cash collateral pursuant to this paragraph, Company shall deposit in an account with Administrative Agent, in the name of Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the Letter of Credit Exposure as of such date plus any accrued and unpaid interest thereon; PROVIDED, the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to Company described in Section 8.1(f) or 8.1(g). Such deposit shall be held by Administrative Agent as collateral for the payment and performance of the obligations of Company under this Agreement. Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of Administrative Agent and at Company's risk and expense, such deposits shall not bear interest. -44- Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by Administrative Agent to reimburse Issuing Bank for Letter of Credit Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of Company at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Issuing Bank), be applied to satisfy other obligations of Company under this Agreement. If Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be promptly returned to Company after all Events of Default have been cured or waived. 2.5. SWING LINE LOANS. (a) SWING LINE LOANS COMMITMENT. During the Revolving Commitment Period, subject to the terms and conditions hereof, Swing Line Lender hereby agrees to make Swing Line Loans to Company in the aggregate amount up to but not exceeding the Swing Line Sublimit; PROVIDED, after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.5 may be repaid and reborrowed during the Revolving Commitment Period. Swing Line Lender's Revolving Commitment shall expire on the Revolving Commitment Termination Date and Company shall repay the then unpaid principal amount of each Swing Line Loan and any accrued and unpaid interest thereon as of the earlier of (i) the Revolving Commitment Termination Date, (ii) any date on which Company is borrowing Revolving Loans or Delayed Draw Loans and (iii) the first date at least two Business Days after such Swing Line Loan is made that is the 15th or last day of any calendar month. (b) BORROWING MECHANICS FOR SWING LINE LOANS. (i) Swing Line Loans shall be made in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that amount. (ii) Whenever Company desires that Swing Line Lender make a Swing Line Loan, Company shall deliver to Swing Line Lender, with a copy to Agents (subject to Section 3.2(b)) a Funding Notice no later than 12:00 p.m. (New York City time) on the proposed Credit Date. (iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent's Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of -45- all such Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited to an account designated in writing to Administrative Agent by Company. (iv) With respect to any Swing Line Loans which have not been prepaid by Company pursuant to Section 2.14 or Section 2.15, Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Company), no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Company) requesting that each Lender holding a Revolving Commitment make Revolving Loans that are Base Rate Loans to Company on such Credit Date in an amount equal to the amount of such Swing Line Loans (the "REFUNDED SWING LINE LOANS") outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Company, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender's outstanding Revolving Loans to Company and shall be due under the Revolving Loan Note issued by Company to Swing Line Lender. Company hereby authorizes Administrative Agent and Swing Line Lender to charge Company's accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent the proceeds of such Revolving Loans made by Lenders, including the Revolving Loan deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all the Revolving Lenders. (v) If for any reason Revolving Loans are not made pursuant to Section 2.5(b)(iv) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business -46- Day's notice from Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of Swing Line Lender. In order to evidence such participation each Lender holding a Revolving Commitment agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In the event any Lender holding a Revolving Commitment fails to make available to Swing Line Lender the amount of such Lender's participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate, as applicable. (vi) Notwithstanding anything contained herein to the contrary, (1) each Lender's obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender's obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, any Credit Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Credit Party; (D) any breach of this Agreement or any other Credit Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; and (2) Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default or (B) at a time when a Funding Default exists unless Swing Line Lender has entered into arrangements satisfactory to it and Company to eliminate Swing Line Lender's risk with respect to the Defaulting Lender's participation in such Swing Ling Loan, including by cash collateralizing such Defaulting Lender's Pro Rata Share of the outstanding Swing Line Loans. 2.6. PRO RATA SHARES; AVAILABILITY OF FUNDS. (a) PRO RATA SHARES. All Loans shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender's obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender's obligation to make a Loan requested hereunder or purchase a participation required hereby. -47- (b) AVAILABILITY OF FUNDS. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent shall promptly notify Company and Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.6(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitment, its Delayed Draw Commitment, its Revolving Commitment or its obligation to purchase participations in Letters of Credit pursuant to Section 2.4(d) hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder. 2.7. USE OF PROCEEDS. The proceeds of the Term Loans made on the Closing Date shall be applied by Company on the Closing Date to pay Merger Financing Requirements. The proceeds of the Revolving Loans, Swing Line Loans and Letters of Credit made after the Closing Date shall be applied by Company for Permitted Acquisition Expenses, working capital and general corporate purposes of Company and its Subsidiaries; PROVIDED, HOWEVER, in no event will the proceeds of Revolving Loans be used for the purposes of prepaying Loans as permitted under Section 2.14 hereof. The proceeds of the Delayed Draw Loans shall be used solely to pay Permitted Acquisition Expenses. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act. 2.8. EVIDENCE OF DEBT; REGISTER; LENDERS' BOOKS AND RECORDS; NOTES. (a) LENDERS' EVIDENCE OF DEBT. Each Lender shall maintain on its internal records an account or accounts evidencing the Indebtedness of Company to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Company, absent manifest error; PROVIDED, failure -48- to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Company's Obligations in respect of any applicable Loans; and PROVIDED FURTHER, in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern. (b) REGISTER. Administrative Agent, acting on behalf of Company, shall maintain at its Principal Office a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the "REGISTER"). The Register shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior request. Administrative Agent shall record in the Register the Commitments and the Loans, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; PROVIDED, failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Company's Obligations in respect of any Loan. Company hereby designates GSCP to serve as Company's agent solely for purposes of maintaining the Register as provided in this Section 2.8, and Company hereby agrees that, to the extent GSCP serves in such capacity, GSCP and its officers, directors, employees, agents and affiliates shall constitute "Indemnitees." (c) NOTES. If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to the Closing Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Closing Date (or, if such notice is delivered after the Closing Date, promptly after Company's receipt of such notice) a Note or Notes to evidence such Lender's Term Loan, Delayed Draw Loan, Swing Line Loan or Revolving Loan, as the case may be. 2.9 INTEREST ON LOANS. (a) Except as otherwise set forth herein, each Class of Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows: (i) in the case of Delayed Draw Loans and Revolving Loans: (1) if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin; (ii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin; and -49- (iii) in the case of Term Loans: (1) if a Base Rate Loan, at the Base Rate PLUS 2.00% per annum; or (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate PLUS 3.00% per annum. (b) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Company and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; PROVIDED, (i) the Term Loans initially shall be made as Base Rate Loans until the date which is five Business Days following the Closing Date and (ii) until the earlier of (A) the date that Syndication Agent notifies Company that the primary syndication of the Loans and Commitments has been completed and (B) the date that is 60 days following the Closing Date, the Term Loans shall be maintained as either (1) Eurodollar Rate Loans having an Interest Period of no longer than one month or (2) Base Rate Loans. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan. Swing Line Loans shall be made and maintained only as Base Rate Loans. (c) In connection with Eurodollar Rate Loans there shall be no more than ten Interest Periods outstanding at any time. In the event Company fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Company shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender. (d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the -50- date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; PROVIDED, if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. (e) Except as otherwise set forth herein, interest on each Loan shall be payable in arrears on and to (i) each Interest Payment Date applicable to that Loan; (ii) any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) at maturity, including final maturity; PROVIDED, HOWEVER, with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date. 2.10. CONVERSION/CONTINUATION. (a) Subject to Section 2.19 and so long as no Default or Event of Default shall have occurred and then be continuing, Company shall have the option: (i) to convert at any time all or any part of any Loan equal to $500,000 and integral multiples of $100,000 in excess of that amount from one Type of Loan to another Type of Loan; PROVIDED, a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Company shall pay all amounts due under Section 2.19 in connection with any such conversion; or (ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $500,000 and integral multiples of $100,000 in excess of that amount as a Eurodollar Rate Loan. (b) The Company shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Conversion/Continuation Notice (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed Conversion/Continuation Date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/ Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith. -51- 2.11. DEFAULT INTEREST. Upon the occurrence and during the continuance of an Event of Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans); PROVIDED, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.11 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. 2.12. FEES. (a) Company agrees to pay to Lenders having Revolving Exposure: (i) commitment fees equal to (1) the average of the daily difference between (a) the Revolving Commitments, and (b) the sum of (x) the aggregate principal amount of outstanding Revolving Loans (but not Swing Line Loans) plus (y) the Letter of Credit Usage, times (2) the Applicable Revolving Commitment Fee Percentage; and (ii) letter of credit fees equal to (1) the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans, times (2) the average aggregate daily maximum amount available to be drawn under all such Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination). All fees referred to in Sections 2.12(a) and 2.12(c) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof. (b) Company agrees to pay directly to Issuing Bank, for its own account, the following fees: (i) a fronting fee in an amount equal to (1) an amount per annum (not to exceed 0.25%) as may be agreed by Company and Issuing Bank, times (2) the average aggregate daily maximum amount available to be drawn under all Letters of Credit (determined as of the close of business on any date of determination); and -52- (ii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with Issuing Bank's standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be. (c) Company agrees to pay to Lenders having Delayed Draw Loan Exposure commitment fees equal to the sum of (x) the daily average Delayed Draw Commitments, times (y) the Applicable Delayed Draw Commitment Fee Percentage. (d) All fees referred to in Section 2.12(a), 2.12(b)(i) and 2.12(c) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the applicable Commitment Period, commencing on the first such date to occur after the Closing Date, and on the applicable Commitment Termination Date. (e) In addition to any of the foregoing fees, Company agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon. 2.13. SCHEDULED PAYMENTS/COMMITMENT REDUCTIONS. (a) SCHEDULED INSTALLMENTS. The principal amounts of the Term Loans shall be repaid in consecutive quarterly installments (each, a "TERM LOAN INSTALLMENT") in the aggregate amounts and on the dates (each, a "TERM LOAN INSTALLMENT DATE") set forth below, commencing on September 30, 2002.
TERM LOAN INSTALLMENT DATE TERM LOAN INSTALLMENT September 30, 2002 $825,000 December 31, 2002 $825,000 March 31, 2003 $825,000 June 30, 2003 $825,000 September 30, 2003 $825,000 December 31, 2003 $825,000 March 31, 2004 $825,000 June 30, 2004 $825,000 September 30, 2004 $825,000 December 31, 2004 $825,000 March 31, 2005 $825,000
-53-
TERM LOAN INSTALLMENT DATE TERM LOAN INSTALLMENT June 30, 2005 $825,000 September 30, 2005 $825,000 December 31, 2005 $825,000 March 31, 2006 $825,000 June 30, 2006 $825,000 September 30, 2006 $825,000 December 31, 2006 $825,000 March 31, 2007 $825,000 June 30, 2007 $825,000 September 30, 2007 $825,000 December 31, 2007 $825,000 March 31, 2008 $825,000 June 30, 2008 $825,000 September 30, 2008 $825,000 December 31, 2008 $825,000 March 31, 2009 $825,000 June 30, 2009 $825,000 September 30, 2009 $76,725,000 December 31, 2009 $76,725,000 March 31, 2010 $76,725,000 June 30, 2010 $76,725,000
(b) The principal amount of the Delayed Draw Loans shall be repaid in consecutive quarterly installments (each, a "DELAYED DRAW INSTALLMENT") on the dates set forth below (each, a "DELAYED DRAW INSTALLMENT DATE"), commencing on March 31, 2004. Each installment shall be in an amount equal to the sum of (x) the initial principal amount of the Delayed Draw Loans, times (y) the percentage listed below for the applicable Delayed Draw Installment Date. -54-
DELAYED DRAW INSTALLMENT DATE DELAYED DRAW INSTALLMENT March 31, 2004 2% June 30, 2004 2% September 30, 2004 2% December 31, 2004 2% March 31, 2005 4% June 30, 2005 4% September 30, 2005 4% December 31, 2005 4% March 31, 2006 6% June 30, 2006 6% September 30, 2006 6% December 31, 2006 6% March 31, 2007 8% June 30, 2007 8% September 30, 2007 8% December 31, 2007 8% March 31, 2008 10% June 30, 2008 10%
(c) Notwithstanding the foregoing, (i)Term Loan Installments and Delayed Draw Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans or the Delayed Draw Loans, as the case may be, in accordance with Sections 2.14, 2.15 and 2.16, as applicable; and (ii) the Term Loans and the Delayed Draw Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Term Loan Maturity Date and the Delayed Draw Loan Maturity Date, respectively. -55- 2.14. VOLUNTARY PREPAYMENTS/COMMITMENT REDUCTIONS. (a) VOLUNTARY PREPAYMENTS. (i) Any time and from time to time: (1) with respect to Base Rate Loans (other than Swing Line Loans), Company may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; (2) with respect to Eurodollar Rate Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; and (3) with respect to Swing Line Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000, and in integral multiples of $100,000 in excess of that amount. (ii) All such prepayments shall be made: (1) in the case of Base Rate Loans (other than Swing Line Loans), upon not less than one Business Day's prior written or telephonic notice to Administrative Agent; (2) in the case of Eurodollar Rate Loans, upon not less than three Business Days' prior written or telephonic notice to Administrative Agent; and (3) in the case of Swing Line Loans, upon written or telephonic notice on the date of prepayment to Administrative Agent and Swing Line Lender; in each case given by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) and, as applicable, Swing Line Lender. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. -56- (B) VOLUNTARY COMMITMENT REDUCTIONS. (i) Company may, upon not less than three Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, (A) during the Delayed Draw Commitment Period, the Delayed Draw Commitments in an amount up to the aggregate amount of the Delayed Draw Commitments and (B) during the Revolving Commitment Period, the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction; PROVIDED, any such partial reduction of Commitments shall be in an aggregate minimum amount for each Class of Commitments of $1,000,000 and integral multiples of $500,000 in excess of that amount. (ii) Company's notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Commitments shall be effective on the date specified in Company's notice and shall reduce the Commitment of each Lender proportionately to its Pro Rata Share thereof. 2.15. MANDATORY PREPAYMENTS/COMMITMENT REDUCTIONS. (a) ASSET SALES. No later than the first Business Day following the date of receipt by Holdings or any of its Subsidiaries of any Net Asset Sale Proceeds, Company shall prepay Loans and/or permanently reduce Commitments as set forth in Section 2.16(b) in an aggregate amount equal to 100% of such Net Asset Sale Proceeds; PROVIDED, (i) so long as no Default or Event of Default shall have occurred and be continuing and (ii) to the extent that aggregate Net Asset Sale Proceeds from the Closing Date through the applicable date of determination do not exceed $10,000,000, Company shall have the option, directly or through one or more of its Subsidiaries, to invest Net Asset Sale Proceeds within two hundred seventy days of receipt thereof in long-term productive assets of the general type used in the business of Company and its Subsidiaries; PROVIDED FURTHER, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments). (b) INSURANCE/CONDEMNATION PROCEEDS. No later than the first Business Day following the date of receipt by Holdings or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds, Company shall prepay Loans and/or reduce Commitments as set forth in Section 2.16(b) in an aggregate amount equal to such Net -57- Insurance/Condemnation Proceeds; PROVIDED, so long as no Default or Event of Default shall have occurred and be continuing, Company shall have the option, directly or through one or more of its Subsidiaries to invest such Net Insurance/Condemnation Proceeds within two hundred seventy days of receipt thereof in the repair, restoration or replacement of the applicable assets thereof, or in long term productive assets of the general type used in the business of Holdings and its Subsidiaries with the consent of Administrative Agent, such consent not to be unreasonably withheld; PROVIDED FURTHER, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments); PROVIDED, FURTHER, if a Default subject to a cure period under Section 8.1(e) has occurred, but such cure period has not yet expired, then (i) until the earlier of (x) the cure of the Default or (y) the expiration of such cure period, all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Revolving Loans (without a reduction in Revolving Commitments) and, to the extent of any excess, held for the benefit of the Lenders under arrangements reasonably satisfactory to Administrative Agent, and (ii) upon the expiration of such cure period, unless the Default has been cured, all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Indebtedness in accordance with the requirements of Section 2.16(b). (c) ISSUANCE OF EQUITY SECURITIES. On the date of receipt by Holdings or any of its Subsidiaries after the Closing Date of any Cash proceeds from a capital contribution to, or the issuance of any Capital Stock of, Holdings or any of its Subsidiaries (other than pursuant to any employee stock or stock option compensation plan), to the extent such proceeds are not used to pay Permitted Acquisition Expenses or, solely in the case of proceeds from Additional Sponsor Equity, Consolidated Capital Expenditures, Company shall prepay Loans and/or reduce Commitments as set forth in Section 2.16(b) in an aggregate amount equal to 75% of such remaining proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable fees and expenses of professional advisors; PROVIDED, during any period in which the Leverage Ratio (determined for any such period by reference to the most recent Compliance Certificate delivered pursuant to Section 5.1(d) calculating the Leverage Ratio) shall be 4.25:1.00 or less, Company shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 50% of such net proceeds. (d) ISSUANCE OF DEBT. On the date of receipt by Holdings or any of its Subsidiaries after the Closing Date of any Cash proceeds from incurrence of any Indebtedness of Holdings or any of its Subsidiaries other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1, excluding Section 6.1(c)(ii), Company shall prepay Loans and/or reduce Commitments as set forth in Section 2.16(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses. -58- (e) CONSOLIDATED EXCESS CASH FLOW. In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (or, in the case of Fiscal Year 2002, for the portion of such Fiscal Year occurring after the date of this Agreement), Company shall, no later than ninety days after the end of such Fiscal Year, prepay Loans and/or reduce Commitments as set forth in Section 2.16(b) in an aggregate amount equal to 75% of such Consolidated Excess Cash Flow; PROVIDED, (i) for any Fiscal Year in which the Leverage Ratio (determined for any such Fiscal Year by reference to the most recent applicable Compliance Certificate delivered pursuant to Section 5.1(d)) is less than 4.25:1.00 but equal to or greater than 3.25:1.00, Company shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 50% of such Consolidated Excess Cash Flow and (ii) for any Fiscal Year in which the Leverage Ratio (determined for any such Fiscal Year by reference to the most recent applicable Compliance Certificate delivered pursuant to Section 5.1(d)) is less than 3.25:1.00, Company shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 25% of such Consolidated Excess Cash Flow. (f) REVOLVING LOANS. Company shall from time to time prepay FIRST, the Swing Line Loans, and SECOND, the Revolving Loans to the extent necessary so that the Total Utilization of Revolving Commitments shall not at any time exceed the Revolving Commitments then in effect. (g) DELAYED DRAW LOANS. The Company shall prepay the Delayed Draw Loans on the date such Delayed Draw Loans are made from any proceeds of the Delayed Draw Loans that were not used on such date to fund Permitted Acquisition Expenses. (h) PREPAYMENT CERTIFICATE. Concurrently with any prepayment of Loans and/or reduction of Commitments pursuant to Sections 2.15(a) through 2.15(e), Company shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Company shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Company shall promptly make an additional prepayment of the Loans and/or the Revolving Commitments shall be permanently reduced in an amount equal to such excess, and Company shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess. 2.16. APPLICATION OF PREPAYMENTS/REDUCTIONS. (a) APPLICATION OF VOLUNTARY PREPAYMENTS BY CLASS OF LOANS. Any prepayment of any Loan pursuant to Section 2.14(a) shall be applied as follows: FIRST, to repay outstanding Swing Line Loans to the full extent thereof; and -59- SECOND, as between outstanding Revolving Loans, on the one hand, and Delayed Draw Loans and Term Loans, on the other hand, as Company may direct, PROVIDED Term Loans and outstanding Delayed Draw Loans are prepaid on a pro rata basis in accordance with the respective outstanding principal amounts thereof. Any prepayment of any Term Loan or Delayed Draw Loan pursuant to Section 2.14(a) shall be further applied on a pro rata basis to reduce the scheduled remaining installments of principal. (b) APPLICATION OF MANDATORY PREPAYMENTS BY CLASS OF LOANS. Any amount required to be paid pursuant to Sections 2.15(a) through 2.15(e) shall be applied as follows: FIRST, to prepay Term Loans and Delayed Draw Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof); SECOND, to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment; THIRD, to pay outstanding reimbursement obligations with respect to drawn Letters of Credit; FOURTH, to prepay Revolving Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment; FIFTH, to cash collateralize Letters of Credit and to further permanently reduce the Revolving Loan Commitments by the amount of such cash collateralization; and SIXTH, to further permanently reduce the Revolving Commitments and any Delayed Draw Commitments on a pro rata basis (in accordance with the aggregate amounts thereof). Notwithstanding the foregoing, any prepayments of Delayed Draw Loans made pursuant to Section 2.15(g) shall be applied to reduce Delayed Draw Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof). (c) WAIVABLE MANDATORY PREPAYMENT. Anything contained herein to the contrary notwithstanding, so long as any Delayed Draw Loans are outstanding, in the event Company is required to make any mandatory prepayment (a "WAIVABLE MANDATORY PREPAYMENT") of the Term Loans, not less than three Business Days prior to the date (the "REQUIRED PREPAYMENT DATE")on which Company is required to make such Waivable Mandatory Prepayment, Company shall notify Administrative Agent of the amount of such prepayment, and -60- Administrative Agent will promptly thereafter notify each Lender holding an outstanding Term Loan of the amount of such Lender's Pro Rata Share of such Waivable Mandatory Prepayment and such Lender's option to refuse such amount. Each such Lender may exercise such option by giving written notice to Company and Administrative Agent of its election to do so on or before the first Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify Company and Administrative Agent of its election to exercise such option on or before the First Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option). On the Required Prepayment Date, Company shall pay to Administrative Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (i) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such option, to prepay the Term Loans of such Lenders (which prepayment shall be applied to the scheduled Term Loan Installments in accordance with Section 2.16(b)), and (ii) in an amount equal to that portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option, to prepay the Delayed Draw Loans (which prepayment shall be further applied to the scheduled installments of principal of the Delayed Draw Loans in Section 2.16(b)). (d) APPLICATION OF PREPAYMENTS OF LOANS TO BASE RATE LOANS AND EURODOLLAR RATE LOANS. Considering each Type of Loan being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to Section 2.19(c). 2.17. GENERAL PROVISIONS REGARDING PAYMENTS. (a) All payments by Company of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 p.m. (New York City time) on the date due at Administrative Agent's Principal Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Company on the next succeeding Business Day. (b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans) shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest before application to principal. -61- (c) Administrative Agent shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender's applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent. (d) Notwithstanding the foregoing provisions hereof, if any Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter. (e) Subject to the provisos set forth in the definition of "Interest Period", whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder. (f) Company hereby authorizes Administrative Agent to charge Company's accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose). (g) Administrative Agent shall deem any payment by or on behalf of Company hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Company and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.9 from the date such amount was due and payable until the date such amount is paid in full. (h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 6.5 of the Pledge and Security Agreement. 2.18. RATABLE SHARING. Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than -62- a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; PROVIDED, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 2.19. MAKING OR MAINTAINING EURODOLLAR RATE LOANS. (a) INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto absent manifest error), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and reasonable means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company. -63- (b) ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the date hereof which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, Company shall have the option, subject to the provisions of Section 2.19(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this Section 2.19(b) shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof. (c) COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. Company shall compensate each Lender, upon written request by such Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds but excluding loss of anticipated profits) which such Lender may sustain: -64- (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan (including, without limitation, pursuant to Section 2.14 hereof); or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company. (d) BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender. (e) ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation of all amounts payable to a Lender under this Section 2.19 and under Section 2.20 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; PROVIDED, HOWEVER, each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.19 and under Section 2.20. 2.20. INCREASED COSTS; CAPITAL ADEQUACY. (a) COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions of Section 2.21, in the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.20(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Excluded Tax) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds -65- applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.20(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error. (b) CAPITAL ADEQUACY ADJUSTMENT. In the event that any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Commitments or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.20(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error. -66- 2.21. TAXES; WITHHOLDING, ETC. (a) PAYMENTS TO BE FREE AND CLEAR. All sums payable by any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than any Excluded Tax) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment. (b) WITHHOLDING OF TAXES. If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender under any of the Credit Documents: (i) Company shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Company becomes aware of it; (ii) Company shall pay any such Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) except with respect to any Excluded Tax, the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Company shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority, PROVIDED, HOWEVER, that no additional amount shall be required to be paid to any Lender under clause (iii) above except to the extent that any change after the Lender Effective Date in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the Lender Effective Date in respect of payments to such Lender. (c) EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX. (i) Each Lender that is not a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a "NON-US LENDER") shall deliver to Administrative Agent for transmission to Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), upon designation of a new lending office, and at such other times as may be necessary in the determination of Company -67- or Administrative Agent (each in the reasonable exercise of its discretion), two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code, or regulations or administrative pronouncements promulgated thereunder, and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents; (ii) Each Lender that is a United States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes, and that is not a person which the Company is entitled to treat as an "exempt recipient" (as such term is defined in Section 1.6049-4(c)(ii) of the United States Treasury Regulations) without receiving a certificate from such person (under current law, including, but not limited to any person whose name includes the terms "Incorporated", "Inc.", "Corporation", "Corp.", "P.C.", "insurance company", "indemnity company", "reinsurance company", "assurance company", "bank", "savings and loan association", "buildings and loan association", "homestead association", "credit union" or "industrial loan association" and their permitted foreign language equivalents, and any entity that is generally known in the investment community to be registered at all times during the taxable year under the Investment Company Act of 1940) (a "US Lender") shall deliver to the Administrative Agent for transmission to the Company, on or prior to the Closing Date (in the case of each US Lender listed on the signature pages hereof, on the Closing Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a US Lender (in the case of each other US Lender), and at such other times as may be necessary in the determination of the Company or Administrative Agent (each in the reasonable exercise of its discretion), two original copies of Internal Revenue Service Form W-9 (or any successor forms), properly completed and duly executed by such US Lender, and such other documentation reasonably requested by the Company, to establish that such US Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such US Lender of principal, interest, fees or other amounts payable under any of the Credit Documents; or (iii) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8 (or any successor form), properly completed and duly executed by such Lender, and such other documentation reasonably requested by Company or Administrative Agent to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.21(c) hereby agrees, from time to time after the initial time for delivery or potential delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent for transmission to -68- Company two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), or a Certificate re Non-Bank Status (or any successor forms) and two original copies of Internal Revenue Service Form W-8 or two original copies of Internal Revenue Service Form W-9, as the case may be (or any successor forms), properly completed and duly executed by such Lender, and such other documentation reasonably requested by Company or Administrative Agent to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence. Company shall not be required to pay any additional amount to any U.S. Lender or Non-US Lender under Section 2.21(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence referred to in the second sentence of this Section 2.21(c), or (2) to notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence, as the case may be; PROVIDED, if such Lender shall have satisfied the requirements of the first sentence of this Section 2.21(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of Section 2.21(c) shall relieve Company of its obligation to pay any additional amounts pursuant to Section 2.20(a) or Section 2.21(b) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein. Each US Lender and Non-US Lender hereby agrees to indemnify and hold harmless the Company from and against any Taxes imposed on or behalf of the United States or any taxing jurisdiction thereof, and any interest, penalties or additions thereto, or costs incurred in connection therewith, incurred or payable by the Company as a result of the failure of the Company to comply with its obligations to deduct or withhold any Taxes imposed by or on behalf of the United States or any taxing jurisdiction thereof from any payments made pursuant to this Agreement to such US Lender, Non-US Lender or the Administrative Agent, which failure resulted from the Company's reliance on any form, statement, certificate or other information provided to it by such Lender pursuant to this Section 2.21 or by reason of such Lender being a "conduit entity" within the meaning of U.S. Treasury Regulation Section 1.881-3 (or any applicable successor provision). 2.22. OBLIGATION TO MITIGATE. Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Commitments, Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.19, 2.20 or 2.21, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Commitments, Loans and Letters of Credit, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, -69- if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.19, 2.20 or 2.21 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Commitments, Loans or Letters of Credit or the interests of such Lender; PROVIDED, such Lender will not be obligated to utilize such other office pursuant to this Section 2.22 unless Company agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described in clause (a) above. A certificate as to the amount of any such expenses payable by Company pursuant to this Section 2.22 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error. 2.23. DEFAULTING LENDERS. Anything contained herein to the contrary notwithstanding, in the event that any Lender, at the direction or request of any regulatory agency or authority, defaults (a "DEFAULTING LENDER") in its obligation to fund (a "FUNDING DEFAULT") any Revolving Loan under Section 2.3(b)(iv) or any Delayed Draw Loan under Section 2.2(b)(iv) or its portion of any unreimbursed payment under Section 2.4(e) (in each case, a "DEFAULTED LOAN"), then (a) during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a "Lender" for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Credit Documents; (b) to the extent permitted by applicable law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary prepayment of the Revolving Loans shall, if Company so directs at the time of making such voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such Defaulting Lender had no Revolving Loans outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (ii) any mandatory prepayment of the Revolving Loans shall, if Company so directs at the time of making such mandatory prepayment, be applied to the Revolving Loans of other Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that Company shall be entitled to retain any portion of any mandatory prepayment of the Revolving Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b); (c) such Defaulting Lender's Revolving Commitment and outstanding Revolving Loans and such Defaulting Lender's Pro Rata Share of the Letter of Credit Usage shall be excluded for purposes of calculating the Revolving Commitment fee payable to Lenders in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any Revolving Commitment fee pursuant to Section 2.11 with respect to such Defaulting Lender's Revolving Commitment in respect of any Default Period with respect to such Defaulting Lender; and (d) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. -70- No Revolving Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.23, performance by Company of its obligations hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Funding Default or the operation of this Section 2.23. The rights and remedies against a Defaulting Lender under this Section 2.23 are in addition to other rights and remedies which Company may have against such Defaulting Lender with respect to any Funding Default and which Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default. 2.24. REMOVAL OR REPLACEMENT OF A LENDER. Anything contained herein to the contrary notwithstanding, in the event that: (a) any Lender (an "INCREASED-COST LENDER") shall give notice to Company that such Lender is an Affected Lender or such Lender becomes entitled to receive payments under Section 2.20 or 2.21, the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and such Lender shall fail to (i) withdraw such notice or (ii) waive in writing the right to receive the applicable payments, in each of cases (i) and (ii), within five Business Days after Company's request for such withdrawal or waiver; or (b) any Lender shall become a Defaulting Lender, the Default Period for such Defaulting Lender shall remain in effect, and such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Company's request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each a "NON-CONSENTING LENDER") whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the "TERMINATED LENDER"), Company may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each a "REPLACEMENT LENDER") in accordance with the provisions of Section 10.6 and Terminated Lender shall pay any fees payable thereunder in connection with such assignment; PROVIDED, (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.12; (2) on the date of such assignment, Company shall pay any amounts payable to such Terminated Lender pursuant to Section 2.19, 2.20 or 2.21 or otherwise as if it were a prepayment; and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which -71- such Terminated Lender was a Non-Consenting Lender; PROVIDED, Company may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, Company shall have caused each outstanding Letter of Credit issued thereby to be cancelled. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender's Revolving Commitments, if any, such Terminated Lender shall no longer constitute a "Lender" for purposes hereof; PROVIDED, any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. SECTION 3. CONDITIONS PRECEDENT 3.1. CLOSING DATE. The obligation of any Lender to make a Credit Extension on the Closing Date is subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions on or before the Closing Date: (a) CREDIT DOCUMENTS. Administrative Agent shall have received sufficient copies of each Credit Document originally executed and delivered by each applicable Credit Party for each Lender. (b) ORGANIZATIONAL DOCUMENTS; INCUMBENCY. Administrative Agent shall have received (i) sufficient copies of each Organizational Document executed and delivered by each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of such Person executing the Credit Documents to which it is a party; (iii) resolutions of the Board of Directors or similar governing body of each Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents and the Related Agreements to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority of each Credit Party's jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Closing Date; and (v) such other documents as Administrative Agent may reasonably request in writing. (c) ORGANIZATIONAL AND CAPITAL STRUCTURE. The organizational structure and capital structure of Holdings and its Subsidiaries, both before and after giving effect to the Merger, shall be as set forth on Schedule 4.2. (d) ISSUANCE OF SENIOR SUBORDINATED NOTES. On or before the Closing Date: (i) Company shall have received the gross proceeds from the issuance of the Senior Subordinated Notes in an aggregate amount in cash of not less than $250,000,000; -72- (ii) Company shall have delivered to Agents complete, correct and conformed copies of the Senior Subordinated Note Documents; and (iii) Company shall have provided evidence satisfactory to Agents that the proceeds of Senior Subordinated Notes have been irrevocably committed, prior to the application of the proceeds of the Term Loans to be made on the Closing Date, to the payment of the Merger Financing Requirements (subject to the concurrent consummation of the Merger). (e) EQUITY FINANCING. On or before the Closing Date, Company shall have provided evidence satisfactory to Agents that the proceeds of the Equity Financing have been irrevocably committed, prior to the application of the proceeds of the Term Loans to be made on the Closing Date, to the payment of the Merger Financing Requirements (subject to the concurrent consummation of the Merger). (f) RELATED AGREEMENTS. Syndication Agent shall have received a fully executed or conformed copy of each Related Agreement and any documents executed in connection therewith, together with copies of any opinions of counsel delivered to the parties under the Related Agreements, accompanied by a letter from each such counsel (to the extent not inconsistent with such counsel's established internal policies) authorizing Lenders to rely upon such opinion to the same extent as though it were addressed to Lenders. Each Related Agreement shall be in full force and effect and no provision thereof shall have been modified or waived in any respect determined by Syndication Agent to be material, in each case without the consent of Syndication Agent. (g) CONSUMMATION OF MERGER AND OTHER TRANSACTIONS. (i) All conditions to the Merger set forth in Article VIII of the Merger Agreement and related documents shall have been satisfied or the fulfillment of any such conditions shall have been waived with the consent of Administrative Agent and Syndication Agent; (ii) the Merger shall have become effective in accordance with the terms of the Merger Agreement; (iii) the other conditions set forth in Schedule 1.1 shall have been satisfied; and (iv) the Merger Financing Requirements shall not exceed $848,800,000. (h) EXISTING GUARANTY OBLIGATIONS. Except as set forth on Schedule 6.1(g), on the Closing Date, Holdings and its Subsidiaries shall have (i) extinguished all guaranty obligations of Company and its Subsidiaries, and (ii) made arrangements satisfactory to Syndication Agent and Administrative Agent with respect to the cancellation of any letters of credit outstanding to support the obligations of Holdings and its Subsidiaries with respect thereto. (i) EXISTING INDEBTEDNESS. Except as set forth on Schedule 6.1(g), on the Closing Date, Holdings and its Subsidiaries shall have (i) repaid in full all of their Indebtedness, (ii) terminated any commitments to lend or make other extensions of credit thereunder, (iii) delivered to Syndication Agent and Administrative Agent all documents or instruments necessary to release all Liens securing any Indebtedness (other than in respect of Surviving Indebtedness) of any of them or other obligations of Holdings and its -73- Subsidiaries thereunder being repaid on the Closing Date, and (iv) made arrangements satisfactory to Syndication Agent and Administrative Agent with respect to the cancellation of any letters of credit outstanding thereunder or the issuance of Letters of Credit to support the obligations of Holdings and its Subsidiaries with respect thereto. (j) TRANSACTION COSTS. On or prior to the Closing Date, Company shall have delivered to Administrative Agent Company's reasonable best estimate of the Transaction Costs (other than fees payable to any Agent). (k) GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. Each Credit Party shall have obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Credit Documents and the Related Agreements and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to Syndication Agent and Administrative Agent, except for such registrations, consents, approvals, notices or actions the failure of which to obtain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the transactions contemplated by the Credit Documents or the Related Agreements or the financing thereof and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired. (l) REAL ESTATE ASSETS. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in each Material Real Estate Asset, Collateral Agent shall have received from Company and each applicable Guarantor: (i) fully executed and notarized Mortgages, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.1(l) (each, a "CLOSING DATE MORTGAGED PROPERTY"); (ii) an opinion of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the form(s) of Mortgages to be recorded in such state and such other matters as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent; (iii) in the case of each Leasehold Property that is a Closing Date Mortgaged Property, (1) a Landlord's Consent, Estoppel Certificate and Amendment and (2) evidence that such Leasehold Property is a Recorded Leasehold Interest; -74- (iv) (A) ALTA mortgagee title insurance policies (or other policies available in such state and reasonably satisfactory to Collateral Agent) or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to Collateral Agent with respect to each Closing Date Mortgaged Property (each, a "TITLE POLICY"), in amounts not less than the fair market value of each Closing Date Mortgaged Property, together with a title report issued by a title company with respect thereto, dated not more than thirty days prior to the Closing Date and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to Collateral Agent and (B) evidence satisfactory to Collateral Agent that such Credit Party has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages for each Closing Date Mortgaged Property in the appropriate real estate records; (v) evidence of flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, in form and substance reasonably satisfactory to Collateral Agent; (vi) ALTA/ACSM surveys (or any other surveys available in such state and reasonably satisfactory to Collateral Agent) of all Closing Date Mortgaged Properties, certified to Collateral Agent and dated not more than thirty days prior to the Closing Date and in form and substance reasonably satisfactory to Collateral Agent. (vii) fully executed UCC-1 fixture filings for filing in each location Collateral Agent reasonably determines to be appropriate; and (viii) an appraisal of each Closing Date Mortgaged Property in form and substance reasonably acceptable to Collateral Agent. (m) OTHER COLLATERAL. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the Collateral (other than Real Estate Assets), Collateral Agent shall have received: (i) evidence satisfactory to the Collateral Agent of the compliance by each Credit Party of their obligations under the Pledge and Security Agreement and the other Collateral Documents (including, without limitation, their obligations to deliver UCC financing statements, originals of securities, -75- instruments and chattel paper and any agreements governing deposit and/or securities accounts as provided therein). (ii) A completed Collateral Questionnaire dated the Closing Date and executed by an Authorized Officer of each Credit Party, together with all attachments contemplated thereby, including (A) the results of a recent search, by a Person reasonably satisfactory to Collateral Agent, of all effective UCC financing statements made with respect to any property, the creation of security interests in which is governed by the UCC, of any Credit Party in the jurisdictions specified in the Collateral Questionnaire, together with copies of all such filings disclosed by such search, and (B) UCC termination statements duly executed by all applicable Persons for filing in all applicable jurisdictions as may be necessary to terminate any effective UCC financing statements disclosed in such search (other than any such financing statements in respect of Permitted Liens); and (iii) opinions of counsel (which counsel shall reasonably be satisfactory to Collateral Agent) with respect to the creation and perfection of the security interests in favor of Collateral Agent in such Collateral and such other matters governed by the laws of each jurisdiction in which any Credit Party or any such Collateral is located as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent. (n) COLLATERAL MATTERS. Each of the Administrative Agent and the Collateral Agent shall have received evidence that each Credit Party shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument and made or caused to be made any other filing and recording (other than as set forth herein) reasonably required by Collateral Agent. (o) FINANCIAL STATEMENTS; PROJECTIONS. Lenders shall have received from Holdings (i) the Historical Financial Statements, (ii) pro forma consolidated and consolidating balance sheets of Holdings and its Subsidiaries as at the Closing Date, and reflecting the consummation of the Merger, the related financings and the other transactions contemplated by the Credit Documents to occur on or prior to the Closing Date, which pro forma financial statements shall be in form and substance satisfactory to Administrative Agent and Syndicated Agent, (iii) the Projections, and (iv) if the Closing Date has not occurred on or prior to August 15, 2002, a certificate of the Chief Financial Officer of Holdings certifying that the Consolidated Adjusted EBITDA for the four Fiscal Quarters ended on June 30, 2002 is not less than $114.2 million determined on a pro forma basis after giving effect to the Merger, the related financings and the other transactions contemplated by the Related Agreements to occur on or prior to the Closing Date. (p) EVIDENCE OF INSURANCE. Each of Syndication Agent and Administrative Agent shall have received a certificate from Company's insurance broker or other -76- evidence satisfactory to it that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect and that Administrative Agent, for the benefit of Lenders has been named as additional insured and loss payee thereunder to the extent required under Section 5.5. (q) OPINIONS OF COUNSEL TO CREDIT PARTIES. Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of Fried, Frank, Harris, Shriver & Jacobson, counsel for Credit Parties, in the form of Exhibit D and as to such other matters as Administrative Agent or Syndication Agent may reasonably request, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to each of Administrative Agent and Syndication Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders). (r) OPINIONS OF COUNSEL TO SYNDICATION AGENT. Lenders shall have received originally executed copies of one or more favorable written opinions of Sullivan & Cromwell, counsel to Syndication Agent, dated as of the Closing Date, in form and substance reasonably satisfactory to each of Syndication Agent and Administrative Agent. (s) FEES. Company shall have paid to the Agents, the fees payable on the Closing Date referred to in Section 2.11(e). (t) SOLVENCY CERTIFICATE; SOLVENCY APPRAISAL. On the Closing Date, Syndication Agent and Administrative Agent shall have received (i) a Solvency Certificate from the Chief Financial Officer of Holdings on behalf of Company and (ii) an opinion from an independent valuation consultant satisfactory to Syndication Agent and Administrative Agent, each dated the Closing Date and addressed to Syndication Agent, Administrative Agent and Lenders, and in form, scope and substance satisfactory to Syndication Agent and Administrative Agent, with appropriate attachments and demonstrating that after giving effect to the consummation of the Merger, the related financings and the other transactions contemplated by the Related Documents to occur on or prior to the Closing Date, Company and its Subsidiaries are and will be Solvent. (u) CLOSING DATE CERTIFICATE. Holdings and Company shall have delivered to Syndication Agent and Administrative Agent an originally executed Closing Date Certificate, together with all attachments thereto. (v) CLOSING DATE. Lenders shall have made the Term Loan to Company on or before August 31, 2002. (w) NO LITIGATION. The representations and warranties set forth in Sections 4.13 and 6.4 of the Merger Agreement (subject to the exemptions and qualifications set forth therein) shall be true and correct as of the -77- Closing Date or compliance therewith as of the Closing Date shall have been waived with the prior approval of Syndication Agent and Administrative Agent. (x) COMPLETION OF PROCEEDINGS. All partnership, corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found acceptable by Administrative Agent or Syndication Agent and its counsel shall be satisfactory in form and substance to Administrative Agent and Syndication Agent and such counsel, and Administrative Agent, Syndication Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent or Syndication Agent may reasonably request. Each Lender, by delivering its signature page to this Agreement and funding a Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date. 3.2. CONDITIONS TO EACH CREDIT EXTENSION. (a) CONDITIONS PRECEDENT. The obligation of each Lender to make any Loan, or Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Closing Date, are subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent: (i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be; (ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect; (iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; (iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; (v) on or before the date of issuance of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as Issuing Bank -78- may reasonably require in connection with the issuance of such Letter of Credit; (vi) in the case of a Revolving Loan used in connection with the financing of a Permitted Acquisition, if (a) the aggregate amount of Permitted Acquisition Expenses exceeds $10,000,000 or (b) the aggregate amount of Permitted Acquisition Expenses for Permitted Acquisitions for the previous four Fiscal Quarters (together with any Permitted Acquisition agreed to and not yet consummated) exceeds $20,000,000, then the Chief Financial Officer of Holdings shall have delivered a Compliance Certificate representing and warranting and otherwise demonstrating to the satisfaction of Administrative Agent and Syndication Agent that, as of such Credit Date, the Leverage Ratio as of the later of (x) March 30, 2002 and (y) the last day of the most recent Fiscal Quarter for which financial statements have been delivered to the Lenders pursuant to Section 5.1(b), determined on a pro forma basis in accordance with Section 6.8(d) after giving effect to the proposed Credit Extension, shall not exceed (i) 5.20:1.00 in respect of Fiscal Quarters ending on or prior to June 29, 2003; (ii) 5.00:1.00 in respect of Fiscal Quarters ending after June 30, 2003 and on or prior to December 25, 2004; and (iii) 4.75:1.00 in respect of subsequent Fiscal Quarters; and (vii) in the case of a Delayed Draw Loan, the Chief Financial Officer of Holdings shall have delivered a Compliance Certificate representing and warranting and otherwise demonstrating to the satisfaction of Administrative Agent and Syndication Agent that, as of such Credit Date, the Leverage Ratio as of the later of (x) March 30, 2002 and (y) the last day of the most recent Fiscal Quarter for which quarterly financial statements have been delivered to Lenders pursuant to Section 5.1(b), determined on a pro forma basis in accordance with Section 6.8(d) after giving effect to the proposed Credit Extension, shall not exceed (i) 5.20:1.00 in respect of Fiscal Quarters ending on or prior to June 29, 2003 or (ii) 5.00:1.00 in respect of subsequent Fiscal Quarters. Any Agent or Requisite Lenders shall be entitled, but not obligated to, request and receive, prior to the making of any Credit Extension, additional information reasonably satisfactory to the requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment of such Agent or Requisite Lender such request is warranted under the circumstances. (b) NOTICES. Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Company may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion/continuation or issuance of a Letter of Credit, as the case may be; PROVIDED each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the applicable date of borrowing, continuation/conversion or issuance. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic -79- notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Company or for otherwise acting in good faith. SECTION 4. REPRESENTATIONS AND WARRANTIES In order to induce Lenders and Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Lender and Issuing Bank, on the Closing Date and on each Credit Date, that the following statements are true and correct, except to the extent any representation or warranty relates to a specific date, in which case such statement shall be true and correct as of such specific date (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made concurrently with the consummation of the Merger, the related financings and the other transactions contemplated by the Related Agreements to occur on the Closing Date). 4.1. ORGANIZATION; REQUISITE POWER AND AUTHORITY; QUALIFICATION. Each of Holdings and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not reasonably be expected to have, a Material Adverse Effect. 4.2. CAPITAL STOCK AND OWNERSHIP. The Capital Stock of each of Holdings and its Subsidiaries has been duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Holdings or any of its Subsidiaries is a party requiring, and there is no Capital Stock of Holdings or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Holdings or any of its Subsidiaries of any additional Capital Stock of Holdings or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, Capital Stock of Holdings or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Holdings and each of its Subsidiaries in their respective Subsidiaries as of the Closing Date both before and after giving effect to the Merger, the related financings and other transactions contemplated by the Related Agreements to occur on the Closing Date. 4.3. DUE AUTHORIZATION. The transactions contemplated by the Credit Documents are within the corporate powers of each Credit Party and the execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto. -80- 4.4. GUARANTOR SUBSIDIARIES. Schedule 4.4 correctly sets forth, as of the Closing Date, all of Company's Guarantor Subsidiaries who are parties to this Agreement. 4.5. NO CONFLICT. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate any provision of any law or any governmental rule or regulation applicable to Holdings or any of its Subsidiaries, any of the Organizational Documents of Holdings or any of its Subsidiaries, or any order, judgment or decree of any court or other agency of government binding on Holdings or any of its Subsidiaries except to the extent such violation, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Holdings or any of its Subsidiaries except to the extent such conflict, breach or default, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Holdings or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of Secured Parties) except to the extent that the creation or imposition of any such Liens, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; or (d) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of Holdings or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date and disclosed in writing to Lenders and except for any such approvals or consents the failure of which to obtain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.6. GOVERNMENTAL CONSENTS. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except as otherwise set forth in the Merger Agreement, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, as of the Closing Date, and except for such registrations, consents, approvals, notices or actions the failure of which to obtain, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.7. BINDING OBLIGATION. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. -81- 4.8. HISTORICAL FINANCIAL STATEMENTS. The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. As of the Closing Date, neither Holdings nor any of its Subsidiaries has any contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings and any of its Subsidiaries taken as a whole. 4.9. PROJECTIONS. On and as of the Closing Date, the Projections of Holdings and its Subsidiaries for the period Fiscal Year 2002 through and including Fiscal Year 2010 (the "PROJECTIONS") are based on good faith estimates and reasonable assumptions made by the management of Holdings; PROVIDED, the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material; PROVIDED FURTHER, as of the Closing Date, management of Holdings believed that the Projections were reasonable and attainable. 4.10. NO MATERIAL ADVERSE CHANGE. Since December 29, 2001, no event, circumstance or change has occurred that has caused or evidences, either in any case or in the aggregate, a continuing Material Adverse Effect. 4.11. ADVERSE PROCEEDINGS, ETC. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4.12. PAYMENT OF TAXES. Except as otherwise permitted under Section 5.3, all material tax returns and reports of Holdings and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all material assessments, fees and other governmental charges upon Holdings and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Holdings knows of no proposed tax assessment against Holdings or any of its Subsidiaries which is not being actively contested by Holdings or such Subsidiary in good faith and by appropriate proceedings; PROVIDED, such -82- reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. 4.13. PROPERTIES. (a) TITLE. Each of Holdings and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (iii) good title to (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.8 and in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business of Company and its Subsidiaries or as otherwise permitted under Section 6.9. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens. (b) REAL ESTATE. As of the Closing Date, Schedule 4.13 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Credit Party, regardless of whether such Credit Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Holdings does not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles. 4.14. ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.14, (i) neither Holdings nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Hazardous Materials Activity, (ii) there are and, to each of Holdings' and its Subsidiaries' knowledge, have been, no conditions, occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis of an Environmental Claim against Holdings or any of its Subsidiaries, (iii) neither Holdings nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9604) or any comparable state law, in each of cases (i), (ii) and (iii) that, if resolved adversely, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No event or condition has occurred or is -83- occurring with respect to Holdings or any of its Subsidiaries relating to any applicable Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity which individually or in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect, other than the events and conditions described on Schedule 4.14 as existing on or prior to the Closing Date. 4.15. NO DEFAULTS. Neither Holdings nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect. 4.16 GOVERNMENTAL REGULATION. Neither Holdings nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. Neither Holdings nor any of its Subsidiaries is a "registered investment company" or a company "controlled" by a "registered investment company" or a "principal underwriter" of a "registered investment company" as such terms are defined in the Investment Company Act of 1940. 4.17. MARGIN STOCK. Neither Holdings nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit Party will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System. 4.18. EMPLOYEE MATTERS. Neither Holdings nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Holdings or any of its Subsidiaries, or to the best knowledge of Holdings and Company, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Holdings or any of its Subsidiaries or to the best knowledge of Holdings and Company, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving Holdings or any of its Subsidiaries, and (c) to the best knowledge of Holdings and Company, no union representation question existing with respect to the employees of Holdings or any of its Subsidiaries and, to the best knowledge of Holdings and Company, no union organization activity that is taking place, except (with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect. -84- 4.19. EMPLOYEE BENEFIT PLANS. Except as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (i) Holdings, each of its Subsidiaries and each of their respective ERISA Affiliates are in substantial compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have substantially performed all their obligations under each Employee Benefit Plan, (ii) each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status, (iii) no liability to the PBGC (other than required premium payments) has been or is expected to be incurred by Holdings, any of its Subsidiaries or any of their ERISA Affiliates, (iv) no ERISA Event has occurred or is reasonably expected to occur, and (v) Holdings, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material "default" (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.) 4.20. SOLVENCY. Each Credit Party is and, upon the incurrence of any Obligation by such Credit Party on any date on which this representation and warranty is made and after giving effect to the provisions of Section 7.2, will be, Solvent. 4.21. RELATED AGREEMENTS. (a) DELIVERY. Holdings and Company have delivered to Syndication Agent and Administrative Agent complete and correct copies of (i) each Related Agreement and of all exhibits and schedules thereto as of the date hereof and (ii) copies of any material amendment, restatement, supplement or other modification to or waiver of each Related Agreement entered into after the date hereof. (b) REPRESENTATIONS AND WARRANTIES. Except to the extent otherwise expressly set forth herein or in the schedules hereto, and subject to the qualifications set forth therein, each of the representations and warranties given by any Credit Party or the Sponsors in any Related Agreement is true and correct in all material respects as of the Closing Date (or as of any earlier date to which such representation and warranty specifically relates). (c) GOVERNMENTAL APPROVALS. All Governmental Authorizations and all other authorizations, approvals and consents of any other Person required by the Related Agreements or to consummate the Merger have been obtained and are in full force and effect in all material respects. (d) CONDITIONS PRECEDENT. On the Closing Date, except as disclosed in writing to the Administrative Agent, (i) all of the conditions to effecting or consummating the Merger set forth in the Related Agreements have been duly -85- satisfied in all material respects or, with the consent of Administrative Agent and Syndication Agent, waived, and (ii) the Merger has been consummated in all material respects in accordance with the Related Agreements and all applicable laws. 4.22. COMPLIANCE WITH STATUTES, ETC. Each of Holdings and its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Holdings or any of its Subsidiaries), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 4.23 DISCLOSURE. No representation or warranty of any Credit Party contained in any Credit Document or in any other documents, certificates or written statements furnished to Lenders by or on behalf of Holdings or any of its Subsidiaries for use in connection with the transactions contemplated hereby at the time such representation or warranty is made contains any untrue statement of a material fact or omits to state a material fact (known to Holdings or Company, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Holdings or Company to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ materially from the projected results. There are no facts known (or which should upon the reasonable exercise of diligence be known) to Holdings or Company (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby. SECTION 5. AFFIRMATIVE COVENANTS Each Credit Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all Obligations and cancellation or expiration of all Letters of Credit, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5. 5.1. FINANCIAL STATEMENTS AND OTHER REPORTS. Holdings will deliver to Administrative Agent and Lenders: (a) MONTHLY REPORTS. Solely to the Administration Agent, (and to other Lenders upon request) as soon as available, and in any event within 30 days after -86- the end of each month ending after the Closing Date, the consolidated balance sheet of Holdings and its Subsidiaries as at the end of such month and the related consolidated statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, to the extent prepared on a monthly basis, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; (b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the consolidated and consolidating balance sheets of Holdings and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated (and with respect to sales and EBITDA, statements of income, consolidating) statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; (c) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any event within 90 days after the end of each Fiscal Year, (i) the consolidated and consolidating balance sheets of Holdings and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and with respect to sales, EBITDA and statements of income, consolidating) statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon of Ernst & Young or other independent certified public accountants of recognized national standing selected by Holdings, and reasonably satisfactory to Administrative Agent (which report shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Holdings and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together (to the extent not inconsistent with the pronouncements of the Institute of Certified Public Accountants and FASB) with a written statement by such independent certified public accountants stating whether, in connection with their audit examination, any failure to comply with the -87- terms, covenants, provisions or conditions of Article 5 or Article 6 (insofar as they relate to the accounting matters) has come to their attention and, if such a failure to comply has come to their attention, specifying the nature and period of existence thereof; (d) COMPLIANCE CERTIFICATE. Together with each delivery of financial statements of Holdings and its Subsidiaries pursuant to Sections 5.1(b) and 5.1(c), a duly executed and completed Compliance Certificate; (e) STATEMENTS OF RECONCILIATION AFTER CHANGE IN ACCOUNTING PRINCIPLES. If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Holdings and its Subsidiaries delivered pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more a statements of reconciliation for all such prior financial statements in form and substance satisfactory to Administrative Agent; (f) NOTICE OF DEFAULT. Promptly upon any Authorized Officer of Holdings or Company obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Holdings or Company with respect thereto; (ii) that any Person has given any notice to Holdings or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any events or changes that have caused or evidence, individually or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officers specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto; (g) NOTICE OF LITIGATION. Promptly upon any Authorized Officer of Holdings or Company obtaining knowledge of (i) the institution of, or non-frivolous written threat of, any Adverse Proceeding not previously disclosed in writing by Company to Lenders, or (ii) any material development in any Adverse Proceeding, in each of the cases (i) or (ii) which if adversely determined, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or which seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other information as may reasonably be available to Holdings or Company to enable Lenders and their counsel to evaluate such matters; (h) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take -88- with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) upon request in writing, with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (i) FINANCIAL PLAN. As soon as practicable and in any event no later than thirty (30) days prior to the beginning of each Fiscal Year, a consolidated plan and financial forecast for such Fiscal Year and each Fiscal Year (or portion thereof) through the final maturity date of the Loans (a "FINANCIAL PLAN"), including (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries for each such Fiscal Year, together with a statement of forecasted compliance with the financial covenants in Section 6.8 (including estimates of the information required in Annex A to the form of Compliance Certificate attached hereto) for each such Fiscal Year and an explanation of the assumptions on which such forecasts are based, and (ii) forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries for each month of each such Fiscal Year, together, in each cases (i) and (ii), with an explanation of the assumptions on which such forecasts are based all in form and substance reasonably satisfactory to Agents; (j) INSURANCE REPORT. As soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Holdings and its Subsidiaries and all material insurance coverage planned to be maintained by Holdings and its Subsidiaries in the immediately succeeding Fiscal Year; (k) NOTICE OF CHANGE IN BOARD OF DIRECTORS. With reasonable promptness, written notice of any change in the board of directors (or similar governing body) of Holdings or Company; (l) ENVIRONMENTAL DISCLOSURE. The materials and information required to be delivered under Section 5.9(a), as and when required; (m) INFORMATION REGARDING COLLATERAL. Information required to be delivered pursuant to Section 3.1(c) of the Pledge and Security Agreement. (n) OTHER INFORMATION. Promptly upon their becoming available, (i) copies of (A) all financial statements, reports, notices and proxy statements sent or made available generally by Holdings to its security holders acting in such capacity or by any Subsidiary of Holdings to its security holders other than Holdings or another Subsidiary of Holdings, (B) all regular and periodic reports and all registration statements and prospectuses, if any, -89- filed by Holdings or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, (C) all press releases and other statements made available generally by Holdings or any of its Subsidiaries to the public concerning material developments in the business of Holdings or any of its Subsidiaries, and (ii) such other information and data with respect to Holdings or any of its Subsidiaries as from time to time may reasonably be requested by Administrative Agent or any Lender. 5.2. EXISTENCE. Except as otherwise permitted under Section 6.9, each Credit Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; PROVIDED, no Credit Party or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if such Person's board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof could not reasonably be expected to have a Material Adverse Effect. 5.3. PAYMENT OF TAXES AND CLAIMS. Each Credit Party will, and will cause each of its Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; PROVIDED, no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in the case of a charge or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim. 5.4. MAINTENANCE OF PROPERTIES. Each Credit Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Holdings and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof. 5.5. INSURANCE. Holdings will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Holdings and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of -90- the foregoing, Holdings will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (b) first party, property coverage insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance shall (i) name Administrative Agent, on behalf of Lenders as an additional insured thereunder as its interests may appear and (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to Administrative Agent, that names Administrative Agent, on behalf of Lenders as the loss payee thereunder and provides for at least 30 days' prior written notice to Administrative Agent of any modification or cancellation of such policy. 5.6. INSPECTIONS. Each Credit Party will, and will cause each of its Subsidiaries to, permit any authorized representatives designated by any Agent or Lender to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect and copy its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested. If such visit and inspection occurs at a time when no Default or Event of Default has occurred and is continuing, such visit and inspection shall be at the expense of such Lender and, if such visit and inspection occur at a time when a Default or Event of Default has occurred and is continuing, such visit and inspection shall be paid by Company pursuant to Section 10.2. By this provision, each Credit Party authorizes its independent public accountants to discuss the affairs, finances and accounts of such Credit Party and its Subsidiaries, PROVIDED, such Credit Party may, if its so chooses, be present and participate in any such discussion. 5.7. LENDERS MEETINGS. Holdings and Company will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Company's corporate offices (or at such other location as may be agreed to by Company and Administrative Agent) at such time as may be agreed to by Company and Administrative Agent. 5.8. COMPLIANCE WITH LAWS. Each Credit Party will comply, and shall cause each of its Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any governmental authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. -91- 5.9. ENVIRONMENTAL. (a) ENVIRONMENTAL DISCLOSURE. Holdings will deliver to Administrative Agent and Lenders the following information and materials, in each case to the extent that they relate to circumstances that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect: (i) as soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports whether prepared by personnel of Holdings or any of its Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to significant environmental matters at any Facility or with respect to any Environmental Claims; (ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (A) any Release required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (B) any remedial action taken by Holdings or any other Person in response to any Hazardous Materials Activities and (C) Holdings or Company's discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws; (iii) as soon as practicable following the sending or receipt thereof by Holdings or any of its Subsidiaries, a copy of any and all written communications with respect to (A) any Environmental Claims (B) any Release required to be reported to any federal, state or local governmental or regulatory agency, and (C) any request for information from any governmental agency that suggests such agency is investigating whether Holdings or any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity; (iv) prompt written notice describing in reasonable detail (A) any proposed acquisition of stock, assets, or property by Holdings or any of its Subsidiaries that could reasonably be expected to expose Holdings or any of its Subsidiaries to, or result in, Environmental Claims or affect the ability of Holdings or any of its Subsidiaries to maintain in full force and effect all Governmental Authorizations required under any Environmental Laws for their respective operations and (B) any proposed action to be taken by Holdings or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Holdings or any of its Subsidiaries to any additional obligations or requirements under any Environmental Laws; and (v) with reasonable promptness, such other documents and information as from time to time may reasonably be requested by Administrative Agent in relation to any matters disclosed pursuant to this Section 5.9(a). -92- (b) HAZARDOUS MATERIALS ACTIVITIES, ETC. Each Credit Party shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder, in each of cases (i) and (ii) where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 5.10. SUBSIDIARIES. In the event that any Person becomes a Domestic Subsidiary of Company, whether pursuant to a Permitted Acquisition or otherwise, Company shall (a) promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a party to the Intercompany Subordination Agreement and a Grantor under the Pledge and Security Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, (b) promptly cause each Person holding Capital Stock of such Domestic Subsidiary (whether or not a Credit Party) to take all of the actions necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent for the benefit of the Secured Parties under the Pledge and Security Agreement in respect of all such Capital Stock and (c) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(b), 3.1(l), 3.1(m), 3.1(n) and 3.1(o) in respect of any Collateral required to be secured for the benefit of Secured Parties under the Pledge and Security Agreement. In the event that any Person becomes a Foreign Subsidiary of Company, and Capital Stock of such Foreign Subsidiary is directly owned by Company or by any Domestic Subsidiary of Company, Company shall, or shall cause such Domestic Subsidiary to, deliver, all such documents, instruments, agreements, and certificates as are similar to those described in Section 3.1(b), and Company shall take, or shall cause such Domestic Subsidiary to take, all of the actions necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent for the benefit of Secured Parties under the Pledge and Security Agreement in such Capital Stock. With respect to each such Subsidiary, Company shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Company, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Company; PROVIDED, such written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof. 5.11. ADDITIONAL MATERIAL REAL ESTATE ASSETS. In the event that any Credit Party acquires a Material Real Estate Asset or any Real Estate Asset becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party, contemporaneously with acquiring such Material Real Estate Asset or upon any Real Estate Asset becoming a Material Real Estate Asset, shall take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Sections 3.1(l), 3.1(m) and 3.1(n) with respect to each such Material Real Estate Asset that Collateral -93- Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in such Material Real Estate Assets. In addition to the foregoing, Company shall, at the request of Requisite Lenders, deliver, from time to time, to Administrative Agent such appraisals as are required by law or regulation of Real Estate Assets with respect to which Collateral Agent has been granted a Lien. 5.12. INTEREST RATE PROTECTION. As soon as reasonably practicable, and in any event no later than 120 days following the Closing Date and at all times thereafter, Company shall maintain, or caused to be maintained, in effect one or more Interest Rate Agreements for a term of not less than two years and otherwise in form and substance reasonably satisfactory to Administrative Agent and Syndication Agent, which Interest Rate Agreements shall effectively limit the Unadjusted Eurodollar Rate Component of the interest costs to Company with respect to an aggregate notional principal amount of not less than 50% of the aggregate principal amount of Consolidated Total Debt (excluding any Revolving Loans) outstanding from time to time (based on the assumption that such notional principal amount was a Eurodollar Rate Loan with an Interest Period of three months) at a rate and on terms satisfactory to the Syndication Agent. 5.13. FURTHER ASSURANCES. At any time or from time to time upon the request of Administrative Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by the Guarantors and are secured by substantially all of the assets of Holdings, and its Subsidiaries and all of the outstanding Capital Stock of Company and its Subsidiaries (subject to limitations contained in the Credit Documents with respect to Foreign Subsidiaries). 5.14. CERTAIN POST-CLOSING MATTERS. Holdings shall have taken all steps necessary to confirm to the satisfaction of the Collateral Agent on or prior to the 31st day following the Closing Date, that (a) all of the 2006 Notes of Holdings shall have been repaid in full, (b) Holdings has granted and perfected a valid and enforceable security interest in 100% of the Capital Stock of the Company pursuant to the Pledge and Security Agreement and delivered certificates in respect of such Capital Stock to the Collateral Agent in accordance with Section 3.4(c) thereof and (c) the Capital Stock of the Company is not subject to any Lien other than the security interest in favor of the Collateral Agent under the Pledge and Security Agreement or any other Lien permitted thereby. -94- SECTION 6. NEGATIVE COVENANTS Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all Obligations and cancellation or expiration of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. 6.1. INDEBTEDNESS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except: (a) the Obligations; (b) (i) Indebtedness of any Guarantor Subsidiary to Company or to any other Guarantor Subsidiary, or of Company to any Guarantor Subsidiary; PROVIDED, (A) all such Indebtedness shall be evidenced by promissory notes and all such notes shall be subject to a First Priority Lien pursuant to the Pledge and Security Agreement, (B) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms and conditions of the applicable promissory notes or the Intercompany Subordination Agreement, and (C) any payment by any Guarantor Subsidiary under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any such Indebtedness owed by such Guarantor Subsidiary to Company or to any of its Guarantor Subsidiaries for whose benefit such payment is made; (ii) Indebtedness of any Foreign Subsidiary to Company or any Guarantor Subsidiary, PROVIDED, (A) all such Indebtedness shall be evidenced by promissory notes and all such notes shall be subject to a First Priority Lien pursuant to the Pledge and Security Agreement and (B) all such Indebtedness shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms and conditions of the applicable promissory notes or an Intercompany Subordination Agreement; (iii) Indebtedness of any Foreign Subsidiary to any other Foreign Subsidiary and (iv) Indebtedness between Company and Holdings arising as a result of Restricted Junior Payments permitted under Section 6.5(d); (c) Company and its Guarantor Subsidiaries may become and remain liable with respect to (i) Senior Subordinated Notes in an aggregate principal amount not to exceed $350,000,000 at any time outstanding under the Senior Subordinated Note Indenture; (ii) additional Subordinated Indebtedness the proceeds of which (net of reasonable costs and expenses associated therewith) are used to repay the Loans pursuant to Section 2.15(d), PROVIDED, the terms and conditions of such Subordinated Indebtedness (including the terms and conditions of any guarantees of or other credit support for such Indebtedness) are not less favorable in any material respect to Company and its Subsidiaries, the Agents or the Lenders than the terms and conditions of the Senior Subordinated Notes; and (iii) extensions, renewals, refinancings or replacements of the Subordinated Indebtedness permitted under clauses (i) and (ii), PROVIDED, such extensions, renewals, refinancings or replacements (A) are on terms -95- and conditions (including the terms and conditions of any guarantees of or other credit support for such Indebtedness) not less favorable in any material respect to Company and its Subsidiaries, the Agents or the Lenders than the terms and conditions of the Indebtedness being extended, renewed, refinanced or replaced, (B) do not add as an obligor any Person that would not have been an obligor under the Indebtedness being extended, renewed, replaced or refinanced, (C) do not result in a greater principal amount or shorter remaining average life to maturity than the Indebtedness being extended, renewed, replaced or refinanced and (D) are not effected at any time when a Default or Event of Default has occurred and is continuing or would result therefrom; (d) Indebtedness in respect of (i) netting services, overdraft protections and otherwise in connection with endorsements of checks and other negotiable instruments and deposit accounts incurred in the ordinary course of business; (ii) workers' compensation claims, self-insurance obligations, performance, surety, release, appeal and similar bonds and completion guarantees incurred in the ordinary course of business of Company and its Subsidiaries and any reimbursement obligations in respect of the foregoing; and (iii) indemnification obligations or obligations in respect of purchase price adjustments or similar obligations incurred or assumed by Company and its Subsidiaries in connection with an Asset Sale or sale of Capital Stock of Holdings otherwise permitted under this Agreement; (e) guaranties in the ordinary course of business of Company and its Subsidiaries of the obligations of suppliers, customers, franchisees and licensees of Holdings and its Subsidiaries; (f) guaranties by Holdings or Company of Indebtedness of a Guarantor Subsidiary or guaranties by a Subsidiary of Company of Indebtedness of Company or a Guarantor Subsidiary with respect, in each case, to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1; (g) Indebtedness described in Schedule 6.1(g), and not exceeding the aggregate principal amount indicated therein (the "SURVIVING INDEBTEDNESS") and, solely in the case of the Surviving Capital Leases and Surviving IRBs, any extensions, renewals, refinancings or replacements thereof, PROVIDED, such extensions, renewals, refinancings or replacements (i) are on terms and conditions (including the terms and conditions of any guarantee or other credit support for such Indebtedness) not less favorable in any material respect to Company and its Subsidiaries, the Agents or the Lenders than the terms and conditions of the Indebtedness being extended, renewed, refinanced or replaced, (ii) do not add as obligor any Person that would not have been an obligor under the Indebtedness being extended, renewed, replaced or refinanced, (iii) do not result in a greater principal amount or shorter remaining average life to maturity than the Indebtedness being extended, renewed, replaced or refinanced and (iv) are not effected at any time when a Default or Event of Default has occurred and is continuing or would result therefrom; -96- (h) Indebtedness with respect to Capital Leases (in addition to any Surviving Capital Leases), including Capital Leases acquired in connection with Permitted Acquisitions, in an aggregate amount at any time outstanding not to exceed the sum of (i) $10,000,000 PLUS (ii) the excess, if any, of (A) the aggregate amount of Surviving Capital Leases outstanding as of the Closing Date over (B) the aggregate amount of Surviving Capital Leases and any extensions, renewals, refinancings or replacements thereof made in accordance with the proviso of Section 6.1(g) outstanding as of the date of determination; (i) Indebtedness of Foreign Subsidiaries (to Persons other than Company or its Subsidiaries) in an aggregate amount not to exceed $5,000,000 at any time outstanding; (j) purchase money Indebtedness in an aggregate amount not to exceed $10,000,000 at any time outstanding (excluding any such Indebtedness of a Person acquired in connection with a Permitted Acquisition); PROVIDED, any such Indebtedness (i) shall be secured only by assets acquired in connection with the incurrence of such Indebtedness, and (ii) shall constitute not less than 90% of the aggregate consideration paid with respect to such asset; (k) (i) Indebtedness (other than Capital Leases) of any Person that becomes a Guarantor Subsidiary after the date hereof pursuant to a Permitted Acquisition (including purchase money Indebtedness of such Person), which Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of, or in connection with, such Person becoming a Subsidiary; and (ii) any extensions, renewals, refinancings or replacements of such Indebtedness which extensions, renewals, refinancings or replacements (A) are on terms and conditions (including the terms and conditions of any guarantee or other credit support for such Indebtedness) not less favorable in any material respect to Company and its Subsidiaries or the Lenders than the terms and conditions of the Indebtedness being extended, renewed, refinanced or replaced and, (B) do not add as obligor any Person that would not have been an obligor under the Indebtedness being extended, renewed, replaced or refinanced, (C) do not result in a greater principal amount or shorter remaining average life to maturity than the Indebtedness being extended, renewed, replaced or refinanced and (D) are not effected at any time when a Default or Event of Default has occurred and is continuing or would result therefrom; PROVIDED, the aggregate amount of Indebtedness described in clauses (i) and (ii) does not exceed $10,000,000 at any time outstanding; (l) Indebtedness with respect to Financial Hedge Agreements; (m) senior unsecured Indebtedness of Holdings to rank PARI PASSU with Holdings' Obligations under its Guaranty, in an aggregate principal amount not to exceed $50,000,000 at any time outstanding; PROVIDED, the Administrative Agent is satisfied that the terms and conditions of such Indebtedness (A) provide that there shall be no payment (whether in Cash or other assets or property, other than payments-in-kind) of principal, interest, fees, -97- expenses or other amounts by Holdings out of the assets or estate of Holdings or any of its Subsidiaries (other than as a consequence of any acceleration or event of default) at any time prior to the payment in full of the Obligations, (B) do not create rights or remedies enforceable against Company or any of its Subsidiaries, (C) do not provide for covenants, restrictions or limitations on Holdings in respect of Company and its Subsidiaries, or Events of Default relating to Company and its Subsidiaries, in each case, that are more restrictive in any material respect than the analogous provisions of the Senior Subordinated Notes and (D) provide for a final maturity after the final maturity of any Loan then outstanding or committed to be lent hereunder; PROVIDED, FURTHER, 100% of the proceeds of such Indebtedness (net of reasonable costs and expenses associated therewith, including reasonable fees and expenses of professional advisors) are contributed as equity capital to Company; (n) other Indebtedness of Holdings and its Guarantor Subsidiaries, which is unsecured and subordinated to the Obligations in a manner satisfactory to Administrative Agent in an aggregate amount not to exceed $10,000,000 at any time outstanding. 6.2. LIENS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset (including any document or instrument in respect of goods or accounts receivable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the UCC of any State or under any similar recording or notice statute, except: (a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document; (b) Liens for Taxes or Liens imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code, in each case, if the underlying obligations are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (c) statutory Liens of landlords, banks (including rights of set-off), carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business of Company and its Subsidiaries (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts; -98- (d) Liens incurred in the ordinary course of business of Company and its Subsidiaries in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof; (e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities affecting any Real Estate Asset in title, in each case which do not and will not materially and adversely affect marketability of title or the value of such Real Estate Asset or interfere in any material respect with the ordinary conduct of the business of Holdings or any of its Subsidiaries; (f) any interest or title in real estate or improvements of a lessor or sublessor, but only as a lessor, under any lease of real estate permitted hereunder; (g) Liens solely on any cash earnest money deposits made by Holdings or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder; (h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to personal property leased pursuant to operating leases entered into in the ordinary course of business of Company and its Subsidiaries; (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (j) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property; (k) licenses of patents, trademarks and other intellectual property rights granted by Holdings or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of Company or such Subsidiary; (l) Liens described in Schedule 6.2(l) or on a title report delivered pursuant to Section 3.1(l)(iv)(A); (m) Liens securing Indebtedness permitted pursuant to Sections 6.1(j) and 6.1(k), PROVIDED, any such Lien (i) exists on the date of the applicable acquisition or, solely in the case of Indebtedness permitted in Section 6.1(j), is created in connection with the financing of the acquisition within 180 days thereafter, (ii) solely in the case of -99- Indebtedness permitted by Section 6.1(k), is not created in contemplation of, or in connection with, such acquisition, and (iii) applies only to the property or assets acquired; (n) (i) Liens in respect of Surviving Capital Leases and Surviving IRBs and existing as of the Closing Date and any replacement Liens, PROVIDED any such replacement Lien applies only to assets and property subject to the Lien so replaced; and (ii) solely during the 30-day period immediately following the Closing Date, the pledge of common stock of the Company in favor of First Trust of New York, National Association, as trustee under the Indenture, dated June 18, 1996, in respect of Holding's 2006 Notes; and (o) other Liens on assets other than the Collateral securing Indebtedness in an aggregate amount not to exceed $5,000,000 at any time outstanding. 6.3. EQUITABLE LIEN. If any Credit Party or any of its Subsidiaries shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, it shall make or cause to be made effective provisions whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; PROVIDED, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not otherwise permitted by Section 6.2. 6.4. NO FURTHER NEGATIVE PLEDGES. No Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, except (a) restrictions pursuant to the Credit Documents, any Subordinated Indebtedness permitted under Section 6.1(c) and any Surviving Indebtedness permitted under Section 6.1(g), PROVIDED, in the case of Subordinated Indebtedness and Surviving Indebtedness, that such restrictions are no more restrictive in any material respect than the applicable restrictions in the Senior Subordinated Note Documents; (b) customary restrictions pending a sale of property or assets permitted hereunder arising under an executed agreement in respect of such sale, PROVIDED, such restrictions relate only to the property or assets being sold; (c) customary restrictions on assignment, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business of Company and its Subsidiaries, PROVIDED, in each case, such restrictions relate only to the property subject to such leases, licenses or similar agreements; and (d) restrictions on property or assets subject to a Lien permitted under Section 6.2(m), PROVIDED, such restrictions relate only to the property or assets subject to such Lien. 6.5. RESTRICTED JUNIOR PAYMENTS. No Credit Party shall, nor shall it permit any of its Subsidiaries through any manner or means or through any other Person to, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment in respect of such Credit Party or Subsidiary, as -100- applicable, except that (a) Company may make regularly scheduled payments of interest in respect of the Senior Subordinated Notes in accordance with the terms of, and only to the extent required by, and subject to the subordination provisions contained in, the Senior Subordinated Note Indenture; (b) Company may extend, renew, refinance or replace Subordinated Indebtedness to the extent permitted under Section 6.1(c); (c) any Subsidiary may pay dividends or make other distributions with respect to any class of its issued and outstanding Capital Stock or intercompany Indebtedness permitted by clauses (i) through (iii) of Section 6.1(b); PROVIDED, any dividends and other distributions by a Subsidiary that is not Wholly-Owned (i) are paid in Cash on a pro rata basis among the holders of each applicable class of Capital Stock and (ii) are not made to any Person other than Company or its Subsidiaries at any time when a Default or Event of Default shall have occurred and be continuing or shall be caused thereby; (d) so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, Company may make Restricted Junior Payments to Holdings (i) in an aggregate amount not to exceed $1,000,000 in any Fiscal Year, to the extent necessary to permit Holdings to pay general administrative costs and expenses and to pay franchise taxes and other fees to maintain its corporate existence, (ii) to the extent necessary to permit Holdings to discharge the consolidated tax liabilities of Holdings and its Subsidiaries and (iii) to the extent necessary to fund Restricted Junior Payments by Holdings in accordance with clause (e) below, PROVIDED, in each of cases (i), (ii) and (iii) Holdings promptly applies the amount of any such Restricted Junior Payment for such purpose; and (e) so long as no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, the following additional payments may be made to holders or purchasers of Capital Stock of Holdings and its Subsidiaries: (i) Holdings may purchase its Capital Stock for Cash from present or former officers and employees of Holdings or any of its Subsidiaries in accordance with the terms of the Employee Leverage Program, Stockholder Agreements and stock option plans upon the death, disability or termination of employment of such officer or employee, PROVIDED, the aggregate amount of such Restricted Junior Payment does not exceed $3,000,000 per Fiscal Year and (ii) any Subsidiary acquired in a Permitted Acquisition may make Cash payments to redeem, retire or repurchase Capital Stock in such Subsidiary held by a minority investor permitted under clause (iii) of the definition of "Permitted Acquisition," PROVIDED, in the case of this clause (ii), the aggregate amount of all such payments by Holdings and its Subsidiaries (exclusive of amounts permitted by Section 6.5(d)) does not exceed $4,000,000 during any Fiscal Year and $12,000,000 from the Closing Date. 6.6. RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except as provided herein, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Company to (a) pay dividends or make any other distributions on any of such Subsidiary's Capital Stock owned by Company or any other Subsidiary of Company, (b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, or (c) make loans or advances to Company or any other Subsidiary of Company, PROVIDED, none of clauses (a) through (c) shall apply to (i) customary restrictions pending a sale of -101- a Subsidiary (or any of its property, assets or Capital Stock) permitted hereunder which restrictions arise under an executed agreement in respect of such sale and relate only to the Subsidiary being sold, (ii) restrictions imposed by applicable law, (iii) restrictions pursuant to the Credit Documents, any Subordinated Indebtedness permitted under Section 6.1(c), any Surviving Indebtedness permitted under Section 6.1(g) and Indebtedness of Foreign Subsidiaries under Section 6.1(i) and (iv) any restrictions existing on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business of Company and its Subsidiaries. 6.7. INVESTMENTS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except: (a) Cash and Cash Equivalents; (b) Investments owned as of the Closing Date in the Capital Stock of any Subsidiary; (c) Investments made after the Closing Date in Capital Stock or, to the extent incurred in accordance with Section 6.1(b), Indebtedness of Company or any Subsidiary, PROVIDED, no Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make any Investment in any Foreign Subsidiary unless on a pro forma basis after giving effect to such Investment as of the last day of the Fiscal Quarter recently ended, Domestic Subsidiaries account for (A) at least 80% of the consolidated assets of Holdings and its Subsidiaries as of the last day of the Fiscal Quarter recently ended and (B) at least 80% of the consolidated revenues of Holdings and its Subsidiaries for the last four full Fiscal Quarters recently ended; (d) Investments made after the Closing Date in Joint Ventures in a business or line of business permitted for Company under Section 6.13, PROVIDED, (A) immediately prior to the making of any Investment, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (B) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations, (C) such Investment can be legally maintained, and is maintained, as Collateral (but only to the extent of Company's interest in such Joint Venture) subject to First Priority security interests on such terms and conditions as are reasonably satisfactory to Administrative Agent, and (D) the aggregate amount of all Investments in Joint Ventures pursuant to this clause (d) does not exceed $10,000,000 at any time outstanding; (e) Investments (i) in any Securities received from financially troubled account debtors in satisfaction or partial satisfaction of accounts receivable incurred in the ordinary course of business of Company and its Subsidiaries, (ii) deposits, prepayments and other credits to suppliers made in the ordinary course of business of Company and its Subsidiaries and (iii) prepaid expenses, negotiable instruments held for collection and -102- lease, utility, worker's compensation, performance and other similar deposits made in the ordinary course of business of Company and its Subsidiaries; (f) Investments that constitute Restricted Junior Payments permitted under Section 6.5(e), Consolidated Capital Expenditures permitted under Section 6.8(c) and Permitted Acquisition Expenses; (g) Investments existing on the Closing Date and described in Schedule 6.7; (h) Investments that constitute Financial Hedge Agreements or agreements permitted under Section 6.18(b); and (i) other Investments (including loans and advances to officers and employees for relocation and other expenses) in an aggregate amount not to exceed $3,000,000 at any time outstanding. 6.8. FINANCIAL COVENANTS. (a) INTEREST COVERAGE RATIO. Holdings shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending on or near December 31, 2002 to be less than the correlative ratio indicated:
FISCAL QUARTER ENDING INTEREST COVERAGE RATIO December 2002 2.00:1.00 March 2003 2.00:1.00 June 2003 2.00:1.00 September 2003 2.00:1.00 December 2003 2.00:1.00 March 2004 2.00:1.00 June 2004 2.10:1.00 September 2004 2.10:1.00 December 2004 2.15:1.00 March 2005 2.15:1.00 June 2005 2.25:1.00 September 2005 2.25:1.00 December 2005 2.25:1.00
-103-
FISCAL QUARTER ENDING INTEREST COVERAGE RATIO March 2006 2.25:1.00 June 2006 2.35:1.00 September 2006 2.35:1.00 December 2006 2.35:1.00 March 2007 2.50:1.00 June 2007 2.50:1.00 September 2007 2.50:1.00 December 2007 2.50:1.00 March 2008 2.50:1.00 June 2008 2.50:1.00 September 2008 2.50:1.00 December 2008 2.50:1.00 March 2009 2.50:1.00 June 2009 2.50:1.00 September 2009 2.50:1.00 December 2009 2.50:1.00 March 2010 2.50:1.00 June 2010 2.50:1.00
(b) LEVERAGE RATIO. Holdings shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending on or near December 31, 2002, to exceed the correlative ratio indicated:
FISCAL QUARTER ENDING LEVERAGE RATIO December 2002 5.90:1.00 March 2003 5.90:1.00 June 2003 5.90:1.00 September 2003 5.75:1.00 December 2003 5.75:1.00
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FISCAL QUARTER ENDING LEVERAGE RATIO March 2004 5.75:1.00 June 2004 5.50:1.00 September 2004 5.50:1.00 December 2004 5.25:1.00 March 2005 5.25:1.00 June 2005 5.25:1.00 September 2005 5.00:1.00 December 2005 5.00:1.00 March 2006 4.75:1.00 June 2006 4.75:1.00 September 2006 4.50:1.00 December 2006 4.50:1.00 March 2007 4.50:1.00 June 2007 4.25:1.00 September 2007 4.25:1.00 December 2007 4.25:1.00 March 2008 4.00:1.00 June 2008 4.00:1.00 September 2008 4.00:1.00 December 2008 4.00:1.00 March 2009 4.00:1.00 June 2009 4.00:1.00 September 2009 4.00:1.00 December 2009 4.00:1.00 March 2010 4.00:1.00 June 2010 4.00:1.00
(c) MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES. Except to the extent funded from the Cash proceeds of Additional Sponsor Equity, Holdings shall not, -105- and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures in any Fiscal Year indicated below in an aggregate amount in excess of (i) the corresponding amount set forth opposite such Fiscal Year PLUS (ii) an amount equal to the Additional Net Sales for such Fiscal Year (the sum of (i) and (ii), together, the "BUDGETED AMOUNT" for such Fiscal Year) PLUS (iii) if the Budgeted Amount for the immediately preceding Fiscal Year was greater than the actual amount of Consolidated Capital Expenditures made or incurred by Holdings or its Subsidiaries for such preceding Fiscal Year, an amount equal to the lesser of (A) the difference between the Budgeted Amount for such preceding Fiscal Year and the actual amount of Consolidated Capital Expenditures for such preceding Fiscal Year and (B) 50% of the Budgeted Amount for such preceding Fiscal Year:
FISCAL QUARTER ENDING CONSOLIDATED CAPITAL EXPENDITURES 2002 $45,000,000 2003 $50,000,000 2004 $50,000,000 2005 $60,000,000 2006 $60,000,000 2007 $60,000,000 2008 $65,000,000 2009 $65,000,000 2010 $65,000,000
(d) CERTAIN CALCULATIONS. For purposes of determining compliance with the financial covenants set forth in this Section 6.8 (but not for purposes of determining the Applicable Margin or Applicable Revolving Commitment Fee Percentage), (i) with respect to any period during which a Permitted Acquisition or an Asset Sale has occurred (each, a "SUBJECT TRANSACTION"), each of Consolidated Adjusted EBITDA, the components of Consolidated Cash Interest Expense and Additional Net Sales shall be calculated with respect to such period on a pro forma basis (including only Permitted Adjustments) using the historical audited financial statements of any business so acquired or to be acquired or sold or to be sold and the consolidated financial statements of Holdings and its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness incurred or repaid in connection therewith, had been consummated or incurred or repaid at the beginning of such period (and assuming that such Indebtedness bears interest during any -106- portion of the applicable measurement period prior to the relevant acquisition at the weighted average of the interest rates applicable to outstanding Loans incurred during such period); (ii) with respect to any period during which the proceeds of any capital contribution to, or issuance of Capital Stock of, Holdings ("EQUITY PROCEEDS") have been applied to make mandatory or voluntary prepayments of Loans, the components of Consolidated Adjusted EBITDA and Consolidated Cash Interest Expense shall be calculated with respect to such period on a pro forma basis (including only pro forma adjustments which are factually supportable and are expected to have a continuing impact, in each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under the Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which pro forma adjustments shall be certified by the Chief Financial Officer of Holdings) using historical financial statements which shall be reformulated (after giving effect to any reformulation required under clause (i) above) as if such Equity Proceeds had been received, and applicable portion of the Loans prepaid, at the beginning of such period; and (iii) with respect to any period including the Fiscal Quarter ended September 30, 2002 or any prior Fiscal Quarter (each an "HISTORICAL QUARTER"), Consolidated Adjusted EBITDA and Consolidated Cash Interest Expense shall be calculated in accordance with Schedule 6.8(d)(iii). 6.9. FUNDAMENTAL CHANGES; DISPOSITION OF ASSETS; ACQUISITIONS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business of Company and its Subsidiaries) the business, property or fixed assets of, or Capital Stock or other evidence of beneficial ownership of, any Person or any business line or unit or division of any Person, except: (a) any Subsidiary of Holdings may be merged with or into Company or any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Company or any Guarantor Subsidiary; PROVIDED, in the case of such a merger, Company or such Guarantor Subsidiary, as applicable, shall be the continuing or surviving Person; (b) sales or other dispositions of assets that do not constitute Asset Sales; -107- (c) Asset Sales in respect of (i) obsolete, worn out or surplus property (including obsolete, worn out or surplus property acquired in a Permitted Acquisition), (ii) property acquired in a Permitted Acquisition which the Company or any of its Subsidiaries is legally required to divest or (iii) other property (other than current assets) the proceeds of which (valued at the principal amount thereof in the case of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) are less than $6,000,000 with respect to any single Asset Sale or series of related Asset Sales pursuant to this clause (iii) and when aggregated with the proceeds of all such other Asset Sales made by Credit Parties pursuant to this clause (iii) within the same Fiscal Year, are less than $10,000,000; PROVIDED, in each of cases (i), (ii) and (iii) the consideration received for such property shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Holdings), no less than 75% of such consideration shall be paid in Cash and all related Net Asset Sale Proceeds shall be applied in accordance with Section 2.16(b); (d) any Permitted Acquisition by Company or any Guarantor Subsidiary; (e) any Foreign Subsidiary may be merged with or into any other Foreign Subsidiary, or be liquidated, wound up or dissolved, or all or any part of the its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any Foreign Subsidiary; (f) Company may liquidate any of its Subsidiaries that has total net assets (as shown on the most recent balance sheet of such Subsidiary delivered to the Agents and at the time of liquidation) of $100,000 or less, PROVIDED, any Restricted Junior Payments in connection with such liquidation are made in accordance with Section 6.5; (g) Sales of Capital Stock in any Subsidiary to qualify directors or allow for investments by foreign nationals, in either case, to the extent required by applicable law; and (h) any Investment permitted under Section 6.7 and any grant of a Permitted Lien. 6.10. DISPOSAL OF SUBSIDIARY INTERESTS. Except for(i) Liens created under any of the Credit Documents and (ii) any sale of all (but not less than all) of the Company's direct and indirect interests in the Capital Stock of any Subsidiary in compliance with the provisions of Section 6.9, no Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to qualify directors or allow for investments by foreign nationals, in either case, if required by applicable law; or (b) permit any of its Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Subsidiaries, except to another Credit Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law. -108- 6.11.SALES AND LEASE-BACKS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Company or any of its Guarantor Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Credit Party to any Person (other than Company or any of its Guarantor Subsidiaries) in connection with such lease, PROVIDED, the foregoing restriction shall not apply to (i) sales and lease-backs of equipment and other personal property in the ordinary course of business of Company and its Subsidiaries which a Credit Party first acquired not more than 30 days prior to the commencement of the applicable lease and (ii) sales and lease-backs of real property with an aggregate fair market value (as sold) not to exceed $1,000,000 at any time outstanding, in each of cases (i) and (ii) to the extent such transactions are otherwise in compliance with this Agreement. 6.12. TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of 10% or more of any class of Capital Stock of Holdings or any of its Subsidiaries or with any Affiliate of Holdings, on terms that are less favorable to it or such Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not such a holder or Affiliate; PROVIDED, the foregoing restriction shall not apply to (a) any transaction between Company and any Wholly-Owned Guarantor Subsidiary; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Holdings and its Subsidiaries; (c) compensation arrangements for officers and other employees of Holdings and its Subsidiaries entered into in the ordinary course of business of Company and its Subsidiaries; (d) transactions in connection with the Merger described in Schedule 1.1; (e) any Restricted Junior Payment permitted to be paid pursuant to Section 6.5(c), 6.5(d), or 6.5(e)(i); (f) any issuance of Securities, or other payments, awards or grants in cash, Securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans (including the Employee Leverage Program) approved by the board of directors of Holdings, in each case which are otherwise consistent with this Agreement; (g) sales or issuances of Capital Stock of Holdings to Affiliates of Company approved by the board of directors of Holdings; and (h) sales of inventory or other product and arrangements in respect of administrative, corporate overhead and insurance, legal and similar expenses among Company and its Subsidiaries in the ordinary course of business. 6.13. CONDUCT OF BUSINESS. From and after the Closing Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (a) the businesses engaged in by such Credit Party on the Closing Date and similar or related businesses and (b) such other lines of business as may be consented to by Requisite Lenders. -109- 6.14. PERMITTED ACTIVITIES OF HOLDINGS. Holdings shall not (a) incur, directly or indirectly, any Indebtedness other than its Obligations under the Credit Documents or guarantees in respect of Indebtedness of Company or any of its Subsidiaries otherwise permitted under this Agreement and Indebtedness permitted under Section 6.1(m); (b) create or suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other than the Liens created under the Collateral Documents to which it is a party or permitted pursuant to Section 6.2; (c) engage in any business or activity or own any assets other than (i) holding 100% of the Capital Stock of Company and, through Company, not less than 80% of the Capital Stock of each of the Subsidiaries of Company; (ii) performing its obligations and activities incidental thereto under the Credit Documents, and to the extent not inconsistent therewith, the Related Agreements; and (iii) making Restricted Junior Payments and Investments to the extent permitted by this Agreement; (d) consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person; (e) sell or otherwise dispose of any Capital Stock of Company; (f) create or acquire any Subsidiary or make or own any Investment in any Person other than Company and, through Company, the Subsidiaries of Company; or (g) fail to hold itself out to the public as a legal entity separate and distinct from all other Persons. 6.15. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Except as set forth in Section 6.16, no Credit Party shall nor shall it permit any of its Subsidiaries to, agree to any material amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under any Related Agreement after the Closing Date without in each case obtaining the prior written consent of Requisite Lenders to such amendment, restatement, supplement or other modification or waiver. 6.16. AMENDMENTS OR WAIVERS OF OR WITH RESPECT TO SUBORDINATED INDEBTEDNESS. No Credit Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, or make any payment consistent with an amendment thereof or change thereto, (a) if the effect of such amendment or change is to increase the interest rate on such Subordinated Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions of such Senior Subordinated Notes (or of any guaranty thereof), or (b) amend or otherwise change the covenants or other provisions contained in any Subordinated Indebtedness not described in clause (a) of this Section 6.16 if the effect of such amendment or change, together with all other amendments or changes made, is to increase the obligations of the obligor thereunder or to confer any additional material rights on the holders of such Subordinated Indebtedness (or a trustee or other representative on their behalf) which would be adverse to any Credit Party or Lenders. -110- 6.17. FISCAL YEAR. No Credit Party shall, nor shall it permit any of its Subsidiaries to, change its Fiscal Year. 6.18. DERIVATIVE TRANSACTIONS. No Credit Party shall enter into any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value, other than (a) Financial Hedge Agreements and (b) for the purposes of hedging the actual exposure of Company and its Subsidiaries to fluctuations in the price of resin or other raw materials used in the operations of Company and its Subsidiaries and not for speculative purposes. SECTION 7. GUARANTY 7.1. GUARANTY OF THE OBLIGATIONS. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guarantee to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)) (collectively, the "GUARANTEED OBLIGATIONS"). Without limiting the obligations of Holdings under this Section 7, Holdings shall become a co- obligor under the Notes, on a joint and several basis with Company, and execute the Notes in such capacity. 7.2. CONTRIBUTION BY GUARANTORS. All Guarantors desire to allocate among themselves (collectively, the "CONTRIBUTING GUARANTORS"), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a "FUNDING GUARANTOR") under this Guaranty that exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the amount of such other Contributing Guarantor's Fair Share Shortfall as of such date, with the result that all such contributions will cause each Contributing Guarantor's Aggregate Payments to equal its Fair Share as of such date. "FAIR SHARE" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. "FAIR SHARE SHORTFALL" means, with respect to a Contributing Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Contributing Guarantor over the Aggregate Payments of such Contributing Guarantor. "FAIR SHARE CONTRIBUTION AMOUNT" means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to -111- avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; PROVIDED, solely for purposes of calculating the "FAIR SHARE CONTRIBUTION AMOUNT" with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. "AGGREGATE PAYMENTS" means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2. 7.3. PAYMENT BY GUARANTORS. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, in same day funds, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Company's becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid. 7.4. LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations or the release of such Guarantor permitted by the Credit Documents. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows: -112- (a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety; (b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Company and any Beneficiary with respect to the existence of such Event of Default; (c) the obligations of each Guarantor hereunder are independent of the obligations of Company and the obligations of any other guarantor (including any other Guarantor) of the obligations of Company, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Company or any of such other guarantors and whether or not Company is joined in any such action or actions; (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor's liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor's covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor's liability hereunder in respect of the Guaranteed Obligations; (e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Financial -113- Hedge Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Company or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents or the Financial Hedge Agreements; and (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents or the Financial Hedge Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Financial Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Financial Hedge Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents or any of the Financial Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary's consent to the change, reorganization or termination of the corporate structure or existence of Holdings or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations. -114- 7.5. WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Company, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary's errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Financial Hedge Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof. 7.6. GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Company or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Company with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Company, and (c) -115- any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Company or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Company, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. 7.7. SUBORDINATION OF OTHER OBLIGATIONS. Any Indebtedness of Company or any Guarantor now or hereafter held by any Guarantor (the "OBLIGEE GUARANTOR") is hereby subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof. 7.8. CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations. 7.9. AUTHORITY OF GUARANTORS OR COMPANY. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them. 7.10. FINANCIAL CONDITION OF COMPANY. Any Credit Extension may be made to Company or continued from time to time, and any Financial Hedge Agreements -116- may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Company at the time of any such grant or continuation or at the time such Financial Hedge Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor's assessment, of the financial condition of Company. Each Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Credit Documents and the Financial Hedge Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Beneficiary. 7.11. BANKRUPTCY, ETC. (a) Without limiting any Guarantor's ability to file a voluntary bankruptcy petition in respect of itself, so long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case or proceeding of or against Company or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company or any other Guarantor or by any defense which Company or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced. (c) In the event that all or any portion of the Guaranteed Obligations are paid by Company, the obligations of Guarantors hereunder shall continue and -117- remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder. 7.12. DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in a transaction consummated in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such disposition. SECTION 8. EVENTS OF DEFAULT 8.1. EVENTS OF DEFAULT. If any one or more of the following conditions or events shall occur: (a) FAILURE TO MAKE PAYMENTS WHEN DUE. Failure by Company to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to Issuing Bank in reimbursement of any Letter of Credit Disbursement; or (iii) any interest on any Loan or any fee or any other amount due hereunder within three days after the date due; or (b) DEFAULT IN OTHER AGREEMENTS. (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in an individual principal amount of $5,000,000 or more or with an aggregate principal amount of $15,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Credit Party with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or (c) BREACH OF CERTAIN COVENANTS. Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.7, Section 5.2 (solely in respect of the Company), Section 5.14 or Section 6 or in Section 3 of the Pledge and Security Agreement; or -118- (d) BREACH OF REPRESENTATIONS, ETC. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto shall be false in any material respect as of the date made or deemed made; or (e) OTHER DEFAULTS UNDER CREDIT DOCUMENTS. Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not have been remedied or waived within 30 days after the earlier of (i) an Authorized Officer of Company or Holdings becoming aware of such default or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or (f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Holdings or any of its Subsidiaries (other than Excluded Foreign Subsidiaries) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal, state or foreign law; or (ii) an involuntary case shall be commenced against Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary) for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary), and any such event described in this clause (ii) shall continue for 60 days without having been dismissed, bonded or discharged; or (g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary) shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Holdings or any of its Subsidiaries (other than Excluded Foreign Subsidiaries) shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its Subsidiaries (other than an Excluded Foreign -119- Subsidiary) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body or any committee thereof) of Holdings or any of its Subsidiaries (other than an Excluded Foreign Subsidiary) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or (h) JUDGMENTS AND ATTACHMENTS. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $5,000,000 or (ii) in the aggregate at any time an amount in excess of $15,000,000 (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Holdings or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any event later than five days prior to the date of any proposed sale thereunder); or (i) DISSOLUTION. Any order, judgment or decree shall be entered against any Credit Party decreeing the dissolution or split up of such Credit Party and such order shall remain undischarged or unstayed for a period in excess of 30 days; or (j) EMPLOYEE BENEFIT PLANS. (i) There shall occur one or more ERISA Events which individually or in the aggregate (A) have or could reasonably be expected to have a Material Adverse Effect, (B) have resulted in liabilities of Holdings, its Subsidiaries or any of their ERISA Affiliates, taken together, in excess of $10,000,000 which liabilities (1) have continued for a period of 60 days without being paid, waived or otherwise discharged and (2) are not being contested in good faith by appropriate proceedings or (ii) there shall be imposed a Lien or security interest under Section 401(a)(29) or Section 412(n) of the Internal Revenue Code or under ERISA on Collateral which Lien or security interest (1) has continued in effect for a period of 60 days without being discharged and (2) is not being contested in good faith by appropriate proceedings; or (k) CHANGE OF CONTROL. A Change of Control shall occur; or (l) GUARANTIES, COLLATERAL DOCUMENTS AND OTHER CREDIT DOCUMENTS. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document (unless released pursuant to -120- the terms of the Credit Documents), in each case for any reason other than the failure of Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party; THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g) with respect to Company or Holdings, automatically, and (2) so long as any other Event of Default shall be continuing, at the request of (or with the consent of) Requisite Lenders, upon notice to Company by Administrative Agent, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; PROVIDED, the foregoing shall not affect in any way the obligations of Lenders under Section 2.3(b)(iv) or Section 2.4(e); (C) Administrative Agent may cause the Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents; and (D) Administrative Agent shall direct Company to pay (and Company hereby agrees upon receipt of such notice, or upon the occurrence of any Event of Default specified in Section 8.1(f) and (g) to pay) to Administrative Agent such additional amounts of cash, to be held as security for Company's reimbursement Obligations in respect of Letters of Credit then outstanding, equal to the Letter of Credit Usage at such time. SECTION 9. AGENTS 9.1. APPOINTMENT OF AGENTS. JPMCB is hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes Syndication Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. GSCP is hereby appointed Administrative Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. Fleet National Bank is hereby appointed Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Collateral Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency -121- or trust with or for Holdings or any of its Subsidiaries. Syndication Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates. As of the Closing Date, each of JPMCB, in its capacity as Syndication Agent, and General Electric Capital Corporation and The Royal Bank of Scotland, in their capacities as Co-Documentation Agents, shall not have any obligations but shall be entitled to all benefits of this Section 9. 9.2. POWERS AND DUTIES. Each Lender irrevocably authorizes each Agent to take such action on such Lender's behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein. 9.3. GENERAL IMMUNITY. (a) NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall have any duties or obligations except those expressly set forth herein, nor shall any Agent be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing. Without limiting the generality of the foregoing, no Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party to any Agent or any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default. Except as expressly set forth herein, no Agent shall have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Credit Party that is communicated to or obtained by such Agent or any of its Affiliates in any capacity. Anything contained herein to the contrary notwithstanding, Administrative Agent -122- shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof. (b) EXCULPATORY PROVISIONS. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent's gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Any Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Any Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Any Agent may consult with legal counsel (who may be counsel for Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 9.4. AGENTS ENTITLED TO ACT AS LENDER. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term "Lender" shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Holdings or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company for services in connection herewith and otherwise without having to account for the same to Lenders. 9.5. LENDERS' REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENT. (a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Holdings and its Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness -123- of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. (B) Each Lender, by delivering its signature page to this Agreement and funding its Term Loan, Delayed Draw Loan and/or a Revolving Loan on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date. 9.6. RIGHT TO INDEMNITY. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out hereof or the other Credit Documents; PROVIDED, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent's gross negligence or willful misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; PROVIDED, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender's Pro Rata Share thereof; and PROVIDED, FURTHER, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence. 9.7. SUB-AGENTS. Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Affiliates. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Affiliates of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as such Agent. -124- 9.8. SUCCESSOR ADMINISTRATIVE AGENT, COLLATERAL AGENT AND SWING LINE LENDER. (a) ADMINISTRATIVE AGENT AND COLLATERAL AGENT. Each of Administrative Agent and Collateral Agent may resign at any time by giving 30 days' prior written notice thereof to Lenders and Company, and each of Administrative Agent and Collateral Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Company and Administrative Agent or Collateral Agent, as applicable, and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days' notice to Company, to appoint a successor Administrative Agent or Collateral Agent with Company's consent (not to be unreasonably withheld) unless an Event of Default has occurred and is continuing or such successor is a Lender, in each of which cases Company's consent need not be obtained. Upon the acceptance of any appointment as Administrative Agent or Collateral Agent hereunder by a successor Administrative Agent or Collateral Agent, that successor Administrative Agent or Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent or Collateral Agent and the retiring or removed Administrative Agent or Collateral Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent or Collateral Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent or Collateral Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent or Collateral Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Administrative Agent or Collateral Agent shall be discharged from its duties and obligations hereunder. After any retiring or removed Administrative Agent's or Collateral Agent's resignation or removal hereunder as Administrative Agent or Collateral Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder. (b) SWING LINE LENDER. Swing Line Lender may be replaced at any time by written agreement among Company, Administrative Agent, the replaced Swing Line Lender and the successor Swing Line Lender. Administrative Agent shall notify the Lenders of any such replacement of Swing Line Lender. At the time any such replacement shall become effective, (i) Company shall prepay any outstanding Swing Line Loans made by the retiring or removed Swing Line Lender, (ii) upon such prepayment, the retiring or removed Swing Line Lender shall surrender any Swing Line Note held by it to Company for cancellation, and (iii) Company shall issue, if so requested by successor Swing Line Loan Lender, a new Swing Line Note to the successor Swing Line Lender, in the principal amount of the Swing Line Loan Sublimit then in effect and with other appropriate insertions. -125- 9.9. COLLATERAL DOCUMENTS AND GUARANTY. (a) AGENTS UNDER COLLATERAL DOCUMENTS AND GUARANTY. Each Lender hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Lenders, to be the agent for and representative of Lenders with respect to the Guaranty, the Collateral and the Collateral Documents. Subject to Section 10.5, without further written consent or authorization from Lenders, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted hereby or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented. (b) RIGHT TO REALIZE ON COLLATERAL AND ENFORCE GUARANTY. Anything contained in any of the Credit Documents to the contrary notwithstanding, Company, Administrative Agent and each Lender hereby agree that (i) no Lender shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Lenders in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale. SECTION 10. MISCELLANEOUS 10.1 NOTICES. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Credit Party, Syndication Agent, Collateral Agent, Administrative Agent, Swing Line Lender or Issuing Bank shall be sent to such Person's address as set forth on Appendix B or in the other relevant Credit Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Each notice hereunder shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been received when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; PROVIDED, no notice to any Agent, Swing Line Lender or Issuing Bank shall be effective until received by such Person. -126- 10.2. EXPENSES. Whether or not the transactions contemplated hereby shall be consummated, Company agrees to pay promptly (a) all the actual and reasonable costs and expenses of preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) all the costs of furnishing all opinions by counsel for Company and the other Credit Parties; (c) the reasonable out-of-pocket fees, expenses and disbursements of outside counsel to Agents in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Company; (d) all the out-of-pocket actual costs and reasonable expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit of Lenders pursuant hereto, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Requisite Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (e) all the out-of-pocket actual costs and reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers; (f) all the out-of-pocket actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (g) all other out-of-pocket actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments and the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (h) after the occurrence of a Default or an Event of Default, (i) all costs and expenses of inspections and visits by any Agent or Lender pursuant to Section 5.6 and (ii) all out-of-pocket costs and expenses, including reasonable attorneys' fees and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a "work-out" or pursuant to any insolvency or bankruptcy cases or proceedings. 10.3 INDEMNITY. (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees' selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and the officers, partners, directors, trustees, employees, agents and Affiliates of each Agent and each Lender (each, an "INDEMNITEE"), from and -127- against any and all Indemnified Liabilities; PROVIDED, no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee, and PROVIDED, FURTHER, no Credit Party shall have any obligation to Issuing Bank in the event of the wrongful dishonor by Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it (it being understood that no dishonor as a result of a Governmental Act shall constitute a wrongful dishonor). To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. To the extent permitted by applicable law, no Credit Party shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, any Credit Document or any agreement or instrument or transaction contemplated hereby. (b) To the extent permitted by applicable law, neither Holdings nor any of its Subsidiaries or Affiliates shall assert, and hereby waives, any claim against any Lender or any of their Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and Holdings and Company hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 10.4. SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Credit Party against and on account of the obligations and liabilities of any Credit Party to such Lender hereunder, under the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected herewith or therewith, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) the principal -128- of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured. Each Credit Party hereby further grants to Administrative Agent and each Lender a security interest in all Deposit Accounts maintained with Administrative Agent or such Lender as security for the Obligations. 10.5. AMENDMENTS AND WAIVERS. (a) REQUISITE LENDERS' CONSENT. Subject to Section 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders. (b) AFFECTED LENDERS' CONSENT. Without the written consent of each Lender (other than a Defaulting Lender) that would be affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would: (i) extend the scheduled final maturity of any Loan or Note; (ii) waive, reduce or postpone any scheduled repayment (but not prepayment); (iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Commitment Termination Date; (iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee payable hereunder; (v) extend the time for payment of any such interest or fees; (vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit; (vii) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c); (viii) amend the definition of "REQUISITE LENDERS" or "PRO RATA SHARE"; PROVIDED, with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of "REQUISITE LENDERS" or "PRO RATA SHARE" on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date; -129- (ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Credit Documents; or (x) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document. (c) OTHER CONSENTS. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall: (i) increase any Revolving or Delayed Draw Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; PROVIDED, no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving or Delayed Draw Commitment of any Lender; (ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender; (iii) amend the definition of "REQUISITE CLASS LENDERS" without the consent of Requisite Class Lenders of each Class; PROVIDED, with the consent of the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of such "REQUISITE CLASS LENDERS" on substantially the same basis as the Term Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are included on the Closing Date; (iv) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of Requisite Class Lenders of each Class which is being allocated a lesser repayment or prepayment as a result thereof; PROVIDED, Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered; (v) amend, modify, terminate or waive any obligation of Lenders relating to the issuance of or purchase of participations in Letters of Credit without the written consent of Administrative Agent and of Issuing Bank; or (vi) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent. -130- (d) EXECUTION OF AMENDMENTS, ETC. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party. 10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) GENERALLY. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party's rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) REGISTER. Company, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and accepted by Administrative Agent and recorded in the Register as provided in Section 10.6(d). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. (c) RIGHT TO ASSIGN. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment or Loans owing to it or other Obligation to any Eligible Assignee upon the giving of notice to Company and Administrative Agent, PROVIDED (i) each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments and shall not, without Company's consent, result in payment to -131- such assignee under Sections 2.19(c), 2.20 and 2.21 that would not have been made to the assigning Lender; and (ii) any assignment to a Person that does not meet the requirements of clause (i) of the definition of the term "Eligible Assignee" shall require the prior written consent of Administrative Agent and, so long as no Event of Default has occurred and is continuing, Company, in each case not to be unreasonably withheld or delayed. (d) MECHANICS. The assigning Lender and the assignee thereof shall execute and deliver to Administrative Agent an Assignment Agreement, together with such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to Section 2.20(c). Any assignment to a Person that does not meet the requirements of clause (i) of the definition of the term "Eligible Assignee," shall be in an aggregate amount of not less than $1,000,000 (or such lesser amount as may be agreed by Company and Administrative Agent or as shall constitute the aggregate amount of a Class of Loans or Commitments of the assigning Lender). (e) NOTICE OF ASSIGNMENT. Upon its receipt of a duly executed and completed Assignment Agreement, (and any forms, certificates or other evidence required by this Agreement in connection therewith), Administrative Agent shall record the information contained in such Assignment Agreement in the Register, shall give prompt notice thereof to Company and shall maintain a copy of such Assignment Agreement. (f) REPRESENTATIONS AND WARRANTIES OF ASSIGNEE. Each Lender, upon execution and delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be, represents and warrants as of the Closing Date or as of the applicable Effective Date (as defined in the applicable Assignment Agreement) that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Commitments or Loans or any interests therein shall at all times remain within its exclusive control). (g) EFFECT OF ASSIGNMENT. Subject to the terms and conditions of this Section 10.6, as of the "Effective Date" specified in the applicable Assignment Agreement: (i) the assignee thereunder shall have the rights and obligations of a "Lender" hereunder to the extent such rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall thereafter be a party hereto and a "Lender" -132- for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations hereunder, such Lender shall cease to be a party hereto); PROVIDED, anything contained in any of the Credit Documents to the contrary notwithstanding, (A) Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (B) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder; (iii) the Commitments shall be modified to reflect the Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Company shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving Commitments and/or outstanding Loans of the assignee and/or the assigning Lender. (h) PARTICIPATIONS. Each Lender shall have the right at any time to sell, without notice to, or consent of the Company and Administrative Agent one or more participations to any Person (other than Holdings, any of its Subsidiaries or any of its Affiliates) in all or any part of its Commitments, Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant's participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant's participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under the Collateral Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. The Company agrees that each participant shall be entitled to the benefits of Sections 2.19(c), 2.20 and 2.21 to the same extent as if it were a Lender and had acquired its -133- interest by assignment pursuant to paragraph (c) of this Section; PROVIDED, (i) a participant shall not be entitled to receive any greater payment under Section 2.20 or 2.21 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with Company's prior written consent and (ii) a participant that would be a Non-US Lender if it were a Lender or would be a US Lender that is not willing or able to execute a valid Form W-9 shall not be entitled to the benefits of Section 2.21 unless Company is notified of the participation sold to such participant and such participant agrees, for the benefit of Company, to comply with Section 2.21 as though it were a Lender. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were a Lender. (i) CERTAIN OTHER ASSIGNMENTS. In addition to any other assignment permitted pursuant to this Section 10.6, (i) any Lender may assign and/or pledge all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including, without limitation, any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; PROVIDED, no Lender, as between Company and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and PROVIDED, FURTHER, in no event shall the applicable Federal Reserve Bank or trustee be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. 10.7. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. 10.8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.19(c), 2.20, 2.21, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17 and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof. 10.9. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other -134- power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents or any of the Financial Hedge Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. 10.10. MARSHALLING; PAYMENTS SET ASIDE. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.11. SEVERABILITY. In case any provision in or obligation hereunder or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.12. OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 10.13 HEADINGS. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect. 10.14 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED -135- IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. 10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION. 10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS -136- AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.17. CONFIDENTIALITY. Each Lender shall hold all non-public information regarding Holdings and Company and their business identified as such by Company and obtained by such Lender pursuant to the requirements hereof in accordance with such Lender's customary procedures for handling confidential information of such nature, it being understood and agreed by Holdings and Company that, in any event, a Lender may make (i) disclosures of such information to Affiliates of such Lender and to their agents and advisors (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by such Lender of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Financial Hedge Agreements (PROVIDED, such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by the provisions of this Section 10.17), (iii) disclosure to any rating agency when required by it, PROVIDED, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from any of the Agents or any Lender, and (iv) required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; PROVIDED, unless specifically prohibited by applicable law or court order, each Lender shall make reasonable efforts to notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. 10.18. USURY SAVINGS CLAUSE. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding -137- sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Company shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Company to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender's option be applied to the outstanding amount of the Loans made hereunder or be refunded to Company. 10.19. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. 10.20 EFFECTIVENESS. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. Remainder of page intentionally left blank -138- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BPC HOLDING CORPORATION By:_____________________________ Name: Title: BERRY PLASTICS CORPORATION By:_____________________________ Name: Title: BERRY IOWA CORPORATION By:_____________________________ Name: Title: PACKERWARE CORPORATION By:_____________________________ Name: Title: KNIGHT PLASTICS, INC. By:_____________________________ Name: Title: BERRY STERLING CORPORATION By:_____________________________ Name: Title: BERRY PLASTICS DESIGN CORPORATION By:_____________________________ Name: Title: POLY-SEAL CORPORATION By:_____________________________ Name: Title: BERRY PLASTICS ACQUISITIONS CORPORATION III By:_____________________________ Name: Title: VENTURE PACKAGING, INC. By:_____________________________ Name: Title: VENTURE PACKAGING MIDWEST, INC. By:_____________________________ Name: Title: BERRY PLASTICS TECHNICAL SERVICES, INC. By:_____________________________ Name: Title: CPI HOLDING CORPORATION By:_____________________________ Name: Title: AEROCON, INC. By:_____________________________ Name: Title: PESCOR, INC. By:_____________________________ Name: Title: BERRY TRI-PLAS CORPORATION By:_____________________________ Name: Title: CARDINAL PACKAGING, INC. By:_____________________________ Name: Title: GOLDMAN SACHS CREDIT PARTNERS L.P., as Administrative Agent and a Lender By:_____________________________ Authorized Signatory JPMORGAN CHASE BANK, as Syndication Agent and a Lender By:_____________________________ Authorized Signatory FLEET NATIONAL BANK, as Collateral Agent, Issuing Bank and Swing Line Lender and a Lender By:_____________________________ Authorized Signatory THE ROYAL BANK OF SCOTLAND, as a Co-Documentation Agent and a Lender By:_____________________________ Authorized Signatory GE CAPITAL CORPORATION, as a Co-Documentation Agent and a Lender By:_____________________________ Authorized Signatory WEBSTER BANK, as a Lender By:_____________________________ Authorized Signatory APPENDIX A-1 TO CREDIT AND GUARANTY AGREEMENT Term Loan Commitments Goldman Sachs Credit Partners L.P. $312,000,000 General Electric Capital Corporation $ 15,000,000 Webster Bank $ 3,000,000
Appendix A-1 APPENDIX A-2 TO CREDIT AND GUARANTY AGREEMENT Delayed Draw Commitments Goldman Sachs Credit Partners L.P. $22,000,000 JPMorgan Chase Bank $ 8,000,000 General Electric Capital Corporation $10,000,000 The Royal Bank of Scotland $ 8,000,000 Webster Bank $ 2,000,000
Appendix A-2 APPENDIX A-3 TO CREDIT AND GUARANTY AGREEMENT Revolving Commitments Goldman Sachs Credit Partners L.P. $37,000,000 JPMorgan Chase Bank $14,000,000 Fleet National Bank $12,000,000 General Electric Capital Corporation $20,000,000 The Royal Bank of Scotland $12,000,000 Webster Bank $ 5,000,000
Appendix A-3 APPENDIX B TO CREDIT AND GUARANTY AGREEMENT Notice Addresses BERRY PLASTICS CORPORATION 101 Oakley St. Evansville, IN 47710 Attention: James A. Kratochvil Telecopier: (812) 424-0128 BPC HOLDING CORPORATION 101 Oakley St. Evansville, IN 47710 Attention: James A. Kratochvil Telecopier: (812) 424-0128 Appendix B-1 GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lead Arranger, Administrative Agent and a Lender Goldman Sachs Credit Partners L.P. 85 Broad Street New York, New York 10004 Attention: Stephen King Telecopier: (212) 357-0932 with a copy to: Goldman Sachs Credit Partners L.P. 85 Broad Street New York, New York 10004 Attention: John Makrinos Telecopier: (212) 357-4597 Appendix B-2 JPMORGAN CHASE BANK, as Syndication Agent and a Lender JP Morgan Chase Bank 270 Park Avenue, 38th Fl. New York, NY 10017 Attention: Stacey Haimes Telecopier: (212) 270-7939 FLEET NATIONAL BANK as Collateral Agent, Issuing Bank, and Swing Line Lender Fleet Bank 100 Federal St. MA DE 100-11A Boston, MA 02110 Attention: Shai Patel Telecopier: (617) 434-4929 Appendix B-3 EX-10.15 9 y62674exv10w15.txt EMPLOYMENT AGREEMENT EXHIBIT 10.15 [Draft: 7/10/01] EMPLOYMENT AGREEMENT dated as of August 14, 2000, between BERRY PLASTICS CORPORATION, a Delaware corporation (the "Corporation"), and WILLIAM J. HERDRICH (the "Employee"). The Employee is an employee of the Corporation and as such has substantial experience that has value to the Corporation. The Corporation desires to employ the Employee, and the Employee desires to accept such employment, on the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto agree as follows: 1. EMPLOYMENT; EFFECTIVENESS OF AGREEMENT. Effective as of the date hereof (such date, the "Commencement Date," for all purposes hereof), the Corporation shall employ the Employee, and the Employee shall accept employment by the Corporation, upon the terms and conditions hereinafter set forth. 2. TERMINATION OF PRIOR CONSULTING AGREEMENT. Reference is made to that certain Consulting and Non-Competition Agreement, dated as of May 9, 2000 between the Employee and the Corporation (the "Consulting Agreement"), wherein the Employee agreed to provide consulting services to the Corporation and to abide by certain non-competition covenants. The parties hereby acknowledge and agree that this Agreement supercedes the Consulting Agreement and that effective on the Commencement Date, the Consulting Agreement shall be terminated and the Consulting Agreement shall be of no further force and effect and neither the Employee nor the Corporation shall have any further rights or obligations under the Consulting Agreement; provided, however, that pursuant to Section 7 of the Consulting Agreement, the Corporation shall continue to pay any remaining amounts due to the Executive pursuant to Section 6(d) therein, payable in accordance with the terms thereof. 3. TERM. Subject to earlier termination as provided herein, the employment of the Employee hereunder shall commence on the Commencement Date and terminate on December 31, 2003. Such period of employment is hereinafter referred to as the "Employment Period." 4. DUTIES. During the Employment Period, the Employee shall be employed by the Corporation as Executive Vice President and General Manager - Closures and shall perform such duties and services consistent with such position as may reasonably be assigned to the Employee by the officers of the Corporation or their designees. 5. TIME TO BE DEVOTED TO EMPLOYMENT. Except for vacation, absences due to temporary illness and absences resulting from causes set forth in Section 7, the Employee shall devote the Employee's business time, attention and energies on a full-time basis to the performance of the duties and responsibilities referred to in Section 4. The Employee shall not during the Employment Period be engaged in any other business activity which, in the reasonable judgment of the officers of the Corporation, would conflict with the ability of the Employee to perform his or her duties under this Agreement, whether or not such activity is pursued for gain, profit or other pecuniary advantage. 6. COMPENSATION; BENEFITS; REIMBURSEMENT. (a) BASE SALARY. During the Employment Period, the Corporation shall pay to the Employee a minimum annual base salary of $250,000, which shall be subject to review and, at the option of persons having authority regarding such matters at the Corporation, subject to increase, beginning February 2002 (such salary, as the same may be increased from time to time as aforesaid, being referred to herein as the "Base Salary"). The Base Salary shall be payable in such installments (but not less frequent than monthly) as is the policy of the Corporation with respect to employees of the Corporation at substantially the same level of employment as the Employee. (b) BONUS. During the Employment Period, the Employee shall be entitled to participate in all bonus and incentive programs of the Corporation (the "Programs") generally available from time to time to employees of the Corporation at substantially the same level of employment as the Employee, such participation to be in substantially the same manner as the participation therein by such employees. The foregoing notwithstanding, Executive shall receive a cash bonus equal to $62,500 for the 2000 fiscal year ending December 31, 2000 and a cash bonus equal to $150,000 for the 2001 fiscal year ending December 31, 2001, payable at the same time and in the same manner as bonuses are paid to other employees of the Corporation, provided, however, that payment of each of the aforementioned cash bonuses is contingent upon Executive's continued employment with the Corporation, on each of the payment dates. (c) BENEFITS. During the Employment Period, the Employee shall be entitled to such benefits (together with the Programs, the "Benefit Arrangements") as are generally made available from time to time to other employees of the Corporation at substantially the same level of employment as the Employee. In addition, the Employee shall be entitled to (i) two weeks of vacation for the period beginning on the Commencement Date and ending on December 31, 2000, provided, however, that the Employee shall not be entitled to carry-over any such unused vacation to the 2001 fiscal year, and (ii) four weeks of vacation per year, commencing on January 1, 2001. (d) REIMBURSEMENT OF EXPENSES. During the Employment Period, the Corporation shall reimburse the Employee, in accordance with the policies and practices of the Corporation in effect from time to time with respect to other employees of the Corporation at substantially the same level of employment as the Employee, for all reasonable and necessary traveling expenses and other disbursements incurred by him for or on behalf of the Corporation in connection with the performance of his duties hereunder upon presentation by the Employee to the Corporation of appropriate documentation therefor. (e) DEDUCTIONS. The Corporation shall deduct from any payments to be made by it to the Employee under this Section 6 or Section 9 any amounts required to be withheld in respect of any Federal, state or local income or other taxes. -2- 7. DISABILITY OR DEATH OF THE EMPLOYEE. (a) If, during the Employment Period, the Employee is incapacitated or disabled by accident, sickness or otherwise (hereinafter, a "Disability") so as to render the Employee mentally or physically incapable of performing the services required to be performed under this Agreement for 90 days in any period of 360 consecutive days, the Corporation may, at any time thereafter, at its option, terminate the employment of the Employee under this Agreement immediately upon giving the Employee notice to that effect, it being understood that upon such termination the Employee shall be eligible for the disability benefits provided by the Corporation. (b) If the Employee dies during the Employment Period, the Termination Date (as defined below) shall be deemed to be the date of the Employee's death. 8. TERMINATION. (a) The Corporation may terminate the employment of the Employee and all of the Corporation's obligations under this Agreement (except as hereinafter provided) at any time for "cause" by giving the Employee notice of such termination, with reasonable specificity of the grounds therefor. For the purposes of this Section 8, "cause" shall mean (i) willful misconduct with respect to the business and affairs of the Corporation or any subsidiary or affiliate thereof, insubordination or willful neglect of duties (other than neglect due solely to the Employee's illness or other involuntary mental or physical disability), including the Employee's violation of any material Corporation policy, (ii) material breach of any of the provisions of this Agreement or (iii) conviction for a crime involving moral turpitude or fraud. A termination pursuant to this Section 8(a) shall take effect immediately upon the giving of the notice contemplated hereby. (b) The Corporation may terminate the employment of the Employee and all of the Corporation's obligations under this Agreement (except as hereinafter provided) at any time during the Employment Period without "cause" by giving the Employee written notice of such termination, to be effective 30 days following the giving of such written notice. (c) The Employee may terminate the employment of the Employee hereunder at any time during the Employment Period by giving the Corporation at least 30 days' prior written notice of such termination, such termination to be effective on the date specified in such notice, whereupon all of the Corporation's obligations hereunder shall terminate (except as hereinafter provided). For convenience of reference, the date upon which any termination of the employment of the Employee pursuant to Section 7 or 8 hereof shall be effective shall be hereinafter referred to as the "Termination Date." 9. EFFECT OF TERMINATION OF EMPLOYMENT. (a) Upon the effective date of termination of the Employee's employment pursuant to Section 7, Section 8(a) or Section 8(c) hereof, neither the Employee nor the Employee's beneficiaries or estate shall have any further rights under this Agreement or any claims against the Corporation arising out of this Agreement, except the right to receive, within 30 days of the Termination Date: -3- (i) the unpaid portion of the Base Salary provided for in Section 6(a), computed on a pro rata basis to the Termination Date; (ii) in the event the Employee's termination is pursuant to Section 7, the applicable bonus provided for in Section 6(b) computed on a pro-rata basis to the Termination Date, payable at the same time and in the same manner only as, if and when bonuses are paid to other employees of the Corporation of comparable seniority; (iii) reimbursement for any expenses for which the Employee shall not have theretofore been reimbursed, as provided in Section 6(d); (iv) the unpaid portion of any amounts earned by the Employee prior to the Termination Date pursuant to any Benefit Arrangement; provided, however, unless specifically provided otherwise in this Section 9, the Employee shall not be entitled to receive any benefits under a Benefit Arrangement that have accrued during a fiscal year if the terms of such Benefit Arrangement require that the beneficiary be employed by the Corporation as of the end of such fiscal year; and (v) any remaining amounts due to the Employee pursuant to Section 2 hereof (as provided in Section 6(d) of the Consulting Agreement) payable in accordance with the terms of the Consulting Agreement. (b) Upon the termination of the Employee's employment pursuant to Section 8(b) or upon the termination of Employee's employment by the Corporation as a result of the expiration of this Agreement pursuant to Section 3, neither the Employee nor the Employee's beneficiaries or estate shall have any further rights under this Agreement or any claims against the Corporation arising out of this Agreement, except the right to receive: (i) the unpaid portion of the Base Salary provided for in Section 6(a), computed on a pro rata basis to the Termination Date plus continuation of Base Salary, for the period from the Termination Date until the first anniversary of the Termination Date, payable in such installments as the Base Salary was paid prior to the Termination Date; (ii) the applicable bonus provided for in Section 6(b) computed on a pro-rata basis to the Termination Date, payable at the same time and in the same manner only as, if and when bonuses are paid to other employees of the Corporation of comparable seniority; and (iii) the payments, if any, referred to in Sections 9(a)(iii), (iv) and (v). (c) The Employee's obligations under Sections 10, 11 and 12 of this Agreement, and the Corporation's obligations under this Section 9, shall survive the termination of this Agreement and the termination of the Employee's employment hereunder. -4- 10. DISCLOSURE OF INFORMATION. (a) From and after the date hereof, the Employee shall not use or disclose to any person, firm, corporation or other business entity (other than any officer, director, employee, affiliate or representative of the Corporation), except as required in connection with the performance of the Employee's duties under and in compliance with the terms of this Agreement and as required by law or judicial process, any Confidential Information (as hereinafter defined) for any reason or purpose whatsoever, nor shall the Employee make use of any of the Confidential Information for the Employee's purposes or for the benefit of any person or entity except the Corporation or any subsidiary thereof. (b) For purposes of this Agreement, "Confidential Information" shall mean (i) the Intellectual Property Rights (as hereinafter defined) of the Corporation and its subsidiaries and (ii) all other information of a proprietary nature relating to the Corporation or any subsidiary thereof, or the business or assets of the Corporation or any such subsidiary, including, without limitation, books, records, customer and registered user lists, vendor lists, supplier lists, distribution channels, pricing information, cost information, marketing plans, strategies, forecasts, financial statements, budgets and projections, other than information which is generally within the public domain at the time of the receipt thereof by the Employee or at the time of use or disclosure of such Confidential Information by the Employee other than as a result of the breach by the Employee of the Employee's agreement hereunder. (c) As used herein, the term "Intellectual Property Rights" means all industrial and intellectual property rights, including, without limitation, patents, patent applications, patent rights, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights, copyright applications, know-how, certificates of public convenience and necessity, franchises, licenses, trade secrets, proprietary processes and formulae, inventions, development tools, marketing materials, trade dress, logos and designs and all documentation and media constituting, describing or relating to the above, including, without limitation, manuals, memoranda and records. 11. RESTRICTIVE COVENANTS. (a) The Employee acknowledges and recognizes that during the Employment Period he will be privy to Confidential Information and further acknowledges and recognizes that the Corporation would find it extremely difficult to replace the Employee. Accordingly, in consideration of the premises contained herein and the consideration to be received by the Employee hereunder (including, without limitation, the severance compensation described in Section 9(b)(i), if any), without the prior written consent of the Corporation, the Employee shall not, at any time during the employer/employee relationship between the Corporation and the Employee and until the later to occur of May 9, 2002 or the first anniversary of the termination of such employer/employee relationship, (i) directly or indirectly engage in, represent in any way, or be connected with, any Competing Business directly competing with the business of the Corporation or any direct or indirect subsidiary or affiliate thereof within the state in which the Employee is employed or any other state of the United States, whether such engagement shall be as an officer, director, owner, employee, partner, affiliate or other participant in any Competing Business (as hereinafter defined), (ii) assist others in engaging in -5- any Competing Business in the manner described in clause (i) above, (iii) induce other employees of the Corporation or any direct or indirect subsidiary or affiliate thereof to terminate their employment with the Corporation or any such direct or indirect subsidiary or affiliate or to engage in any Competing Business or (iv) induce any entity or person with which the Corporation or any direct or indirect subsidiary or any affiliate thereof has a business relationship to terminate or alter such business relationship. As used herein, "Competing Business" shall mean any business involving the sale of products in any city or county in any state of the United States, or in any country or province outside the United States if such business or the products sold by it are competitive, directly or indirectly, at the time of the Termination of Employment with (A) the business of the Corporation or any direct or indirect subsidiary thereof, (B) any of the products manufactured, sold or distributed by the Corporation or any direct or indirect subsidiary thereof or (C) any products or business being developed or conducted by the Corporation or any direct or indirect subsidiary thereof. (b) The Employee understands that the foregoing restrictions may limit his ability to earn a livelihood in a business similar to the business of the Corporation or any subsidiary or affiliate thereof, but he nevertheless believes that he has received and will receive sufficient consideration and other benefits as an employee of the Corporation and as otherwise provided hereunder to justify clearly such restrictions which, in any event (given his education, skills and ability), the Employee does not believe would prevent him from earning a living. 12. RIGHT TO INVENTIONS. The Employee shall promptly disclose, grant and assign to the Corporation for its sole use and benefit any and all inventions, improvements, technical information and suggestions reasonably relating to the business of the Corporation or any subsidiary or affiliate thereof (collectively, the "Inventions") which the Employee may develop or acquire during the period of the employer/employee relationship between the Corporation and the Employee (whether or not during usual working hours), together with all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or upon the Inventions. In connection therewith: (a) the Employee recognizes and agrees that the Inventions shall be the sole property of the Corporation, and the Corporation shall be the sole owner of all patent applications, letters patent, copyrights and reissues thereof that may at any time be granted for or on the Inventions; (b) the Employee hereby assigns to the Corporation any rights the Employee may have in or acquire to the Inventions; (c) the Employee shall, at the expense of the Corporation, promptly execute and deliver such applications, assignments, descriptions and other instruments as may be necessary or proper in the opinion of the Corporation to vest title to the Inventions and any patent applications, patents, copyrights, reissues or other proprietary rights related thereto in the Corporation and to enable it to obtain and maintain the entire right and title thereto throughout the world; -6- (d) the Employee recognizes and agrees that the Inventions to the extent copyrightable shall constitute works for hire under the copyright laws of the United States; and (e) the Employee shall render to the Corporation, at its expense, all such assistance as it may require in the prosecution of applications for said patents, copyrights, reissues or other proprietary rights, in the prosecution or defense of interferences which may be declared involving any said applications, patents, copyrights or other proprietary rights and in any litigation in which the Corporation may be involved relating to the Inventions. 13. MISCELLANEOUS PROVISIONS. (a) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other agreements referred to herein contain the entire agreement between the parties hereto with respect to the transactions contemplated hereby and supersede all prior agreements or understandings between the parties with respect thereto. This Agreement shall not be altered or otherwise amended except pursuant to an instrument in writing signed by each of the parties hereto. (b) DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provisions of this Agreement. (c) NOTICES. All notices or other communications pursuant to this Agreement shall be in writing and shall be deemed to be sufficient if delivered personally, telecopied, sent by nationally-recognized, overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (i) if to the Corporation, to: Berry Plastics Corporation 101 Oakley Street Evansville, Indiana 47706 Attention: Ira G. Boots Telecopier: (812) 421-9604; with a copy to: O'Sullivan LLP 30 Rockefeller Plaza New York, New York 10112 Attention: Michael J. O'Brien, Esq. Telecopier: (212) 408-2420; and -7- (ii) if to the Employee, to him or her at: William J. Herdrich 11276 Ridermark Row Columbia, Maryland 21044 with a copy to: Piper Marbury Rudnick & Wolfe LLP 6225 Smith Avenue Baltimore, MD 21209-3600 Attention: Herbert D. Frerichs, Jr., Esq. Telecopier: (410) 580-3001 All such notices and other communications shall be deemed to have been delivered and received (A) in the case of personal delivery, on the date of such delivery, (B) in the case of delivery by telecopy, on the date of such delivery, (C) in the case of delivery by nationally-recognized, overnight courier, on the Business Day following dispatch, and (D) in the case of mailing, on the third Business Day following such mailing. As used herein, "Business Day" shall mean any day that is not a Saturday, Sunday or a day on which banking institutions in New York, New York are not required to be open. (d) COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. (e) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of Indiana applicable to contracts made and performed wholly therein. (f) BENEFITS OF AGREEMENT; ASSIGNMENT. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, representatives, heirs and estate, as applicable. Anything contained herein to the contrary notwithstanding, this Agreement shall not be assignable by any party hereto without the consent of the other party hereto. (g) WAIVER OF BREACH. The waiver by either party of a breach of any provision of this Agreement by the other party must be in writing and shall not operate or be construed as a waiver of any subsequent breach by such other party. (h) SEVERABILITY. In the event that any provision of this Agreement is determined to be partially or wholly invalid, illegal or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction, be modified or restricted to the extent necessary to make such provision valid, binding and enforceable, or if such provision cannot be modified or restricted, then such provision shall, as to such jurisdiction, be deemed to be excised from this Agreement; provided, however, that the binding effect and enforceability of the remaining provisions of this Agreement, to the extent the economic benefits conferred upon the parties by -8- virtue of this Agreement remain substantially unimpaired, shall not be affected or impaired in any manner, and any such invalidity, illegality or unenforceability with respect to such provisions shall not invalidate or render unenforceable such provision in any other jurisdiction. (i) REMEDIES. All remedies hereunder are cumulative, are in addition to any other remedies provided for by law and may, to the extent permitted by law, be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed to be an election of such remedy or to preclude the exercise of any other remedy. The Employee acknowledges that in the event of a breach of any of the Employee's covenants contained in Sections 11, 12 or 13, the Corporation shall be entitled to immediate relief enjoining such violations in any court or before any judicial body having jurisdiction over such a claim. (j) SURVIVAL. Section 2, Sections 9 through 12, this Section 13 and the defined terms used in any section referred to in this Section 13(j), shall to the extent provided in such Sections, survive the termination of the Employee's employment on the Termination Date and the expiration of this Agreement. * * * * -9- IN WITNESS WHEREOF, the parties have duly executed this Employment Agreement as of the date first above written. BERRY PLASTICS CORPORATION By: --------------------------------- Ira G. Boots President --------------------------------- William J. Herdrich EX-10.18 10 y62674exv10w18.txt PLEDGE AND SECURITY AGREEMENT EXHIBIT 10.18 PLEDGE AND SECURITY AGREEMENT DATED AS OF JULY 22, 2002 BETWEEN EACH OF BERRY PLASTICS CORPORATION, AND THE OTHER GRANTORS PARTY HERETO AND FLEET NATIONAL BANK, AS THE COLLATERAL AGENT TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS; GRANT OF SECURITY......................... 1 1.1. General Definitions.................................... 1 1.2. Definitions; Interpretation............................ 9 1.3. Grant of Security...................................... 9 1.4. Certain Limited Exclusions............................. 10 SECTION 2. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE....... 10 2.1. Security for Obligations............................... 10 2.2. Grantors Remain Liable................................. 11 SECTION 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS........... 11 3.1. Generally.............................................. 11 3.2. Equipment and Inventory................................ 15 3.3. Receivables............................................ 16 3.4. Investment Related Property............................ 18 3.5. Material Contracts..................................... 25 3.6. Letter of Credit Rights................................ 26 3.7. Intellectual Property.................................. 27 3.8. Commercial Tort Claims................................. 31 SECTION 4. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS........................ 31 4.1. Access; Right of Inspection............................ 31 4.2. Further Assurances..................................... 32 4.3. Additional Grantors.................................... 33 SECTION 5. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT............ 33 5.1. Power of Attorney...................................... 33 5.2. No Duty on the Part of Collateral Agent or Secured Partsies............................................... 34 SECTION 6. REMEDIES............................................... 35
i 6.1. Generally.............................................. 35 6.2. Investment Related Property............................ 37 6.3. Intellectual Property.................................. 37 6.4. Cash Proceeds.......................................... 39 6.5. Application of Proceeds................................ 40 SECTION 7. COLLATERAL AGENT....................................... 40 SECTION 8. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND RELEASES............................... 41 SECTION 9. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM......... 41 SECTION 10. MISCELLANEOUS.......................................... 42
ii SCHEDULES: SCHEDULE 3.1 - GENERAL INFORMATION SCHEDULE 3.2 - LOCATION OF EQUIPMENT AND INVENTORY SCHEDULE 3.4 - INVESTMENT RELATED PROPERTY SCHEDULE 3.5 - DESCRIPTION OF MATERIAL CONTRACT SCHEDULE 3.6 - DESCRIPTION OF LETTERS OF CREDIT SCHEDULE 3.7 - INTELLECTUAL PROPERTY SCHEDULE 3.8 - COMMERCIAL TORT CLAIMS EXHIBITS: EXHIBIT A - PLEDGE SUPPLEMENT EXHIBIT B - FORM OF SECURITY INTEREST OPINION EXHIBIT C - UNCERTIFICATED SECURITIES CONTROL AGREEMENT EXHIBIT D - SECURITIES ACCOUNT CONTROL AGREEMENT EXHIBIT E - DEPOSIT ACCOUNT CONTROL AGREEMENT EXHIBIT F - COPYRIGHT SECURITY INTEREST ASSIGNMENT EXHIBIT G - PATENT SECURITY INTEREST ASSIGNMENT EXHIBIT H - TRADEMARK SECURITY INTEREST ASSIGNMENT iii This PLEDGE AND SECURITY AGREEMENT, dated as of July 22, 2002 (this "AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original signatory hereto or as an Additional Grantor (as herein defined) (each, a "GRANTOR"), and FLEET NATIONAL BANK, as collateral agent for the Secured Parties (as herein defined) (in such capacity as collateral agent, the "COLLATERAL AGENT"). RECITALS: WHEREAS, reference is made to that certain Credit and Guaranty Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified from time to time, the "CREDIT Agreement"), by and among BERRY PLASTICS CORPORATION, a Delaware corporation ("COMPANY"), BPC HOLDING CORPORATION, a Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, the Lenders party thereto from time to time (the "LENDERS"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Administrative Agent, JPMORGAN CHASE BANK, as Syndication Agent, FLEET NATIONAL BANK, as Collateral Agent, Issuing Bank and Swing Line Lender, and THE ROYAL BANK OF SCOTLAND and GE CAPITAL CORPORATION, as Co-Documentation Agents. WHEREAS, subject to the terms and conditions of the Credit Agreement, certain Grantors may enter into one or more Financial Hedge Agreements (as herein defined) with one or more Lender Counterparties; WHEREAS, in consideration of the extensions of credit and other accommodations of Lenders and Lender Counterparties as set forth in the Credit Agreement and the Financial Hedge Agreements, respectively, each Grantor has agreed to secure such Grantor's obligations under the Credit Documents and the Financial Hedge Agreements as set forth herein; and NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, each Grantor and the Collateral Agent agree as follows: SECTION 1. DEFINITIONS; GRANT OF SECURITY. 1.1. GENERAL DEFINITIONS. In this Agreement, the following terms shall have the following meanings: "ACCOUNT DEBTOR" shall mean each Person who is obligated on a Receivable or any Supporting Obligation related thereto. "ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the UCC. "ADDITIONAL GRANTORS" shall have the meaning assigned in Section 4.3. "AGREEMENT" shall have the meaning set forth in the preamble. "ASSIGNED AGREEMENTS" shall mean all agreements and contracts to which such Grantor is a party as of the date hereof, or to which such Grantor becomes a party after the date hereof, including each Material Contract, as each such agreement may be amended, supplemented or otherwise modified from time to time. "CASH PROCEEDS" shall have the meaning assigned in Section 6.4. "CHATTEL PAPER" shall mean all "chattel paper" as defined in Article 9 of the UCC, including "electronic chattel paper" or "tangible chattel paper", as each term is defined in Article 9 of the UCC. "COLLATERAL" shall have the meaning assigned in Section 1.3. "COLLATERAL AGENT" shall have the meaning set forth in the preamble. "COLLATERAL RECORDS" shall mean books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon. "COLLATERAL SUPPORT" shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property. "COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as defined in Article 9 of the UCC, including all commercial tort claims listed on Schedule 3.8 (as such schedule may be amended or supplemented from time to time). "COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as defined in Article 9 of the UCC and (ii) shall include all of the accounts listed on Schedule 3.4 under the heading "Commodities Accounts" (as such schedule may be amended or supplemented from time to time). "COPYRIGHT LICENSES" shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder) including each agreement referred to in Schedule 3.7(B) (as such schedule may be amended or supplemented from time to time). "COPYRIGHT SECURITY INTEREST ASSIGNMENT" means an assignment in the form of Exhibit F. 2 "COPYRIGHTS" shall mean all United States, state and foreign copyrights, all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force throughout the world, all registrations and applications therefor including the applications and registrations referred to in Schedule 3.7(A) (as such schedule may be amended or supplemented from time to time), all rights corresponding thereto throughout the world, all extensions and renewals of any thereof, the right to sue for past, present and future infringements of any of the foregoing, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit, which are owned or licensed by a Grantor. "CREDIT AGREEMENT" shall have the meaning set forth in the recitals. "DEPOSIT ACCOUNT CONTROL AGREEMENT" means an agreement in the form of Exhibit E. "DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as defined in Article 9 of the UCC and (ii) shall include all of the accounts listed on Schedule 3.4(A) under the heading "Deposit Accounts" (as such schedule may be amended or supplemented from time to time). "DOCUMENTS" shall mean all "documents" as defined in Article 9 of the UCC. "EQUIPMENT" shall mean: (i) all "equipment" as defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whether characterized as equipment under the UCC) and (iii) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing, including any fixtures. "GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as defined in Article 9 of the UCC, including "payment intangibles" also as defined in Article 9 of the UCC and (ii) shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations, all Assigned Agreements and all Intellectual Property (in each case, regardless of whether characterized as general intangibles under the UCC). "GOODS" (i) shall mean all "goods" as defined in Article 9 of the UCC and (ii) shall include all Inventory and Equipment (in each case, regardless of whether characterized as goods under the UCC). "GRANTOR" shall have the meaning set forth in the preamble. 3 "INSTRUMENTS" shall mean all "instruments" as defined in Article 9 of the UCC. "INSURANCE" shall mean: (i) all insurance policies covering any or all of the Collateral (regardless of whether the Collateral Agent is the loss payee thereof) and (ii) any key man life insurance policies. "INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses. "INTELLECTUAL PROPERTY SECURITY INTEREST ASSIGNMENTS" means Copyright Security Interest Assignments, Patent Security Interest Assignments, and Trademark Security Interest Assignments. "INTERCOMPANY INDEBTEDNESS" shall mean all Indebtedness of any Grantor to any other Grantor. "INVENTORY" shall mean: (i) all "inventory" as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Grantor's business; all goods in which any Grantor has an interest in mass or a joint or other interest or right of any kind; and all goods which are returned to or repossessed by any Grantor, all computer programs embedded in any goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC). "INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment property" (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, Pledged Debt, Securities Accounts, Commodities Accounts, Deposit Accounts and certificates of deposit. "LENDER" shall have the meaning set forth in the recitals. "LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as defined in Article 9 of the UCC. "MATERIAL CONTRACT" means any agreement pursuant to which any Credit Party is or may be obligated to pay or entitled to receive more than $5,000,000 in the aggregate during the term of such agreement. 4 "MATERIAL IMPAIRMENT" means a material adverse effect on the value of any material Collateral or the rights of any Secured Party in respect thereof, including the rights to levy legal process or to sell such Collateral upon foreclosure. "MONEY" shall mean "money" as defined in the UCC. "PATENT SECURITY INTEREST ASSIGNMENT" means an assignment in the form of Exhibit G. "PATENT LICENSES" shall mean all agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder) including each agreement referred to in Schedule 3.7(D) (as such schedule may be amended or supplemented from time to time). "PATENTS" shall mean all inventions and discoveries, whether patentable or not, United States, state and foreign patents and applications for letters patent throughout the world, including, but not limited to each patent and patent application referred to in Schedule 3.7(C) (as such schedule may be amended or supplemented from time to time), all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations of any of the foregoing, all rights corresponding thereto throughout the world, and all proceeds of the foregoing including licenses, royalties, income, payments, claims, damages, and proceeds of suit and the right to sue for past, present and future infringements of any of the foregoing, which are owned or licensed by a Grantor. "PAYMENT INTANGIBLE" shall have the meaning specified in Article 9 of the UCC. "PERMITTED SALE" shall mean those sales, transfers or assignments permitted by Section 6.9 of the Credit Agreement. "PLEDGED DEBT" shall mean all Indebtedness evidenced by an instrument or a certificated security owed to such Grantor, including all Intercompany Indebtedness and all Indebtedness described on Schedule 3.4(A) under the heading "Pledged Debt" (as such schedule may be amended or supplemented from time to time), issued by the obligors named therein, the instruments evidencing such Indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness. "PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests. "PLEDGED LLC INTERESTS" shall mean all interests acquired in any limited liability company including all limited liability company interests listed on Schedule 3.4(A) under the heading "Pledged LLC Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and 5 records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends or other distributions from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests. "PLEDGED PARTNERSHIP INTERESTS" shall mean all interests acquired in any general partnership, limited partnership, limited liability partnership or other partnership including all partnership interests listed on Schedule 3.4(A) under the heading "Pledged Partnership Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends or other distributions from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests. "PLEDGED STOCK" shall mean all shares of capital stock owned by such Grantor, including all shares of capital stock described on Schedule 3.4(A) under the heading "Pledged Stock" (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends or other distributions from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. "PLEDGED TRUST INTERESTS" shall mean all interests acquired in a Delaware business trust or other statutory trust including all trust interests listed on Schedule 3.4(A) under the heading "Pledged Trust Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such trust interests and any interest of such Grantor on the books and records of such trust or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests. "PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in substantially the form of Exhibit A. "PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of the UCC, (ii) payments or distributions made with respect to any Investment Related Property and (iii) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. "RECEIVABLES" shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including all such rights constituting 6 or evidenced by any Account, Chattel Paper or Instrument, together with all of Grantor's rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records. "RECEIVABLES RECORDS" shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or secured parties, and certificates, acknowledgments, or other writings, including lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or nonwritten forms of information related in any way to the foregoing or any Receivable. "RECORD" shall have the meaning specified in Article 9 of the UCC. "SECURED OBLIGATIONS" shall have the meaning assigned in Section 2.1. "SECURED PARTIES" means the Lenders and the Lender Counterparties and shall include all former Lenders and Lender Counterparties to the extent that any Obligations owing to such Persons were incurred while such Persons were Lenders or Lender Counterparties and such Obligations have not been paid or satisfied in full. "SECURITIES ACCOUNT CONTROL AGREEMENT" means an agreement in the form of Exhibit D. "SECURITIES ACCOUNTS" (i) shall mean all "securities accounts" as defined in Article 8 of the UCC and (ii) shall include all of the accounts listed on Schedule 3.4(A) under the heading "Securities Accounts" (as such schedule may be amended or supplemented from time to time). "SECURITIES ENTITLEMENTS" shall mean all "securities entitlements" as defined in Article 8 of the UCC. "SUPPORTING OBLIGATION" shall mean all "supporting obligations" as defined in Article 9 of the UCC. "TAX CODE" shall mean the United States Internal Revenue Code of 1986, as amended from time to time. 7 "TRADEMARK LICENSES" shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder) including each agreement referred to in Schedule 3.7(F) (as such schedule may be amended or supplemented from time to time). "TRADEMARK SECURITY INTEREST ASSIGNMENT" means an assignment in the form of Exhibit H. "TRADEMARKS" shall mean all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade dress, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, but not limited to the registrations and applications referred to in Schedule 3.7(E) (as such schedule may be amended or supplemented from time to time), but excluding in all cases all intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. Section 1051(c) or 15 U.S.C. Section 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. Section 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office, all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit, which are owned or licensed by a Grantor. "TRADE SECRET LICENSES" shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder) including each agreement referred to in Schedule 3.7(G) (as such schedule may be amended or supplemented from time to time). "TRADE SECRETS" shall mean all trade secrets and all other confidential or proprietary information and know-how including customer lists, plans, processes, supplier lists, business plans, business methods and prototypes now or hereafter owned or used in, or contemplated at any time for use in, the business of such Grantor throughout the world (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit. "UCC" shall mean the Uniform Commercial Code as in effect from time to time in the State of New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction. 8 "UNCERTIFICATED SECURITIES CONTROL AGREEMENT" means an agreement in the form of Exhibit C. 1.2. DEFINITIONS; INTERPRETATION. All capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement or, if not defined therein, in the UCC. References to "Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. If any conflict or inconsistency exists between this Agreement and the Credit Agreement, the Credit Agreement shall govern. All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. 1.3. GRANT OF SECURITY. Each Grantor hereby grants to the Collateral Agent for the ratable benefit of the Secured Parties a security interest in and continuing lien on, all of such Grantor's right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which, except as provided in Section 1.4, being hereinafter collectively referred to as the "COLLATERAL"): (a) Accounts; (b) Chattel Paper; (c) Documents; (d) General Intangibles; (e) Goods; (f) Instruments; (g) Insurance; (h) Intellectual Property; 9 (i) Investment Related Property; (j) Letter of Credit Rights; (k) Money; (l) Receivables and Receivable Records; (m) Commercial Tort Claims; (n) to the extent not otherwise included above, all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; and (o) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing. 1.4. CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything contained in Section 1.3 hereof or anything else herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in, any of such Grantor's right, title or interest (a) in any Intellectual Property if the grant of such security interest shall constitute or result in the abandonment, invalidation or rendering unenforceable any right, title or interest of any Grantor therein, or breach or termination pursuant to the terms of, or a default under, any Intellectual Property or the violation of any applicable law (in each case, other than to the extent any such term is rendered ineffective by Sections 9-406--9-409 of the UCC); or (b) in any of the outstanding capital stock of a Foreign Subsidiary in excess of 65% of the voting power of all classes of capital stock of such Foreign Subsidiary entitled to vote; provided that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Foreign Subsidiary without adverse tax consequences, the Collateral shall include, and each Grantor shall be deemed to have granted a security interest in, such greater percentage of capital stock of each Foreign Subsidiary. SECTION 2. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE. 2.1. SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) (and any successor provision thereof)), of all Obligations with respect to every Grantor (the "SECURED OBLIGATIONS"). 10 2.2. GRANTORS REMAIN LIABLE. (a) Anything contained herein to the contrary notwithstanding, but subject to the transfer of Pledged Equity Interests to the Collateral Agent or its nominee upon foreclosure after an Event of Default: (i) each Grantor shall remain liable under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interest or Pledged LLC Interest, any Assigned Agreement and/or any other contracts and agreements included in the Collateral, to the extent set forth therein, to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed; (ii) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral; and (iii) neither the Collateral Agent nor any Lender nor Lender Counterparty shall have any obligation or liability under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interests or Pledged LLC Interests, any Assigned Agreement or any other contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Collateral Agent, any Lender or any Lender Counterparty be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. (b) Neither the Collateral Agent, any Lender, any Lender Counterparty nor any purchaser at a foreclosure sale under this Agreement shall be obligated to assume any obligation or liability under any partnership agreement or limited liability company agreement relating to any Pledged Partnership Interests or Pledged LLC Interests, any Assigned Agreement or any other contracts and agreements included in the Collateral unless the Collateral Agent, any Lender, any Lender Counterparty or any such purchaser otherwise expressly agrees in writing to assume any or all of said obligations. SECTION 3. REPRESENTATIONS AND WARRANTIES AND COVENANTS. 3.1. GENERALLY. (a) Representations and Warranties. Each Grantor hereby represents and warrants that: (i) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, will continue to own or have such rights in each item of the Collateral, in each case free and clear of any 11 and all Liens, rights or claims of all other Persons other than Permitted Liens, including liens arising as a result of such Grantor becoming bound (as a result of merger or otherwise) as debtor under a security agreement entered into by another Person; (ii) the full legal name of such Grantor is as set forth on Schedule 3.1(A) and it has not done in the last five years, and does not do, business under any other name (including any trade-name or fictitious business name) except for those names set forth on Schedule 3.1(B) (as such schedule may be amended or supplemented from time to time); (iii) it has indicated on Schedule 3.1(A) (as such schedule may be amended or supplemented from time to time): (w) the type of organization of such Grantor, (x) the jurisdiction of organization of such Grantor, (y) the chief executive office or sole place of business of such Grantor and (z) the Federal Taxpayer Identification Number, if any, of such Grantor; (iv) except as provided on Schedule 3.1(C), it has not changed its name, jurisdiction of organization, Federal Taxpayer Identification Number, chief executive office or sole place of business or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the past five years; (v) it has not within the last five years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore been terminated other than the agreements identified on Schedule 3.1(D) hereof (as such schedule may be amended or supplemented from time to time); (vi) with respect to each agreement identified on Schedule 3.1(D), it has indicated on Schedule 3.1 (A) and Schedule 3.1(B) the information required pursuant to Section 3.1(a)(ii), (iii) and (iv) with respect to the debtor under each such agreement; (vii) upon the filing of UCC-1 financing statements naming each Grantor as "debtor" and the Collateral Agent as "secured party" and describing the Collateral in the filing offices set forth opposite such Grantor's name on Schedule 3.1(E) hereof (as such schedule may be amended or supplemented from time to time), and compliance with the other requirements of Section 3 of this Agreement, all actions and consents necessary to create and perfect First Priority security interests in all of the Collateral will have been made or obtained and the security interests granted to the Collateral Agent hereunder will constitute valid and perfected (with respect to Intellectual Property, to the extent such perfection and priority may be achieved by filings made in the United States) First Priority security interests in all of the Collateral; 12 (viii) all actions and consents, including all filings, notices, registrations and recordings necessary for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained; (ix) other than the financing statements filed in favor of the Collateral Agent, no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office except for (x) financing statements for which proper termination statements have been delivered to the Collateral Agent for filing and (y) financing statements filed in connection with Permitted Liens; (x) no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of the Collateral Agent hereunder or (ii) the exercise by Collateral Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (vii) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities; and (xi) except as could not reasonably be expected to result in a Material Impairment, all information supplied by any Grantor with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all respects. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that until the payment in full of all Secured Obligations and termination of all Commitments: (i) except for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, except Permitted Liens, and such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein; (ii) it shall not produce, use or permit any Collateral to be used (a) in violation of any provision of this Agreement or (b) except as could not reasonably be expected to result in a Material Impairment, unlawfully or in violation of any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (iii) it shall not change its name, type of organization, jurisdiction of organization, Federal Taxpayer Identification Number or corporate structure in any way (e.g., by merger, consolidation, change in corporate form or 13 otherwise) unless it shall (a) promptly after such change or establishment notify the Collateral Agent in writing, by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, of any such change or establishment, identifying such new proposed name, jurisdiction of organization, Federal Taxpayer Identification Number or corporate structure and providing the Collateral Agreement certified copies of any relevant filings and such other information in connection therewith as the Collateral Agent may reasonably request and (b) take all actions necessary or advisable, in the reasonable judgment of Collateral Agent, to maintain the continuous validity, perfection and the same or better priority of the Collateral Agent's security interest in the Collateral intended to be granted and agreed to hereby; (iv) to the extent required by the Credit Agreement, it shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Collateral, except to the extent the validity thereof is being contested in good faith; provided, such Grantor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment entered or filed against such Grantor or any of the Collateral as a result of the failure to make such payment; (v) upon any officer of such Grantor obtaining knowledge thereof, such Grantor shall promptly notify the Collateral Agent in writing of any event that could reasonably be expected to have a Material Adverse Effect or to result in a Material Impairment; (vi) it shall not take or permit any action which could materially impair the Collateral Agent's rights in the Collateral; (vii) it shall not sell, transfer or assign (by operation of law or otherwise) any Collateral except pursuant to Permitted Sales or as otherwise permitted under the Credit Agreement; and (viii) in the event any Person becomes its Domestic Subsidiary, such Grantor shall (a) promptly cause such Domestic Subsidiary to become an Additional Grantor pursuant to Section 4.3, (b) promptly take all actions necessary to grant and to perfect (with respect to Intellectual Property to the extent such perfection and priority may be achieved by filings made in the United States) a First Priority security interest in the Collateral (subject to 3.2(B)(iv)) of such Domestic Subsidiary in favor of Collateral Agent for the benefit of the Secured Parties in respect of such Collateral, and (c) promptly cause each Person holding Capital Stock of such Domestic Subsidiary to take all actions necessary to 14 grant and to perfect a First Priority security interest in favor of Collateral Agent for the benefit of the Secured Parties in respect of all such Capital Stock. (c) Annual Collateral Verification. Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(c) of the Credit Agreement, Holdings will deliver to Collateral Agent and Lenders a certificate of an Authorized Officer either confirming that there has been no change in the Collateral information described in the schedules to this Pledge and Security Agreement delivered on the Closing Date, as they may be amended or supplemented from time to time, since the date of the most recent such certificate delivered pursuant to this Section or identifying such changes. 3.2. EQUIPMENT AND INVENTORY. (a) Representations and Warranties. Each Grantor represents and warrants, on the Closing Date and on each Credit Date, that: (i) all of the Equipment and Inventory (except for mobile goods or Equipment and Inventory with an aggregate book value of up to $1,000,000 per location) included in the Collateral is kept for the past five years only at the locations specified in Schedule 3.2(A) (as such schedule may be amended or supplemented from time to time); (ii) except as could not reasonably be expected to result in a Material Impairment any Goods now or hereafter produced by any Grantor included in the Collateral have been and will be produced in compliance with the requirements of the Fair Labor Standards Act, as amended; and (iii) except as set forth on Schedule 3.2(A) (as such schedule may be amended or supplemented from time to time), none of the Inventory or Equipment (except for mobile goods, Equipment or Inventory with an aggregate book value of up to $500,000) is in the possession of an issuer of a negotiable document (as defined in Section 7-104 of the UCC) therefor or otherwise in the possession of a bailee or a warehouseman. (b) Covenants and Agreements. Each Grantor covenants and agrees that until the payment in full of all Secured Obligations and termination of all Commitments: (i) it shall keep correct and accurate records of the Inventory as is customarily maintained under similar circumstances by Persons of established reputation engaged in similar business, and in any event in conformity with GAAP; 15 (ii) it shall not deliver any Document evidencing any Equipment and Inventory to any Person other than the issuer of such Document to claim the Goods evidenced therefor or the Collateral Agent; (iii) if any Equipment or Inventory is in possession or control of any third party, each Grantor shall, as a condition to entering into any such arrangement in respect of Equipment or Inventory in an aggregate amount exceeding $1,000,000 at any time and otherwise upon request of the Collateral Agent, join with the Collateral Agent in notifying the third party of the Collateral Agent's security interest and obtaining an acknowledgment from the third party that it is holding the Equipment and Inventory for the benefit of the Collateral Agent; and (iv) with respect to any Equipment in excess of $100,000 individually or $1,000,000 in the aggregate which is covered by a certificate of title under a statute of any jurisdiction under the law of which indication of a security interest on such certificate is required as a condition of perfection thereof, upon the reasonable request of the Collateral Agent, (A) it shall provide the Collateral Agent information with respect to any such Equipment, (B) it shall execute and file with the registrar of motor vehicles or other appropriate authority in such jurisdiction an application or other document requesting the notation or other indication of the security interest created hereunder on such certificate of title, and (C) it shall deliver to the Collateral Agent copies of all such applications or other documents filed during such calendar quarter and copies of all such certificates of title issued during such calendar quarter indicating the security interest created hereunder in the items of Equipment covered thereby. 3.3. RECEIVABLES. (a) Representations and Warranties. Each Grantor represents and warrants, on the Closing Date and on each Credit Date, that: (i) no Receivable in excess of $100,000 individually or $1,000,000 in the aggregate is evidenced by, or constitutes, an Instrument or Chattel Paper which has not been delivered to, or otherwise subjected to the control of, the Collateral Agent to the extent required by, and in accordance with Section 3.3(c); and (ii) each Grantor has delivered to the Collateral Agent or GSCP a complete and correct copy of each standard form of document under which a Receivable may arise. (b) Covenants and Agreements: Each Grantor hereby covenants and agrees that until the payment in full of all Secured Obligations and termination of all Commitments: 16 (i) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Receivables as is customarily maintained under similar circumstances by Persons of established reputation engaged in similar business, and in any event in conformity with GAAP, including, but not limited to, the originals of all documentation with respect to all such Receivables and records of all payments received and all credits granted on such Receivables, all merchandise returned and all other dealings therewith; (ii) it shall not amend, modify, terminate or waive any provision of any Receivable in any manner that could reasonably be expected to have a Material Adverse Effect or result in a Material Impairment. Other than in the ordinary course of business as generally conducted by it, and except as otherwise provided in subsection (v) below, during the continuance of an Event of Default, such Grantor shall not (w) grant any extension or renewal of the time of payment of any Receivable, (x) compromise or settle any dispute, claim or legal proceeding with respect to any Receivable for less than the total unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon; (iii) except as otherwise provided in this subsection, each Grantor shall continue to collect all amounts due or to become due to such Grantor under the Receivables and any Supporting Obligation and diligently exercise each material right it may have under any Receivable, any Supporting Obligation or Collateral Support, in each case, at its own expense, and in connection with such collections and exercise, such Grantor shall take such action as such Grantor or after the occurrence and during the continuance of an Event of Default, the Collateral Agent, may deem necessary or advisable. Notwithstanding the foregoing, the Collateral Agent shall have the right at any time to notify, or require any Grantor to notify, any Account Debtor of the Collateral Agent's security interest in the Receivables and any Supporting Obligation and, in addition, at any time following the occurrence and during the continuation of an Event of Default, the Collateral Agent may: (1) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder directly to the Collateral Agent; (2) notify, or require any Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to the Collateral Agent; and (3) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. If the Collateral Agent notifies any Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables received by such Grantor shall be forthwith (and in any event within two (2) Business Days) deposited by such 17 Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent if required, in a Securities Account or Deposit Account maintained under the sole dominion and control of the Collateral Agent, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of the Collateral Agent hereunder and shall be segregated from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon; and (iv) it shall use its reasonable best efforts to keep in full force and effect any Supporting Obligation or Collateral Support relating to any Receivable. (c) Delivery and Control of Receivables. With respect to any Receivables in excess of $100,000 individually or $1,000,000 in the aggregate that is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor shall cause each originally executed copy thereof to be delivered to the Collateral Agent (or its agent or designee) appropriately indorsed to the Collateral Agent or indorsed in blank: (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten days of such Grantor acquiring rights therein. With respect to any Receivables in the aggregate which would constitute "electronic chattel paper" under Article 9 of the UCC, each Grantor shall take all steps necessary to give the Collateral Agent control over such Receivables (within the meaning of Section 9-105 of the UCC): (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten days of such Grantor acquiring rights therein. Any Receivable not otherwise required to be delivered or subjected to the control of the Collateral Agent in accordance with this subsection (c) shall be delivered or subjected to such control upon request of the Collateral Agent at any time during the continuance of an Event of Default. 3.4. INVESTMENT RELATED PROPERTY. (a) Representations and Warranties. Each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that: (i) Schedule 3.4(A) (as such schedule may be amended or supplemented from time to time) sets forth under the headings "Pledged Stock, "Pledged LLC Interests," "Pledged Partnership Interests" and "Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor and such Pledged Equity Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests, percentage of partnership 18 interests or percentage of beneficial interest of the respective issuers thereof indicated on such Schedule; (ii) except as set forth on Schedule 3.4(B), it has not acquired any equity interests of another entity or substantially all the assets of another entity within the past five years; (iii) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights or claims of other Persons other than Permitted Liens and there are no outstanding warrants, options or other rights to purchase, or shareholder voting trusts or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests; (iv) no consent that has not been made or obtained of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status of the security interest of the Collateral Agent in any Pledged Equity Interests or the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof; (v) none of the Pledged LLC Interests nor Pledged Partnership Interests are or represent interests in issuers that are: (a) registered as investment companies, (b) are dealt in or traded on securities exchanges or markets or (c) have opted to be treated as securities under the uniform commercial code of any jurisdiction; (vi) Schedule 3.4(A) (as such schedule may be amended or supplemented from time to time) sets forth under the heading "Pledged Debt" all of the Pledged Debt owned by any Grantor and all of such Pledged Debt has been duly authorized, authenticated or issued, and delivered and is the valid and binding obligation of the issuers thereof subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting rights of creditors and general principles of equity and is not in default and constitutes all of the issued and outstanding Indebtedness evidenced by an instrument or certificated security of the respective issuers thereof owing to such Grantor; (vii) Schedule 3.4(A) (as such schedule may be amended or supplemented from time to time) sets forth under the headings "Securities Accounts" and "Commodities Accounts," respectively, all of the Securities Accounts and Commodities Accounts in which any Grantor has an interest. The Grantors are the sole entitlement holders of each such respective Securities Account and Commodities Account, and no such Grantor has consented to, and is not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto) having "control" (within the meanings of Sections 8-106 and 9-106 of the 19 UCC) over, or any other interest in, any such Securities Account or Commodity Account or any securities or other property credited thereto, except to the extent such control would constitute a Permitted Lien; (viii) Schedule 3.4(A) (as such schedule may be amended or supplemented from time to time) sets forth under the heading "Deposit Accounts" all of the Deposit Accounts in which each Grantor has an interest and the Grantors are the sole account holders of each such respective Deposit Account and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto) having "control" (within the meaning of Section 9-104 of the UCC) over, or any other interest in, any such Deposit Account or any money or other property deposited therein except to the extent such control would constitute a Permitted Lien; and (ix) each Grantor has taken all actions necessary, including those specified in Section 3.4(c), to: (a) establish the Collateral Agent's "control" (within the meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the Investment Related Property constituting Certificated Securities, Uncertificated Securities, Securities Accounts or Commodities Accounts (each as defined in the UCC); (b) except as otherwise in accordance with the last sentence of Section 3.4(c) hereof, establish the Collateral Agent's "control" (within the meaning of Section 9-104 of the UCC) over all Deposit Accounts; and (c) to deliver all Instruments to the Collateral Agent. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that until the payment in full of all Secured Obligations and termination of all Commitments: (i) without the prior written consent of the Collateral Agent, it shall not vote to enable or take any other action to: (a) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that materially changes the rights of such Grantor with respect to any Investment Related Property or materially and adversely affects the validity, perfection or priority of the Collateral Agent's security interest, (b) other than as permitted under the Credit Agreement, permit any issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (c) other than as permitted under the Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose of all or a material portion of their assets, (d) waive any material default under or breach of any material terms of any organizational document relating to the issuer of any Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the 20 UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided, however, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (e), such Grantor shall promptly notify the Collateral Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Collateral Agent's "control" thereof; (ii) in the event it acquires rights in any Investment Related Property after the date hereof, it shall deliver to the Collateral Agent a completed Pledge Supplement, together with all Supplements to Schedules thereto, reflecting such new Investment Related Property and all other Investment Related Property. Notwithstanding the foregoing, it is understood and agreed that the security interest of the Collateral Agent shall attach to all Investment Related Property immediately upon any Grantor's acquisition of rights therein and shall not be affected by the failure of any Grantor to deliver a supplement to Schedule 3.4 as required hereby; (iii) except as provided in the next sentence or in the Credit Agreement, in the event such Grantor receives any dividends, interest or distributions on any Investment Related Property, or any securities or other property upon the merger, consolidation, liquidation or dissolution of any issuer of any Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) such Grantor shall within ten days take all steps, if any, necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Collateral Agent over such Investment Related Property (including delivery thereof to the Collateral Agent) and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Collateral Agent and shall be segregated from all other property of such Grantor. Notwithstanding the foregoing, so long as no Event of Default shall have occurred and be continuing, the Collateral Agent authorizes each Grantor to retain all cash dividends and distributions and all payments of interest and principal; (iv) it shall comply in all material respects with all of its obligations under any partnership agreement or limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC Interests and shall enforce in all material respects all of its rights with respect to any Investment Related Property; (v) it shall notify the Collateral Agent of any default under any Pledged Debt that has caused, either in any case or in the aggregate, a Material Adverse Effect. 21 (vi) without the prior written consent of the Collateral Agent or as permitted under the Credit Agreement, it shall not permit any issuer of any Pledged Equity Interest to merge or consolidate unless all the outstanding capital stock or other equity interests of the surviving or resulting corporation, limited liability company, partnership or other entity is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding equity interests of any other constituent company; provided that if the surviving or resulting company upon any such merger or consolidation involving an issuer which is a Foreign Subsidiary, then such Grantor shall only be required to pledge equity interests in accordance with Section 1.4 hereof; and (vii) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Collateral Agent and to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to the Collateral Agent or its nominee following an Event of Default and to the substitution of the Collateral Agent or its nominee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto. (c) Delivery and Control. Each Grantor agrees that with respect to (i) any Investment Related Property in which it currently has rights (other than the Company Stock) it shall comply with the provisions of this Section 3.4(c) on or before the Closing Date, (ii) with respect to the Company Stock it shall comply with the provisions of this Section 3.4(c) on or before the 31st day following the Closing Date and (iii) with respect to any Investment Related Property hereafter acquired by such Grantor it shall comply with the provisions of this Section 3.4(c) within ten days upon acquiring rights therein, in each case in form and substance reasonably satisfactory to the Collateral Agent. With respect to any Investment Related Property that is represented by a certificate or that is an "instrument" (other than any Investment Related Property credited to a Securities Account) it shall cause such certificate or instrument to be delivered to the Collateral Agent, indorsed in blank by an "effective indorsement" (as defined in Section 8-107 of the UCC), regardless of whether such certificate constitutes a "certificated security" for purposes of the UCC. With respect to any Investment Related Property that is an "uncertificated security" for purposes of the UCC (other than any "uncertificated securities" credited to a Securities Account), it shall cause the issuer of such uncertificated security to either (i) register the Collateral Agent as the registered owner thereof on the books and records of the issuer or (ii) (x) execute an Uncertificated Securities Control Agreement pursuant to which such issuer agrees to comply with the Collateral Agent's instructions with respect to such uncertificated security without further consent by such Grantor and (y) deliver an opinion of counsel in form and substance reasonably satisfactory to the Collateral Agent that upon execution of such Uncertificated Securities Control Agreement, the Collateral Agent will have the benefit of a perfected security interest for the benefit of the Secured Parties in the Grantor's interests in such uncertificated security. With respect to any Investment Related Property consisting of 22 Securities Accounts, Securities Entitlements or Commodities Accounts, it shall (i) cause the securities intermediary maintaining such Securities Account, Securities Entitlements or Commodities Accounts to execute a Securities Account Control Agreement (or, in the case of Commodities Accounts, a substantially similar agreement in form and substance reasonably acceptable to the Collateral Agreement) pursuant to which it shall agree to comply with the Collateral Agent's "entitlement orders" without further consent by such Grantor and (ii) deliver an opinion of counsel in form and substance reasonably satisfactory to the Collateral Agent that upon execution by the securities intermediary of such Securities Account Control Agreement (or such agreement substantially similar thereto in the case of Commodities Accounts), the Collateral Agent will have the benefit of a perfected security interest for the benefit of the Secured Parties in the Grantor's interests in such Securities Accounts, Securities Entitlements or Commodities Accounts. With respect to any Investment Related Property that is a "Deposit Account," it shall cause the depositary institution maintaining such account to enter into a Deposit Account Control Agreement pursuant to which the Collateral Agent shall have "control" (within the meaning of Section 9-104 of the UCC) over such Deposit Account. Each Grantor shall have entered into such control agreement or agreements with respect to: (i) any Securities Accounts, Securities Entitlements or Deposit Accounts that exist on the Closing Date, as of or prior to the Closing Date and (ii) any Securities Accounts, Securities Entitlements or Deposit Accounts that are created or acquired after the Closing Date, as of or prior to the deposit or transfer of any such Securities Entitlements or funds, whether constituting moneys or investments, into such Securities Accounts or Deposit Accounts. In addition to the foregoing, if any issuer of any Investment Related Property is located in a jurisdiction outside of the United States, each Grantor shall take such reasonable additional actions, including causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary under the laws of such issuer's jurisdiction to insure the validity, perfection and priority of the security interest of the Collateral Agent. Upon the occurrence of an Event of Default, the Collateral Agent shall have the right, without notice to any Grantor, to transfer all or any portion of the Investment Related Property to its name or the name of its nominee or agent. In addition, the Collateral Agent shall have the right at any time, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Related Property for certificates or instruments of smaller or larger denominations. Notwithstanding anything to the contrary set forth herein, Grantors may maintain Deposit Accounts without delivering a Deposit Account Control Agreement, provided that (i) the average aggregate overnight balances in all such accounts do not exceed $1,000,000 during any period of seven consecutive days and (ii) the aggregate balances in all such accounts do not exceed $10,000,000 at any time. (d) Voting and Distributions. (i) So long as no Event of Default shall have occurred and be continuing: 23 (A) except as otherwise provided in Section 3.4(b)(i) of this Agreement, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof, provided, no Grantor shall exercise or refrain from exercising any such right (1) if the Collateral Agent shall have notified such Grantor that, in the Collateral Agent's reasonable judgment, such action would have a Material Adverse Effect; (2) for any purpose inconsistent with the terms of this Agreement or the Credit Agreement; or (3) without giving the Collateral Agent at least five Business Days' prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right; it being understood, however, that for the purposes of clauses (1) and (3) above neither the voting by such Grantor of any Pledged Stock for, or such Grantor's consent to, the election of directors (or similar governing body) at any meeting of stockholders or action by written consent in lieu thereof or with respect to incidental matters at any such meeting or in such consent, nor such Grantor's consent to or approval of any action otherwise permitted under this Agreement and the Credit Agreement, shall be deemed inconsistent with the terms of this Agreement or the Credit Agreement within the meaning of this Section 3.4(d)(i)(A), and no notice of any such voting or consent need be given to the Collateral Agent; and (B) the Collateral Agent shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all proxies, and other instruments as such Grantor may from time to time reasonably request for the purpose of enabling such Grantor to exercise the voting and other consensual rights when and to the extent which it is entitled to exercise pursuant to clause (A) above; (ii) Upon the occurrence and during the continuation of an Event of Default: (A) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall thereupon have the sole right but not the obligation to exercise such voting and other consensual rights; and (B) in order to permit the Collateral Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions 24 which it may be entitled to receive hereunder: (1) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other instruments as the Collateral Agent may from time to time reasonably request and (2) each Grantor acknowledges that the Collateral Agent may utilize the power of attorney set forth in Section 5. 3.5. MATERIAL CONTRACTS. (a) Representations and Warranties. Each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that: (i) Schedule 3.5 (as such schedule may be amended or supplemented from time to time) sets forth all of the Material Contracts to which such Grantor has rights; (ii) the Material Contracts, true and complete copies (including any amendments or supplements thereof) of which have been furnished to the Collateral Agent, have been duly authorized, executed and delivered by the Grantors and, to the best knowledge of the Grantors after due inquiry, the other parties thereto, are in full force and effect and are binding upon and enforceable against the Grantors and, to the best knowledge of the Grantors after due inquiry, the other parties thereto in accordance with their respective terms subject to the effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting rights of creditors generally and general principles of equity. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that until the payment in full of the Secured Obligations and termination of all Commitments: (i) in addition to any rights under Section 3.3, the Collateral Agent may if it deems reasonably necessary at any time notify, or require any Grantor to so notify, the counterparty on any Material Contract of the security interest of the Collateral Agent therein. In addition, after the occurrence and during the continuance of an Event of Default, the Collateral Agent may upon written notice to the applicable Grantor, notify, or require any Grantor to notify, the counterparty to make all payments under the Material Contracts directly to the Collateral Agent; (ii) each Grantor shall deliver promptly to the Collateral Agent a copy of each material demand, notice or document received by it relating in any way to any Material Contract; (iii) each Grantor shall deliver promptly to the Collateral Agent, and in any event within ten Business Days, after (1) any Material Contract of such 25 Grantor is terminated or amended in a manner that is materially adverse to such Grantor or (2) any new Material Contract is entered into by such Grantor, a written statement describing such event, with copies of such material amendments or new contracts, delivered to the Collateral Agent (to the extent such delivery is permitted by the terms of any such Material Contract, provided, no prohibition on delivery shall be effective if it were bargained for by such Grantor with the intent of avoiding compliance with this Section 3.5(b)(iii)), and an explanation of any actions being taken with respect thereto; (iv) it shall perform in all material respects all of its obligations with respect to the Material Contracts; (v) it shall promptly and diligently exercise each material right (except the right of termination) it may have under any Material Contract, any Supporting Obligation or Collateral Support, in each case, at its own expense, and in connection with such collections and exercise, such Grantor shall take such action as such Grantor or after the occurrence and during the continuance of an Event of Default, the Collateral Agent may deem necessary or advisable; (vi) it shall use its commercially reasonable efforts to keep in full force and effect any Supporting Obligation or Collateral Support relating to any Material Contract. 3.6. LETTER OF CREDIT RIGHTS. (a) Representations and Warranties. Except with respect to the Letters of Credit issued under the Credit Agreement, each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that: (i) all material letters of credit to which such Grantor has rights are listed on Schedule 3.6 (as such schedule may be amended or supplemented from time to time) hereto; and (ii) it has obtained the consent of each issuer of any material letter of credit to the assignment of the proceeds of the letter of credit to the Collateral Agent and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Collateral Agent pursuant hereto) having "control" (within the meaning of Section 9-104 of the UCC) over, or any other interest in any of the Grantor's rights in respect thereof. (b) Covenants and Agreements. Except with respect to the Letters of Credit issued under the Credit Agreement, each Grantor hereby covenants and agrees that, until the payment in full of all Secured Obligations and terminations of all Commitments, with respect to any material letter of credit hereafter arising it shall obtain the consent of the issuer thereof to the assignment of the proceeds of the letter of credit to the Collateral Agent and shall deliver to the Collateral Agent a completed Pledge 26 Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto. 3.7. INTELLECTUAL PROPERTY. (a) Representations and Warranties. Except as disclosed in Schedule 3.7(H) (as such schedule may be amended or supplemented from time to time), each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that: (i) Schedule 3.7 (as such schedule may be amended or supplemented from time to time) sets forth a true and complete list of (i) all United States state and foreign registrations of and applications for Patents, Trademarks, and Copyrights owned by each Grantor and material to the business of each Grantor and (ii) all Patent Licenses, Trademark Licenses and Copyright Licenses material to the business of each Grantor; (ii) it has executed and delivered to the Collateral Agent, Intellectual Property Security Interest Assignments for all Copyrights, Patents and Trademarks owned by such Grantor, including, but not limited to, all Copyrights, Patents and Trademarks on Schedule 3.7 (as such schedule may be amended or supplemented from time to time); (iii) it is the sole and exclusive owner of the entire right, title, and interest in and to or has the valid right to use the Intellectual Property on Schedule 3.7 (as such schedule may be amended or supplemented from time to time) listed under its respective name, and owns all other Intellectual Property used in or necessary to conduct its business, as currently conducted free and clear of all Liens, claims, encumbrances and licenses, except for Permitted Liens and the licenses set forth on Schedule 3.7(B), (D), (F) and (G) (as each may be amended or supplemented from time to time); (iv) its Intellectual Property is subsisting and has not been adjudged invalid or unenforceable, in whole or in part except as could not reasonably be expected to have a Material Adverse Effect or result in Material Impairment, and each Grantor has performed all acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and every registration and application of Intellectual Property in full force and effect, except to the extent that a particular Patent, Trademark or Copyright is no longer material or necessary to the business of such Grantor; (v) its Intellectual Property is valid and enforceable in all material respects; no holding, decision, or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity of, such Grantor's right to register, or such Grantor's rights to own or use, any Intellectual Property except as could not reasonably be expected to have a 27 Material Adverse Effect or result in Material Impairment and no such action or proceeding is pending or, to such Grantor's knowledge, threatened except as disclosed in Schedule 3.7(H); (vi) all registrations and applications for Copyrights, Patents and Trademarks are standing in the name of a Grantor, and none of the material Trademarks, Patents, Copyrights or Trade Secret Collateral has been licensed by any Grantor to any affiliate or third party, except as disclosed in Schedule 3.7(B), (D), (F), or (G) (as each may be amended or supplemented from time to time); (vii) it has been using appropriate statutory notice of registration in connection with its use of registered Trademarks, proper marking practices in connection with the use of Patents, and appropriate notice of copyright in connection with the publication of Copyrights material to the business of such Grantor; (viii) it uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with all Trademarks and has taken all commercially reasonable action necessary to insure that all licensees of the Trademarks owned by such Grantor use such adequate standards of quality; (ix) the conduct of its business does not infringe upon any trademark, patent, copyright, trade secret or similar intellectual property right owned or controlled by a third party; no written claim has been made that the use of any material Intellectual Property owned or used by any Grantor (or any of its respective licensees) violates the asserted rights of any third party except as could not reasonably be expected to have a Material Adverse Effect or result in a Material Impairment; (x) to its knowledge, no third party is infringing upon any Intellectual Property owned or used by such Grantor in any material respect, or any of its respective licensees; (xi) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by any Grantor or to which any Grantor is bound that adversely affect its rights to own or use any Intellectual Property except as would not have a Material Adverse Effect or result in a Material Impairment, in each case individually or in the aggregate; (xii) each Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of any Intellectual Property for purposes of granting a security interest or as Collateral that has not been terminated or released. There is no effective financing statement or other document or instrument now executed, or on file or recorded in any public office, granting a security interest in or otherwise encum- 28 bering any part of the Intellectual Property, other than in favor of the Collateral Agent or Permitted Liens; and (xiii) not later than the 30th day following the Closing Date the Credit Parties shall deliver an opinion of counsel in form and substance reasonably satisfactory to the Collateral Agent on behalf of the Secured Parties concerning the perfection as of the Closing Date of Intellectual Property subject to this Section 3.7. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees as follows until the payment in full of the Secured Obligations and termination of the Commitments: (i) it shall not do any act or omit to do any act whereby any of the Intellectual Property which is material to the business of Grantor may lapse, or become abandoned, dedicated to the public, or unenforceable, or which would adversely affect the validity, grant, or enforceability of the security interest granted therein, except to the extent that a particular item of Intellectual Property is no longer material or necessary to the business of such Grantor; (ii) it shall not, with respect to any Trademarks which are material to the business of any Grantor, cease the use of any of such Trademarks or fail to maintain the level of the quality of products sold and services rendered under any of such Trademark at a level at least substantially consistent with the quality of such products and services as of the date hereof, and each Grantor shall take all commercially reasonable steps necessary to insure that licensees of such Trademarks use such consistent standards of quality, except to the extent that a Trademark is no longer material or necessary to the business of such Grantor; (iii) it shall, within thirty days of the creation or acquisition of any Copyrightable work the registration of which is material to the business of Grantor, apply to register the Copyright in the United States Copyright Office; (iv) it shall promptly notify the Collateral Agent if it knows or has reason to know that any item of the Intellectual Property that is material to the business of any Grantor may become (a) abandoned or dedicated to the public or placed in the public domain, (b) invalid or unenforceable, or (c) subject to any material adverse determination or development (including the institution of proceedings) in any action or proceeding in the United States Patent and Trademark Office, the United States Copyright Office, and state registry, any foreign counterpart of the foregoing, or any court; (v) it shall take all commercially reasonable steps in the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to pursue any application and maintain any registration of each Trademark, Patent, and Copyright owned by any 29 Grantor the maintenance or registration of which is material to its business which is now or shall become included in the Intellectual Property including, but not limited to, those items on Schedule 3.7(A), (C) and (E) (as each may be amended or supplemented from time to time); (vi) in the event that any material Intellectual Property owned by or exclusively licensed to any Grantor is materially infringed, misappropriated, or diluted by a third party, such Grantor shall promptly take all commercially reasonable actions to stop such infringement, misappropriation, or dilution and protect its exclusive rights in such Intellectual Property including, but not limited to, the initiation of a suit for injunctive relief and to recover damages; (vii) it shall promptly (but in no event more than thirty days after any Grantor obtains knowledge thereof) report to the Collateral Agent (i) the filing of any application to register any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office, or any state registry or foreign counterpart of the foregoing (whether such application is filed by such Grantor or through any agent, employee, licensee, or designee thereof) and (ii) the registration of any Intellectual Property by any such office, in each case by executing and delivering to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto; (viii) it shall, promptly upon the reasonable request of the Collateral Agent, execute and deliver to the Collateral Agent Intellectual Property Security Interest Assignments and any other document required to acknowledge, confirm, register, record, or perfect the Collateral Agent's interest in any part of the Intellectual Property, whether now owned or hereafter acquired; (ix) except with the prior consent of the Collateral Agent or as permitted under the Credit Agreement, (A) no Grantor shall execute, and there will not be on file in any public office, any financing statement or other document or instruments which remain in effect, except financing statements or other documents or instruments filed or to be filed in favor of the Collateral Agent and (B) such Grantor shall not sell, assign, transfer, grant any option, or create or suffer to exist any Lien upon or with respect to the Intellectual Property, except for the Lien created by and under this Security Agreement and the other Credit Documents; (x) it shall hereafter use commercially reasonable efforts so as not to permit the inclusion in any contract to which it hereafter becomes a party of any provision that could or might in any way materially impair or prevent the creation of a security interest in, or the assignment of, such Grantor's rights and interests in any property included within the definitions of any Intellectual Property acquired under such contracts; 30 (xi) it shall take all commercially reasonable steps to protect the secrecy of all Trade Secrets relating to the products and services sold or delivered under or in connection with the Intellectual Property, including entering into confidentiality agreements with employees and labeling and restricting access to secret information and documents, except to the extent that a Trade Secret is no longer material or necessary to the business of such Grantor; (xii) it shall use proper statutory notice in connection with its use of any of the Intellectual Property where necessary and proper; and (xiii) it shall continue to collect, at its own expense, all amounts due or to become due to such Grantor in respect of the Intellectual Property or any portion thereof. In connection with such collections, any Grantor may take (and, at the Collateral Agent's reasonable direction, shall take) such action as such Grantor or after the occurrence and during the continuance of an Event of Default, the Collateral Agent may deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding the foregoing, the Collateral Agent shall have the right at any time, to notify, or require any Grantor to notify, any obligors with respect to any such amounts of the existence of the security interest created hereby. 3.8. COMMERCIAL TORT CLAIMS. (a) Representations and Warranties. Each Grantor hereby represents and warrants, on the Closing Date and on each Credit Date, that Schedule 3.8 (as such schedule may be amended or supplemented from time to time) sets forth all Commercial Tort Claims in excess of $1,000,000 individually or in the aggregate of each Grantor; and (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that until the payment in full of the Secured Obligations and termination of all Commitments with respect to any Commercial Tort Claim in excess of $1,000,000 individually or in the aggregate hereafter arising it shall deliver to the Collateral Agent a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims. SECTION 4. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS. 4.1. ACCESS; RIGHT OF INSPECTION. The Collateral Agent shall at reasonable times with reasonable notice have full and free access during normal business hours and without unreasonable disruption of business to all the books, correspondence and records of each Grantor, and the Collateral Agent and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to the Collateral Agent, at such Grantor's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Collateral Agent and 31 its representatives shall at reasonable times with reasonable notice also have the right during normal business hours and without unreasonable disruption of business to enter any premises of each Grantor and inspect any property of each Grantor where any of the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting or exhibiting the same, observing its use or otherwise protecting its interests therein. 4.2. FURTHER ASSURANCES. (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall: (i) file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Collateral Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in the Intellectual Property with any intellectual property registry in the United States in which said Intellectual Property is registered or in which an application for registration is pending including the United States Patent and Trademark Office, the United States Copyright Office and the various Secretaries of State; and (iii) at the Collateral Agent's request, appear in and defend any action or proceeding that may affect such Grantor's title to or the Collateral Agent's security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes the Collateral Agent to file a Record or Records, including financing or continuation statements, and amendments thereto, in all jurisdictions and with all filing offices as the Collateral Agent may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the Collateral Agent herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Collateral Agent herein, including describing such property as "all assets" or "all personal property." Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules 32 further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail. (c) Each Grantor hereby authorizes the Collateral Agent to modify this Agreement after obtaining such Grantor's approval of or signature to such modification by amending Schedule 3.7 (as such schedule may be amended or supplemented from time to time) to include reference to any right, title or interest in any existing Intellectual Property or any Intellectual Property acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property in which any Grantor no longer has or claims any right, title or interest. 4.3. ADDITIONAL GRANTORS. From time to time subsequent to the date hereof, additional Persons may become parties to the Credit Agreement and this Agreement as additional Grantors (each, an "ADDITIONAL GRANTOR"), by executing a Counterpart Agreement. Upon delivery of any such Counterpart Agreement to the Collateral Agent, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Additional Grantor shall deliver to the Collateral Agent, together with such Counterpart Agreement, a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, reflecting all personal property to which it has rights that will be deemed Collateral pursuant to Section 1.3. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Collateral Agent not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 5. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. 5.1. POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled with an interest) as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agent's reasonable discretion to take any action and to execute any instrument that the Collateral Agent may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, including the following: (a) upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Collateral Agent pursuant to the Credit Agreement; (b) upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; 33 (c) upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral; (e) to prepare and file any UCC financing statements against such Grantor as debtor; (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in the Intellectual Property in the name of such Grantor as assignor; (g) upon the occurrence and during the continuance of any Event of Default, to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including access to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, any such payments made by the Collateral Agent to become obligations of such Grantor to the Collateral Agent, due and payable immediately without demand; and (h) upon the occurrence and during the continuance of any Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Collateral Agent were the absolute owner thereof for all purposes, and to do, at the Collateral Agent's option and such Grantor's expense, at any time or from time to time, all acts and things that the Collateral Agent deems reasonably necessary to protect, preserve or realize upon the Collateral and the Collateral Agent's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 5.2. NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES. The powers conferred on the Collateral Agent hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise any such powers. The Collateral Agent and the Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their or their affiliates' officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct. 34 SECTION 6. REMEDIES. 6.1. GENERALLY. (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously: (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Collateral Agent forthwith, assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent that is reasonably convenient to both parties; (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process; (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Collateral Agent deems appropriate; and (iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable. (b) The Collateral Agent or any Secured Party may be the purchaser of any or all of the Collateral at any public or private (to the extent such portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Collateral Agent, as collateral agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal 35 which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the Collateral Agent and the Secured Parties arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, provided this sentence shall not restrict the operation of Section 9-615(f) of the UCC. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be liable for the deficiency and the reasonable fees of any attorneys employed by the Collateral Agent to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights of the Collateral Agent hereunder. (c) The Collateral Agent may sell the Collateral without giving any warranties as to the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely effect the commercial reasonableness of any sale of the Collateral. (d) If the Collateral Agent sells any of the Collateral on credit, the Secured Obligations will be credited only with payments actually made by the purchaser and received by the Collateral Agent and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, the Collateral Agent may resell the Collateral. (e) The Collateral Agent shall have no obligation to marshall any of the Collateral. 36 6.2. INVESTMENT RELATED PROPERTY. (a) Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Collateral Agent may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Collateral Agent shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Collateral Agent determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Collateral Agent all such information as the Collateral Agent may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by the Collateral Agent in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. (b) Upon the occurrence and during the continuation of an Event of Default, the Collateral Agent shall have the right to apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of the Collateral Agent. 6.3. INTELLECTUAL PROPERTY. (a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default: (i) the Collateral Agent shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Collateral Agent or otherwise, in the Collateral Agent's sole discretion, to enforce any Intellectual Property, in which event such Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all documents required by the Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and 37 indemnify the Collateral Agent and the Secured Parties as provided in Section 10.3 of the Credit Agreement in connection with the exercise of its rights under this Section, and, to the extent that the Collateral Agent shall elect not to bring suit to enforce any Intellectual Property as provided in this Section, each Grantor agrees to use all commercially reasonable efforts, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property by others; (ii) upon written demand from the Collateral Agent, each Grantor shall grant, assign, convey or otherwise transfer to the Collateral Agent all of such Grantor's right, title and interest in and to the Intellectual Property and shall execute and deliver to the Collateral Agent such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Collateral Agent (or any Lender or any Lender Counterparty) receives cash proceeds in respect of the sale of, or other realization upon, the Intellectual Property; (iv) within five Business Days after written notice from the Collateral Agent, each Grantor shall make available to the Collateral Agent, to the extent within such Grantor's power and authority, such personnel in such Grantor's employ on the date of such Event of Default as the Collateral Agent may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Trademarks and Trademark Licenses, such persons to be available to perform their prior functions on the Collateral Agent's behalf and to be compensated by the Collateral Agent at such Grantor's expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and (v) the Collateral Agent shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of the Intellectual Property, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Collateral Agent, and, upon such notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done and such Grantor agrees that it shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. 38 (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Collateral Agent of any rights, title and interests in and to the Intellectual Property shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Collateral Agent shall promptly execute and deliver to such Grantor, at such Grantor's sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Collateral Agent as aforesaid, subject to any disposition thereof that may have been made by the Collateral Agent; provided, after giving effect to such reassignment, the Collateral Agent's security interest granted pursuant hereto, as well as all other rights and remedies of the Collateral Agent granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any Liens granted by or on behalf of the Collateral Agent and the Secured Parties. (c) Solely for the purpose of enabling the Collateral Agent to exercise rights and remedies under this Section 6 after an Event of Default and at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants upon an Event of Default, to the Collateral Agent, to the extent it has the right to do so, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to the grant of sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located. 6.4. CASH PROCEEDS. In addition to the rights of the Collateral Agent specified in Section 3.3 with respect to payments of Receivables, all proceeds of any Collateral received by any Grantor consisting of cash, checks and other near-cash items (collectively, "CASH PROCEEDS") (i) if no Event of Default shall have occurred and be continuing, shall be applied by such Grantor in a manner not inconsistent with the Credit Agreement, and (ii) if an Event of Default shall have occurred and be continuing, shall be held by such Grantor in trust for the Collateral Agent, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, unless otherwise provided pursuant to Section 3.4(b)(iii), be turned over to the Collateral Agent in the exact form received by such Grantor (duly indorsed by such Grantor to the Collateral Agent, if required) and may, in the sole discretion of the Collateral Agent, (A) be held by the Collateral Agent for the ratable benefit of the Secured Parties, as collateral security for the Secured Obligations (whether matured or unmatured) and/or (B) then or at any time thereafter may be applied by the Collateral Agent against the Secured Obligations then due and owing. 39 6.5. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in this Agreement, upon and during the continuance of an Event of Default, all proceeds received by the Collateral Agent in respect of any sale, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by the Collateral Agent against, the Secured Obligations in the following order of priority: first, to the payment of all reasonable costs and expenses of such sale, collection or other realization, including reasonable compensation to the Collateral Agent and its agents and counsel, and all other liabilities incurred by the Collateral Agent in connection therewith, and all amounts for which the Collateral Agent is entitled to indemnification hereunder (in its capacity as the Collateral Agent and not as a Lender) and all advances made or incurred by the Collateral Agent hereunder for the account of the applicable Grantor, and to the payment of all costs and expenses paid or incurred by the Collateral Agent in connection with the exercise of any right or remedy hereunder or under the Credit Agreement, all in accordance with the terms hereof or thereof; second, to the extent of any excess of such proceeds, (i) to the payment of interest and fees on the Secured Obligations for the ratable benefit of the Lenders and the Lender Counterparties and (ii) to the payment of all other Secured Obligations for the ratable benefit of the Lenders and the Lender Counterparties; and third, to the extent of any excess of such proceeds, to the payment to or upon the order of such Grantor or to whosoever may be lawfully entitled to receive the same from the Collateral Agent or the Lender or as a court of competent jurisdiction may direct. SECTION 7. COLLATERAL AGENT. The Collateral Agent has been appointed to act as Collateral Agent hereunder by Lenders and, by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement; provided, the Collateral Agent shall, after payment in full of all Obligations under the Credit Agreement and the other Credit Documents, exercise, or refrain from exercising, any remedies provided for herein in accordance with the instructions of the holders of a majority of the aggregate notional amount (or, with respect to any Financial Hedge Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Financial Hedge Agreement) under all Financial Hedge Agreements. In furtherance of the foregoing provisions of this Section, each Lender Counterparty, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Lender Counterparty that all rights and remedies hereunder may be exercised solely by the Collateral Agent for the ratable benefit of Lenders and Lender Counterparties in accordance with the terms of this Section. Collateral Agent may resign and a successor Collateral Agent may be appointed, all in accordance with Section 9.8 of the Credit Agreement. After any retiring Collateral Agent's resignation as the Collateral Agent, the 40 provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was the Collateral Agent hereunder. SECTION 8. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND RELEASES. This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and its successors, transferees and assigns for the benefit and on behalf of the Secured Parties. Without limiting the generality of the foregoing, but subject to the terms of the Credit Agreement, any Lender may assign or otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to Lenders herein or otherwise. Upon the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding Letters of Credit, the security interest granted hereby shall terminate hereunder and of record and all rights to the Collateral shall revert to Grantors. Upon any such termination the Collateral Agent shall, at Grantors' expense, reasonably promptly upon request by Grantor, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Collateral Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary or desirable for the release of the Liens created hereby on such Collateral. At the request and sole expense of Company, a Guarantor Subsidiary shall be released from its obligations hereunder in the event that all the Capital Stock or substantially all of the assets of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement (including by way of merger or consolidation). In the event that any Subsidiary is released from its obligations hereunder pursuant to this Section 8, any Mortgage granted by such Subsidiary to the Collateral Agent shall also be released. SECTION 9. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM. The powers conferred on the Collateral Agent hereunder are solely to protect its interest, for the benefit and on behalf of the Secured Parties, in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be 41 deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property. Neither the Collateral Agent nor any of its directors, officers, employees or agents shall be liable for failure to take or delay in taking action under this Agreement except to the extent such delay or failure arises from the gross negligence or willful misconduct of the Collateral Agent or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor under Section 10.2 of the Credit Agreement. SECTION 10. MISCELLANEOUS. Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 10.1 of the Credit Agreement. No failure or delay on the part of the Collateral Agent in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Credit Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists. This Agreement shall be binding upon and inure to the benefit of the Collateral Agent and Grantors and their respective successors and assigns. No Grantor shall, without the prior written consent of the Collateral Agent given in accordance with the Credit Agreement, assign any right, duty or obligation hereunder. This Agreement and the other Credit Documents embody the entire agreement and understanding between Grantors and the Collateral Agent and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Credit Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. 42 THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. [Remainder of page intentionally left blank] 43 IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. GRANTORS: BERRY PLASTICS CORPORATION By: ___________________________________ Name: Title: BPC HOLDING CORPORATION By: _____________________________ Name: Title: BERRY IOWA CORPORATION By: _____________________________ Name: Title: PACKERWARE CORPORATION By: _____________________________ Name: Title: KNIGHT PLASTICS, INC. By: _____________________________ Name: Title: 44 BERRY STERLING CORPORATION By: _____________________________ Name: Title: BERRY PLASTICS DESIGN CORPORATION By: _____________________________ Name: Title: POLY-SEAL CORPORATION By: _____________________________ Name: Title: BERRY PLASTICS ACQUISITION CORPORATION III By: _____________________________ Name: Title: VENTURE PACKAGING, INC. By: _____________________________ Name: Title: VENTURE PACKAGING MIDWEST, INC. By: _____________________________ Name: Title: 45 BERRY PLASTICS TECHNICAL SERVICES, INC. By: _____________________________ Name: Title: CPI HOLDINGS CORPORATION By: _____________________________ Name: Title: AEROCON, INC. By: _____________________________ Name: Title: PESCOR, INC. By: _____________________________ Name: Title: BERRY TRI-PLAS CORPORATION By: _____________________________ Name: Title: CARDINAL PACKAGING, INC. By: _____________________________ Name: Title: 46 SECURED PARTY: FLEET NATIONAL BANK, as the Collateral Agent By: _____________________________ Name: Title: 47 EX-10.19 11 y62674exv10w19.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.19 AMENDMENT TO EMPLOYMENT AGREEMENT AMENDMENT NO. 4 dated as of June 30, 2001, between BERRY PLASTICS CORPORATION, a Delaware corporation (the "Corporation"), and RALPH BRENT BEELER (the "Executive"). Reference is made to the Employment Agreement dated as of December 24, 1990, (as amended by Amendment No. 1 dated as of January 1, 1993, and Amendment No. 2 dated as of November 30, 1995, and Amendment No. 3 dated as of June 30, 1996, the "Employment Agreement"), between the Corporation and the Executive. The Corporation and the Executive desire to extend the term of the Employment Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Employment Agreement. Accordingly, in consideration of the mutual covenants and premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Term. Section 2 of the Employment Agreement is hereby amended to read in its entirety as follows: "Subject to earlier termination as provided herein, the employment of the Executive hereunder shall commence on the date hereof (the "Effective Date"), and terminate on January 1, 2007 (the "Expiration Date"). Such period of employment is hereinafter referred to as the "Employment Period." 2. Termination of Employment Following a Change of Control. The Employment Agreement is hereby amended by adding a new Section 12A which reads in its entirety as follows: "12A. Effect of Termination of Employment Following a Change of Control. In the Event of a Termination of Employment occurring after the consummation of a Change of Control (as hereinafter defined) which termination is pursuant to a Termination Without Cause or a Resignation for Good Reason (as defined in paragraph (d) below), neither the Executive nor his estate or beneficiaries shall have any further rights or claims against the Corporation under this Agreement except the right to receive: (a) the portion of the Base Salary which accrued with respect to the period prior to the Termination Date but which remained unpaid as of the Termination Date; (b) the aggregate amount of Reimbursable Expenses which were incurred prior to the Termination Date but which were not reimbursed by the Corporation as provided in Section 5(d) prior to the Termination Date; (c) as severance compensation: (i) an amount equal to the greater of (A) the Executive's Base Salary (as of the Termination Date) to be paid until the later to occur of (x) the second anniversary of the date upon which the Change of Control occurred, and (y) the first anniversary of the Termination Date, or (B) 1/12th of one-year's Base Salary (as of the Termination Date) for each year (not to exceed 30 years in the aggregate) that the Executive was employed by the Corporation (and its predecessors-in-interest); the amount referred to in clause (A) or (B), as the case may be, to be payable at the same times at which and in the same manner in which the Base Salary was paid prior to the termination; and (ii) the pro-rata portion of the applicable bonus provided for in Section 5(b); (d) For purposes of this Section 12A, the following definitions shall apply: "Change of Control" means (i) the sale of all or substantially all of the assets of the Corporation or BPC Holding Corporation ("BPC"), (ii) a sale of more than 50% of the outstanding voting shares of the Corporation or BPC in a non-public sale to persons who are not affiliates of the shareholders of BPC prior to the closing, or (iii) any merger or consolidation of the Corporation or BPC immediately after which a majority of the outstanding voting shares of the surviving entity are not held by persons who held a majority of such shares of BPC immediately prior to such transaction. "Resignation for Good Reason" means the Executive's resignation after the date in which a Change of Control has occurred as a result of Executive's reassignment to an office location greater than 25 miles from the office location Executive utilized as of the date on which a Change of Control occurred." 3. Key Person Life Insurance. The Employment Agreement is hereby amended by deleting Section 24 in its entirety and replacing it with the following: "Section 24. [Intentionally Omitted]" -2- 4. Notices. Section 16 of the Employment Agreement is hereby amended by deleting the information relating to O'Sullivan Graev & Karabell, LLP and replacing it with the following: "O'Sullivan LLP 30 Rockefeller Plaza New York, NY 10112 Attn: Michael J. O'Brien, Esq. Telecopier: (212) 408-2420" 5. Effect of Amendment. Except as expressly amended hereby, the Employment Agreement shall remain in full force and effect and unchanged. 6. Counterparts. This Amendment No. 4 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. * * * * * -3- IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first written above. BERRY PLASTICS CORPORATION By:____________________________________ Ira G. Boots President and Chief Executive Officer ____________________________________ Ralph Brent Beeler EX-10.20 12 y62674exv10w20.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.20 AMENDMENT TO EMPLOYMENT AGREEMENT AMENDMENT NO. 3 dated as of June 30, 2001, between BERRY PLASTICS CORPORATION, a Delaware corporation (the "Corporation"), and IRA G. BOOTS (the "Executive"). Reference is made to the Employment Agreement dated as of January 1, 1993 (as amended by Amendment No. 1 dated as of November 30, 1995, and Amendment No. 2 dated as of June 30, 1996, the "Employment Agreement"), between the Corporation and the Executive. The Corporation and the Executive desire to extend the term of the Employment Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Employment Agreement. Accordingly, in consideration of the mutual covenants and premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Term. Section 2 of the Employment Agreement is hereby amended to read in its entirety as follows: "Subject to earlier termination as provided herein, the employment of the Executive hereunder shall commence on January 1, 1993 (the "Effective Date"), and terminate on January 1, 2007 (the "Expiration Date"). Such period of employment is hereinafter referred to as the "Employment Period." 2. Termination of Employment Following a Change of Control. The Employment Agreement is hereby amended by adding a new Section 11A which reads in its entirety as follows: "11A. Effect of Termination of Employment Following a Change of Control. In the Event of a Termination of Employment occurring after the consummation of a Change of Control (as hereinafter defined) which termination is pursuant to a Termination Without Cause or a Resignation for Good Reason (as defined in paragraph (d) below), neither the Executive nor his estate or beneficiaries shall have any further rights or claims against the Corporation under this Agreement except the right to receive: (a) the portion of the Base Salary which accrued with respect to the period prior to the Termination Date but which remained unpaid as of the Termination Date; (b) the aggregate amount of Reimbursable Expenses which were incurred prior to the Termination Date but which were not reimbursed by the Corporation as provided in Section 5(d) prior to the Termination Date; (c) as severance compensation: (i) an amount equal to the greater of (A) the Executive's Base Salary (as of the Termination Date) to be paid until the later to occur of (x) the second anniversary of the date upon which the Change of Control occurred, and (y) the first anniversary of the Termination Date, or (B) 1/12th of one-year's Base Salary (as of the Termination Date) for each year (not to exceed 30 years in the aggregate) that the Executive was employed by the Corporation (and its predecessors-in-interest); the amount referred to in clause (A) or (B), as the case may be, to be payable at the same times at which and in the same manner in which the Base Salary was paid prior to the termination; and (ii) the pro-rata portion of the applicable bonus provided for in Section 5(b); (d) For purposes of this Section 11A, the following definitions shall apply: "Change of Control" means (i) the sale of all or substantially all of the assets of the Corporation or BPC Holding Corporation ("BPC"), (ii) a sale of more than 50% of the outstanding voting shares of the Corporation or BPC in a non-public sale to persons who are not affiliates of the shareholders of BPC prior to the closing, or (iii) any merger or consolidation of the Corporation or BPC immediately after which a majority of the outstanding voting shares of the surviving entity are not held by persons who held a majority of such shares of BPC immediately prior to such transaction. "Resignation for Good Reason" means the Executive's resignation after the date in which a Change of Control has occurred as a result of Executive's reassignment to an office location greater than 25 miles from the office location Executive utilized as of the date on which a Change of Control occurred." 3. Key Person Life Insurance. The Employment Agreement is hereby amended by deleting Section 23 in its entirety and replacing it with the following: "Section 23. [Intentionally Omitted]" -2- 4. Notices. Section 15 of the Employment Agreement is hereby amended by deleting the information relating to O'Sullivan Graev & Karabell, LLP and replacing it with the following: "O'Sullivan LLP 30 Rockefeller Plaza New York, NY 10112 Attn: Michael J. O'Brien, Esq. Telecopier: (212) 408-2420" 5. Effect of Amendment. Except as expressly amended hereby, the Employment Agreement shall remain in full force and effect and unchanged. 6. Counterparts. This Amendment No. 3 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. * * * * * -3- IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first written above. BERRY PLASTICS CORPORATION By:____________________________________ James M. Kratochvil Executive Vice President, Chief Financial Officer, Treasurer and Secretary ______________________________________ Ira G. Boots President and Chief Executive Officer EX-10.21 13 y62674exv10w21.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.21 AMENDMENT TO EMPLOYMENT AGREEMENT AMENDMENT NO. 4 dated as of June 30, 2001, between BERRY PLASTICS CORPORATION, a Delaware corporation (the "Corporation"), and JAMES M. KRATOCHVIL (the "Executive"). Reference is made to the Employment Agreement dated as of December 24, 1990, (as amended by Amendment No. 1 dated as of January 1, 1993, and Amendment No. 2 dated as of November 30, 1995, and Amendment No. 3 dated as of June 30, 1996, the "Employment Agreement"), between the Corporation and the Executive. The Corporation and the Executive desire to extend the term of the Employment Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Employment Agreement. Accordingly, in consideration of the mutual covenants and premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Term. Section 2 of the Employment Agreement is hereby amended to read in its entirety as follows: "Subject to earlier termination as provided herein, the employment of the Executive hereunder shall commence on the date hereof (the "Effective Date"), and terminate on January 1, 2007 (the "Expiration Date"). Such period of employment is hereinafter referred to as the "Employment Period." 2. Termination of Employment Following a Change of Control. The Employment Agreement is hereby amended by adding a new Section 12A which reads in its entirety as follows: "12A. Effect of Termination of Employment Following a Change of Control. In the Event of a Termination of Employment occurring after the consummation of a Change of Control (as hereinafter defined) which termination is pursuant to a Termination Without Cause or a Resignation for Good Reason (as defined in paragraph (d) below), neither the Executive nor his estate or beneficiaries shall have any further rights or claims against the Corporation under this Agreement except the right to receive: (a) the portion of the Base Salary which accrued with respect to the period prior to the Termination Date but which remained unpaid as of the Termination Date; (b) the aggregate amount of Reimbursable Expenses which were incurred prior to the Termination Date but which were not reimbursed by the Corporation as provided in Section 5(d) prior to the Termination Date; (c) as severance compensation: (i) an amount equal to the greater of (A) the Executive's Base Salary (as of the Termination Date) to be paid until the later to occur of (x) the second anniversary of the date upon which the Change of Control occurred, and (y) the first anniversary of the Termination Date, or (B) 1/12th of one-year's Base Salary (as of the Termination Date) for each year (not to exceed 30 years in the aggregate) that the Executive was employed by the Corporation (and its predecessors-in-interest); the amount referred to in clause (A) or (B), as the case may be, to be payable at the same times at which and in the same manner in which the Base Salary was paid prior to the termination; and (ii) the pro-rata portion of the applicable bonus provided for in Section 5(b); (d) For purposes of this Section 12A, the following definitions shall apply: "Change of Control" means (i) the sale of all or substantially all of the assets of the Corporation or BPC Holding Corporation ("BPC"), (ii) a sale of more than 50% of the outstanding voting shares of the Corporation or BPC in a non-public sale to persons who are not affiliates of the shareholders of BPC prior to the closing, or (iii) any merger or consolidation of the Corporation or BPC immediately after which a majority of the outstanding voting shares of the surviving entity are not held by persons who held a majority of such shares of BPC immediately prior to such transaction. "Resignation for Good Reason" means the Executive's resignation after the date in which a Change of Control has occurred as a result of Executive's reassignment to an office location greater than 25 miles from the office location Executive utilized as of the date on which a Change of Control occurred." 3. Key Person Life Insurance. The Employment Agreement is hereby amended by deleting Section 24 in its entirety and replacing it with the following: "Section 24. [Intentionally Omitted]" -2- 4. Notices. Section 16 of the Employment Agreement is hereby amended by deleting the information relating to O'Sullivan Graev & Karabell, LLP and replacing it with the following: "O'Sullivan LLP 30 Rockefeller Plaza New York, NY 10112 Attn: Michael J. O'Brien, Esq. Telecopier: (212) 408-2420" 5. Effect of Amendment. Except as expressly amended hereby, the Employment Agreement shall remain in full force and effect and unchanged. 6. Counterparts. This Amendment No. 4 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. * * * * * -3- IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date first written above. BERRY PLASTICS CORPORATION By:____________________________________ Ira G. Boots President and Chief Executive Officer _______________________________________ James M. Kratochvil EX-10.22 14 y62674exv10w22.txt AMENDMENT TO EMPLOYMENT AGREEMENT EXHIBIT 10.22 AMENDMENT TO EMPLOYMENT AGREEMENT AMENDMENT NO. 2 dated as of July 16, 2002, between BERRY PLASTICS CORPORATION, a Delaware corporation (the "Corporation"), and BRUCE J. SIMS (the "Employee"). Reference is made to the Employment Agreement dated as of January 21, 1997 (as amended on January 21, 2002) (the "Employment Agreement"), between the Corporation and the Employee. The Corporation and the Employee desire to amend the Employment Agreement as hereinbelow set forth. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Employment Agreement. Accordingly, in consideration of the mutual covenants and premises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Restrictive Covenants. The first portion of the second sentence of Section 11(a) of the Employment Agreement is hereby amended to read as follows: "Accordingly, in consideration of the premises contained herein and the consideration to be received by the Employee hereunder (including, without limitation, the severance compensation described in Section 9(b)(i) and Section 9A(c)(i), if any ("Severance Compensation")), without the prior written consent of the Corporation, the Employee shall not, at any time during the employer/employee relationship between the Corporation and the Employee and for the longer of (x) the one-year period after the termination of such employer/employee relationship and (y) the period of time beginning with the termination of such employer/employee relationship and ending upon the final payment of Severance Compensation," 2. Notices. Section 13(C)(i) of the Employment Agreement is hereby amended by deleting the information relating to O'Sullivan LLP and replacing it with the following: "Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, NY 10004 Att: Paul M. Reinstein, Esq. Telephone: (212) 859-8156 Telecopier: (212) 859-4000; and Goodwin Procter, LLC 599 Lexington Avenue New York, NY 10022 Attn: Michael J. O'Brien, Esq. Telecopier: (212) 355-3333" 3. Effect of Amendment. Except as expressly amended hereby, the Employment Agreement shall remain in full force and effect and unchanged. 4. Counterparts. This Amendment No. 2 may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have hereunto set their hands as of the first day written above. BERRY PLASTICS CORPORATION By:______________________________ Ira G. Boots President and Chief Executive Officer ______________________________ Bruce J. Sims 2 EX-12.1 15 y62674exv12w1.txt RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.1 BERRY PLASTICS CORPORATION STATEMENT RE: COMPUTATION OF EARNINGS TO FIXED CHARGES (in Thousands)
Fiscal Thirteen Weeks Ended --------------------------------------------------- -------------------- March 31, March 30, (Dollars in thousands) 1997 1998 1999 2000 2001 2001 2002 --------- --------- --------- --------- --------- --------- ---------- Earnings: Income (loss) before income taxes $(14,273) $ (7,819) $ (8,584) $(22,227) $ (1,361) $ 1,104 $ 4,657 Interest expense 32,237 35,555 40,819 51,457 54,355 13,494 12,806 Interest portion of rental expense 1,111 1,805 2,427 3,061 2,764 810 804 --------- --------- --------- --------- --------- --------- --------- Earnings $ 19,075 $ 29,541 $ 34,662 $ 32,291 $ 55,758 $15,408 $ 18,267 ========= ========= ========= ========= ========= ========= ========= Fixed Charges: Interest expense $ 31,896 $ 34,778 $ 39,372 $ 49,750 $ 53,766 $13,365 $ 12,658 Interest portion of rental expenses 1,111 1,805 2,427 3,061 2,764 810 804 --------- --------- --------- --------- --------- --------- --------- Fixed charges $ 33,007 $ 36,583 $ 41,799 $ 52,811 $ 56,530 $ 14,175 $ 13,462 ========= ========= ========= ========= ========= ========= ========= Ratio (Deficiency) of earnings to cover fixed charges 0.6x 0.8x 0.8x 0.6x 1.0x 1.1x 1.4x ========= ========= ========= ========= ========= ========= =========
EX-21.1 16 y62674exv21w1.txt LIST OF SUBSIDIARIES EXHIBIT 21.1
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 Berry Plastics Acquisition Corporation IV Delaware Berry Plastics Acquisition Corporation V Delaware Berry Plastics Acquisition Corporation VI Delaware Berry Plastics Acquisition Corporation VII Delaware Berry Plastics Acquisition Corporation VIII Delaware Berry Plastics Acquisition Corporation IX Delaware Berry Plastics Acquisition Corporation X Delaware Berry Plastics Acquisition Corporation XI Delaware Berry Plastics Acquisition Corporation XII Delaware Berry Plastics Acquisition Corporation XIII Delaware Berry Plastics Acquisition Corporation XIV, LLC Delaware Berry Plastics Acquisition Corporation XV, LLC Delaware
EX-23.2 17 y62674exv23w2.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Selected Consolidated Financial Data" and "Independent Auditors" and to the use of our report dated February 15, 2002, in the Registration Statement with respect to BPC Holding Corporation in the Registration Statement (Form S-4) and related Prospectus of Berry Plastics Corporation for the registration of $250,000,000 of 10 3/4% Senior Subordinated Notes due 2012. /s/ Ernst & Young LLP Indianapolis, Indiana August 7, 2002 EX-25.1 18 y62674exv25w1.txt FORM T-1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________ FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)___ _______________________________________________________ U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) 41-1973763 I.R.S. Employer Identification No. 300 EAST DELAWARE AVENUE, 8{TH} FLOOR WILMINGTON, DELAWARE 19809 (Address of principal executive offices) (Zip Code) Barbara A. Nastro U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Telephone (212) 361-2525 (Name, address and telephone number of agent for service) BERRY PLASTICS CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 35-1813706 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 101 OAKLEY STREET, EVANSVILLE, INDIANA 47710 (Address of Principal Executive Offices) (Zip Code) DEBT SECURITIES (TITLE OF THE INDENTURE SECURITIES) FORM T-1 Item 1. GENERAL INFORMATION. Furnish the following information as to the Trustee. a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency Washington, D.C. b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None USE ONE OF FOLLOWING RESPONSES ONLY ITEMS 3-15 Not applicable because, to the best of Trustee's knowledge, the Trustee is not a trustee under any other indenture under which any other securities or certificates of interest or participation in any other securities of the obligor are outstanding and there is not, nor has there been, a default with respect to securities issued under the indenture to be qualified. ITEMS 3-15 The Trustee is a Trustee under other Indentures under which securities issued by the obligor are outstanding. There is not and there has not been a default with respect to the securities outstanding under other such Indentures. Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of the Trustee now in effect, incorporated herein by reference to Exhibit 1 of Form T-1, Document 6 of Registration No. 333-84320. 2. A copy of the certificate of authority of the Trustee to commence business, incorporated herein by reference to Exhibit 2 of Form T-1, Document 6 of Registration No. 333-84320. 3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers, incorporated herein by reference to Exhibit 3 of Form T-1, Document 6 of Registration No. 333-84320. 4. A copy of the existing bylaws of the Trustee, as now in effect, incorporated herein by reference to Exhibit 4 of Form T-1, Document 6 of Registration No. 333-84320. 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, incorporated herein by reference to Exhibit 6 of Form T-1, Document 6 of Registration No. 333-84320. 2 7. Report of Condition of the Trustee as of March 31, 2002, published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. 8. Not applicable. 9. Not applicable. 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, State of New York on the 4{th} day of June, 2002. U.S. BANK TRUST NATIONAL ASSOCIATION By: /S/ BARBARA A. NASTRO ------------------------------- BARBARA A. NASTRO Vice President 4 Exhibit 7 U.S. BANK TRUST NATIONAL ASSOCIATION STATEMENT OF FINANCIAL CONDITION AS OF 3/31/2002 ($000'S)
3/31/2002 --------- ASSETS Cash and Due From Depository Institutions $ 73,646 Fixed Assets 367 Intangible Assets 47,815 Other Assets 13,306 --------- TOTAL ASSETS $135,134 LIABILITIES Other Liabilities $ 10,844 --------- TOTAL LIABILITIES $ 10,844 EQUITY Common and Preferred Stock $ 1,000 Surplus 125,932 Undivided Profits (2,642) --------- TOTAL EQUITY CAPITAL $124,290 TOTAL LIABILITIES AND EQUITY CAPITAL $135,134
To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank Trust National Association By: /S/ Barbara A. Nastro Vice President Date: July 31, 2002 5 EX-99.1 19 y62674exv99w1.txt FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR TENDER OF ALL OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 IN EXCHANGE FOR 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 OF BERRY PLASTICS CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2002 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS EXTENDED BY BERRY PLASTICS CORPORATION IN ITS SOLE DISCRETION. TENDERS OF OUTSTANDING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. EXCHANGE AGENT: U.S. BANK TRUST NATIONAL ASSOCIATION BY MAIL: U.S. BANK TRUST NATIONAL ASSOCIATION 180 EAST FIFTH STREET P.O. BOX 64111 ST. PAUL, MN 551654-0111 ATTENTION: SHAUNA THILMANY FACSIMILE: 651-244-1537 CONFIRM BY TELEPHONE: 651-244-8112 BY HAND OR OVERNIGHT DELIVERY: U.S. BANK TRUST NATIONAL ASSOCIATION 180 EAST FIFTH STREET 4TH FLOOR--BOND DROP WINDOW ST. PAUL, MN 55101 ATTENTION: SHAUNA THILMANY FACSIMILE: 651-244-1537 CONFIRM BY TELEPHONE: 651-244-8112 BY HAND: U.S. BANK TRUST NATIONAL ASSOCIATION 100 WALL STREET 16TH FLOOR--BOND DROP WINDOW NEW YORK, NY 10005 ATTENTION: BARBARA NASTRO DELIVERY TO AN ADDRESS OTHER THAN THE DEPOSITORY TRUST COMPANY (ATOP) OR AS SET FORTH IN THIS LETTER OF TRANSMITTAL OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. By execution hereof, the undersigned acknowledges receipt of the Prospectus dated , 2002 (the "Prospectus") of Berry Plastics Corporation ("Berry") which, together with this Letter of Transmittal (the "Letter of Transmittal"), constitute Berry's offer (the "Exchange Offer") to exchange $1,000 in stated amount at maturity of a new series of 10 3/4% Senior Subordinated Notes Due 2012 (the "Exchange Notes") of Berry for each $1,000 in stated amount at maturity of outstanding 10 3/4% Senior Subordinated Notes Due 2012 (the "Outstanding Notes") of Berry. The terms of the Exchange Notes are identical in all material respects (including stated amount at maturity, interest rate and maturity) to the terms of the Outstanding Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes will have been registered under the Securities Act of 1933 (the "Securities Act"), as amended, and, therefore, will not bear legends restricting the transfer thereof. This Letter of Transmittal is to be used by Holders (as defined below) if: (i) certificates representing Outstanding Notes are to be physically delivered to the Exchange Agent herewith by Holders; (ii) tender of Outstanding Notes is to be made by book-entry transfer to the Exchange Agent's account at The Depository Trust Company ("DTC") by any financial institution that is a participant in DTC and whose name appears on a security position listing as the owner of Outstanding Notes (such participants, acting on behalf of Holders, are referred to herein, together with such Holders, as "Acting Holder"); or (iii) tender of Outstanding Notes is to be made according to the guaranteed delivery procedures. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. If delivery of the Outstanding Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC as set forth in (ii) in the immediately preceding paragraph, this Letter of Transmittal need not be manually executed; provided, however, that tenders of Outstanding Notes must be effected in accordance with the procedures mandated by DTC's Automated Tender Offer Program ("ATOP"). To tender Outstanding Notes through ATOP, the electronic instructions sent to DTC and transmitted by DTC to the Exchange Agent must contain the character by which the participant acknowledges its receipt of and agrees to be bound by this Letter of Transmittal. Unless the context requires otherwise, the term "Holder" for purposes of this Letter of Transmittal means: (i) any person in whose name Outstanding Notes are registered on the books of Berry or any other person who has obtained a properly completed bond power from the registered Holder or (ii) any participant in DTC whose Outstanding Notes are held of record by DTC who desires to deliver such Outstanding Notes by book-entry transfer at DTC. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Exchange Agent. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OUTSTANDING NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY. List below the Outstanding Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the Certificate Numbers and Stated Amounts at Maturity should be listed on a separate signed schedule affixed hereto. Tenders of Outstanding Notes will be accepted only in authorized denominations of $1,000. 2 - ---------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF OUTSTANDING NOTES - ---------------------------------------------------------------------------------------------------------------------- CERTIFICATE NUMBER(S)* AGGREGATE STATED AMOUNT NAME(S) AND ADDRESS(ES) OF HOLDER(S) (ATTACHED SIGNED LIST AT MATURITY TENDERED (PLEASE FILL IN, IF BLANK) IF NECESSARY) (IF LESS THAN ALL)** - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- TOTAL STATED AMOUNT AT MATURITY OF OUTSTANDING NOTES TENDERED - ---------------------------------------------------------------------------------------------------------------------- * Need not be completed by Holders tending by book-entry transfer. ** Need not be completed by Holders who wish to tender with respect to all Outstanding Notes listed. See Instruction 2. - ----------------------------------------------------------------------------------------------------------------------
3 [ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY DTC TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: DTC Book-Entry Account: Transaction Code No.: Holders who wish to tender their Outstanding Notes and (i) whose Outstanding Notes are not immediately available, or (ii) who cannot deliver their Outstanding Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, or cannot complete the procedure for book-entry transfer on a timely basis, may effect a tender according to the guaranteed delivery procedures and must also complete the Notice of Guaranteed Delivery. [ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Holder(s) of Outstanding Notes: Window Ticket No. (If Any): Date of Execution of Notice of Guaranteed Delivery: Name of Eligible Institution That Guaranteed Delivery: DTC Book-Entry Account No.: If Delivered by Book-Entry Transfer: [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO: Name: Address: 4 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to Berry the above-described stated amount at maturity of Outstanding Notes. Subject to, and effective upon, the acceptance for exchange of the Outstanding Notes tendered herewith, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, Berry all right, title and interest in and to such Outstanding Notes. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Exchange Agent also acts as the agent of Berry and as Trustee under the Indenture for the Outstanding Notes and the Exchange Notes) to cause the Outstanding Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Outstanding Notes and to acquire Exchange Notes issuable upon the exchange of such tendered Outstanding Notes, and that, when the same are accepted for exchange, Berry will acquire good and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or Berry to be necessary or desirable to complete the exchange, assignment and transfer of tendered Outstanding Notes. The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption "the exchange offer--Conditions to the exchange offer". The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by Berry) as more particularly set forth in the Prospectus, Berry may not be required to exchange any of the Outstanding Notes tendered hereby and, in such event, the Outstanding Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned. By tendering, each Holder of Outstanding Notes represents to Berry that (i) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is such Holder, (ii) neither the Holder of Outstanding Notes nor any such other person has an arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Notes in violation of the provisions of the Securities Act, (iii) if the Holder is not a broker-dealer or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Outstanding Notes, neither the Holder nor any such other person is engaged in or intends to participate in a distribution of the Exchange Notes and (iv) neither the Holder nor any such other person is an "affiliate" of Berry or any Guarantor within the meaning of Rule 405 under the Securities Act or, if such Holder is such an "affiliate", that such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the tendering Holder is a broker-dealer (whether or not it is also an "affiliate" of Berry within the meaning of Rule 405 under the Securities Act) that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For purposes of the Exchange Offer, Berry shall be deemed to have accepted validly tendered Outstanding Notes when, as and if Berry has given oral or written notice thereof to the Exchange Agent 5 and complied with the applicable provisions of the Registration Rights Agreement. If any tendered Outstanding Notes are not accepted for exchange pursuant to the Exchange Offer for any reason or if Outstanding Notes are submitted for a greater stated amount at maturity than the holder desires to exchange, such unaccepted or non-exchanged Outstanding Notes will be returned without expense to the tendering Holder thereof (or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to customary book-entry transfer procedures, such non-exchanged Notes will be credited to an account maintained with such Book-Entry Transfer Facility) as promptly as practicable after the expiration or termination of the Exchange Offer. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death, incapacity or dissolution of the undersigned and every obligation under this Letter of Transmittal shall be binding upon the undersigned's heirs, personal representatives, successors and assigns. The undersigned understands that tenders of Outstanding Notes pursuant to the instructions hereto will constitute a binding agreement between the undersigned and Berry upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated under "Special Issuance Instruction", please issue the certificates representing the Exchange Notes issued in exchange for the Outstanding Notes accepted for exchange and return any Outstanding Notes not tendered or not exchanged, in the name(s) of the undersigned (or in either such event in the case of Outstanding Notes tendered by DTC, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions", please send the certificates representing the Exchange Notes issued in exchange for the Outstanding Notes accepted for exchange and any certificates for Outstanding Notes not tendered or not exchanged (and accompanying documents as appropriate) to the undersigned at the address shown below the undersigned's signatures, unless, in either event, tender is being made through DTC. In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes issued in exchange for the Outstanding Notes accepted for exchange and return any Outstanding Notes not tendered or not exchanged in the name(s) of, and send said certificates to, the person(s) so indicated. The undersigned recognizes that Berry has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instruction" to transfer any Outstanding Notes from the name of the registered holder(s) thereof if Berry does not accept for exchange any of the Outstanding Notes so tendered. 6 PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS OF OUTSTANDING NOTES REGARDLESS OF WHETHER OUTSTANDING NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH) This Letter of Transmittal must be signed by the Holder(s) of Outstanding Notes exactly as their name(s) appear(s) on certificate(s) for Outstanding Notes or, if tendered by a participant in DTC, exactly as such participant's name appears on a security position listing as the owner of Outstanding Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below under "Capacity" and submit evidence satisfactory to Berry of such person's authority to so act. See Instruction 3 herein. If the signature appearing below is not of the registered Holder(s) of the Outstanding Notes, then the registered Holder(s) must sign a valid proxy. X Date: - --------------------------------------------------- -------------------------------------------- X Date: - --------------------------------------------------- -------------------------------------------- Signature(s) of Holder(s) or Authorized Signatory Names: Address: - --------------------------------------------------- --------------------------------------------------- - --------------------------------------------------- --------------------------------------------------- (Please Print) (Including ZIP Code) Area Code and Capacity(ies): Telephone No: - --------------------------------------------------- --------------------------------------------------- Social Security No(s).:
- -------------------------------------------------------------------------------- PLEASE COMPLETE FORM W-9 HEREIN SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN) CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION - -------------------------------------------------------------------------------- (Name of Eligible Institution Guaranteeing Signatures) - -------------------------------------------------------------------------------- (Address (including zip code) and Telephone Number (including area code) of Firm) - -------------------------------------------------------------------------------- (Authorized Signature) - -------------------------------------------------------------------------------- (Printed Name) - -------------------------------------------------------------------------------- (Title) Date: - -------------------- 7 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTION 4 HEREIN) To be completed ONLY if certificates for the Exchange Notes issued pursuant to the Exchange Offer are to be issued to the order of, someone other than the person or persons whose signature(s) appear(s) within this Letter of Transmittal or issued to an address different from that shown in the box entitled "Description of Outstanding Notes" within this Letter of Transmittal, or if Outstanding Notes tendered by book-entry transfer that are not accepted are maintained at DTC other than the account at DTC indicated above. Name: -------------------------------------------------------------------------- Address: ------------------------------------------------------------------------ - ------------------------------------------------------ (Please Print) - ------------------------------------------------------ Zip Code: - ------------------------------------------ Taxpayer Identification or Social Security Number: ------------------------------------------------------------------------ (See Form W-9 herein) SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTION 4 HEREIN) To be completed ONLY if certificates for the Exchange Notes issued pursuant to the Exchange Offer are sent to, someone other than the person or persons whose signature(s) appear(s) within this Letter of Transmittal or to be credited to an account maintained at DTC other than the account at DTC indicated above. Name: -------------------------------------------------------------------------- Address: ------------------------------------------------------------------------ - ------------------------------------------------------ (Please Print) - ------------------------------------------------------ Zip Code: - ------------------------------------------ Taxpayer Identification or Social Security Number: ------------------------------------------------------------------------ (See Form W-9 herein) 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. The certificates for the tendered Outstanding Notes (or a confirmation of a book-entry into the Exchange Agent's account at DTC of all Outstanding Notes delivered electronically), as well as a properly completed and duly executed copy of this Letter of Transmittal of facsimile hereof and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 5:00 P.M., New York City time, on the Expiration Date. The method of delivery of the tendered Outstanding Notes, this Letter of Transmittal and all other required documents to the Exchange Agent are at the election and risk of the Holder and, except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that the Holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. No Letter of Transmittal or Outstanding Notes should be sent to Berry. Holders who wish to tender their Outstanding Notes and (i) whose Outstanding Notes are not immediately available or (ii) who cannot deliver their Outstanding Notes, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Exchange Date, or who cannot complete the procedure for book-entry transfer of a timely basis must tender their Outstanding Notes and follow the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made by or through an Eligible Institution (as defined below); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Outstanding Notes, the certificate number or numbers of such Outstanding Notes and the stated amount at maturity of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange trading days after the Expiration Date, this Letter of Transmittal (or copy thereof) (or electronic instructions containing the character by which the participant acknowledges its receipt of and agrees to be bound by this Letter of Transmittal) together with the certificate(s) representing the Outstanding Notes (or a confirmation of electronic mail delivery of book-entry into the Exchange Agent's account at DTC) and any of the required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or copy thereof) (or electronic instructions containing the character by which the participant acknowledges its receipt of and agrees to be bound by this Letter of Transmittal), as well as all other documents required by this Letter of Transmittal, and the certificate(s) representing all tendered Outstanding Notes in proper form for transfer (or a confirmation of electronic mail delivery book-entry delivery into the Exchange Agent's account at DTC), must be received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Any Holder of Outstanding Notes who wishes to tender these Outstanding Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M., New York City time, on the Expiration Date. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Outstanding Notes will be determined by Berry in its sole discretion, which determination will be final and binding. Berry reserves the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes Berry's acceptance of which would, in the opinion of counsel for Berry, be unlawful. Berry also reserves the absolute right to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. Berry's interpretation of the terms and 9 conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be in its sole discretion and will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as Berry shall determine. Although Berry intends to notify Holders of defects or irregularities with respect to tenders of Outstanding Notes, neither Berry, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed to have been made until such defects or irregularities have been cured or waived and will be returned without cost by the Exchange Agent to the tendering Holders of Outstanding Notes, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 2. PARTIAL TENDERS; WITHDRAWALS. If less than all Outstanding Notes are tendered, the tendering Holder should fill in the number of Outstanding Notes tendered in the third column of the chart entitled "Description of Outstanding Notes." All Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If not all Outstanding Notes are tendered, Outstanding Notes for the aggregate stated amount at maturity of Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If not all Outstanding Notes are tendered, a certificate or certificates representing Exchange Notes issued in exchange of any Outstanding Notes tendered and accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box in this Letter of Transmittal or unless tender is made through DTC, promptly after the Outstanding Notes are accepted for exchange. 3. SIGNATURE ON THE LETTER OF TRANSMITTAL; BOND POWER AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or copy hereof) is signed by the registered Holder(s) of the Outstanding Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Outstanding Notes without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or copy hereof) is signed by the registered Holder(s) of Outstanding Notes tendered and the certificate(s) for Exchange Notes issued in exchange therefor is to be issued (or any untendered number of Outstanding Notes is to be reissued) to the registered Holder, such Holder need not and should not endorse any tendered Outstanding Note, nor provide a separate bond power. In any other case, such holder must either properly endorse the Outstanding Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signature on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or copy hereof) if signed by a person other than the registered Holder(s) of Outstanding Notes listed therein, such Outstanding Notes must be endorsed or accompanied by properly completed bond powers which authorized such person to tender the Outstanding Notes on behalf of the registered Holder, in either case signed as the name of the registered Holder or Holders appears on the Outstanding Notes. If this Letter of Transmittal (or copy hereof) or any Outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such person should so indicate when signing and unless waived by Berry, evidence satisfactory to Berry of their authority to so act must be submitted with this Letter of Transmittal. Endorsements on Outstanding Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal (or copy hereof) or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National 10 Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution") unless the Outstanding Notes tendered pursuant thereto are tendered (i) by a registered Holder (including any participant in DTC whose name appears on a security position listing as the owner of Outstanding Notes) who has not completed the box set forth herein entitled "Special Issuance Instructions" or "Special Delivery Instructions" of this Letter of Transmittal or (ii) for the account of an Eligible Institution. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering Holders should include, in the applicable spaces, the name and address to which Exchange Notes are to be sent, if different from the name and address of the person signing this Letter of Transmittal (or in the case of tender of the Outstanding Notes through DTC, if different from the account maintained at DTC indicated above). In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 5. TRANSFER TAXES. Berry shall pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes, or Outstanding Notes for stated amounts at maturity not tendered or accepted for exchange, are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Outstanding Notes tendered hereby, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering Holder. Except as provided in this Instruction 5, it will not be necessary for transfer tax stamps to be affixed to the Outstanding Notes listed in this Letter of Transmittal. 6. WAIVER OF CONDITIONS. Berry reserves the absolute right to amend, waive or modify, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 7. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering, as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address specified in the Prospectus. 9. IRREGULARITIES. All questions as to the validity, form, eligibility (including time of receipt), and acceptance of Letters of Transmittal or Outstanding Notes will be resolved by Berry, whose determination will be final and binding. Berry reserves the absolute right in its sole discretion to reject any or all Letters of Transmittal or tenders that are not in proper form or the acceptance of which would, in the opinion of Berry or Berry's counsel, be unlawful. Berry also reserves the right to waive any irregularities or conditions of tender as to the particular Outstanding Notes covered by any Letter of Transmittal or tendered pursuant to such Letter of Transmittal. None of Berry, the Exchange Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability 11 for failure to give any such notification. Berry's interpretation of the terms and conditions of the Exchange Offer shall be final and binding. 10. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted unless converted to by Berry. All tendering holders of Outstanding Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Outstanding Notes for exchange. 11. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and not otherwise defined have the meanings given in the Prospectus. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH CERTIFICATES FOR OUTSTANDING NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. 12 Form W-9 REQUEST FOR TAXPAYER (Rev. January 2002) IDENTIFICATION NUMBER AND CERTIFICATION GIVE FORM TO THE Department of the Treasury REQUESTER. DO Internal Revenue Service NOT SEND TO THE IRS. - --------------------------------------------------------------------------------------
PRINT OR TYPE SEE SPECIFIC INSTRUC- TIONS ON PAGE 2. Name ------------------------------------------------------------------------- Business name, if different from above ------------------------------------------------------------------------- Check appropriate box: [ ] Individual/Sole Proprietor [ ] Corporation [ ] Partnership [ ] Other , ....................... [ ] Exempt from backup withholding ------------------------------------------------------------------------- Address (number, street, and apt. or suite no.) ------------------------------------------------------------------------- City, state and ZIP code ------------------------------------------------------------------------- List account number(s) here (optional) - ----------------------------------------------------------------------------------- Name ------------------------------------------------------------------------- ----------------------------------------------- ------------------------------------------------------------------------- ----------------------------------------------- Check appropriate box: [ ] Individual/Sole Proprietor [ ] Corporation [ ] Partnership [ ] Other , ......................................... [ ] Exempt from backup withholding ------------------------------------------------------------------------- ----------------------------------------------- Requester's name and address (optional) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ----------------------------------------------- - -----------------------------------------------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER (TIN) ------------------------------------------------------------------------------- Enter your TIN in the appropriate box. For individuals, this SOCIAL SECURITY NUMBER is your social security number (SSN). HOWEVER, FOR A RESIDENT ALIEN, SOLE PROPRIETOR, OR DISREGARDED ENTITY, SEE THE PART I INSTRUCTIONS ON PAGE 2. For other entities, it is your employer identification number (EIN), if you do not have a number, see HOW TO GET A TIN on page 2. --------------------------- OR EMPLOYER IDENTIFICATION NUMBER --------------------------- NOTE: If the account is in more than one name, see the chart on page 2 for guidelines on whose number to enter. PART II CERTIFICATION -------------------------------------------------------------------------------
Under penalties of perjury, I certify that: 1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), AND 2. I am not subject to backup withholding because: (A) I am exempt from backup withholding, or (B) I have not been notified by the Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (C) the IRS has notified me that I am no longer subject to backup withholding, AND 3. I am a U.S. person (including a U.S. resident alien). CERTIFICATION INSTRUCTIONS. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct TIN. (See the instructions on page 2.) - -------------------------------------------------------------------------------- SIGN HERE SIGNATURE OF U.S. PERSON , DATE , - -------------------------------------------------------------------------------- PURPOSE OF FORM A person who is required to file an information return with the IRS must get your correct taxpayer identification number (TIN) to report, for example, income paid to you, real estate transactions, mortgage interest you paid, acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA. USE FORM W-9 ONLY IF YOU ARE A U.S. PERSON (including a resident alien), to give your correct TIN to the person requesting it (the requester) and, when applicable, to: 1. Certify the TIN you are giving is correct (or you are waiting for a number to be issued). 2. Certify you are not subject to backup withholding, or 3. Claim exemption from backup withholding if you are a U.S. exempt payee. IF YOU ARE A FOREIGN PERSON, USE THE APPROPRIATE FORM W-8. See PUB. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. NOTE: If a requester gives you a form other than a Form W-9 to request your TIN, you must use the requester's form if it is substantially similar to this Form W-9. WHAT IS BACKUP WITHHOLDING? Persons making certain payments to you must under certain conditions withhold and pay to the IRS 30% of such payments AFTER December 31, 2001 (29% after December 31, 2003). This is called "backup withholding." Payments that may be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee pay, and certain payments from fishing boat operators. Real estate transactions are not subject to backup withholding. You will NOT be subject to backup withholding on payments you receive if you give the requestor your correct TIN, make the proper certifications, and report all your taxable interest and dividends on your tax return. PAYMENTS YOU RECEIVE WILL BE SUBJECT TO BACKUP WITHHOLDING IF: 1. You do not furnish your TIN to the requester, or 2. You do not certify your TIN when required (see the Part II instructions on page 2 for details), or 3. The IRS tells the requester that you furnished an incorrect TIN, or 4. The IRS tells you that you are subject to backup withholding because you did not report all your interest and dividends on your tax return (for reportable interest and dividends only), or 5. You do not certify to the requester that you are not subject to backup withholding under 4 above (for reportable interest and dividend accounts opened after 1983 only). Certain payees and payments are exempt from backup withholding. See the instructions on page 2 and the separate INSTRUCTIONS FOR THE REQUESTER OF FORM W-9. PENALTIES FAILURE TO FURNISH TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. MISUSE OF TINS. If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties. - -------------------------------------------------------------------------------- Cat. No. 10231X Form W-9 (Rev. 1-2002) 13 Form W-9 (Rev. 1-2002) Page 2 - -------------------------------------------------------------------------------- SPECIFIC INSTRUCTIONS NAME. If you are an individual, you must generally enter the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage without informing the Social Security Administration of the name change, enter your first name, the last name shown on your social security card, and your new last name. If the account is in joint names, list first and then circle the name of the person or entity whose number you enter in Part I of the form. SOLE PROPRIETOR. Enter your INDIVIDUAL name as shown on your social security card on the "Name" line. You may enter your business, trade, or "doing business as (DBA)" name on the "Business name" line. LIMITED LIABILITY COMPANY (LLC). If you are a single-member LLC (including a foreign LLC with a domestic owner) that is disregarded as an entity separate from its owner under Treasury regulations section 301.7701-3, ENTER THE OWNER'S NAME ON THE "NAME" LINE. Enter the LLC's name on the "Business name" line. OTHER ENTITIES. Enter your business name as shown on required Federal tax documents on the "Name" line. This name should match the name shown on the charter or other legal document creating the entity. You may enter any business, trade, or DBA name on the "Business name" line. EXEMPT FROM BACKUP WITHHOLDING. If you are exempt, enter your name as described above, then check the "Exempt from backup withholding" box in the line following the business name, sign and date the form. Individuals (including sole proprietors) are not exempt from backup withholding. Corporations are exempt from backup withholding for certain payments, such as interest and dividends. For more information on exempt payees, see the Instructions for the Requester of Form W-9. If you are a nonresident alien or a foreign entity not subject to backup withholding, give the requester the appropriate completed Form W-8. NOTE: If you are exempt from backup withholding, you should still complete this form to avoid possible erroneous backup withholding. PART I--TAXPAYER IDENTIFICATION NUMBER (TIN) ENTER YOUR TIN IN THE APPROPRIATE BOX. If you are a RESIDENT ALIEN and you do not have and are not eligible to get an SSN, your TIN is your IRS individual taxpayer identification number (ITIN). Enter it in the social security number box. If you do not have an ITIN, see HOW TO GET A TIN below. If you are a SOLE PROPRIETOR and you have an EIN, you may enter either your SSN or EIN. However, the IRS prefers that you use your SSN. If you are an LLC that is DISREGARDED AS AN ENTITY separate from its owner (see LIMITED LIABILITY COMPANY (LLC) above), and are owned by an individual, enter your SSN (or "pre-LLC" EIN, if desired). If the owner of a disregarded LLC is a corporation, partnership, etc., enter the owner's EIN. NOTE: See the chart on this page for further clarification of name and TIN combinations. HOW TO GET A TIN. If you do not have a TIN, apply for one immediately. To apply for an SSN, get FORM SS-5, Application for a Social Security Card, from your local Social Security Administration office. Get FORM W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN, or FORM SS-4, Application for Employer Identification Number, to apply for an EIN. You can get Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-FORM (1-800-829-3676) or from the IRS Web Site at www.irs.gov. If you are asked to complete Form W-9 but do not have a TIN, write "Applied For" in the space for the TIN, sign and date the form, and give it to the requester. For interest and dividend payments, and certain payments made with respect to readily tradable instruments, generally you will have 60 days to get a TIN and give it to the requester before you are subject to backup withholding on payments. The 60-day rule does not apply to other types of payments. You will be subject to backup withholding on all such payments until you provide your TIN to the requester. NOTE: Writing "Applied For" means that you have already applied for a TIN OR that you intend to apply for one soon. CAUTION: A disregarded domestic entity that has a foreign owner must use the appropriate Form W-8. PART II--CERTIFICATION To establish to the withholding agent that you are a U.S. person, or resident alien, sign Form W-9. You may be requested to sign by the withholding agent even if items 1, 3, and 5 below indicate otherwise. For a joint account, only the person whose TIN is shown in Part I should sign (when required). Exempt recipients, see EXEMPT FROM BACKUP WITHHOLDING above. SIGNATURE REQUIREMENTS. Complete the certification as indicated in 1 through 5 below. 1. INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You must give your correct TIN, but you do not have to sign the certification. 2. INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the certification or backup withholding will apply. If you are subject to backup withholding and you are merely providing your correct TIN to the requester, you must cross out item 2 in the certification before signing the form. 3. REAL ESTATE TRANSACTIONS. You must sign the certification. You may cross out item 2 of the certification. 4. OTHER PAYMENTS. You must give your correct TIN, but you do not have to sign the certification unless you have been notified that you have previously given an incorrect TIN. "Other payments" include payments made in the course of the requester's trade or business for rents, royalties, goods (other than bills for merchandise), medical and health care services (including payments to corporations), payments to a nonemployee for services, payments to certain fishing boat crew members and fishermen, and gross proceeds paid to attorneys (including payments to corporations). 5. MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED PROPERTY, CANCELLATION OF DEBT, QUALIFIED TUITION PROGRAM PAYMENTS (UNDER SECTION 529), IRA OR ARCHER MSA CONTRIBUTIONS OR DISTRIBUTIONS, AND PENSION DISTRIBUTIONS. You must give your correct TIN, but you do not have to sign the certification. PRIVACY ACT NOTICE Section 6109 of the Internal Revenue Code requires you to give your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt, or contributions you made to an IRA or Archer MSA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states, and the District of Columbia to carry out their tax laws. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 30% of taxable interest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may also apply. WHAT NAME AND NUMBER TO GIVE THE REQUESTER - ---------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF: - ---------------------------------------------------- 1. Individual The individual 2. Two or more The actual owner of the individuals (joint account or, if combined account) funds, the first individual on the account (1) 3. Custodian account of The minor (2) a minor (Uniform Gift to Minors Act) 4. a. The usual The grantor-trustee (1) revocable savings trust (grantor is also trustee) b. So-called trust The actual owner (1) account that is not a legal or valid trust under state law 5. Sole proprietorship The owner (3) - ---------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE NAME AND SSN OF: - ---------------------------------------------------- 6. Sole proprietorship The owner (3) 7. A valid trust, Legal entity (4) estate, or pension trust. 8. Corporate The corporation 9. Association, club, The organization religious, charitable, educational, or other tax-exempt organization 10. Partnership The partnership 11. A broker or The broker or nominee registered nominee 12. Account with the The public entity Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ----------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's SSN. (3) YOU MUST SHOW YOUR INDIVIDUAL NAME, but you may also enter your business or "DBA" name. You may use either your SSN or EIN (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when more than one name is listed, the number will be considered to be that of the first name listed. [RECYCLED PAPER LOGO] IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH CERTIFICATES FOR OUTSTANDING NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO 5:00 P.M., NEW YORK CITY TIME ON THE EXPIRATION DATE. (DO NOT WRITE IN SPACE BELOW)
OUTSTANDING OUTSTANDING CERTIFICATE SURRENDERED NOTES TENDERED NOTES ACCEPTED - ------------------------------------------------------------------------------------------------------------------- - ------------------------------------ ------------------------------------ ------------------------------------ - ------------------------------------ ------------------------------------ ------------------------------------ - ------------------------------------ ------------------------------------ ------------------------------------ - ------------------------------------ ------------------------------------ ------------------------------------ Delivery Prepared by: Checked by: Date:
EX-99.2 20 y62674exv99w2.txt FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ALL OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 IN EXCHANGE FOR 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 OF BERRY PLASTICS CORPORATION Registered holders of outstanding 10 3/4% Senior Subordinated Notes Due 2012 (the "Outstanding Notes") of Berry Plastics Corporation ("Berry") who wish to tender their Outstanding Notes in exchange for a like stated amount at maturity of 10 3/4% Senior Subordinated Notes Due 2012 (the "Exchange Notes") of Berry and, in each case, whose Outstanding Notes are not immediately available or who cannot deliver their Outstanding Notes and Letter of Transmittal (and any other documents required by the Letter of Transmittal) to U.S. Bank Trust National (the "Exchange Agent"), prior to the Expiration Date, may use this Notice of Guaranteed Delivery or one substantially equivalent hereto. This Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight delivery) or mail to the Exchange Agent. See "The exchange offer--Guaranteed delivery procedures" in the Prospectus. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2002 (THE "EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED BY BERRY IN ITS SOLE DISCRETION. TENDERS OF OUTSTANDING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: U.S. BANK TRUST NATIONAL ASSOCIATION BY MAIL: U.S. BANK TRUST NATIONAL ASSOCIATION 180 EAST FIFTH STREET P.O. BOX 64111 ST. PAUL, MN 551654-0111 ATTENTION: SHAUNA THILMANY FACSIMILE: 651-244-1537 CONFIRM BY TELEPHONE: 651-244-8112 BY HAND OR OVERNIGHT DELIVERY: U.S. BANK TRUST NATIONAL ASSOCIATION 180 EAST FIFTH STREET 4TH FLOOR--BOND DROP WINDOW ST. PAUL, MN 55101 ATTENTION: SHAUNA THILMANY FACSIMILE: 651-244-1537 CONFIRM BY TELEPHONE: 651-244-8112 BY HAND: U.S. BANK TRUST NATIONAL ASSOCIATION 100 WALL STREET 16TH FLOOR--BOND DROP WINDOW NEW YORK, NY 10005 ATTENTION: BARBARA NASTRO FOR ANY QUESTIONS REGARDING THIS NOTICE OF GUARANTEED DELIVERY OR FOR ANY ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT 212-361-2525, OR BY FACSIMILE AT 212-509-3384. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution, such signature guarantee must appear in the applicable space provided on the Letter of Transmittal for Guarantee of Signatures. Ladies & Gentlemen: The undersigned hereby tender(s) to Berry, upon the terms and subject to the conditions set forth in the Prospectus and the accompanying Letter of Transmittal, receipt of which is hereby acknowledged, the aggregate stated amount at maturity of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus. The undersigned understands that tenders of Outstanding Notes will be accepted only in stated amounts at maturity equal to $1,000 or integral multiples thereof. The undersigned understands that tenders of Outstanding Notes pursuant to the Exchange Offer may not be withdrawn after 5:00 p.m., New York City time on the business day prior to the Expiration Date. Tenders of Outstanding Notes may also be withdrawn if the Exchange Offer is terminated without any such Outstanding Notes being purchased thereunder or as otherwise provided in the Prospectus. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. 2 PLEASE SIGN AND COMPLETE Signature(s) of Registered Owner(s) or Authorized Signatory: ----------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- Stated Amount at Maturity of Outstanding Notes Tendered: ----------------------------------------------------------- Certificate No(s). of Outstanding Notes (if available): ----------------------------------------------------------- ----------------------------------------------------------- Date: ---------------------------------------------------- Name(s) of Registered Holder(s): - ----------------------------------------------------------- - ----------------------------------------------------------- - ----------------------------------------------------------- Address: - ------------------------------------------------ - ----------------------------------------------------------- Area Code and Telephone No.: - ----------------------------------------------------------- If Outstanding Notes will be delivered by book-entry transfer at The Depository Trust Company, insert Depository Account No.: - ----------------------------------------------------------- 3 This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Outstanding Notes exactly as its (their) name(s) appear on certificates for Outstanding Notes or on a security position listing as the owner of Outstanding Notes, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Capacity: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Address(es): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DO NOT SEND OUTSTANDING NOTES WITH THIS FORM. OUTSTANDING NOTES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. GUARANTEE OF DELIVERY (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or a correspondent in the United States or an "eligible guarantor institution" as defined by Rule 17Ad-15 under the Exchange Act, hereby (a) represents that each holder of Outstanding Notes on whose behalf this tender is being made "own(s)" the Outstanding Notes covered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) represents that such tender of Outstanding Notes complies with such Rule 14e-4, and (c) guarantees that, within three New York Stock Exchange trading days from the date of this Notice of Guaranteed Delivery, a properly completed and duly executed Letter of Transmittal, together with certificates representing the Outstanding Notes covered hereby in proper form for transfer and required documents will be deposited by the undersigned with the Exchange Agent. THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF TRANSMITTAL AND OUTSTANDING NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME SET FORTH ABOVE AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO THE UNDERSIGNED. Name of Firm: Authorized Signature Address: Name: ----------------------------------------------- - ----------------------------------------------- Title: ----------------------------------------------- Area Code and Telephone No. - ----------------------------------------------- Date: -----------------------------------------------
4 EX-99.3 21 y62674exv99w3.txt FORM OF INSTRUCTIONS TO REGISTERED HOLDER EXHIBIT 99.3 INSTRUCTION TO REGISTERED HOLDER FROM BENEFICIAL OWNER OF 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 OF BERRY PLASTICS CORPORATION To Registered Holder: The undersigned hereby acknowledges receipt of the Prospectus dated , 2002 (the "Prospectus") of Berry Plastics Corporation ("Berry"), and accompanying Letter of Transmittal (the "Letter of Transmittal"), that together constitute Berry's offer (the "Exchange Offer") to exchange $1,000 in stated amount at maturity of a new series of 10 3/4% Senior Subordinated Notes Due 2012 (the "Exchange Notes") of Berry for each $1,000 in stated amount at maturity of outstanding 10 3/4% Senior Subordinated Notes Due 2012 (the "Outstanding Notes") of Berry. Capitalized terms used but not defined herein have the meanings ascribed to them in the Prospectus. This will instruct you, the registered holder, as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned. The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount): $ of 10 3/4% Senior Subordinated Notes Due 2012. With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box): [ ] To TENDER the following Outstanding Notes held by you for the account of the undersigned (insert stated amount at maturity of Outstanding Notes to be tendered (if any)): $ of 10 3/4% Senior Subordinated Notes Due 2012. [ ] NOT to TENDER any Outstanding Notes held by you for the account of the undersigned. If the undersigned instructs you to tender Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned, by its signature below, hereby makes to you), the representations and warranties contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations, that (i) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the undersigned, (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution (within the meaning of the securities Act of 1933, as amended (the "Securities Act")) of such Exchange Notes in violation of the provisions of the Securities Act, (iii) if the undersigned is not a broker-dealer, or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Outstanding Notes, neither the undersigned nor any such other person is engaged in or intends to participate in the distribution of such Exchange Notes and (iv) neither the undersigned nor any such other person is an "affiliate" of Berry or any Guarantor within the meaning of Rule 405 under the Securities Act or, if the undersigned is an "affiliate", that the undersigned will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is a broker-dealer (whether or not it is also an "affiliate") that will receive Exchange Notes for its own account in exchange for Outstanding Notes, it represents that such Outstanding Notes were acquired as a result of market-making activities or other trading activities, and it acknowledges that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, the undersigned is not deemed to admit that it is an "underwriter" within the meaning of the Securities Act. SIGN HERE Name of beneficial owner(s)(please print): ------------------------------------------------------------------ Signature(s): ------------------------------------------------------------------ Address: ------------------------------------------------------------------ Telephone Number: ------------------------------------------------------------------ Taxpayer identification or Social Security Number: ------------------------------------------------------------------ Date: ------------------------------------------------------------------ 2 EX-99.4 22 y62674exv99w4.txt LETTER TO CLIENTS EXHIBIT 99.4 TENDER FOR ALL OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 IN EXCHANGE FOR 10 3/4% SENIOR SUBORDINATED NOTES DUE 2012 OF BERRY PLASTICS CORPORATION To Our Clients: We are enclosing herewith a Prospectus, dated , 2002, of Berry Plastics Corporation ("Berry"), and a related Letter of Transmittal (which together constitute the "Exchange Offer") relating to the offer by Berry, to exchange its 10 3/4% Senior Subordinated Notes Due 2012 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for a like stated amount at maturity of its issued and outstanding 10 3/4% Senior Subordinated Notes Due 2012 (the "Outstanding Notes") upon the terms and subject to the conditions set forth in the Exchange Offer. PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2002 UNLESS EXTENDED BY BERRY IN ITS SOLE DISCRETION. THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF OUTSTANDING NOTES BEING TENDERED. We are the holder of record of Outstanding Notes held by us for your account. A tender of such Outstanding Notes can be made only by us as the record holder and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Outstanding Notes held by us for your account. We request instructions as to whether you wish to tender any or all of the Outstanding Notes held by us for your account pursuant to the terms and conditions of the Exchange Offer. Please so instruct us by completing, executing and returning to us the enclosed Instruction to Registered Holder from Beneficial Holder enclosed herewith. We urge you to read carefully the Prospectus and the Letter of Transmittal before instructing us to tender your Outstanding Notes. We also request that you confirm with such instruction form that we may on your behalf make the representations contained in the Letter of Transmittal. Pursuant to the Letter of Transmittal, each holder of Outstanding Notes will represent to Berry that (i) the Exchange Notes acquired in the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is such holder, (ii) neither the holder of the Outstanding Notes nor any such other person has an arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of such Exchange Notes in violation of the provisions of the Securities Act, (iii) if the holder is not a broker-dealer or is a broker-dealer but will not receive Exchange Notes for its own account in exchange for Outstanding Notes, neither the holder nor any such other person is engaged in or intends to participate in a distribution of the Exchange Notes and (iv) neither the holder nor any such other person is an "affiliate" of Berry or any Guarantor within the meaning of Rule 405 under the Securities Act or, if such holder is an "affiliate", that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the tendering holder is a broker-dealer (whether or not it is also an "affiliate") that will receive Exchange Notes for its own account in exchange for Outstanding Notes, we will represent on behalf of such broker-dealer that the Outstanding Notes to be exchanged for the Exchange Notes were acquired by it as a result of market-making activities or other trading activities, and acknowledge on behalf of such broker-dealer that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes. By acknowledging that it will deliver and by delivering a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Notes, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Very truly yours, 2 -----END PRIVACY-ENHANCED MESSAGE-----