AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 2003
REGISTRATION NO. 333-98561
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
TEKNI-PLEX, INC.*
(Exact name of Registrant as specified in its charter)
<Table>
DELAWARE 3086, 3052 22-3286312
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
260 NORTH DENTON TAP ROAD
COPPELL, TEXAS 75019
TELEPHONE: (972) 304-5077
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
DR. F. PATRICK SMITH
CHIEF EXECUTIVE OFFICER
TEKNI-PLEX, INC.
260 NORTH DENTON TAP ROAD
COPPELL, TEXAS 75019
TELEPHONE: (972) 304-5077
FACSIMILE: (972) 304-6297
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
FRANCIS J. MORISON
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 450-4044
FACSIMILE: (212) 450-6892
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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 number of the earlier effective registration statement for the same
offering. [ ]
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*TABLE OF ADDITIONAL REGISTRANTS
<Table>
<Caption>
STATE OR OTHER
JURISDICTION OF I.R.S. EMPLOYER
INCORPORATION OR IDENTIFICATION
NAME, ADDRESS AND TELEPHONE NUMBER ORGANIZATION NUMBER
- ---------------------------------- ---------------- ---------------
PureTec Corporation(1)...................................... Delaware 22-3376449
Plastic Specialties and Technologies, Inc.(1)............... Delaware 22-2743384
Plastic Specialties and Technologies Investments, Inc.(1)... Delaware 22-2663552
Burlington Resins, Inc.(1).................................. Delaware 22-3334106
Pure Tech APR, Inc.(1)...................................... New York 11-3065942
Coast Recycling North, Inc.(1).............................. California 68-0200870
Distributors Recycling, Inc.(1)............................. New Jersey 22-2466975
REI Distributors, Inc.(1)................................... New Jersey 22-2418824
Pure Tech Recycling of California(1)........................ California 77-0356589
Alumet Smelting Corp.(1).................................... New Jersey 22-2054447
Tri-Seal Holdings, Inc(1)................................... Delaware 52-2141575
Natvar Holdings, Inc(1)..................................... Delaware 22-3703725
TPI Acquisition Subsidiary, Inc.(1)......................... Delaware 52-2340472
TP/Elm Acquisition Subsidiary, Inc.(1)...................... Delaware 71-0891561
</Table>
- ---------------
(1) The address of each of these additional registrants is: 201 Industrial
Parkway, Somerville, New Jersey 08876. The telephone number of each is (908)
722-4800.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 21, 2003
PROSPECTUS
TEKNI-PLEX, INC.
OFFER TO EXCHANGE
12 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2010
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF OUR OUTSTANDING
12 3/4% SENIOR SUBORDINATED NOTES DUE 2010
---------------------
We are offering to exchange up to $40,000,000 of our 12 3/4% Series B
Senior Subordinated Notes due 2010, which will be registered under the
Securities Act of 1933, as amended, for up to $40,000,000 of our existing
12 3/4% Senior Subordinated Notes due 2010. We have $275,000,000 principal
amount of our existing 12 3/4% Senior Notes due 2010 issued and outstanding that
have identical terms to the notes offered by this prospectus. We are offering to
issue the new notes to satisfy our obligations contained in the registration
rights agreement entered into when the old notes were sold in transactions
permitted by Rule 144A and Regulation S under the Securities Act.
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the old notes do not apply
to the new notes.
---------------------
To exchange your old notes for new notes:
- You must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent by 5:00 p.m., New York time, on
, 2003.
- If your old notes are held in book-entry form at The Depository Trust
Company, you must instruct DTC, through your signed letter of
transmittal, that you wish to exchange your old notes for new notes. When
the exchange offer closes, your DTC account will be changed to reflect
your exchange of old notes for new notes.
- You should read the section called "The Exchange Offer" for additional
information on how to exchange your old notes for new notes.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DESCRIPTION OF RISK FACTORS
THAT YOU SHOULD CONSIDER BEFORE TENDERING YOUR OLD NOTES IN THE EXCHANGE OFFER.
THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF THE FOLLOWING: OUR ANNUAL
REPORTS ON FORM 10-K AND 10-K/A FOR THE FISCAL YEAR ENDED JUNE 29, 2002 AND OUR
QUARTERLY REPORTS ON FORM 10-Q AND 10-Q/A FOR THE QUARTERS ENDED SEPTEMBER 27,
2002, DECEMBER 27, 2002 AND MARCH 28, 2003.
---------------------
THE OLD NOTES HAVE NOT BEEN, AND THE NEW NOTES WILL NOT BE, LISTED ON AN
EXCHANGE OR QUOTED ON AN AUTOMATED QUOTATION MEDIUM.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED.
---------------------
The date of this prospectus is , 2003.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Prospectus Summary.......................................... 1
The Exchange Offer.......................................... 3
Risk Factors................................................ 8
Use of Proceeds............................................. 14
Capitalization.............................................. 15
The Exchange Offer.......................................... 16
Description of the New Notes................................ 24
United States Federal Income Tax Considerations............. 54
Plan of Distribution........................................ 55
Legal Matters............................................... 56
Experts..................................................... 56
Where You Can Find More Information......................... 56
</Table>
i
PROSPECTUS SUMMARY
The following summary contains information about Tekni-Plex and the
exchange offer. It presents a summary of the material information appearing
elsewhere in the prospectus and filings incorporated by reference. For a more
complete understanding of Tekni-Plex and the exchange offer, we urge you to read
this entire prospectus carefully, including the "Risk Factors" section and our
financial statements and the notes to those statements. Our fiscal year ends on
the Friday closest to June 30 of each calendar year. For example, fiscal year
2002 refers to the year ended June 28, 2002.
COMPANY OVERVIEW
We are a global, diversified manufacturer of packaging, packaging products
and materials as well as tubing products. We primarily serve the healthcare,
food and consumer markets. We have built leadership positions in our core
markets and focus on vertically integrated production of highly specialized
products. We have operations in the United States, Europe and Canada. We believe
that our end market and product line diversity has the effect of reducing risk
related to any single product or customer. Our operations are aligned under two
business segments: Packaging and Tubing Products. Representative product lines
in each of our business segments are listed below:
BUSINESS SEGMENT
<Table>
<Caption>
PACKAGING TUBING PRODUCTS
--------- ---------------
- - Foam egg cartons - Garden and irrigation hose
- - Pharmaceutical blister films - Medical tubing
- - Poultry and meat processor trays - Pool and vacuum hose
- - Closure Liners
- - Aerosol and pump packaging components
- - Foam plates
</Table>
COMPETITIVE STRENGTHS
We believe that our competitive strengths include:
- Strong customer relationships. We have long-standing relationships with
many of our customers. We attribute our long-term customer relationships
to our ability consistently to manufacture high quality products and
provide a superior level of customer service. We routinely win customer
awards for our superior products and customer service and have recently
been recognized for supplier excellence by 3M Pharmaceuticals, Pfizer,
Eli Lilly, Boston Scientific and Kraft Foods, among others.
- Strong market positions in core businesses. We have a strong market
presence in our product lines. The following table shows what we believe
to be our market position in the U.S. in each core product line:
<Table>
<Caption>
MARKET
PRODUCT POSITION
- ------- --------
Vinyl medical device materials.............................. 1
Vinyl medical tubing........................................ 1
Laminated, clear, high barrier pharmaceutical blister
packaging................................................. 1
Multi-layered co-extruded and laminated closure liners...... 1
Garden and irrigation hose.................................. 1
Precision tubing and gaskets for aerosol packaging.......... 1
Egg cartons................................................. 1
Foam processor trays........................................ 2
</Table>
- Experienced management team. Our management team has been successful in
selecting and integrating strategic acquisitions as well as improving
underlying business fundamentals. After significantly improving the
business of Tekni-Plex following our 1994 acquisition, management
successfully integrated both the Flemington and Dolco operations during
1996, the latter being a public company then nearly twice our size.
During the same period, the Brooklyn and Flemington operations
1
were also successfully merged. In 1997, we acquired and integrated the
PurePlast operations. In 1998, we acquired PureTec, a public company then
more than twice our size. In 1999, we acquired and integrated the assets
and business of Tri-Seal and Natvar. In 2000, we acquired and integrated
all the assets of the Super Plastics division of RCR International, Inc.
In 2001, we acquired and integrated the Swan Hose garden hose business of
Mark IV Industries, Inc. In July 2002, we acquired the assets and
business of Elm Packaging. Management has substantially improved the
operating margins of each of these acquisitions. Members of our
management team have integrated acquisitions, effected turnarounds,
provided strategic direction and leadership, increased sales and market
share, improved manufacturing efficiencies and productivity, and
developed new technologies to enhance the competitive strengths of the
companies they have managed.
- Producer of high quality, technically sophisticated products. We
believe, based upon our knowledge and experience in the industry, that we
have a long-standing reputation as a manufacturer of high quality, high
performance products, materials and primary packaging material (where the
packaging material comes into direct contact with the end product). Our
emphasis on quality is evidenced by our product lines which address the
more technically sophisticated areas of their respective markets.
- Strong equity sponsorship. We have obtained a strong equity commitment
from co-investors in conjunction with the recapitalization in June 2000.
New investors agreed to contribute $269.6 million in aggregate equity
commitments to Tekni-Plex Partners, of which $167.0 million was
contributed to consummate the recapitalization in June 2000. Of the
remaining $102.6 million, $5.0 million was contributed in conjunction
with our acquisition of Super Plastics in October 2000, and $30.0 million
was contributed in June 2001 in anticipation of our announced acquisition
of Mark IV's Swan Hose Division. In October 2001, an additional $50.0
million was contributed to consummate the Swan Hose acquisition and in
anticipation of our Elm acquisition. The remaining $17.6 million is
available at least through June 2005 to be used for our general corporate
purposes, including acquisitions. We believe that these equity
commitments will provide us with significant flexibility to take
advantage of business opportunities as they arise. In connection with the
recapitalization, all members of our current management maintained their
entire equity investment, which had an implied aggregate value, as of
June 2000, of approximately $96.0 million.
BUSINESS STRATEGY
We seek to maximize our profitability and growth and take advantage of our
competitive strengths by pursuing the following business strategy:
- Ongoing cost reduction through technical process improvement. We have an
ongoing program to improve manufacturing and other processes in order to
drive down costs. Examples of cost improvement programs include:
- material and energy conservation through enhanced process controls and
advanced product design;
- reduction in machine set-up time through the use of proprietary
technology;
- continual product line rationalization; and
- development of backward and forward integration opportunities.
- Internal growth through product line extension and improvement. We
continually seek to improve and extend our product lines and leverage our
existing technological capabilities in order to increase market share in
existing markets, effectively penetrate new markets and improve
profitability. Our strategy is to emphasize our expertise in providing
packaging, products and materials with specific high performance
characteristics through the development of various unique proprietary
materials and proprietary manufacturing process techniques.
- Growth through acquisitions. We will continue to pursue acquisitions
selectively when the opportunity arises. Our objective is to pursue
acquisitions that provide us with the opportunity to gain economies of
scale and reduce costs through, among other things, technology sharing
and synergistic cost reduction.
2
- Growth through international expansion. We believe that there is
significant opportunity to expand our international sales, which
currently represent approximately 11% of our total revenues. At present
we have manufacturing or conversion operations with attached sales
offices in Argentina, Canada, The United Kingdom, Belgium and Italy. We
have a regional sales office in Singapore covering the southeast Asia
region, including the People's Republic of China. In addition, we have
manufacturing liaisons and strategic supplier agreements in Japan,
Germany and Italy and a manufacturing licensee in Japan. We have recently
added sales representatives for Jordan, Saudi Arabia and the United Arab
Emirates, as well as in the Philippines and India to our existing
representatives in Australia/New Zealand, South Africa, Central America,
Brazil, Mexico, China (including Hong Kong) and Taiwan. We believe that
our growing international presence, which is a combination of our own
regional manufacturing and sales forces and independent sales
representatives, will continue to generate increases in sales.
RECENT DEVELOPMENTS
On July 10, 2002 Tekni-Plex acquired Elm Packaging Company ("Elm") for
approximately $16.4 million, including acquisition costs. The acquisition was
structured as an acquisition of substantially all of the assets and assumption
of certain liabilities of Elm by a wholly-owned subsidiary of Tekni-Plex. Elm
produces polystyrene foam packaging products such as plates, bowls, trays and
hinged-lid containers for the food packaging and food service industries. Elm
will become part of Tekni-Plex's packaging business segment.
The allocation of purchase price resulted in current assets of $8.4
million, fixed assets of $12.5 million, accrued liabilities and integration
reserve of $13.7 million and goodwill of $9.6 million. The amounts allocated to
inventory, accrued expenses and integration reserve are based on preliminary
estimates. Management is evaluating the fair value of the inventory acquired.
The amounts of accrued liabilities assumed and the integration reserve are also
estimated based on the information currently available. Management expects to
finalize these estimates within the next six to nine months.
THE EXCHANGE OFFER
All capitalized terms used without definition within this section shall
have the respective meanings set forth under "Description of the New Notes"
below.
New Notes..................... $40,000,000 principal amount of 12 3/4% Series
B Senior Subordinated Notes due 2010. The terms
of the new notes are identical in all material
respects to the terms of the old notes, except
that the transfer restrictions, registration
rights and additional interest provisions
relating to the old notes do not apply to the
new notes.
Old Notes..................... The old notes were sold on May 6, 2002 to
Lehman Brothers Inc. (the initial purchaser)
pursuant to a Purchase Agreement dated May 1,
2002 between Tekni-Plex and the initial
purchaser. The initial purchaser subsequently
resold the old notes to qualified institutional
buyers pursuant to Rule 144A under the
Securities Act.
The Exchange Offer............ We are offering to exchange $1,000 principal
amount of new notes for each $1,000 principal
amount of old notes. As of the date hereof,
$40,000,000 aggregate principal amount of old
notes are outstanding. We are offering to issue
the new notes to satisfy our obligations
contained in the registration rights agreement
we entered into when we sold the old notes in
transactions pursuant to Rule 144A, Rule 501
and Regulation S under the Securities Act.
Based on interpretations by the SEC's staff in
no-action letters issued to third parties, we
believe that new notes issued in exchange for
old notes in the exchange offer may be offered
for resale, resold or otherwise transferred by
you without registering
3
the new notes under the Securities Act or
delivering a prospectus, unless you are a
broker-dealer receiving notes for your own
account, so long as:
- you are not one of our "affiliates," which is
defined in Rule 405 of the Securities Act;
- you acquire the new notes in the ordinary
course of your business;
- you do not have any arrangement or
understanding with any person to participate
in the distribution of the new notes; and
- you are not engaged in, and do not intend to
engage in, a distribution of the new notes.
If you are an affiliate of Tekni-Plex, or you
are engaged in, intend to engage in or have any
arrangement or understanding with respect to,
the distribution of new notes acquired in the
exchange offer, you (1) should not rely on our
interpretations of the position of the SEC's
staff and (2) must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any resale
transaction.
If you are a broker-dealer and receive new
notes for your own account in the exchange
offer:
- you must represent that you do not have any
arrangement with us or any of our affiliates
to distribute the new notes;
- you must acknowledge that you will deliver a
prospectus in connection with any resale of
the new notes you receive from us in the
exchange offer. The letter of transmittal
states that by so acknowledging and by
delivering a prospectus, you will not be
deemed to admit that you are an "underwriter"
within the meaning of the Securities Act; and
- you may use this prospectus, as it may be
amended or supplemented from time to time, in
connection with the resale of new notes
received in exchange for old notes acquired
by you as a result of market-making or other
trading activities.
For a period of 180 days after the expiration
of the exchange offer, we will make this
prospectus available to any broker-dealer for
use in connection with any resale described
above.
Expiration Date, Tenders,
Withdrawal.................... 5:00 p.m., New York City time, on ,
2003 unless we choose to extend the exchange
offer in our sole discretion, in which case the
term "expiration date" means the latest date
and time to which we extend the exchange offer.
To tender your old notes you must follow the
detailed procedures described under the heading
"The Exchange Offer -- Procedures for
Tendering" including special procedures for
certain beneficial owners and broker-dealers.
If you decide to exchange your old notes for
new notes, you must acknowledge that you do not
intend to engage in and have no arrangement
with any person to participate in a
distribution of the new notes. If you decide to
tender your
4
old notes pursuant to the exchange offer, you
may withdraw them at any time prior to 5:00
p.m., New York City time, on the expiration
date.
Maturity Date................. June 15, 2010.
Interest...................... Interest on new notes will accrue from the last
interest payment date on which interest was
paid on the old notes surrendered for them, or,
if no interest has been paid on such old notes,
from May 6, 2002. We will not pay interest on
the old notes accepted for exchange. Interest
will be paid on June 15 and December 15 of each
year.
Denominations and Issuance of
New Notes..................... The new notes will be issued only in registered
form without coupons, in minimum denominations
of $1,000 and multiples of $1,000.
Consequences of Failure to
Exchange...................... If you fail to exchange your old notes for new
notes in the exchange offer, your old notes
will continue to be subject to transfer
restrictions and you will not have any further
rights under the registration rights agreement,
including any right to require us to register
your old notes or to pay any additional
interest.
Trading Market................ To the extent that old notes are tendered and
accepted in the exchange offer, your ability to
sell untendered, and tendered but unaccepted,
old notes could be adversely affected. There
may be no trading market for the old notes.
The new notes will be fungible with our
currently outstanding $275,000,000 principal
amount of 12 3/4% Senior Notes due 2010.
Shelf Registration
Statement..................... If any holder of the old notes (other than any
such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under
the Securities Act) is not eligible under
applicable securities laws to participate in
the exchange offer, and such holder has
provided information regarding such holder and
the distribution of such holder's old notes to
us for use therein, we have agreed to register
the old notes on a shelf registration statement
and to use our best efforts to cause it to be
declared effective by the SEC as promptly as
reasonably practical on or after the
consummation of the exchange offer. We have
agreed to maintain the effectiveness of the
shelf registration Statement, under certain
circumstances, until the date on which the old
notes are no longer "restricted securities"
(within the meaning of Rule 144 under the
Securities Act).
Use of Proceeds............... We will not receive any cash proceeds from the
issuance of the new notes in the exchange
offer.
Exchange Agent................ HSBC Bank USA is the exchange agent for the
exchange offer.
Federal Income Tax
Consequences.................. Your exchange of old notes for new notes
pursuant to the exchange offer will not result
in a gain or loss to you.
Ranking....................... The new notes and the guarantees will be
unsecured senior subordinated obligations. The
new notes will rank:
5
- subordinate in right of payment to all of our
and our guarantors' existing and future
senior indebtedness (including our and our
guarantors' obligations under our senior
credit facility);
- equal in right of payment to our and our
guarantors' existing and future senior
subordinated indebtedness (including our
existing 12 3/4% Senior Subordinated Notes
due 2010); and
- senior in right of payment to our and our
guarantors' future subordinated indebtedness.
At March 28, 2003, the amount of our
outstanding debt senior to the new notes was
416.3 million, and the amount of our
outstanding debt ranked equally to the new
notes was 272.3 million. We have no debt that
is ranked junior to the new notes.
Payment Blockage Provisions... We will make no payment on the new notes for a
period of 180 days if, at the time payment is
due, there exists a default in the payment of
all or any portion of the obligations on any
designated senior debt. See "Description of the
Notes -- Ranking" on page 27.
Exchange Guarantee............ The new notes will be fully and unconditionally
guaranteed on a senior subordinated basis by
our domestic subsidiaries. The form and terms
of the new guarantees will be substantially
identical to the form and terms of the old
guarantees. The guarantees will be general
unsecured obligations of the guarantors and
will rank subordinate in right of payment to
all existing and future senior debt of such
guarantors, including the guarantors' guarantee
of indebtedness under the new credit facility.
The guarantees will rank equal in right of
payment with any other senior subordinated
indebtedness of the guarantors. Our foreign
subsidiaries will not be guarantors.
Optional Redemption........... We may redeem the new notes in whole or in
part, at any time on or after June 15, 2005 at
the redemption prices set forth in the
"Description of the New Notes" section under
the heading "Optional Redemption" (plus accrued
and unpaid interest to the redemption date).
Prior to June 15, 2003 we may redeem up to 35%
of the principal amount of the new notes with
the cash proceeds we have received from one or
more public offerings of our capital stock
(other than disqualified stock) at a redemption
price of 112.75% of the principal amount
thereof, plus accrued and unpaid interest to
the redemption date; provided, however, that at
least 65% of the aggregate principal amount of
the old notes originally issued pursuant to the
initial private placement (including any new
notes exchanged therefor) remains outstanding
immediately after any such redemption.
Change of Control............. Upon a change of control of Tekni-Plex, you may
require us to repurchase your new notes, in
whole or in part, at a purchase price equal to
101% of the principal amount thereof plus
accrued and unpaid interest to the purchase
date. See "Description of New Notes -- Change
of Control." Our new credit facility prohibits
us from purchasing outstanding new notes prior
to repaying borrowings under the new credit
facility. It is possible that upon a change
6
of control we may not have sufficient funds to
repurchase any of the new notes. See
"Description of Certain Indebtedness."
Certain Covenants............. The indenture governing the new notes contains
covenants, which are the same as the covenants
applicable to the old notes, that, among other
things, limit our and certain of our
subsidiaries' ability to:
- incur liens upon properties or assets;
- incur additional indebtedness;
- merge or consolidate with another company;
- transfer substantially all of our assets;
- enter into transactions with affiliates;
- make certain restricted payments or
investments; or
- permit dividend or other payment restrictions
to apply to subsidiaries.
For more details, see the section under the
heading "Description of the New
Notes -- Covenants" in the prospectus. In
addition, in certain circumstances, we will be
required to offer to purchase new notes at 100%
of the principal amount thereof with the net
proceeds of certain asset sales. These
covenants are subject to a number of
significant exceptions and qualifications.
For additional information regarding the new notes, see "Description of the
New Notes."
RISK FACTORS
You should carefully consider the specific matters set forth under "Risk
Factors" as well as the other information and data included in this prospectus
in evaluating the exchange offer and deciding whether to exchange your old
notes.
RATIO OF EARNINGS TO FIXED CHARGES
<Table>
<Caption>
NINE MONTHS
YEARS ENDED ENDED
-------------------------------------------------- ---------------------
JULY 3, JULY 2, JUNE 30, JUNE 29, JUNE 28, MARCH 29, MARCH 28,
1998 1999 2000 2001 2002 2002 2003
------- ------- -------- -------- -------- --------- ---------
Ratio of earnings to fixed charges....... 1.9x 1.7x 1.8x -- 1.1x -- 1.2x
</Table>
For the purposes of the ratio of earnings to fixed charges, (i) earnings
are calculated as our earnings before income taxes, extraordinary item and fixed
charges and (ii) fixed charges include interest on all indebtedness and
amortization of deferred financing costs. For the year ended June 29, 2001 and
for the nine months ended March 29, 2002, fixed charges exceeded earnings before
fixed charges by $12.2 million and $7.2 million, respectively.
7
RISK FACTORS
You should carefully consider the following risk factors as well as the
other information and data included in this prospectus before investing in the
notes. We have summarized below the material risks that face us and this
offering. Any of the following risks could materially and adversely affect our
business, financial condition or results of operations. In such case, you may
lose all or part of your original investment.
RISKS RELATING TO OUR DEBT
OUR SUBSTANTIAL INDEBTEDNESS COULD PREVENT US FROM FULFILLING OUR OBLIGATIONS
UNDER THE NOTES AND OTHERWISE RESTRICT OUR ACTIVITIES.
We currently have a significant amount of indebtedness. Our total debt and
stockholders' deficit were $729.1 million and $(84.3) million, respectively, as
of March 28, 2003. Our substantial debt may have important consequences to you.
For example, it could:
- make it more difficult for us to satisfy our obligations with respect to
these notes;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- put us at a competitive disadvantage compared to our competitors that
have less debt;
- increase our vulnerability to general adverse economic and industry
conditions;
- increase our vulnerability to interest rate increases to the extent our
variable-rate debt is not effectively hedged; and
- limit our ability to make investments or take other actions or borrow
additional funds.
In addition, the indenture relating to the notes and our credit facility
contain financial and other restrictive covenants that will limit our ability to
engage in activities that may be in our long-term best interests. Our failure to
comply with those covenants could result in an event of default which, if not
cured or waived, could result in acceleration of all of our debts.
Our level of debt is reflected in our ratio of earnings to fixed charges,
which was 1.1 for the fiscal year ended June 28, 2002 and 1.2 for the nine
months ended March 28, 2003.
DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE
TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER EXACERBATE THE RISKS
ASSOCIATED WITH OUR SUBSTANTIAL INDEBTEDNESS.
Despite our high leverage, we may be able to incur substantial additional
indebtedness in the future. The terms of the indenture do not prohibit us or our
subsidiaries from incurring indebtedness, although the indenture does contain
limitations on additional indebtedness. If new debt is added to our and our
subsidiaries' current debt levels, the related risks that we and they now face
could intensify.
THE OPERATING AND FINANCIAL RESTRICTIONS IMPOSED BY OUR DEBT AGREEMENTS,
INCLUDING OUR CREDIT FACILITY AND THE INDENTURE RELATING TO THE NOTES, COULD
NEGATIVELY AFFECT OUR ABILITY TO FINANCE OPERATIONS AND CAPITAL NEEDS OR TO
ENGAGE IN OTHER BUSINESS ACTIVITIES.
Covenants contained in the indenture and our credit facility limit our
operating flexibility with respect to certain business matters. Among other
things, these covenants limit our ability and our subsidiaries' ability to:
- incur additional indebtedness;
- incur liens upon properties or assets;
- make acquisitions;
8
- merge or consolidate with third parties;
- make investments;
- pay dividends and make distributions;
- repurchase or redeem capital stock;
- dispose of assets; and
- engage in certain transactions with subsidiaries and affiliates and
otherwise restrict corporate activities.
In addition, our credit facility contains financial covenants, including:
- a minimum consolidated EBITDA test;
- a minimum fixed coverage ratio; and
- a maximum leverage ratio.
These covenants may adversely affect our ability to finance our future
operations or capital needs or to engage in other business activities that may
be in our interest. Our ability to meet these covenants and requirements in the
future may be affected by events beyond our control, including prevailing
economic, financial and industry conditions. Our breach of or failure to comply
with any of these covenants could result in a default under our credit facility
or the indenture even if we are able to make the required payments thereunder.
If we default under our credit facility, our lenders could cease to make further
extensions of credit, cause all of our outstanding debt obligations under the
new credit facility to become due and payable, require us to apply all of our
available cash to repay the indebtedness under our credit facility or prevent us
from making debt service payments on any other indebtedness we owe. If a default
under the indenture occurs, the holders of the notes could elect to declare the
notes due and payable. If the indebtedness under the new credit facility or the
notes is accelerated, we may not have sufficient assets to repay amounts due
under these existing debt agreements or on other debt securities then
outstanding. We may amend the provisions and limitations of the new credit
facility from time to time without the consent of the holders of the notes. For
a more complete description of the terms of our outstanding debt and the
covenants contained in the notes, see "Description of Certain Indebtedness" and
"Description of the Notes -- Covenants."
WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS. OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to repay or refinance our indebtedness will depend on our
financial and operating performance. which, in turn, is subject to prevailing
economic and competitive conditions and to financial, business and other
factors, many of which are beyond our control. These factors could include
operating difficulties, increased operating costs or raw material or product
prices, the response of competitors, regulatory developments and delays in
implementing strategic projects. Our ability to meet our debt service and other
obligations may depend in significant part on the extent to which we can
successfully implement our business strategy. We may not be able to implement
our business strategy or the anticipated results of our strategy may not be
realized.
At March 28, 2003, our annual debt service payment obligation was
approximately $74.9 million. As of March 28, 2003, subject to certain
restrictions, we could have borrowed up to $12 million of additional senior
indebtedness under our revolving credit facility. If the entire $100 million
under the revolving credit facility had been outstanding for the nine months
ended March 28, 2003, our debt service (all interest) for this period would have
increased by approximately $1.7 million based on an average interest rate of
4.8%.
Our business may be unable to generate sufficient cash flows from
operations and future borrowings may not be available to us under our credit
facility in an amount sufficient to enable us to pay our indebtedness, including
these notes, or to fund our other liquidity needs. We may need to refinance all
or a portion of our indebtedness, including these notes, on or before maturity.
We may not be able to refinance any of our indebtedness including our credit
facility, our existing 12 3/4% Senior Subordinated Notes due 2010 and these
notes, on commercially reasonable terms or at all.
9
YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES IS JUNIOR TO OUR SENIOR DEBT AND
POSSIBLY ALL OF OUR FUTURE BORROWINGS. THE GUARANTEES WILL BE JUNIOR TO
GUARANTOR SENIOR DEBT, AND THESE OBLIGATIONS WILL BE EFFECTIVELY JUNIOR TO THE
LIABILITIES OF OUR NONGUARANTOR SUBSIDIARIES AND POSSIBLY TO ALL OF THEIR
FUTURE BORROWINGS, WHICH MAY BE SIGNIFICANT.
The notes will be unsecured senior subordinated obligations and will be
junior to all our existing and future senior indebtedness, including our credit
facility. Each of our currently existing domestic subsidiaries will guarantee
the notes. These guarantees will be unsecured senior subordinated obligations
and will be junior to all existing and future senior debt of the guarantors. The
notes will be effectively junior to all existing and future debt and other
liabilities of our subsidiaries that are not guarantors, which include our
foreign subsidiaries. As of March 28, 2003, we had outstanding $416.3 million of
senior debt, the guarantors had no senior debt outstanding (other than their
guarantees of our debt) and the nonguarantor subsidiaries had outstanding $5.4
million of total debt to third parties including trade payables.
We also may incur significant additional senior indebtedness under the
terms of our revolving credit facility. For example, as of March 28, 2003, we
had $12 million available under our revolving credit facility which, if
borrowed, would be senior indebtedness. If we become bankrupt, liquidate or
dissolve, our assets would be available to pay obligations on the notes only
after our senior indebtedness has been paid. Similarly, if one of our guarantor
subsidiaries becomes bankrupt, liquidates or dissolves, that subsidiary's assets
would be available to pay obligations on its guarantee only after payments have
been made on its senior indebtedness.
If we fail to pay any of our senior indebtedness, we may make payments on
the notes only if either we first pay our senior debt or the holders of our
senior indebtedness waive the payment default. Moreover, if any non-payment
default exists under our senior indebtedness, we may not make any cash payments
on the notes for a period of up to 179 days in any 360-day period, unless we
cure the non-payment default, the holders of the senior indebtedness waive the
default or rescind acceleration of the indebtedness or we repay the indebtedness
in full. In the event of a non-payment default we may not have sufficient assets
to pay amounts due on the notes. In addition, various events of default under
the new credit facility would prohibit us from making any payments on the notes.
THE NOTES WILL NOT BE SECURED BY ANY OF OUR ASSETS. HOWEVER, OUR CREDIT
FACILITY IS SECURED BY SUBSTANTIALLY ALL OF OUR ASSETS.
In addition to being subordinated to all our senior indebtedness, the notes
will not be secured by any of our assets. However, our credit facility is
secured by substantially all of our assets and the assets of our domestic
subsidiaries. Additionally, the terms of the indenture and our credit facility
permit us to incur additional secured debt. 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 will have
a prior claim on our assets. In that event, because the notes will not be
secured by any of our assets, it is possible that there will be no assets
remaining from which claims of the holders of the notes can be satisfied or, if
any assets remain, the remaining assets might be insufficient to satisfy those
claims in full.
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 a change of control, you will have the right to
require us to purchase all or a portion of your notes. Nevertheless, if a change
of control were to occur, we might not have sufficient financial resources, or
might not be able to arrange financing, to pay the purchase price for all notes
that you tender.
10
In addition, the terms of our credit facility limit our ability to purchase
any notes and to identify certain events that would constitute a change of
control or an event of default under our credit facility. The terms of our
existing notes contain change of control provisions substantially identical in
the notes issued pursuant to this offering. Any future credit agreements or
other agreements relating to other indebtedness to which we become a party may
contain similar restrictions and provisions. In the event a change of control
occurs at a time when we are prohibited from purchasing notes, we could seek the
consent of our lenders to purchase notes or could attempt to refinance the
borrowings that contain such prohibition. If we do not obtain this consent or
repay the borrowing, however, we would remain prohibited from purchasing the
notes. Our failure to purchase tendered notes would constitute an event of
default under the indenture, that would, in turn, constitute a further default
under certain of our existing debt agreements and may constitute a default under
the terms of other indebtedness that we may enter into from time to time.
Further, the provisions of the indenture may not protect you in the event
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction that might adversely affect holders of notes, if the
transaction did not result in a change of control. For a more complete
description of the change of control provisions contained in the notes, see
"Description of the Notes -- Change of Control."
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO
LIMIT YOUR RIGHTS AS A NOTEHOLDER OR VOID GUARANTEES AND REQUIRE NOTEHOLDERS
TO RETURN PAYMENTS RECEIVED FROM GUARANTORS.
Federal and state fraudulent transfer laws permit a court, if it makes
certain findings, to:
- avoid all or a portion of our obligations to you;
- subordinate our obligations to you to our other existing and future
indebtedness, entitling other creditors to be paid in full before any
payment is made on the notes; and
- take other action detrimental to you, including invalidating the notes.
In that event, you may never be repaid.
Under federal and state fraudulent transfer laws, in order to take any of
those actions, a court typically would need to find that, at the time the notes
were issued, we:
- issued the notes with the intent of hindering, delaying or defrauding
current or future creditors; or
- received less than fair consideration or reasonably equivalent value for
incurring the indebtedness represented by the notes; and
(a) were insolvent or were rendered insolvent by reason of the
issuance of the notes;
(b) were engaged, or about to engage, in a business or transaction for
which our assets were unreasonably small; or
(c) intended to incur, or believed or should have believed we would
incur, debts beyond our ability to pay as such debts mature.
Many of the foregoing terms are defined in or interpreted under those
fraudulent transfer statutes.
A court could apply different standards in order to determine whether we
were "insolvent" as of the date the notes were issued, and, regardless of the
method of valuation, a court could determine that we were insolvent on that
date. A court could also determine, regardless of whether we were insolvent on
the date the notes were issued, that the payments constituted fraudulent
transfers on another ground.
Different jurisdictions define "insolvency" differently. However, we
generally would be considered insolvent at the time we incurred the indebtedness
constituting the notes if our liabilities exceeded our assets (at a fair
valuation) or if the present saleable value of our assets is less than amount
required to pay our total existing debts and liabilities (including the probable
liability related to contingent liabilities) as they become absolute or matured.
11
Our obligations under the notes are guaranteed on a senior subordinated
basis by our restricted domestic subsidiaries, and the guarantees may also be
subject to review under various laws for the protection of creditors. It is
possible that creditors of the guarantors may challenge the guarantees as a
fraudulent transfer or conveyance. The analysis set forth above would generally
apply, except that the guarantees could also be subject to the claim that, since
the guarantees were incurred for our benefit, and only indirectly for the
benefit of the guarantors, the obligations of the guarantors thereunder were
incurred for less than reasonably equivalent value or fair consideration. A
court could void a guarantor's obligation under its guarantee, subordinate the
guarantee to the other indebtedness of a guarantor, direct that holders of the
notes return any amounts paid under a guarantee to the relevant guarantor or to
a fund for the benefit of its creditors, or take other action detrimental to the
holders of the notes. In addition, the liability of each guarantor under the
indenture will be limited to the amount that will result in its guarantee not
constituting a fraudulent conveyance or improper corporate distribution, and a
court could apply different standards in making a determination as to what would
be the maximum liability of each guarantor.
RISKS RELATING TO OUR BUSINESS
OUR PROFITS MAY BE ADVERSELY AFFECTED BY PRICE VOLATILITY AND AVAILABILITY OF
RAW MATERIALS IF WE ARE UNABLE TO PASS PRICE INCREASES ON TO CUSTOMERS OR TO
OBTAIN NECESSARY RAW MATERIALS.
Our profitability may be adversely affected if raw material prices increase
and we are unable to pass these price increases on to our customers, employ
successful hedging strategies, enter into supply contracts at favorable prices
or buy on the spot market at favorable prices. Our products are manufactured
from commodity petrochemicals that are readily available in bulk quantities from
numerous large, vertically integrated chemical companies. Except for PCTFE film,
a raw material used in manufacturing our clear, laminated blister packaging
materials, we currently purchase each principal raw material from several of the
top suppliers. Prices for our raw materials have fluctuated in the past and
likely will continue to do so in the future. Historically, we have been able to
pass on substantially all of the price increases in raw materials to our
customers on a timely basis, although in the case of our garden hose products we
are usually not able to do so until the following season because prices are set
annually. We may, however, be unable to pass on price increases in the future.
WE OPERATE IN DISCRETE MARKET SEGMENTS OF OUR INDUSTRY, SOME OF WHICH ARE
HIGHLY COMPETITIVE AND INCLUDE PARTICIPANTS WITH GREATER RESOURCES THAN OURS.
We compete with a wide variety of manufacturers because we operate in
discrete market segments. Some of our competitors are larger, have greater
financial resources and are less leveraged than we are. As a result, these
competitors may be better able to withstand a change in market conditions within
the industry and throughout the economy as a whole. These competitors may also
be able to maintain significantly greater operating and financial flexibility
than we can. Additionally, a number of our niche product applications are
customized or sold for highly specialized uses. Competitors with greater
financial, technological, manufacturing and marketing resources than ours and
that do not currently market similar applications for these uses could choose to
do so in the future. Increased competition could have a material adverse effect
on our business, financial condition or results of operations.
THE SUCCESS OF OUR ACQUISITION STRATEGY COULD BE ADVERSELY AFFECTED BY THE
UNAVAILABILITY OF SUITABLE ACQUISITION CANDIDATES OR OUR INABILITY TO FINANCE
FUTURE ACQUISITIONS OR SUCCESSFULLY INTEGRATE ACQUIRED BUSINESSES.
Acquiring suitable businesses is a key component of our business strategy.
Nonetheless, we may not identify suitable acquisitions or acquisitions that can
be made at an acceptable price. In the event we are able to acquire additional
businesses, we may require substantial capital to do so. Although we will be
able to borrow under our revolving credit facility under certain circumstances
to fund acquisitions, it is possible that such borrowings will not be available
in sufficient amounts or that other financing will not be available in amounts
and on terms that we deem acceptable. In addition, growth by acquisition
involves risks such as
- diversion of our management's attention from ongoing business concerns;
12
- difficulties in integrating the operations and personnel of acquired
companies;
- difficulty in assessing the value, strengths and weaknesses of
acquisition candidates;
- failure to discover liabilities of the acquired company for which we will
be responsible following the acquisition;
- the potential loss of key employees and customers of acquired companies;
- diversion of other corporate resources from our existing operations; and
- failure to achieve the expected benefits of the acquisition.
If the execution of our acquisition strategy is unsuccessful, our ability
to compete successfully or repay our indebtedness may be reduced.
RISKS RELATING TO FOREIGN INVESTMENT AND OPERATIONS MAY HARM OUR RESULTS.
We have operations and other investments in a number of countries outside
of the United States. Our foreign operations and investments are subject to the
risks normally associated with conducting business in foreign countries,
including:
- limitations on ownership and on repatriation of earnings;
- import and export restrictions and tariffs;
- additional expenses relating to the difficulties and costs of staffing
and managing international operations;
- labor disputes and uncertain political and economic environments,
including risks of war and civil disturbances and the impact of foreign
business cycles;
- change in laws or policies of a foreign country;
- delays in obtaining or the inability to obtain necessary governmental
permits;
- potentially adverse consequences resulting from the applicability of
foreign tax laws;
- cultural differences; and
- increased expenses due to inflation.
Our foreign operations and investments may also be adversely affected by
laws and policies of the United States and the other countries in which we
operate affecting foreign trade, investment and taxation.
THE GARDEN AND IRRIGATION HOSE PRODUCTS BUSINESS IS HIGHLY SEASONAL, WHICH
RESULTS IN SIGNIFICANT FLUCTUATION OF OUR FINANCIAL RESULTS OVER THE COURSE OF
THE FISCAL YEAR.
The market for our garden and irrigation hose products is highly seasonal,
with approximately 75% of the sales occurring in spring and early summer. As a
result of the need to build up inventories in anticipation of such sales, our
working capital requirements peak in the spring. In addition, this seasonality
has a significant impact on our net income from quarter to quarter. To the
extent such sales peak later in any fiscal year compared to other fiscal years,
as a result of weather or other factors, cash flows may not be comparable on an
interim period basis.
WE ARE DEPENDENT ON CERTAIN KEY PERSONNEL AND COULD BE ADVERSELY AFFECTED BY
LOSS OF THEIR SERVICES.
We are dependent on the management experience and continued services of our
executive officers, including Dr. F. Patrick Smith and Mr. Kenneth W.R. Baker.
We maintain a key person life insurance policy on Dr. Smith. The loss of the
services of these officers could have a material adverse effect on our business.
In addition, our continued growth depends on our ability to attract and retain
experienced key employees.
13
WE MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL AND SAFETY LAWS AND REGULATIONS.
We could incur significant fines, penalties, capital costs or other
liabilities associated with any noncompliance, remediation of contamination or
natural resource damage or toxic tort liability at or related to any of our
current or former facilities. Changes in laws or the interpretation thereof, the
development of new facts or the failure of third parties to perform remediation
at current or former facilities could also cause us to incur additional costs.
Any of these foregoing fines, penalties, capital costs, liabilities or costs
could have a material adverse effect on our businesses, financial condition or
results of operations.
Our facilities, operations, and properties are subject to foreign, federal,
provincial, state and local environmental laws and regulations. As a result, we
are involved from time to time in administrative or legal proceedings relating
to environmental matters and have in the past and will continue to incur capital
costs and other expenditures relating to environmental matters. Current and
prior owners and operators of property or businesses may be liable under
environmental laws without regard to fault or to knowledge about the condition
or action causing the liability. We are currently, and may in the future be,
required to incur costs relating to the remediation of property, including
property where we dispose of our waste, and environmental conditions could lead
to claims for personal injury, property damage or damages to natural resources.
We are aware of environmental conditions at certain properties that we now or
previously owned or leased that are undergoing remediation by us or by third
parties. Although based on current information we have no reason to believe
otherwise, these third parties may not complete the required remediation.
WE ARE CONTROLLED BY SHAREHOLDERS WHO WILL BE ABLE TO MAKE IMPORTANT DECISIONS
ABOUT OUR BUSINESS AND CAPITAL STRUCTURE; THE CONTROLLING SHAREHOLDERS'
INTERESTS MAY DIFFER FROM YOUR INTERESTS AS A NOTEHOLDER.
Circumstances may occur in which the interests of the controlling
shareholders of Tekni-Plex could be in conflict with your interests as a
noteholder. The common shareholders may have an interest in pursuing
acquisitions, divestitures or other transactions that, in their judgment, could
enhance the value of their individual equity investments, even though these
transactions might involve risks to the holders of the notes. Tekni-Plex
Partners holds approximately 96.3% of our outstanding common stock
(approximately 93.6% on a fully diluted basis) and MST/TP Partners holds the
remaining common stock. Tekni-Plex Management, as sole managing member of
Tekni-Plex Partners and MST/TP Partners, controls both these entities.
Tekni-Plex Management is controlled by Dr. Smith, our Chairman of the Board and
Chief Executive Officer.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" including, in
particular, the 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," and in the Pro
Forma Unaudited Condensed Financial Information and the related notes thereto.
Although we believe that our plans, intentions and expectations reflected in or
suggested by such forward-looking statements are reasonable, it is possible that
such plans, intentions or expectations may not be achieved. Important factors
that could cause actual results to differ materially from the forward-looking
statements we make in this prospectus are set forth in this prospectus,
including under the headings "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." All
forward-looking statements attributable to Tekni-Plex or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements
and risk factors contained throughout this prospectus.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
The new notes will be exchanged for old notes as described in this prospectus
upon our receipt of old notes. We will cancel all of the old notes surrendered
in exchange for the new notes.
Our net proceeds from the sale of the old notes were approximately $40.4
million, after deduction of the initial purchasers' discounts and commissions
and other expenses of the offering. We used those net proceeds to repay
borrowings under our revolving credit facility and for related fees and
expenses.
14
CAPITALIZATION
The following table sets forth our actual capitalization as of March 28,
2003. You should read this table in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations," in our Form l0-K
for the period ended June 28, 2002 and our Form 10-Q for the nine months ended
March 28, 2003. As well as the related financial statements and the notes to
these statements incorporated by reference in this prospectus.
<Table>
<Caption>
AS OF
MARCH 28,
2003
-----------
(DOLLARS IN
THOUSANDS)
Cash and cash equivalents................................... $ 16,842
=========
Long term debt:
Senior credit facility:
Revolving credit facility(1)........................... $ 88,000
Term loans............................................. 322,900
12 3/4% senior subordinated notes outstanding............. 312,800
Other..................................................... 5,396
---------
Total debt.................................................. 729,096
Stockholders' deficit:
Common stock.............................................. --
Additional paid in capital................................ 170,568
Accumulated other comprehensive loss...................... (4,745)
Accumulated deficit....................................... (29,595)
Treasury stock............................................ (220,522)
---------
Total stockholders' deficit................................. (84,294)
---------
Total capitalization........................................ $ 644,802
=========
</Table>
- ---------------
(1) At March 28, 2003, $12 million was available under our revolving credit
facility.
15
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The old notes were sold by us to the initial purchaser on May 6, 2002
pursuant to a purchase agreement, dated May 1, 2002, between us and the initial
purchaser. The initial purchaser subsequently sold the old notes to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act in
reliance on Rule 144A, to a limited number of institutional "accredited
investors," as defined in Rule 501 under the Securities Act, and outside the
United States in accordance with Regulation S under the Securities Act. As a
condition to the initial sale of the old notes, we and the initial purchaser
entered into the registration rights agreement. Pursuant to the registration
rights agreement, we agreed that we would:
- use our reasonable best efforts to file with the SEC within 120 days
after the closing date, which is the date we delivered the old notes to
the initial purchaser, a registration statement under the Securities Act
with respect to the new notes; and
- cause such registration statement to become effective under the
Securities Act within 210 days after the closing date and to remain open
for at least 20 business days.
We agreed to issue and exchange new notes for all old notes validly
tendered and not withdrawn before the expiration of the exchange offer. A copy
of the registration rights agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. The registration
statement is intended to satisfy certain of our obligations under the
registration rights agreement and the purchase agreement. In the event that due
to a change in current interpretations by the SEC, we are not permitted to
effect such exchange offer, or if for any other reason the exchange offer is not
consummated within 250 days after the original issue date of the old notes, or
if any holder of the old notes (other than an "affiliate" of Tekni-Plex or the
initial purchaser) is not eligible to participate in the exchange offer, or upon
the request of the initial purchaser under certain circumstances, it is
contemplated that we will instead file a shelf registration statement covering
resales by the holders of the old notes and will use our reasonable best efforts
to cause such shelf registration statement to become effective and to keep such
shelf registration statement effective for a maximum of two years from the
closing date.
TERMS OF 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 any and all old notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time on the
expiration date.
We will issue $1,000 principal amount of new notes in exchange for each
respective $1,000 principal amount of outstanding old notes validly tendered and
not withdrawn pursuant to the exchange offer. Old notes may be tendered in the
principal amount of $1,000 and integral multiples of $1,000 in excess thereof,
provided that if fewer than all of the old notes of a holder are tendered for
exchange, the untendered principal amount of the holder's remaining old notes
must be $100,000 or any integral multiple of $1,000 in excess thereof.
The form and terms of the new notes are substantially the same as the form
and terms of the old notes except that:
- the new notes bear a Series B designation and a different CUSIP number
from the old notes;
- the exchange will be registered under the Securities Act and, therefore,
the new notes will not bear legends restricting the transfer thereof; and
- holders of the new notes will not be entitled to any of the registration
rights of holders of old notes under the registration rights agreement,
which rights will terminate upon the consummation of the exchange offer.
The new notes will evidence the same indebtedness as the old notes (which they
replace) and will be issued under, and be entitled to the benefits of, the
indenture, which also authorized the issuance of the old notes, such that the
new notes and the old notes will be treated as a single class of securities
under the indenture. The
16
new notes will be fully and unconditionally guaranteed on a senior subordinated
basis by the guarantors. The form and terms of the exchange guarantees will be
substantially identical to the form and terms of the old guarantees.
As of the date of this prospectus, $40,000,000 principal amount of old
notes are outstanding, all of which are registered in the name of Cede & Co., as
nominee for DTC. Solely for reasons of administration, we have fixed the close
of business on , 2003 as the record date for the exchange offer for
purposes of determining the persons to whom this prospectus and the letter of
transmittal will be mailed initially. There will be no fixed record date for
determining holders of the old notes entitled to participate in the exchange
offer.
Holders of the old notes do not have any appraisal or dissenters' rights
under the General Corporation Law of the State of Delaware or the indenture in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the provisions of the registration rights agreement and the
applicable requirements of the Securities Act and the rules and regulations of
the SEC thereunder.
We shall be deemed to have accepted validly tendered old notes when, and
if, we have given oral or written notice thereof to HSBC Bank USA, the exchange
agent. The exchange agent will act as agent for the tendering holders of old
notes for the purpose of receiving the new notes from us.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes
pursuant to the exchange offer. We will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the exchange offer.
See "The Exchange Offer -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, 2003, unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" shall mean the latest date and time to
which the exchange offer is extended.
If we determine to extend the exchange offer, we will, prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date:
- notify the exchange agent of any extension by oral or written notice; and
- mail to registered holders an announcement of the extension.
We reserve the right, in our sole discretion:
- to delay accepting any old notes;
- to extend the exchange offer; or
- if, in the opinion of our counsel, the consummation of the exchange offer
would violate any applicable law, rule or regulation or any applicable
interpretation of the staff of the SEC, to terminate or amend the
exchange offer by giving oral or written notice of such delay, extension,
termination or amendment to the exchange agent. Any such delay in
acceptance, extension, termination or amendment will be followed as
promptly as practicable by a press release or other public announcement
thereof.
INTEREST ON THE NEW NOTES
Interest on new notes will accrue from the last interest payment date on
which interest was paid on the old notes surrendered for them, or, if no
interest has been paid on such old notes, from May 6, 2002. We will not pay
interest on the old notes accepted for exchange. Interest on the new notes will
be paid on June 15 and December 15 of each year commencing June 15, 2003.
17
RESALE OF THE NEW NOTES
With respect to the new notes, based upon interpretations by the staff of
the SEC set forth in certain no-action letters issued to third parties, we
believe that a holder who exchanges old notes for new notes in the ordinary
course of business, who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate in a
distribution of the new notes, and who is not an "affiliate" of ours within the
meaning of Rule 405 of the Securities Act, will be allowed to resell new notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the new notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act.
If any holder is an affiliate of ours or acquires new notes in the exchange
offer for the purpose of distributing or participating in the distribution of
the new notes, such holder:
- cannot rely on the position of the staff of the SEC enumerated in such
no-action letters issued to third parties; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction, unless an
exemption from registration is otherwise available.
Each broker-dealer that receives new notes for its own account in exchange
for old notes acquired by such broker-dealer as a result of market-making or
other trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of any new
notes received in exchange for old notes acquired by such broker-dealer as a
result of market-making or other trading activities. We will make this
prospectus, as it may be amended or supplemented from time to time, available to
any such broker-dealer that requests copies of such prospectus in the letter of
transmittal for use in connection with any such resale for a period of up to 180
days after the expiration date. See "Plan of Distribution."
PROCEDURES FOR TENDERING
To tender in the exchange offer, a holder of old notes must either:
- complete, sign and date the letter of transmittal or facsimile thereof,
have the signatures thereon guaranteed if required by the letter of
transmittal, and mail or otherwise deliver such letter of transmittal or
such facsimile to the exchange agent; or
- if such old notes are tendered pursuant to the procedures for book-entry
transfer set forth below, a holder tendering old notes may transmit an
agent's message (as defined below) to the exchange agent in lieu of the
letter of transmittal,
in either case for receipt on or prior to the expiration date.
In addition, either:
- certificates for such old notes must be received by the exchange agent
along with the letter of transmittal;
- a timely confirmation of a book-entry transfer of such old notes into the
exchange agent's account at DTC pursuant to the procedure for book-entry
transfer described below, along with the letter of transmittal or an
agent's message, as the case may be, must be received by the exchange
agent prior to the expiration date; or
- the holder must comply with the guaranteed delivery procedures described
below.
The term "agent's message" means a message, transmitted to the exchange
agent's account at DTC and received by the exchange agent and forming a part of
the book-entry confirmation, which states that such account has received an
express acknowledgment from the tendering participant that such participant has
18
received and agrees to be bound by the letter of transmittal and that we may
enforce the letter of transmittal against such participant. To be tendered
effectively, the letter of transmittal and other required documents, or an
agent's message in lieu thereof, must be received by the exchange agent at the
address set forth below under "-- Exchange Agent" prior to 5:00 p.m., New York
City time, on the expiration date.
The tender by a holder that is not withdrawn prior to the expiration date
will constitute an agreement between such holder and us in accordance with the
terms and subject to the conditions set forth herein and in the letter of
transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY OLD NOTES TO US.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner(s) of the old notes whose old notes are held through a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf. If such beneficial
owner wishes to tender on its own behalf, such owner must, prior to completing
and executing the letter of transmittal and delivering such owner's old notes:
- make appropriate arrangements to register ownership of the old notes in
such owner's name; or
- obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an eligible institution unless the old notes tendered pursuant thereto are
tendered:
- by a registered holder who has not completed the box titled "Special
Delivery Instruction" on the letter of transmittal; or
- for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be made by an "eligible guarantor institution" (within the meaning of Rule
17Ad-15 under the Exchange Act) which is a member of one of the recognized
signature guarantee programs identified in the letter of transmittal.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes listed therein, such old notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder exactly as such registered holder's name appears on such old
notes with the signature thereon guaranteed by an eligible guarantor
institution.
In connection with any tender of old notes in definitive certified form, if
the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's Automated Tender Offer
Program to tender old notes. Accordingly, DTC participants may electronically
transmit their acceptance of the exchange offer by causing DTC to transfer old
notes to the exchange agent in accordance with DTC's ATOP procedures for
transfer. DTC will then send an agent's message to the exchange agent.
19
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered old notes will be determined by
us in our sole discretion, which determination will be final and binding. We
reserve the absolute right:
- to reject any and all old notes not properly tendered and any old notes
our acceptance of which would, in the opinion of our counsel, be
unlawful; and
- to waive any defects, irregularities or conditions of tender as to
particular old notes.
Our interpretation of the terms and conditions of the exchange offer
(including the instructions in the letter of transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of old notes must be cured within such time as we shall
determine. Although we intend to notify holders of defects or irregularities in
connection with tenders of old notes, neither we, the exchange agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of old notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While we have no present plan to acquire any old notes that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any old notes that are not tendered pursuant to the exchange offer,
we reserve the right in our sole discretion to purchase or make offers for any
old notes that remain outstanding subsequent to the expiration date and, to the
extent permitted by applicable law, purchase old notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer.
By tendering old notes pursuant to the exchange offer, each holder of old
notes will represent to us that, among other things, that:
- the new notes to be acquired by such holder of old notes in connection
with the exchange offer are being acquired by such holder in the ordinary
course of business of such holder;
- such holder is not participating, does not intend to participate, and has
no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the new notes;
- such holder acknowledges and agrees that any person who is participating
in the exchange offer for the purpose of distributing the new notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale of the new notes
acquired by such person and cannot rely on the position of the staff of
the SEC set forth in certain no-action letters;
- such holder understands that a secondary resale transaction, described
above, and any resales of new notes obtained by such holder in exchange
for old notes acquired by such holder directly from us should be covered
by an effective registration statement containing the selling security
holder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the SEC; and
- such holder is not an "affiliate", as defined in Rule 405 under the
Securities Act, of ours.
If the holder is a broker-dealer that will receive new notes for such
holder's own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, such holder will be
required to acknowledge in the letter of transmittal that such holder will
deliver a prospectus in connection with any resale of such new notes; however,
by so acknowledging and by delivering a prospectus, such holder will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
RETURN OF OLD NOTES
In all cases, issuance of new notes for old notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of:
- old notes or a timely book-entry confirmation of such old notes into the
exchange agent's account at DTC; and
20
- a properly completed and duly executed letter of transmittal and all
other required documents, or an agent's message in lieu thereof.
If any tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if old notes are withdrawn or are
submitted for a greater principal amount than the holders desire to exchange,
such unaccepted, withdrawn or otherwise non-exchanged old notes will be returned
without expense to the tendering holder thereof (or, in the case of old notes
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, such old notes
will be credited to an account maintained with DTC) as promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old securities at DTC for purposes of the exchange offer promptly after
the date of this prospectus. Any financial institution that is a participant in
DTC's systems may make book-entry delivery of old securities by causing DTC to
transfer old securities into the exchange agent's account in accordance with
DTC's Automated Tender Offer Program procedures for transfer. However, the
exchange for the old securities so tendered will only be made after timely
confirmation of book-entry transfer of old securities into the exchange agent's
account, and timely receipt by the exchange agent of an agent's message,
transmitted by DTC and received by the exchange agent and forming a part of a
book-entry confirmation. The agent's message must state that DTC has received an
express acknowledgment from the participant tendering old securities that are
the subject of that book-entry confirmation that the participant has received
and agrees to be bound by the terms of the letter of transmittal, and that we
may enforce the agreement against that participant.
Although delivery of old securities may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal, or
a facsimile copy, properly completed and duly executed, with any required
signature guarantees, must in any case be delivered to and received by the
exchange agent at its address listed under "-- Exchange Agent" on or prior to
the expiration date.
If your old securities are held through DTC, you must complete a form
called "instructions to registered holder and/or book-entry participant," which
will instruct the DTC participant through whom you hold your securities of your
intention to tender your old securities or not tender your old securities.
Please note that delivery of documents to DTC in accordance with its procedures
does not constitute delivery to the exchange agent and we will not be able to
accept your tender of securities until the exchange agent receives a letter of
transmittal and a book-entry confirmation from DTC with respect to your
securities. A copy of that form is available from the exchange agent.
GUARANTEED DELIVERY PROCEDURES
If a holder of the old notes desires to tender such old notes and the old
notes are not immediately available or the holder cannot deliver its old notes
(or complete the procedures for book-entry transfer), the letter of transmittal
or any other required documents to the exchange agent prior to the expiration
date, a holder may effect a tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from such
eligible institution (by facsimile transmission, mail or hand delivery) a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by us setting forth the name and
address of the holder, the certificate number(s) of such old notes (if
applicable) and the principal amount of old notes tendered, stating that
the tender is being made thereby and guaranteeing that, within three New
York Stock Exchange trading days after the expiration date:
(i) the letter of transmittal (or a facsimile thereof), or an agent's
message in lieu thereof,
(ii) the certificate(s) representing the old notes in proper form for
transfer or a book-entry confirmation, as the case may be, and
21
(iii) any other documents required by the letter of transmittal,
will be deposited by the eligible institution with the exchange agent; and
- such properly executed letter of transmittal (or facsimile thereof), or
an agent's message in lieu thereof, as well as the certificate(s)
representing all tendered old notes in proper form for transfer or a
book-entry confirmation, as the case may be, and all other documents
required by the letter of transmittal, are received by the exchange agent
within three New York Stock Exchange trading days after the expiration
date.
Upon request to the exchange agent, a form of Notice of Guaranteed Delivery
will be sent to holders who wish to tender their old notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of old notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of old notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to the expiration date. Any such
notice of withdrawal must:
- specify the name of the person having deposited the old notes to be
withdrawn;
- identify the old notes to be withdrawn (including the certificate number
or numbers, if applicable, and principal amount of such old notes); and
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered
(including any required signature guarantees).
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of DTC. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by us, in our sole discretion, which determination shall be final and
binding on all parties.
Any old notes so withdrawn will be deemed not to have been validly tendered
for purposes of the exchange offer, and no new notes will be issued with respect
thereto, unless the old notes so withdrawn are validly re-tendered. Properly
withdrawn old notes may be re-tendered by following one of the procedures
described above under "-- Procedures for Tendering" at any time prior to the
expiration date.
TERMINATION OF CERTAIN RIGHTS
All registration rights under the registration rights agreement accorded to
holders of the old notes (and all rights to receive additional interest in the
event of a Registration Default as defined therein) will terminate upon
consummation of the exchange offer. However, for a period of up to 180 days
after the registration statement is declared effective, we will keep the
registration statement effective and provide copies of the latest version of the
prospectus to any broker-dealer that requests copies of such prospectus in the
letter of transmittal for use in connection with any resale by such
broker-dealer of new notes received for its own account pursuant to the exchange
offer in exchange for old notes acquired for its own account as a result of
market-making or other trading activities.
22
EXCHANGE AGENT
HSBC Bank USA has been appointed as exchange agent for the exchange offer.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notice of guaranteed
delivery should be directed to the exchange agent addressed as follows:
<Table>
<Caption>
By Registered or Certified Mail,
Overnight Courier or Hand: By Facsimile:
HSBC Bank USA HSBC Bank USA
One Hanson Place Attention: Paulette Shaw
Brooklyn, New York 11243 (718) 488-4488
Attention: Paulette Shaw
Tel: (718) 488-4475
</Table>
Originals of all documents submitted by facsimile should be sent promptly
by registered or certified mail, overnight courier or hand. Delivery to an
address other than as set forth above will not constitute a valid delivery.
HSBC Bank USA also serves as trustee under the indenture.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, facsimile transmission, telephone or in person by our officers and
regular employees or those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
The expenses to be incurred in connection with the exchange offer,
including registration fees, fees and expenses of the exchange agent and the
trustee, accounting and legal fees, and printing costs, will be paid by us.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, a transfer tax is imposed for
any reason other than the exchange of the old notes pursuant to the exchange
offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. Holders of the old notes
are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
Old notes that are not exchanged for the new notes pursuant to the exchange
offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) under the Securities Act. Accordingly, such old notes may not be
offered, sold, pledged or otherwise transferred except:
- to us (upon redemption thereof or otherwise);
- to a person whom the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for its
own account or for the account of a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A;
- in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act;
23
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available);
- pursuant to an effective registration statement under the Securities Act;
or
- pursuant to another available exemption from the registration
requirements of the Securities Act, and, in each case, in accordance with
all other applicable securities laws.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the term of the new notes.
CONDITIONS
Notwithstanding any other term of the exchange offer, we shall not be
required to accept for exchange, or exchange new notes for, any old notes, and
may terminate or amend the exchange offer as provided herein if:
(a) as of the expiration date of the offer, any action or proceeding
is instituted or threatened in any court or by or before any governmental
agency with respect to the exchange offer (or other similar exchange
offers) which, in our reasonable judgment, might materially impair our
ability to proceed with the exchange offer or any material adverse
development has occurred in any existing action or proceeding with respect
to us or any of our subsidiaries;
(b) as of the expiration date of the offer, any law, statute, rule,
regulation or interpretation by the staff of the SEC is proposed, adopted
or enacted, which, in our reasonable judgment, might materially impair our
ability to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us; or
(c) any governmental approval has not been obtained, which approval we
shall, in our reasonable discretion, deem necessary for the consummation of
the exchange offer as contemplated hereby.
If we determine in our reasonable discretion that any of the conditions is
not satisfied, we may (i) refuse to accept any old notes and return all tendered
old notes to the tendering holders, (ii) extend the exchange offer and retain
all old notes tendered prior to the expiration of the exchange offer, subject,
however, to the rights of holders to withdraw such old notes (see "-- Withdrawal
of Tenders") or (iii) waive such unsatisfied condition(s) with respect to the
exchange offer and accept all properly tendered old notes that have not been
withdrawn. In the event we waive a condition to the exchange offer we will
provide notice of the waiver and extend the offer.
DESCRIPTION OF THE NEW NOTES
As used below in this "Description of the New Notes" section, the
"Company," "we," "us," "our" and "ours" means Tekni-Plex, Inc. but not any of
its subsidiaries. We issued the old notes, and the new notes are to be issued
under an indenture, dated as of June 21, 2000 and amended as of May 6, 2002 and
August 22, 2002, among us, the guarantors and HSBC Bank USA, as 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, as amended. The
notes are subject to all such terms, and holders of the notes are referred to
the indenture and the Trust Indenture Act for a statement thereof. A copy of the
indenture, the registration rights agreement and our senior debt credit
agreement described below will be made available to prospective investors upon
request. The statements made under this caption relating to the notes, the
indenture, the registration rights agreement and our senior debt credit
agreement are intended to be summaries of all material elements of such
documents and, as such, do not purport to be complete and where reference is
made to particular provisions of the indenture, the registration rights
agreement and our senior debt credit agreement, such provisions, including the
definitions of certain terms appearing at the end of this section and under the
caption "Senior Debt", are qualified in their entirety by such reference.
24
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the old notes do not apply
to the new notes. The old notes and the new notes will be considered
collectively to be a single class for all purposes under the indenture,
including, without limitation, waivers and amendments.
The notes will be our general unsecured obligations. The notes constitute a
further issuance of and, following their registration under the Act, will be
consolidated and form a single series with our outstanding 12 3/4% Senior
Subordinated Notes. The indenture is not limited in amount, and additional
amounts may be issued in one or more series from time to time under the
indenture subject to the limitations on the incurrence of additional
indebtedness set forth under "Covenants -- Limitation on Indebtedness" and
restrictions contained in the credit agreement. The notes will be our senior
subordinated obligations, subordinated in right of payment to all our senior
debt. The notes will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple thereof. No service charge
will be made for any registration of transfer or exchange of notes, but we may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Initially, the trustee will act as
paying agent and registrar for the notes.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on June 15, 2010 and will bear interest at the rate
per annum shown on the cover page hereof, except as noted under "-- Registration
Rights," from the Issue Date or from the most recent interest payment date to
which interest has been paid or provided for. Interest on the new notes will be
payable semiannually on June 15 and December 15 of each year, commencing June
15, 2003, to the person in whose name a note is registered at the close of
business on the preceding June 1 or December 1 (each, a "record date"), as the
case may be. Interest on the notes will be computed on the basis of a 360-day
year of twelve 30-day months. Holders must surrender the notes to the paying
agent for the notes to collect principal payments. We will pay principal and
interest by check and may mail interest checks to a holder's registered address.
OPTIONAL REDEMPTION
The notes will be subject to redemption, at our option, in whole or in
part, at any time on or after June 15, 2005 and prior to maturity, upon not less
than 30 nor more than 60 days' notice mailed to each holder of notes to be
redeemed at his address appearing in the register for the notes, in amounts of
$1,000 or an integral multiple of $1,000, at the following redemption prices
(expressed as percentages of principal amount) plus accrued interest to but
excluding the date fixed for redemption (subject to the right of holders of
record on the relevant record date to receive interest due on an interest
payment date that is on or prior to the date fixed for redemption), if redeemed
during the 12-month period beginning June 15 of the years indicated:
<Table>
<Caption>
YEAR PERCENTAGE
- ---- ----------
2005........................................................ 106.375%
2006........................................................ 104.250%
2007........................................................ 102.135%
2008 and thereafter......................................... 100.000%
</Table>
In addition, prior to June 15, 2003, we may redeem up to 35% of the
principal amount of the notes with the net cash proceeds received by us from one
or more public offerings of our capital stock (other than disqualified stock),
at a redemption price (expressed as a percentage of the principal amount) of
112.75% of the principal amount thereof, plus accrued and unpaid interest to the
date fixed for redemption; provided however, that at least 65% of the aggregate
principal amount of the notes originally issued pursuant to this offering
remains outstanding immediately after any such redemption (excluding any notes
owned by us or any of our affiliates). Notice of redemption pursuant to this
paragraph must be mailed to holders of notes not later than 60 days following
the consummation of such public offering.
25
Selection of notes for any partial redemption shall be made by the trustee,
in accordance with the rules of any national securities exchange on which the
notes may be listed or, if the notes are not so listed, pro rata or by lot or in
such other manner as the trustee shall deem appropriate and fair. Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. Notice of redemption will be mailed before the date fixed
for redemption to each holder of notes to be redeemed at his or her registered
address. On and after the date fixed for redemption, interest will cease to
accrue on notes or portions thereof called for redemption.
The notes will not have the benefit of any sinking fund.
RANKING
The payment of principal, premium, if any, and interest on the notes and
any claims arising out of or with respect to the indenture is subordinated and
subject in right of payment, to the extent and in the manner provided in the
indenture, to the prior payment in full of all our senior debt.
Upon any payment or distribution of our assets or securities of any kind or
character, whether in cash, property or securities, upon any dissolution or
winding up or total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due with respect to our senior
debt (including any interest accruing on or after, or which would accrue but
for, an event of bankruptcy, regardless of whether such interest is an allowed
claim enforceable against the debtor under the Bankruptcy Code) shall first be
paid in full, or payment provided for, in either case in cash or cash
equivalents or otherwise in a form satisfactory to the holders of senior debt,
before the holders of the notes or the trustee on behalf of such holders shall
be entitled to receive any payment by us of the principal of premium, if any, or
interest on the notes, or any payment to acquire any of the notes for cash,
property or securities, or any distribution with respect to the notes of any
kind or character, whether in cash, property or securities, by set-off or
otherwise (all such payments and distributions referred to individually and
collectively, as a "securities payment"). Before any payment may be made by us,
or on our behalf, of the principal of, premium, if any, or interest on the notes
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of our assets or securities of any kind or character,
whether in cash, property or securities, to which the holders of the notes or
the trustee on their behalf would be entitled, but for the subordination
provisions of the indenture, shall be made by us or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, directly to the holders of our senior debt (pro rata to such
holders on the basis of the respective amounts of senior debt held by such
holders) or their representatives or to the trustee or trustees under any
indenture pursuant to which any such senior debt may have been issued as their
respective interests may appear, to the extent necessary to pay all such senior
debt in full in cash or cash equivalents or otherwise in a form satisfactory to
the holders of such senior debt after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such senior debt.
No securities payment by us or on our behalf, whether pursuant to the terms
of the notes or upon acceleration or otherwise, will be made if, at the time of
such payment, there exists a default in the payment of all or any portion of the
obligations on any designated senior debt, whether at maturity, on account of
mandatory redemption or prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of such designated senior debt. In addition, during
the continuance of any non-payment default or non-payment event of default with
respect to any designated senior debt pursuant to which the maturity thereof may
be accelerated, and upon receipt by the Trustee of notice (a "payment blockage
notice") from a holder or holders of such designated senior debt or the trustee
or agent acting on behalf of such designated senior debt, then, unless and until
such default or event of default has been cured or waived or has ceased to exist
or such designated senior debt has been discharged or repaid in full in cash or
cash equivalents or otherwise in a form satisfactory to the holders of such
designated senior debt, no securities payment will be made by us or on our
behalf, except from those funds held in trust for purposes of defeasance for the
benefit of the holders of any notes to such holders, during a period (a "payment
blockage period") commencing on the date of receipt of such payment blockage
notice by the trustee and ending 179 days thereafter. Notwithstanding anything
herein to the contrary, (1) in no
26
event will a payment blockage period extend beyond 179 days from the date of the
payment blockage notice in respect thereof was given and (2) there must be 180
days in any 365 day period during which no payment blockage period is in effect.
Not more than one payment blockage period may be commenced with respect to the
notes during any period of 365 consecutive days. No default or event of default
that existed or was continuing on the date of commencement of any payment
blockage period with respect to the designated senior debt initiating such
payment blockage period may be, or be made, the basis for the commencement of
any other payment blockage period by the holder or holders of such designated
senior debt or the trustee or agent acting on behalf of such designated senior
debt, whether or not within a period of 365 consecutive days, unless such
default or event of default has been cured or waived for a period of not less
than 90 consecutive days (it being acknowledged that any subsequent action or
any breach of any financial covenants for a period commencing after the date of
commencement of such payment blockage period that, in either case, would give
rise to an event of default pursuant to any provision under which an event of
default previously existed or was continuing, shall constitute a new event of
default for this purpose).
The failure to make any payment or distribution for or on account of the
notes by reason of the provisions of the indenture described under this section
will not be construed as preventing the occurrence of an event of default
described in clause (1), (2) or (3) of the first paragraph under "-- Events of
Default."
By reason of the subordination provisions described above, in the event we
become insolvent, funds which would otherwise be payable to holders of the notes
will be paid to the holders of our senior debt to the extent necessary to repay
such senior debt in full, and we may be unable to fully meet our obligations
with respect to the notes. Subject to the restrictions set forth in the
indenture, in the future we may incur additional senior debt.
SENIOR DEBT
At March 28, 2003 we had $416.3 million of senior debt outstanding. We
could also have borrowed up to an additional $12 million of indebtedness under
our revolving credit facility, all of which would have constituted senior debt.
Our senior debt contains covenants, including a minimum Fixed Charge Coverage
Ratio, a minimum Leverage Ratio and a minimum Consolidated EBITDA, all of which
are defined in our senior debt credit agreement and described in greater detail
below. As of March 28, 2003 we were in compliance with all of our covenants.
Fixed Charge Coverage Ratio. Our credit agreement requires that we meet a
minimum Fixed Charge Coverage Ratio. The minimum Fixed Charge Coverage Ratio
ranges from a ratio of 1.20:1 for our third quarter of the current fiscal year
to 1.40:1 for the quarter ending in December 2007 and any subsequent periods.
Increases in the ratio take effect in accordance with the following table:
<Table>
<Caption>
FISCAL QUARTER ENDING CLOSEST TO RATIO
- -------------------------------- ------
March through December 2003................................. 1.20:1
March 2004.................................................. 1.25:1
June through December 2004.................................. 1.30:1
March 2005.................................................. 1.35:1
June 2005 through December 2007 and thereafter.............. 1.40:1
</Table>
Leverage Ratio. Our credit agreement further requires that we meet a
minimum Leverage Ratio. The minimum Leverage Ratio ranges from a ratio of 5.75:1
for the third quarter of the current fiscal year to 4.5:1
27
for the quarter ending in December 2007 and any subsequent periods. Decreases in
the ratio take effect in accordance with the following table:
<Table>
<Caption>
FISCAL QUARTER ENDING CLOSEST TO RATIO
- -------------------------------- ------
December 2002 through March 2003............................ 5.75:1
June through December 2003.................................. 5.50:1
March 2004.................................................. 5.25:1
June through December 2004.................................. 5.00:1
March 2005.................................................. 4.75:1
June 2005 through December 2007 and thereafter.............. 4.50:1
</Table>
Minimum Consolidated EBITDA. Our credit agreement also requires that we
meet a minimum Consolidated EBITDA. The minimum Consolidated EBITDA ranges from
$120,000,000 for the third quarter of the current fiscal year to $125,000,000
for the quarter ending December 2007 and any subsequent periods. Increases in
minimum Consolidated EBITDA take effect in accordance with the following table:
<Table>
<Caption>
FISCAL QUARTER ENDING CLOSEST TO AMOUNT
- -------------------------------- ------------
March 2003.................................................. $120,000,000
June through December 2003.................................. $122,500,000
March 2004 through December 2007 and thereafter............. $125,000,000
</Table>
THE GUARANTEES
The indenture provides that the guarantors will fully and unconditionally
guarantee, jointly and severally, on a senior subordinated basis all of our
obligations under the indenture, including our obligation to pay principal,
premium, if any, and interest with respect to the notes. The obligation of each
guarantor is limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such guarantor, including, without
limitation, such guarantor's guarantee of outstanding obligations under the
credit agreement, will result in the obligations of such guarantor under the
guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. Except as provided in "-- Covenants" below, we are not
restricted from selling or otherwise disposing of a guarantor.
The indenture provides that if the notes are defeased in accordance with
the terms of the indenture, or if all or substantially all of the assets of a
guarantor or all of the capital stock of a guarantor is sold (including by
issuance or otherwise) by us or any of our restricted subsidiaries in a
transaction constituting an asset disposition, and if (1) the net available
proceeds from such asset dispositions are used in accordance with the covenant
described under "-- Covenants -- Limitation on Certain Asset Dispositions" or
(2) we deliver to the trustee an officers' certificate to the effect that the
net available proceeds from such asset disposition shall be used in accordance
with the covenant described under "-- Covenants -- Limitation on Certain Asset
Dispositions" and within the time limits specified by such covenant, then such
guarantor (in the event of a sale or other disposition of all or substantially
all of its assets) shall be released and discharged from its guarantee
obligations.
The obligations of each guarantor under the guarantee are subordinated to
the prior payment in full of all senior debt of such guarantor on the same basis
as our obligations on the notes are subordinated to our senior debt. The
guarantee will be pari passu in right of payment with any other senior
subordinated indebtedness of each guarantor and senior to any future
subordinated indebtedness of each guarantor.
28
COVENANTS
The indenture contains, among others, the following covenants:
LIMITATION ON INDEBTEDNESS
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, directly or indirectly, incur any indebtedness
(including acquired indebtedness), except:
(1) indebtedness of ours or of any of our restricted subsidiaries, if
immediately after giving effect to the incurrence of such indebtedness and
the receipt and application of the net proceeds thereof, our consolidated
cash flow ratio for a year consisting of the four full fiscal quarters for
which quarterly or annual financial statements are available next preceding
the incurrence of such indebtedness (calculated on a pro forma basis in
accordance with Article 11 of Regulation S-X under the Securities Act or
any successor provision as if such indebtedness had been incurred on the
first day of such year) would be greater than 2.0 to 1.0;
(2) indebtedness of ours and of our restricted subsidiaries incurred
under the credit agreement in an amount not to exceed $125.0 million in
aggregate principal amount at any time outstanding less the amount of any
such indebtedness that is permanently repaid or, without duplication, the
amount by which commitments thereunder are permanently reduced, in either
case, from the proceeds of asset dispositions;
(3) indebtedness owed by us to any of our direct or indirect wholly
owned subsidiaries or indebtedness owed by any of our direct or indirect
restricted subsidiaries to us or any other of our direct or indirect wholly
owned subsidiaries; provided, however, upon either (a) the transfer or
other disposition by such direct or indirect wholly owned subsidiary of any
indebtedness so permitted under this clause (3) to a Person other than us
or another of our direct or indirect wholly owned subsidiaries or (b) the
issuance (other than directors' qualifying shares), sale, transfer or other
disposition of shares of capital stock or other ownership interests
(including by consolidation or merger) of such direct or indirect wholly
owned subsidiary to a person other than us or another such wholly owned
subsidiary, the provisions of this clause (3) shall no longer be applicable
to such indebtedness and such indebtedness shall be deemed to have been
incurred at the time of any such issuance, sale, transfer or other
disposition, as the case may be;
(4) indebtedness of ours or of any of our restricted subsidiaries
under any interest rate or foreign currency hedge or exchange or other
similar agreement to the extent entered into to hedge any other
indebtedness permitted under the indenture (including the notes);
(5) indebtedness incurred to defer, renew, extend, replace, refinance
or refund, whether under any amendment, supplement or otherwise
(collectively for purposes of this clause (5) to "refund"), any
indebtedness described in clause (8) below, any indebtedness incurred under
clause (1) above, the notes issued on June 21, 2000 and the guarantee of
the notes; provided, however, that
(a) such indebtedness does not exceed the principal amount (or
accrued amount, if less) of indebtedness so refunded plus the amount of
any premium required to be paid in connection with such refunding
pursuant to the terms of the indebtedness refunded or the amount of any
premium reasonably determined by the issuer of such indebtedness as
necessary to accomplish such refunding by means of a tender offer,
exchange offer, or privately negotiated repurchase, plus the expenses of
such issuer reasonably incurred in connection therewith, and
(b) (i) in the case of any refunding of indebtedness that is pari
passu with the notes, such refunding indebtedness is made pari passu
with or subordinate in right of payment to the notes, and, in the case
of any refunding of indebtedness that is subordinate in right of payment
to the notes, such refunding indebtedness is subordinate in right of
payment to the notes on terms no less favorable to the holders of the
notes than those contained in the indebtedness being refunded, (ii) in
either case, the refunding indebtedness by its terms, or by the terms of
any agreement or instrument pursuant to which such indebtedness is
issued, does not have an average life that is less than the remaining
average life of the indebtedness being refunded and does not permit
redemption or other retirement
29
(including pursuant to any required offer to purchase to be made by us
or any of our restricted subsidiaries) of such indebtedness at the
option of the holder thereof prior to the final stated maturity of the
indebtedness being refunded, other than a redemption or other retirement
at the option of the holder of such indebtedness (including pursuant to
a required offer to purchase made by us or any of our restricted
subsidiaries) which is conditioned upon a change of control of us
pursuant to provisions substantially similar to those contained in the
indenture described under "-- Change of Control" below and (iii) any
indebtedness incurred to refund any indebtedness is incurred by the
obligor on the indebtedness being refunded or by us;
provided, further, that clause (b) of the immediately preceding proviso shall
not apply to any indebtedness incurred to refinance term loans under the credit
agreement outstanding on June 21, 2000 or to subsequent refinancings of any such
refinancing indebtedness;
(6) commodity agreements of ours or of any of our restricted
subsidiaries to the extent entered into to protect us and our restricted
subsidiaries from fluctuations in the prices of raw materials used in their
businesses;
(7) indebtedness of ours under the exchange notes and indebtedness of
the guarantors under the guarantees incurred in accordance with the
indenture;
(8) indebtedness issued or outstanding on June 21, 2000 (including (a)
indebtedness under clause (13) below and (b) indebtedness consisting of
term loans under the credit agreement outstanding on June 21, 2000 and
excluding indebtedness consisting of revolving loans under the credit
agreement outstanding on June 21, 2000;
(9) guarantees by us or our restricted subsidiaries of indebtedness
otherwise permitted to be incurred hereunder;
(10) indebtedness the net proceeds of which are applied to defease the
notes in their entirety;
(11) indebtedness of ours or of any of our subsidiaries that is an
endorsement of bank drafts and similar negotiable instruments for
collection or deposit in the ordinary course of business;
(12) indebtedness incurred by us or by any of our restricted
subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other indebtedness with respect to reimbursement-type
obligations regarding workers' compensation claims or self-insurance and
obligations in respect of performance and surety bonds and completion
guarantees provided by us or any of our restricted subsidiaries in the
ordinary course of business not in excess of $10.0 million at any time
outstanding; and
(13) indebtedness of ours or of our restricted subsidiaries not
otherwise permitted to be incurred pursuant to clauses (1) through (12)
above which, together with any other outstanding indebtedness incurred
pursuant to this clause (13), has an aggregate principal amount not in
excess of $40.0 million at any time outstanding, which indebtedness may be
incurred under the credit agreement or otherwise.
For purposes of determining compliance with this covenant, in the event
than an item of indebtedness meets the criteria of more than one of the
categories of indebtedness described in clauses (1) through (14) above, we
shall, in our sole discretion, classify such item of indebtedness in any manner
that complies with this covenant and such item of indebtedness will be treated
as having been incurred pursuant to only one of such clauses. In addition, we
may, at any time, change the classification of an item of indebtedness (or any
portion thereof) to any other clause; provided that we would be permitted to
incur such item of indebtedness (or such portion thereof) pursuant to such other
clause at such time of reclassification. Accrual of interest, accretion or
amortization of original issue discount will not be deemed to be an incurrence
of indebtedness for purposes of this covenant.
30
LIMITATION ON RESTRICTED PAYMENTS
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, directly or indirectly,
(1) declare or pay any dividend, or make any distribution of any kind
or character (whether in cash, property or securities), on or in respect of
any class of our capital stock or that of any of our restricted
subsidiaries excluding any (a) dividends or distributions payable solely in
shares of our capital stock (other than disqualified stock) or in options,
warrants or other rights to acquire our capital stock (other than
disqualified stock), or (b) in the case of any of our restricted
subsidiaries, dividends or distributions payable to us or to any of our
restricted subsidiaries or to the extent payable on a pro rata basis to all
holders of capital stock of such restricted subsidiary,
(2) purchase, redeem, or otherwise acquire or retire for value shares
of our capital stock or that of any of our restricted subsidiaries, any
options, warrants or rights to purchase or acquire shares of our capital
stock or that of any of our restricted subsidiaries or any securities
convertible or exchangeable into shares of our capital stock or that of any
of our restricted subsidiaries, excluding any such shares of capital stock,
options, warrants, rights or securities which are owned by us or any of our
restricted subsidiaries,
(3) make any investment in (other than a permitted investment), or
make any payment on a guarantee of any obligation of, any person, other
than us or any of our direct or indirect wholly owned subsidiaries, or
(4) redeem, defease, repurchase, retire or otherwise acquire or retire
for value, prior to any scheduled maturity, repayment or sinking fund
payment, subordinated indebtedness (each of the transactions described in
clauses (1) through (4) (other than any exception to any such clause) being
a "restricted payment"),
if at the time thereof:
(1) a default or an event of default shall have occurred and be
continuing, or
(2) upon giving effect to such restricted payment, we could not incur
at least $1.00 of additional indebtedness pursuant to the terms of the
indenture described in clause (1) of "-- Limitation on Indebtedness" above,
or
(3) upon giving effect to such restricted payment, the aggregate of
all restricted payments made on or after the issue date exceeds the sum of:
(a) 50% of our cumulative consolidated net income (or, in the case
our cumulative consolidated net income shall be negative, less 100% of
such deficit) since June 21, 2000, plus
(b) 100% of the aggregate net proceeds received after June 21,
2000, including the fair market value of property other than cash
(determined in good faith by our board of directors as evidenced by a
resolution of such board of directors filed with the trustee) from the
issuance of, or equity contribution with respect to, our capital stock
(other than disqualified stock) and warrants, rights or options on our
capital stock (other than disqualified stock) (other than in respect of
any such issuance to any of our restricted subsidiaries) and the
principal amount of indebtedness of ours or of any of our restricted
subsidiaries that has been converted into or exchanged for our capital
stock which indebtedness was incurred after June 21, 2000, plus
(c) 100% of the aggregate after-tax net cash proceeds of the sale
or other disposition of any investment constituting a restricted payment
made after June 21, 2000; provided that any gain on the sale or
disposition to the extent included in this clause (c) shall not be
included in determining consolidated net income for purposes of clause
(a) above; provided, further, that amounts included in this clause (c)
shall not exceed the net investment by us in the asset so sold or
disposed.
31
The foregoing provision will not be violated by:
(1) any dividend on any class of our capital stock or that of any of
our restricted subsidiaries paid within 60 days after the declaration
thereof if, on the date when the dividend was declared, we or such
restricted subsidiary, as the case may be, could have paid such dividend in
accordance with the provisions of the indenture;
(2) the renewal, extension, refunding or refinancing of any
indebtedness otherwise permitted pursuant to the terms of the indenture
described in clause (5) of "-- Limitation on Indebtedness" above;
(3) the exchange or conversion of any indebtedness of ours or of any
of our restricted subsidiaries for or into our capital stock (other than
disqualified stock):
(4) so long as no default or event of default has occurred and is
continuing, any investment made with the proceeds of a substantially
concurrent sale (other than in respect of any issuance to any of our
restricted subsidiaries) for cash of our capital stock (other than
disqualified stock); provided, however, that the proceeds of such sale of
capital stock, to the extent used in any such investment, shall not be (and
have not been) included in subclause (b) of clause (3) of the preceding
paragraph;
(5) the redemption, repurchase, retirement or other acquisition of any
our capital stock in exchange for or out of the net cash proceeds of a
substantially concurrent sale (other than to any of our restricted
subsidiaries) of our capital stock (other than disqualified stock);
provided, however, that the proceeds of such sale of capital stock, to the
extent used for such redemption, repurchase, retirement or other
acquisition or retirement, shall not be (and have not been) included in
subclause (b) of clause (3) of the preceding paragraph;
(6) payments made by us in an aggregate amount not to exceed $237.0
million to acquire shares of our capital stock as part of our 2000
recapitalization;
(7) payments made to purchase, redeem or otherwise acquire or retire
for value shares of our capital stock or that of any of our restricted
subsidiaries at no more than fair market value (determined in good faith by
our board of directors as evidenced by a resolution of such board of
directors filed with the trustee) from our present and former employees and
directors or those of any such restricted subsidiary in an amount not in
excess of up to $5.0 million for each fiscal year and $15.0 million in the
aggregate, in each case net of the aggregate net cash proceeds received
from such persons after June 21, 2000 from the issuance of, or equity
contributions with respect to, our capital stock (other than disqualified
stock) and warrants, rights or options on our capital stock (other than
disqualified stock);
(8) so long as no default or event of default has occurred and is
continuing, the redemption, repurchase or retirement of our subordinated
indebtedness in exchange for, by conversion into, or out of the net
proceeds of, a substantially concurrent sale or incurrence of subordinated
indebtedness (other than any indebtedness owed to a subsidiary) of ours
that is contractually subordinated in right of payment to the notes to at
least the same extent, and which has an average life at least as long, in
each case, as the subordinated indebtedness being redeemed, repurchased or
retired;
(9) so long as no default or event of default has occurred and is
continuing, investments not otherwise permitted pursuant to this covenant
up to $15.0 million in the aggregate;
(10) so long as no default or event of default has occurred and is
continuing, restricted payments not otherwise permitted pursuant to this
covenant up to $10.0 million in the aggregate;
(11) any permitted investment; and
(12) so long as no default or event of default has occurred and is
continuing, investments in any person the primary business of which is
located outside the United States and is related, ancillary or
complementary to our business or that of our restricted subsidiaries,
provided that the aggregate amount of investments pursuant to this clause
does not exceed $25.0 million.
32
Each restricted payment described in clauses (1) (to the extent not already
taken into account for purposes of computing the aggregate amount of all
restricted payments pursuant to clause (3) of the preceding paragraph), (4),
(7), (9), (10) and (12) of this paragraph shall be taken into account for
purposes of computing the aggregate amount of all restricted payments pursuant
to clause (3) of the preceding paragraph.
The indenture provides that for purposes of this covenant:
(1) an "investment" shall be deemed to have been made at the time any
restricted subsidiary is designated as an unrestricted subsidiary in an
amount (proportionate to our equity interest in such subsidiary) equal to
the net worth of such restricted subsidiary at the time that such
restricted subsidiary is designated as an unrestricted subsidiary ("net
worth" to be calculated based upon the fair market value of the assets of
such subsidiary as of any such date of designation);
(2) at any date the aggregate of all restricted payments made as
investments since June 21, 2000 shall exclude and be reduced by an amount
(proportionate to our equity interest in such subsidiary) equal to the net
worth of an unrestricted subsidiary at the time that such unrestricted
subsidiary is designated a restricted subsidiary, not to exceed, in the
case of any such redesignation of an unrestricted subsidiary as a
restricted subsidiary, the amount of investments previously made by us and
the restricted subsidiaries in such unrestricted subsidiary ("net worth" to
be calculated based upon the fair market value of the assets of such
subsidiary as of any such date of designation); and
(3) any property transferred to or from an unrestricted subsidiary
shall be valued at its fair market value at the time of such transfer.
LIMITATIONS CONCERNING DISTRIBUTIONS AND TRANSFERS BY RESTRICTED SUBSIDIARIES
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist any consensual encumbrance or restriction on the ability of any
of our restricted subsidiaries to:
(a) pay, directly or indirectly, dividends or make any other
distributions in respect of its capital stock or pay any indebtedness or
other obligation owed to us or any of our restricted subsidiaries;
(b) make loans or advances to us or any of our restricted
subsidiaries; or
(c) transfer any of its property or assets to us or any of our
restricted subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(1) any agreement in effect on June 21, 2000 as any such agreement
is in effect on such date;
(2) the credit agreement;
(3) any agreement relating to any indebtedness incurred by such
restricted subsidiary prior to the date on which such restricted
subsidiary was acquired by us and outstanding on such date and not
incurred in anticipation or contemplation of becoming a restricted
subsidiary and provided such encumbrance or restriction shall not apply
to any of our assets or assets of our restricted subsidiaries other than
such restricted subsidiary;
(4) customary provisions contained in an agreement which has been
entered into for the sale or disposition of all or substantially all of
the capital stock or assets of a restricted subsidiary; provided,
however, that such encumbrance or restriction is applicable only to such
restricted subsidiary or assets;
(5) an agreement effecting a renewal, exchange, refunding,
amendment or extension of indebtedness incurred pursuant to an agreement
referred to in clause (1) or (3) above; provided, however, that the
provisions contained in such renewal, exchange, refunding, amendment or
extension agreement relating to such encumbrance or restriction are no
more restrictive in any material respect than the provisions contained
in the agreement that is the subject thereof in the
33
reasonable judgment of our board of directors as evidenced by a
resolution of such board of directors filed with the trustee;
(6) the indenture;
(7) applicable law;
(8) customary provisions restricting subletting or assignment of
any lease governing any leasehold interest of any of our restricted
subsidiaries;
(9) restrictions contained in indebtedness permitted to be incurred
subsequent to June 21, 2000 pursuant to the provisions of the covenant
described under "-- Limitation on Indebtedness"; provided that any such
restrictions are ordinary and customary with respect to the type of
indebtedness incurred;
(10) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the type
referred to in clause (c) of this covenant; or
(11) restrictions of the type referred to in clause (c) of this
covenant contained in security agreements securing indebtedness of any
of our restricted subsidiaries to the extent that such liens were
otherwise incurred in accordance with "-- Limitation on Liens" below and
restrict the transfer of property subject to such agreements.
LIMITATION ON LIENS
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, incur any lien on or with respect to any property or
assets of ours or such restricted subsidiary owned on June 21, 2000 or
thereafter acquired or on the income or profits thereof to secure indebtedness,
without making, or causing any such restricted subsidiary to make, effective
provision for securing the notes and all other amounts due under the indenture
(and, if we shall so determine, any other indebtedness of ours or such
restricted subsidiary, including subordinated indebtedness; provided, however,
that liens securing the notes and any indebtedness pari passu with the notes are
senior to such liens securing such subordinated indebtedness) equally and
ratably with such indebtedness or, in the event such indebtedness is subordinate
in right of payment to the notes or the guarantee, prior to such indebtedness,
as to such property or assets for so long as such indebtedness shall be so
secured.
The foregoing restrictions do not apply to:
(1) liens existing on June 21, 2000 securing indebtedness existing on
June 21, 2000;
(2) liens securing senior debt (including liens securing indebtedness
outstanding under the credit agreement) and any guarantees thereof or
indebtedness under any interest rate hedge or exchange or other similar
agreement to the extent entered into to hedge any floating rate
indebtedness permitted under the indenture, in each case to the extent that
the indebtedness secured thereby is permitted to be incurred under the
covenant described under "-- Limitation on Indebtedness" above; provided,
however, that indebtedness under the credit agreement shall be deemed not
to have been incurred in violation of such provisions for purposes of this
clause (2) if the holder(s) of such indebtedness or their agent or
representative shall have received a representation from us to the effect
that the incurrence of such indebtedness does not violate such provision;
(3) liens securing only the notes and the guarantees;
(4) liens in favor of us or a guarantor;
(5) liens to secure indebtedness incurred for the purpose of financing
all or any part of the purchase price or the cost of construction or
improvement of the property (or any other capital expenditure financing)
subject to such liens; provided, however, that (a) the aggregate principal
amount of any indebtedness secured by such a lien does not exceed 100% of
such purchase price or cost, (b) such lien does not extend to or cover any
other property other than such item of property and any improvements on
34
such item, (c) the indebtedness secured by such lien is incurred by us
within 180 days of the acquisition, construction or improvement of such
property and (d) the incurrence of such indebtedness is permitted by the
provisions of the indenture described under "-- Limitation on Indebtedness"
above;
(6) liens on property existing immediately prior to the time of
acquisition thereof (and not created in anticipation or contemplation of
the financing of such acquisition);
(7) liens on property of a person existing at the time such person is
acquired or merged with or into or consolidated with us or any such
restricted subsidiary (and not created in anticipation or contemplation
thereof);
(8) liens to secure indebtedness incurred to extend, renew, refinance
or refund (or successive extensions, renewals, refinancings or refundings),
in whole or in part, any indebtedness secured by liens referred to in
clauses (1) through (7), (9) through (12) and (14) of this paragraph so
long as such liens do not extend to any other property and the principal
amount of indebtedness so secured is not increased except for the amount of
any premium required to be paid in connection with such renewal,
refinancing or refunding pursuant to the terms of the indebtedness renewed,
refinanced or refunded or the amount of any premium reasonably determined
by us as necessary to accomplish such renewal, refinancing or refunding by
means of a tender offer, exchange offer or privately negotiated repurchase,
plus the expenses of the issuer of such indebtedness reasonably incurred in
connection with such renewal, refinancing or refunding;
(9) liens in favor of the trustee as provided for in the indenture on
money or property held or collected by the trustee in its capacity as
trustee;
(10) liens securing a tax, assessment or other governmental charge or
levy or the claim of a materialman, mechanic, carrier, warehouseman or
landlord for labor, materials, supplies or rentals incurred in the ordinary
course or business;
(11) liens consisting of a deposit or pledge made in the ordinary
course of business in connection with, or to secure payment of, obligations
under workers compensation, unemployment insurance or similar legislation;
(12) liens arising pursuant to an order of attachment, distraint or
similar legal process arising in connection with legal proceedings; and
(13) liens incurred in the ordinary course of business securing assets
not having a fair market value in excess of $5.0 million.
LIMITATION ON CERTAIN ASSET DISPOSITIONS
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, directly or indirectly, make one or more asset
dispositions unless:
(1) we or such restricted subsidiary, as the case may be, receive
consideration for such asset disposition at least equal to the fair market
value of the assets sold or disposed of as determined by our board of
directors in good faith amid evidenced by a resolution of such board of
directors filed with the trustee;
(2) not less than 75% of the consideration for the disposition
consists of (a) cash or readily marketable securities or the assumption of
indebtedness (other than non-recourse indebtedness or any subordinated
indebtedness) of ours or such restricted subsidiary or other obligations
relating to such assets (and release of us or of such restricted subsidiary
from all liability on the indebtedness or other obligations assumed) or (b)
assets which constitute or are part of businesses which are related to our
business or that of our restricted subsidiaries as of June 21, 2000 or
which assets consist of the issued and outstanding capital stock of a
person (which becomes a restricted subsidiary as a result of the
transaction) the assets of which are principally comprised of such assets;
and
35
(3) all net available proceeds, less any amounts invested within 360
days of such asset disposition in assets related to our business or that of
our restricted subsidiaries (including in the capital stock of another
person (other than any person that is our restricted subsidiary immediately
prior to such investment); provided, however, that immediately after giving
effect to any such investment in capital stock (and not prior thereto) such
person shall be our restricted subsidiary), (a) are applied, on or prior to
the 360th day after such asset disposition, unless and to the extent that
we shall determine to make an offer to purchase, to the permanent reduction
and prepayment of any senior debt of ours or of any of our subsidiaries
then outstanding (including a permanent reduction of commitments in respect
thereof) or (b) are committed to the repayment, on a date no later than
substantially concurrently with the consummation of an offer to purchase,
of any indebtedness which is pari passu in right of payment with the notes
on a pro rata basis with the notes.
Any net available proceeds from any asset disposition which is subject to
the preceding paragraph that are not applied or committed as provided in the
preceding paragraph shall be used promptly after the expiration of the 360th day
after such asset disposition, or promptly after we shall have earlier determined
to not apply any net available proceeds therefrom as provided in clause (3) of
the preceding paragraph, to make an offer to purchase outstanding notes at a
purchase price in cash equal to 100% of their principal amount plus accrued
interest to the purchase date.
Notwithstanding the foregoing, we may defer making any offer to purchase
outstanding notes until there are aggregate unutilized net available proceeds
from asset dispositions otherwise subject to the two immediately preceding
sentences equal to or in excess of $15.0 million (at which time, the entire
unutilized net available proceeds from asset dispositions otherwise subject to
the two preceding paragraphs, and not just the amount in excess of $15.0
million, shall be applied as required pursuant to this covenant).
Any remaining net available proceeds following the completion of the
required offer to purchase (and any concurrent offer to repurchase pari passu
indebtedness) may be used by us for any other purpose (subject to the other
provisions of the indenture) and the amount of net available proceeds then
required to be otherwise applied in accordance with this covenant shall be reset
to zero, subject to any subsequent asset disposition. These provisions will not
apply to a transaction consummated in compliance with the provisions of the
indenture described under "-- Mergers, Consolidations and Certain Sales of
Assets" below.
In the event that we make an offer to purchase the notes, we shall comply
with any applicable securities laws and regulations, including any applicable
requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange Act.
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS
The indenture provides that we will not:
(1) directly or indirectly incur any indebtedness that by its terms
would expressly rank senior in right of payment to the notes and expressly
rank subordinate in right of payment to any senior debt and
(2) permit a guarantor to, and no guarantor will, directly or
indirectly incur any indebtedness that by its terms would expressly rank
senior in right of payment to the guarantee of such guarantor and expressly
rank subordinate in right of payment to any senior debt of such guarantor.
LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to transfer, convey, sell or otherwise dispose of any
shares of capital stock of any of our restricted subsidiaries, except:
(1) to us or to a wholly owned subsidiary;
(2) issuances of director's qualifying shares or sales to foreign
nationals of shares of capital stock of foreign restricted subsidiaries, to
the extent required by applicable law;
36
(3) if immediately after giving effect to such issuance or sale, such
restricted subsidiary would no longer constitute a restricted subsidiary
and any investment in such person remaining after giving effect to such
issuance or sale would have been permitted to be made under the "Limitation
on Restricted Payments" covenant if made on the date of such issuance or
sale; or
(4) issuances or sales of common stock of a restricted subsidiary,
provided that we apply or such restricted subsidiary applies the net
available proceeds, if any, of any such sale in accordance with the
provisions of the "Limitation on Certain Asset Dispositions" covenant
described above.
LIMITATION ON TRANSACTIONS WITH AFFILIATES AND RELATED PERSONS
The indenture provides that we will not, and will not permit any of our
restricted subsidiaries to, enter into directly or indirectly any transaction
with any of our respective affiliates or related persons (other than us or any
of our restricted subsidiaries), including, without limitation, the purchase,
sale, lease or exchange of property, the rendering of any service, or the making
of any guarantee, loan, advance or investment, either directly or indirectly,
involving aggregate consideration in excess of $2.0 million unless a majority of
the disinterested directors of our board of directors determines, in its good
faith judgment evidenced by a resolution of such board of directors filed with
the trustee, that the terms of such transaction are at least as favorable as the
terms that could be obtained by us or such restricted subsidiary, as the case
may be, in a comparable transaction made on an arm's-length basis between
unaffiliated parties; provided, however, that if the aggregate consideration is
in excess of $20.0 million we shall also obtain, prior to the consummation of
the transaction, the favorable opinion as to the fairness of the transaction to
us or such restricted subsidiary, from a financial point of view from an
independent financial advisor.
The provisions of this covenant shall not apply to:
(1) transactions permitted by the provisions of the indenture
described above under the caption "-- Limitation on Restricted Payments"
above; and
(2) reasonable fees and compensation paid to, and indemnity provided
on behalf of our officers, directors and employees and those of our
restricted subsidiaries as determined in good faith by our board of
directors or our authorized executive officers, as the case may be.
CHANGE OF CONTROL
Within 30 days following the date of the consummation of a transaction
resulting in a change of control, we will commence an offer to purchase all
outstanding notes at a purchase price in cash equal to 101% of their principal
amount plus accrued interest to the purchase date. Such offer to purchase will
be consummated not earlier than 30 days and not later than 60 days after the
commencement thereof. Each holder shall be entitled to tender all or any portion
of the notes owned by such holder pursuant to the offer to purchase, subject to
the requirement that any portion of a note tendered must bear an integral
multiple of $1,000 principal amount.
A "change of control" will be deemed to have occurred in the event that
(whether or not otherwise permitted by the indenture), after June 21, 2000:
(1) any person or any persons acting together that would constitute a
group (for purposes of Section 13(d) of the Exchange Act, or any successor
provision thereto) (a "group"), together with any affiliates or related
persons thereof, other than any such person, persons. affiliates or related
person who are permitted holders, shall "beneficially own" (as defined in
Rule l3d-3 under the Exchange Act, or any successor provision thereto),
directly or indirectly, at least (a) 50% of the voting power of our
outstanding voting stock or (b) 40% of the voting power of our outstanding
voting stock and in the case of clause (b) the permitted holders own less
than such person or group (in doing the "own less than" comparison in this
clause (b), the holdings of the permitted holders who are members of the
new group shall not be counted in the shares held in the aggregate by
permitted holders); provided that in no event shall a "governance change",
within the meaning of the amended and restated limited liability company
agreement of Tekni-Plex Partners and the limited liability company
agreement of MST/TP Partners, in each case as in effect on June 21, 2000,
be deemed to be a change of control under the indenture;
37
(2) any sale, lease or other transfer (in one transaction or a series
of related transactions) is made by us or any of our restricted
subsidiaries of all or substantially all of the consolidated assets of us
and our restricted subsidiaries to any person;
(3) we consolidate with or merge with or into another person or any
person consolidates with, or merges with or into, us, in any such event
pursuant to a transaction in which immediately after the consummation
thereof persons owning a majority of our voting stock immediately prior to
such consummation shall cease to own a majority of our voting stock, or, if
we are not the surviving entity, a majority of the voting stock of such
surviving entity;
(4) continuing directors cease to constitute at least a majority of
our board of directors; or
(5) our stockholders approve any plan or proposal for our liquidation
or dissolution.
In no event would the sale of our common stock to an underwriter or a group
of underwriters in privity of contract with us (or anybody in privity of
contract with such underwriters) be deemed to be a change of control or be
deemed the acquisition of more than 40% of the voting power of our outstanding
voting stock by a person or any group unless such common stock is not held in an
investment account in which case the investment account would be treated without
giving effect to the foregoing part of this sentence.
The indenture will acknowledge that, prior to the mailing of a notice to
each holder regarding the offer to purchase, but in any event within 30 days
following the date on which a change of control occurs, we will be obligated
under the credit agreement as in effect on June 21, 2000 to:
(1) repay in full all indebtedness under the credit agreement (and
terminate all such commitments) or offer to repay in full all such
indebtedness (and terminate all such commitments) and to repay the
indebtedness owed to (and terminate the commitments of) each lender which
has accepted such offer; or
(2) obtain the requisite consents under the credit agreement to permit
the repurchase of the notes as provided below.
We will first comply with our obligations described in the preceding
sentence before it will be required to offer to repurchase notes pursuant to the
provisions described below, provided that nothing in the preceding paragraph or
this paragraph shall eliminate our obligation to consummate an offer to purchase
the notes within 90 days of the consummation of a transaction resulting in a
change of control.
In the event that we make an offer to purchase the notes, we shall comply
with any applicable securities laws and regulations, including any applicable
requirements of Section 14(e) of, and Rule 14e-1 under, the Exchange Act.
With respect to the sale of assets referred to in the definition of "change
of control," the phrase "all or substantially all" of our assets will likely be
interpreted under applicable law and will be dependent upon particular facts and
circumstances. As a result, there may be a degree of uncertainty in ascertaining
whether a sale or transfer of "all or substantially all" of our assets has
occurred. In addition, no assurances can be given that we will be able to
acquire notes tendered upon the occurrence of a change of control. Our ability
to pay cash to the holders of notes upon a change of control may be limited by
its then existing financial resources. The credit agreement will contain certain
covenants prohibiting, or requiring waiver or consent of the lenders thereunder
prior to, the repurchase of the notes upon a change of control and our future
debt agreements may provide the same. If we do not obtain such waiver or consent
to repay such indebtedness, we will remain prohibited from repurchasing the
notes. In such event, our failure to purchase tendered notes would constitute an
event of default under the indenture (without any further grace period) which
would in turn constitute a default under the credit agreement and possibly other
indebtedness. If such a cross-default leads to an acceleration of the
obligations under the credit agreement or any other senior debt, the payment on
the notes would be effectively subordinated to any such senior debt. None of the
provisions relating to a repurchase upon a change of control are waivable by our
board of directors or the trustee.
The foregoing provisions will not prevent us from entering into
transactions of the types described above with management or their affiliates.
In addition, such provisions may not necessarily afford the holders of the
38
notes protection in the event of a highly leveraged transaction, including a
reorganization, restructuring, merger or similar transaction involving us that
may adversely affect the holders because such transactions may not involve a
shift in voting power or beneficial ownership, or even if they do, may not
involve a shift of the magnitude required under the definition of change of
control to trigger the provisions. Nonetheless, such provisions may have the
effect of deterring certain mergers, tender offers, takeover attempts or similar
transactions by increasing the cost of such a transaction and may limit our
ability to obtain additional equity financing in the future.
FUTURE GUARANTORS
The indenture provides that we shall not create or acquire, nor permit any
of its domestic restricted subsidiaries to create or acquire, any domestic
restricted subsidiary after June 21, 2000 unless, at the time such domestic
restricted subsidiary has either assets or stockholder's equity in excess of
$25,000, such domestic restricted subsidiary:
(1) executes and delivers to the trustee a supplemental indenture in
form reasonably satisfactory to the trustee pursuant to which such domestic
restricted subsidiary shall unconditionally guarantee all of our
obligations under the notes and the indenture on the terms set forth in the
indenture; and
(2) delivers to the trustee an opinion of counsel that such
supplemental indenture has been duly authorized, executed and delivered by
such domestic restricted subsidiary and constitutes a legal, valid, binding
and enforceable obligation of such domestic restricted subsidiary.
PROVISION OF FINANCIAL INFORMATION
Whether or not we are subject to Section 13(a) or 15(d) of the Exchange
Act, or any successor provision thereto, we shall file with the SEC the annual
reports, quarterly reports and other documents which we would have been required
to file with the SEC pursuant to such Section 13(a) or 15(d) or any successor
provision thereto if we were so required, such documents to be filed with the
SEC on or prior to the respective dates (the "required filing dates") by which
we would have been required so to file such documents if we were so required.
We shall also in any event:
(1) within 15 days of each required filing date (a) transmit or cause
to be transmitted by mail to all holders of notes, as their names and
addresses appear in the note register, without cost to such holders, and
(b) file with the trustee, copies of the annual reports, quarterly reports
and other documents which we are required to file with the SEC pursuant to
the preceding sentence; and
(2) if, notwithstanding the preceding sentence, filing such documents
by us with the SEC is not permitted under the Exchange Act, promptly upon
written request supply copies of such documents to any prospective holder
of notes.
MERGERS, CONSOLIDATIONS AND CERTAIN SALES OF ASSETS
We will not consolidate or merge with or into any person, or sell, assign,
lease, convey or otherwise dispose of (or cause or permit any of our restricted
subsidiaries to consolidate or merge with or into any person or sell, assign,
lease, convey or otherwise dispose of) all or substantially all of our assets
(determined on a consolidated basis for us and our restricted subsidiaries),
whether as an entirety or substantially an entirety in one transaction or a
series of related transactions, including by way of liquidation or dissolution,
to any person unless, in each such case:
(1) the entity formed by or surviving any such consolidation or merger
(if other than us or such restricted subsidiary, as the case may be), or to
which such sale, assignment, lease, conveyance or other disposition shall
have been made (the "surviving entity"), is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia;
39
(2) if there is a surviving entity, the surviving entity assumes by
supplemental indenture all of our obligations (or in the case a restricted
subsidiary is the surviving entity, the obligations of such restricted
subsidiary) on the notes and under the indenture;
(3) immediately after giving effect to such transaction and the use of
any net proceeds therefrom on a pro forma basis, we or the surviving
entity, as the case may be:
(a) shall have a consolidated net worth equal to or greater than
our consolidated net worth immediately prior to such transaction; and
(b) could incur at least $1.00 of indebtedness pursuant to clause
(1) of the provisions of the indenture described under "-- Limitation on
Indebtedness" above.
(4) immediately before and after giving effect to such transaction and
treating any indebtedness which becomes an obligation of ours or of any of
such restricted subsidiaries as a result of such transaction as having been
incurred by us or such restricted subsidiary, as the case may be, at the
time of the transaction, no default or event of default shall have occurred
and be continuing; and
(5) if, as a result of any such transaction, our property or assets or
those of any of our restricted subsidiaries would become subject to a lien
not excepted from the provisions of the indenture described under
"-- Limitation on Liens" above, we, such Restricted Subsidiary or the
Surviving Entity, as the case may be, shall have secured the notes as
required by said covenant.
The provisions of the foregoing paragraph shall not apply to any merger of
any of our restricted subsidiaries with or into us or any of our wholly owned
subsidiaries or any transaction pursuant to which a guarantor, is to be released
in accordance with the terms of the guarantee and the indenture in connection
with any transaction complying with the provisions of the indenture described
under "-- Limitation on Certain Asset Dispositions" above.
EVENTS OF DEFAULT
The following are events of default under the indenture:
(1) failure to pay principal of (or premium, if any, on) any note when
due (whether or not prohibited by the provisions of the indenture described
under "-- Ranking" above);
(2) failure to pay any interest on any note when due, and the default
continues for 30 days (whether or not prohibited by the provisions of the
indenture described under "-- Ranking" above);
(3) default in the payment of principal of and interest on notes
required to be purchased pursuant to an offer to purchase as described
under "-- Covenants -- Change of Control" and "-- Covenants -- Limitation
on Certain Asset Dispositions" above when due and payable (whether or not
prohibited by the provisions of the indenture described under "-- Ranking"
above);
(4) failure to perform or comply with any of the provisions described
under "-- Covenants -- Mergers, Consolidations and Certain Sales of Assets"
above;
(5) failure to perform any other covenant or agreement of ours under
the indenture or the notes and the default continues for 60 days after
written notice to us by the trustee or holders of at least 25% in aggregate
principal amount of outstanding notes;
(6) default under the terms of one or more instruments evidencing or
securing indebtedness of ours or of any of our restricted subsidiaries
having an outstanding principal amount of $20 million or more individually
or in the aggregate that has resulted in the acceleration of the payment of
such indebtedness or failure to pay principal when due at the stated
maturity of any such indebtedness;
(7) the rendering of a final judgment or judgments (not subject to
appeal) against us or any of our restricted subsidiaries in an amount of
$10 million or more which remains undischarged or unstayed for a period of
60 days after the date on which the right to appeal has expired;
40
(8) certain events of bankruptcy, insolvency or reorganization
affecting us or any of our material subsidiaries; and
(9) any guarantee ceases to be in full force and effect or is declared
null and void and unenforceable or is found to be invalid or a guarantor
denies its liability under the guarantee (other than by reason of a release
of such guarantor from the guarantee in accordance with the terms of the
indenture and the guarantee).
If an event of default (other than an event of default with respect to us
described in clause (8) of the preceding paragraph) shall occur and be
continuing, either the trustee or the holders of at least 25% in aggregate
principal amount of the outstanding notes may accelerate the maturity of all
notes; provided, however, that after such acceleration, but before a judgment or
decree based on acceleration, the holders of a majority in aggregate principal
amount of outstanding notes may, under certain circumstances, rescind and annul
such acceleration if all events of default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the indenture;
and provided, further, that so long as the credit agreement shall be in full
force and effect, if an event of default shall have occurred and be continuing
(other than as specified under clause (8) above), the notes shall not become due
and payable until the earlier to occur of (x) five business days following
delivery of a written notice of such acceleration of the notes to the agent
under the credit agreement, if such event of default has not been cured prior to
such fifth business day, and (y) the acceleration of any indebtedness under the
credit agreement. If an event of default specified in clause (8) of the
preceding paragraph with respect to us occurs, the outstanding notes will ipso
facto become immediately due and payable without any declaration or other act on
the part of the trustee or any holder. For information as to waiver of defaults,
see "-- Modification and Waiver."
The indenture provides that the trustee shall, within 30 days after the
occurrence of any default or event of default with respect to the notes, give
the holders thereof notice of all uncured defaults or events of default known to
it; provided, however, that, except in the case of an event of default or a
default in payment with respect to the notes or a default or event of default in
complying with "-- Covenants -- Mergers, Consolidations and Certain Sales of
Assets," the trustee shall be protected in withholding such notice if and so
long as the board of directors or responsible officers of the trustee in good
faith determine that the withholding of such notice is in the interest of the
holders of the notes.
No holder of any note will have any right to institute any proceeding with
respect to the indenture or for any remedy thereunder, unless such holder shall
have previously given to the trustee written notice of a continuing event of
default and unless the holders of at least 25% in aggregate principal amount of
the outstanding notes shall have made written request, and offered reasonable
indemnity, to the trustee to institute such proceeding as trustee, and the
trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a holder of a
note for enforcement of payment of the principal of and premium, if any, or
interest on such note on or after the respective due dates expressed in such
note.
We are required to furnish to the trustee annually a statement as to its
performance of certain of its obligations under the indenture and as to any
default in such performance.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
We may terminate our substantive obligations and the substantive
obligations of the guarantors in respect of the notes and the guarantees by
delivering all outstanding notes to the trustee for cancellation and paying all
sums payable by us on account of principal of, premium, if any, and interest on
all notes or otherwise. In addition to the foregoing, we may, provided that no
default or event of default has occurred and is continuing or would arise
therefrom (or, with respect to a default or event of default specified in clause
(8) of "-- Events of Default" above, any time on or prior to the 91st calendar
day after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until after such 91st day)) and provided that no
default under any senior debt would result therefrom, terminate our substantive
obligations and the substantive obligations of the guarantors in respect of the
notes and the guarantees (except for our obligation
41
to pay the principal of (and premium, if any, on) and the interest on the notes
and such guarantors's guarantee thereof) by:
(1) depositing with the trustee, under the terms of an irrevocable
trust agreement, money or United States government obligations sufficient
(without reinvestment) to pay all remaining indebtedness on the notes;
(2) delivering to the trustee either an opinion of counsel or a ruling
directed to the trustee from the Internal Revenue Service to the effect
that the holders of the notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and termination of
obligations;
(3) delivering to the trustee an opinion of counsel to the effect that
our exercise of our option under this paragraph will not result in us, the
trustee or the trust created by our deposit of funds pursuant to this
provision becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended; and
(4) complying with certain other requirements set forth in the
indenture.
In addition, we may, provided that no default or event of default has
occurred, and is continuing or would arise therefrom (or, with respect to a
default or event of default specified in clause (8) of "-- Events of Default"
above, any time on or prior to the 91st calendar day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until after such 91st day)) and provided that no default under any senior debt
would result therefrom, terminate all of our substantive obligations and all of
the substantive obligations of the guarantors in respect of the notes and the
guarantees (including our obligation to pay the principal of (and premium, if
any, on) and interest on the notes and such guarantor's guarantee thereof by:
(1) depositing with the trustee, under the terms of an irrevocable
trust agreement, money or United States Government obligations sufficient
(without reinvestment) to pay all remaining indebtedness on the notes;
(2) delivering to the trustee either a ruling directed to the trustee
from the Internal Revenue Service to the effect that the holders of the
notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations or an
opinion of counsel based upon such a ruling addressed to the trustee or a
change in the applicable federal tax law since the date of the indenture,
to such effect;
(3) delivering to the trustee an officers' certificate and an opinion
of counsel to the effect that our exercise of our option under this
paragraph will not result in us, the trustee or the trust created by our
deposit of funds pursuant to this provision becoming or being deemed to be
an "investment company" under the Investment Company Act of 1940, as
amended; and
(4) complying with certain other requirements set forth in the
indenture.
We may make an irrevocable deposit pursuant to this provision only if at
such time it is not prohibited from doing so under the subordination provisions
of the indenture or certain covenants in the instruments governing senior debt
and we have delivered to the trustee and any paying agent an officers's
certificate to that effect,
GOVERNING LAW
The indenture, the notes and the guarantees are governed by the laws of the
State of New York without regard to principles of conflicts of laws.
42
MODIFICATION AND WAIVER
Modifications and amendments of the indenture may be made by us and the
trustee with the consent of the holders of a majority in aggregate principal
amount of the outstanding notes; provided, however, that no such modification or
amendment may, without the consent of the holder of each note affected thereby:
(1) change the stated maturity of the principal of or any installment
of interest on any note or alter the optional redemption or repurchase
provisions of any note or the indenture in a manner adverse to the holders
of the notes;
(2) reduce the principal amount of (or the premium) of any note;
(3) reduce the rate of or extend the time for payment of interest on
any note;
(4) change the place or currency of payment of principal of (or
premium) or interest on any note;
(5) modify any provisions of the indenture relating to the waiver of
past defaults (other than to add sections of the indenture subject thereto)
or the right of the holders to institute suit for the enforcement of any
payment on or with respect to any note or the guarantee, or the
modification and amendment of the indenture and the notes (other than to
add sections of the indenture or the notes which may not be amended,
supplemented or waived without the consent of each holder affected);
(6) reduce the percentage of the principal amount of outstanding notes
necessary for amendment to or waiver of compliance with any provision of
the indenture or the notes or for waiver of any default;
(7) waive a default in the payment of principal of, interest on, or
redemption payment with respect to, any note (except a rescission of
acceleration of the notes by the holders as provided in the indenture and a
waiver of the payment default that resulted from such acceleration);
(8) modify the ranking or priority of the notes or the guarantee, or
modify the definition of senior debt or designated senior debt or amend or
modify the subordination provisions of the indenture in any manner adverse
to the holders;
(9) release the guarantors from any of their respective obligations
under the guarantee or the indenture otherwise than in accordance with the
indenture; or
(10) modify the provisions relating to any offer to purchase required
under the covenants described under "-- Covenants -- Limitation on Certain
Asset Dispositions" or "-- Covenants -- Change of Control" in a manner
materially adverse to the holders of notes with respect to any asset
disposition that has been consummated or change of control that has
occurred.
The holders of a majority in aggregate principal amount of the outstanding
notes, on behalf of all holders of notes, may waive compliance by us with
certain restrictive provisions of the indenture. Subject to certain rights of
the trustee, as provided in the indenture, the holders of a majority in
aggregate principal amount of the outstanding notes, on behalf of all holders of
notes, may waive any past default under the indenture, except a default in the
payment of principal, premium or interest or a default arising from failure to
purchase any note tendered pursuant to an offer to purchase, or a default in
respect of a provision that under the indenture cannot be modified or amended
without the consent of the holder of each outstanding note affected.
THE TRUSTEE
The indenture provides that, except during the continuance of a default,
the trustee will perform only such duties as are specifically set forth in the
indenture. During the existence of a default, the trustee will exercise such
rights and powers vested in it under the indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs. The indenture and
provisions of the Trust Indenture Act incorporated by reference therein contain
limitations on the rights of the trustee, should it become our creditor, the
guarantors, or any other obligor upon the notes, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claim as security or otherwise. The trustee is permitted to engage in other
transactions with us or
43
an affiliate of ours; provided, however, that if it acquires any conflicting
interest (as defined in the indenture or in the Trust Indenture Act), it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
indenture or the registration rights agreement. Reference is made to the
indenture or the registration rights agreement for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired indebtedness" means, with respect to any person, indebtedness of
such person (1) existing at the time such person becomes a restricted
subsidiary; (2) assumed in connection with the acquisition of assets from
another person; or (3) incurred in connection with, or in contemplation of, such
person becoming a restricted subsidiary or such acquisition, as the case may be.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with any specified person. For 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.
"Asset disposition" means any sale, transfer or other disposition
(including, without limitation, by merger, consolidation or sale-and-leaseback
transaction) of:
(1) shares of capital stock of any of our restricted subsidiaries
(other than directors' qualifying shares); or
(2) our property or assets or the property or assets of any of our
restricted subsidiaries other than in the ordinary course of business;
provided, however, that an asset disposition shall not include:
(a) any sale, transfer or other disposition of shares of capital
stock, property or assets by any of our restricted subsidiaries to us or to
any of our wholly owned subsidiaries;
(b) any sale, transfer or other disposition of defaulted receivables
for collection or any sale, transfer or other disposition of property or
assets in the ordinary course of business;
(c) any isolated sale, transfer or other disposition that does not
involve aggregate consideration in excess of $5 million individually;
(d) the grant in the ordinary course of business of any non-exclusive
license of patents, trademarks, registrations therefor and other similar
intellectual property;
(e) any lien (or foreclosure thereon) securing indebtedness to the
extent that such lien is granted in compliance with
"-- Covenants -- Limitation on Liens" above;
(f) any restricted payment permitted by "-- Covenants -- Limitation on
Restricted Payments" above;
(g) any disposition of assets or property in the ordinary course of
business to the extent such property or assets are obsolete, worn-out or no
longer useful in our business or that of any of our restricted
subsidiaries;
(h) the sale, lease, conveyance or disposition or other transfer of
all or substantially all of our assets as permitted under
"-- Covenants -- Mergers, Consolidations and Certain Sales of Assets"
above; provided, that the assets not so sold, leased, conveyed, disposed of
or otherwise transferred shall be deemed an asset disposition; or
(i) any disposition that constitutes a change of control.
44
"Average life" means, as of the date of determination, with respect to any
indebtedness for borrowed money or preferred stock, the quotient obtained by
dividing (1) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or liquidation
value payments of such indebtedness or preferred stock, respectively, and the
amount of such principal or liquidation value payments, by (2) the sum of all
such principal or liquidation value payments.
"Bankruptcy Code" means Title 11 of United States Code.
"Capital lease obligations" of any person means the obligations to pay rent
or other amounts under a lease of (or other indebtedness arrangements conveying
the right to use) real or personal property of such Person which are required to
be classified and accounted for as a capital lease or liability on the face of a
balance sheet of such Person in accordance with GAAP. The amount of such
obligations shall be the capitalized amount thereof 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 terminated by the lessee without payment of a penalty.
"Capital stock" of any person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such person.
"Common stock" of any person means capital stock of such person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such person, to shares of capital stock of any other class of such person.
"Consolidated cash flow available for fixed charges" of any person means
for any period the consolidated net income of such person for such period
increased (to the extent consolidated net income for such period has been
reduced thereby) by the sum of (without duplication):
(1) consolidated interest expense of such person for such period, plus
(2) consolidated income tax expense of such person for such period,
plus
(3) the consolidated depreciation and amortization expense included in
the income statement of such person prepared in accordance with GAAP for
such period, plus
(4) any other non-cash charges to the extent deducted from or
reflected in consolidated net income except for any non-cash charges that
represent accruals of, or reserves for, cash disbursements to be made in
any future accounting period.
"Consolidated cash flow ratio" of any person means for any period the ratio
of:
(1) consolidated cash flow available for fixed charges of such person
for such period, to
(2) the sum of:
(a) consolidated interest expense of such person for such period,
plus
(b) the annual interest expense with respect to any indebtedness
proposed to be incurred by such person or our restricted subsidiaries,
minus
(c) consolidated interest expense of such person to the extent
included in clause (2)(a) with respect to any indebtedness that will no
longer be outstanding as a result of the incurrence of the indebtedness
proposed to be incurred, plus
(d) the annual interest expense with respect to any other
indebtedness incurred by such person or our restricted subsidiaries
since the end of such period to the extent not included in clause
(2)(a), minus
(e) consolidated interest expense of such person to the extent
included in clause (2)(a) with respect to any indebtedness that no
longer is outstanding as a result of the incurrence of the indebtedness
referred to in clause (2)(d).
45
In making such computation, the consolidated interest expense of such
person attributable to interest on any indebtedness bearing a floating interest
rate shall be computed on a pro forma basis as if the rate in effect on the date
of computation (after giving effect to any hedge in respect of such indebtedness
that will, by its terms, remain in effect until the earlier of the maturity of
such indebtedness or the date one year after the date of such determination) had
been the applicable rate for the entire period.
In the event such person or any of its restricted subsidiaries has made any
asset dispositions or acquisitions of assets not in the ordinary course of
business (including acquisitions of other persons by merger, consolidation or
purchase of capital stock) during or after such period and on or prior to the
date of measurement, such computation shall be made on a pro forma basis as if
the asset dispositions or acquisitions had taken place on the first day of such
period.
Calculations of pro forma amounts in accordance with this definition shall
be done in accordance with Article 11 of Regulation S-X under the Securities Act
or any successor provision and may include reasonably ascertainable cost
savings.
"Consolidated income tax expense" of any person means for any period the
consolidated provision for income taxes of such person and its restricted
subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated interest expense" for any person means for any period,
without duplication:
(1) the consolidated interest expense included in a consolidated
income statement (without deduction of interest or finance charge income)
of such person and its restricted subsidiaries for such period calculated
on a consolidated basis in accordance with GAAP and
(2) dividend requirements of such person and its restricted
subsidiaries with respect to disqualified stock and with respect to all
other preferred stock of restricted subsidiaries of such person (in each
case whether in cash or otherwise (except dividends payable solely in
shares of capital stock of such person or such restricted subsidiary))
paid, accrued or accumulated during such period times a fraction the
numerator of which is one and the denominator of which is one minus the
then effective consolidated federal, state and local tax rate of such
person, expressed as a decimal.
"Consolidated net income" of any person means for any period the
consolidated net income (or loss) of such person and its restricted subsidiaries
for such period determined on a consolidated basis in accordance with GAAP;
provided, however, that there shall be excluded therefrom:
(1) the net income (or loss) of any person acquired by such person or
a restricted subsidiary of such person in a pooling-of-interests
transaction for any period prior to the date of such transaction;
(2) the net income (but not net loss) of any restricted subsidiary of
such person which is subject to restrictions which prevent or limit the
payment of dividends or the making of distributions to such person to the
extent of such restrictions (regardless of any waiver thereof);
(3) non-cash gains and losses due solely to fluctuations in currency
values;
(4) the net income of any person that is not a restricted subsidiary
of such person, except to the extent of the amount of dividends or other
distributions representing such person's proportionate share of such other
person's net income for such period actually paid in cash to such person by
such other person during such period;
(5) gains but not losses on asset dispositions by such person or its
restricted subsidiaries;
(6) all extraordinary gains and losses determined in accordance with
GAAP; and
(7) in the case of a successor to the referent person by consolidation
or merger or as a transferee of the referent person's assets, any earnings
(or losses) of the successor corporation prior to such consolidation,
merger or transfer of assets.
46
"Consolidated net worth" of any person means the consolidated stockholders'
equity of such person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to disqualified capital
stock of such person.
"Continuing director" means a director who either was a member of our board
of directors on June 21, 2000 or who became one of our directors subsequent to
the issue date and whose election, or nomination for election by our
stockholders, was duly approved by a majority of the continuing directors then
on our board of directors in accordance with the investors' agreement or
otherwise, either by a specific vote or by approval of the proxy statement
issued by us on behalf of our entire board of directors in which such individual
is named as nominee for director.
"Credit agreement" means the amended and restated credit agreement, to be
dated as of June 21, 2000, among us, as borrower thereunder, and Morgan Guaranty
Trust Company of New York, as agent on behalf of itself and the others named
therein, and any deferrals, renewals, extensions, replacements, refinancings or
refundings thereof, or amendments, modifications or supplements thereto or
replacements thereof (including, without limitation, any amendment increasing
the amount borrowed thereunder) and any agreement providing therefor whether by
or with the same or any other lender, creditors, or group of creditors and
including related notes, guarantee agreements, security agreements and other
instruments and agreements executed in connection therewith.
"Default" means any event that is, or after notice or lapse of time or both
would become, an event of default.
"Designated senior debt" means (1) so long as the credit agreement is in
effect, the senior debt incurred thereunder and (2) thereafter, any other senior
debt which has at the time of initial issuance an aggregate outstanding
principal amount in excess of $25.0 million which has been so designated as
designated senior debt by our board of directors at the time of initial issuance
in a resolution delivered to the trustee.
"Disqualified stock" of any person means any capital stock of such person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final maturity of the notes (other than
pursuant to change of control provisions similar to those applicable to the
notes, provided that such provisions expressly provide that no payment can be
made on such stock until any offer to purchase required pursuant to the
provisions described under "-- Change of Control" above shall have been
consummated and paid in full).
"Domestic restricted subsidiary" means any of our restricted subsidiaries
organized and existing under the laws of the United States, any state thereof or
the District of Columbia.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"GAAP" means generally accepted accounting principles, consistently
applied, as in effect on June 21, 2000 in the United States of America, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession in the United States.
"Guarantee" means the guarantee of the senior subordinated notes by each
guarantor under the indenture.
"Guarantor" means (1) each domestic restricted subsidiary on June 21, 2000
with assets or stockholder's equity in excess of $25,000 and (2) each domestic
restricted subsidiary, if any, of ours formed or acquired after the issue date,
which pursuant to the terms of the indenture executes a supplement to the
indenture as a guarantor.
47
"Incur" means, with respect to any indebtedness or other obligation of any
person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such indebtedness or other obligation on the balance sheet
of such person (and "incurrence," "incurred" and "incurring" shall have meanings
correlative to the foregoing). Indebtedness of any person or any of its
restricted subsidiaries existing at the time such person becomes our restricted
subsidiary (or is merged into or consolidates with us or any of our restricted
subsidiaries), whether or not such indebtedness was incurred in connection with,
or in contemplation of, such person becoming our restricted subsidiary (or being
merged into or consolidated with us or any of our restricted subsidiaries),
shall be deemed incurred at the time any such person becomes our restricted
subsidiary or merges into or consolidates with us or any of our restricted
subsidiaries.
"Indebtedness" means (without duplication), with respect to any person,
whether recourse is to all or a portion of the assets of such person and whether
or not contingent:
(1) every obligation of such person for money borrowed;
(2) every obligation of such person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses;
(3) every reimbursement obligation of such person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such person outstanding for more than 15 days;
(4) every obligation of such person issued or assumed as the deferred
purchase price of property or services outstanding for more than 15 days
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue or which are being
contested in good faith);
(5) every capital lease obligation of such person;
(6) every net obligation under interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements of
such person; and
(7) every obligation of the type referred to in clauses (1) through
(6) of another person and all dividends of another person the payment of
which, in either case, such person has guaranteed or is responsible or
liable for, directly or indirectly, as obligor, guarantor or otherwise.
Indebtedness shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any of our disqualified stock owned
by any person other than us or any of our restricted subsidiaries, and any
preferred stock of any of our restricted subsidiaries. Indebtedness shall never
be calculated taking into account any cash and cash equivalents held by such
person. Indebtedness shall not include obligations arising from agreements of
ours or of any of our restricted subsidiaries to provide for indemnification,
adjustment of purchase price, earn-out, or other similar obligations, in each
case, incurred or assumed in connection with the disposition of any business or
assets of any of our restricted subsidiaries. The amount outstanding at any time
of any indebtedness issued with original issue discount is the face amount of
such indebtedness less the remaining unamortized portion of the original issue
discount of such indebtedness at such time as determined in accordance with
GAAP.
"Investment" by any person means any direct or indirect loan, advance,
guarantee or other extension of credit (excluding credit balances in bank
accounts or similar accounts with other financial institutions) or capital
contribution to (by means of transfers of cash or other property to others or
payments for property or services for the account or use of others, or
otherwise), or purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidence of indebtedness issued by any other
person.
"Investors' agreement" means the investors' agreement be dated as of June
21, 2000 among Tekni-Plex, Tekni-Plex Partners, MST/TP Partners, Dr. Smith,
Michael F. Cronin and Tekni-Plex Management as in effect on June 21, 2000.
48
"Issue date" means the original issue date of the notes offered by this
offering memorandum.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, security interest, lien, charge,
easement (other than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security agreement
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Material subsidiary" means, at any date of determination, any subsidiary
that, together with its subsidiaries, (1) for our most recent fiscal year
accounted for more than 5% of our consolidated revenues or (2) as of the end of
such fiscal year, was the owner of more than 5% of our consolidated assets, all
as set forth on our most recently available consolidated financial statements
for such fiscal year prepared in conformity with GAAP.
"Moody's" means Moody's Investors Service, Inc. or any successor to its
debt rating business.
"Net available proceeds" from any asset disposition by any person means
cash or readily marketable securities received (including by way of sale or
discounting of a note, installment receivable or other receivable, but excluding
any other consideration received in the form of assumption by the acquiror of
indebtedness or other obligations relating to such properties or assets or
received in any other non-cash form) therefrom by such person, including any
cash received by way of deferred payment or upon the monetization or other
disposition of any non-cash consideration (including notes or other securities)
received in connection with such asset disposition, net of:
(1) all legal, title and recording tax expenses, commissions and other
fees and expenses incurred and all federal, state, foreign and local taxes
required to be accrued as a liability as a consequence of such asset
disposition;
(2) all payments made by such person or its restricted subsidiaries on
any indebtedness which is secured by such assets in accordance with the
terms of any lien upon or with respect to such assets or which must by the
terms of such lien, 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 payments made with respect to liabilities associated with the
assets which are the subject of the asset disposition, including, without
limitation, trade payables and other accrued liabilities;
(4) appropriate amounts to be provided by such person or any
restricted subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets
and retained by such person or any restricted subsidiary thereof, as the
case may be, after such asset disposition, including, without limitation,
liabilities under any indemnification obligations and severance and other
employee termination costs associated with such asset disposition, until
such time as such amounts are no longer reserved or such reserve is no
longer necessary (at which time any remaining amounts will become net
available proceeds to be allocated in accordance with the provisions of
clause (3) of the covenant of the indenture described under
"-- Covenants -- Limitation on Certain Asset Dispositions"); and
(5) all distributions and other payments made to minority interest
holders in restricted subsidiaries of such person or joint ventures as a
result of such asset disposition.
"Net investment" means the excess of:
(1) the aggregate amount of all Investments in unrestricted
subsidiaries or joint ventures made by us or any restricted subsidiary on
or after June 21, 2000 (in the case of an investment made other than in
cash, the amount shall be the fair market value of such investment as
determined in good faith by our board of directors or such restricted
subsidiary); over
(2) the aggregate amount returned in cash on or with respect to such
investments whether through interest payments, principal payments,
dividends or other distributions or payments;
49
provided, however, that such payments or distributions shall not be (and have
not been) included in subclause (b) of clause (3) of the first paragraph
described under "-- Covenants Limitation on Restricted Payments", provided,
further that with respect to all Investments made in any unrestricted subsidiary
or joint venture the amounts referred to in clause (2) above with respect to
such investments shall not exceed the aggregate amount of all such investments
made in such unrestricted subsidiary or joint venture.
"Offer to purchase" means a written offer (the "offer") sent by us by first
class mail, postage prepaid, to each holder at his address appearing in the
register for the notes on the date of the offer offering to purchase up to the
principal amount of notes specified in such offer at the purchase price
specified in such offer (as determined pursuant to the indenture). Unless
otherwise required by applicable law, the offer shall specify an expiration date
(the "expiration date") of the offer to purchase which shall be not less than 30
days nor more than 60 days after the date of such offer and a settlement date
(the "purchase date") for purchase of notes within five business days after the
expiration date. We shall notify the trustee at least 15 business days (or such
shorter period as is acceptable to the trustee) prior to the mailing of the
offer of our obligation to make an offer to purchase, and the offer shall be
mailed by us or, at our request, by the trustee in the name and at our expense.
The offer shall contain all the information required by applicable law to be
included therein. The offer shall contain all instructions and materials
necessary to enable such holders to tender notes pursuant to the offer to
purchase.
The offer shall also state:
(1) the section of the indenture pursuant to which the offer to
purchase is being made;
(2) the expiration date and the purchase date;
(3) the aggregate principal amount of the outstanding notes offered to
be purchased by us pursuant to the offer to purchase (including, if less
than 100%, the manner by which such amount has been determined pursuant to
the section of the indenture requiring the offer to purchase) (the
"purchase amount");
(4) the purchase price to be paid by us for each $1,000 aggregate
principal amount of notes accepted for payment (as specified pursuant to
the indenture) (the "purchase price");
(5) that the holder may tender all or any portion of the notes
registered in the name of such holder and that any portion of a note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where notes are to be surrendered for tender
pursuant to the offer to purchase;
(7) that interest on any note not tendered or tendered but not
purchased by us pursuant to the offer to purchase will continue to accrue;
(8) that on the purchase date the purchase price will become due and
payable upon each note being accepted for payment pursuant to the offer to
purchase and that interest thereon shall cease to accrue on and after the
purchase date;
(9) that each holder electing to tender all or any portion of a note
pursuant to the offer to purchase will be required to surrender such note
at the place or places specified in the offer prior to the close of
business on the expiration date (such note being, if we or the trustee so
require, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to us and the trustee duly executed by, the
holder thereof or his attorney duly authorized in writing);
(10) that holders will be entitled to withdraw all or any portion of
notes tendered if we (or our paying agent) receive, not later than the
close of business on the fifth business day next preceding the expiration
date, a telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of the note the holder tendered,
the certificate number of the note the holder tendered and a statement that
such holder is withdrawing all or a portion of his tender;
50
(11) that (a) if notes in an aggregate principal amount less than or
equal to the purchase amount are duly tendered and not withdrawn pursuant
to the offer to purchase, we shall purchase all such notes and (b) if notes
in an aggregate principal amount in excess of the purchase amount are
tendered and not withdrawn pursuant to the offer to purchase, we shall
purchase notes having an aggregate principal amount equal to the purchase
amount on a pro rata basis (with such adjustments as may be deemed
appropriate so that only notes in denominations of $1,000 or integral
multiples thereof shall be purchased); and
(12) that in the case of any holder whose note is purchased only in
part, we shall execute and the trustee shall authenticate and deliver to
the holder of such note without service charge, a new note or notes, of any
authorized denomination as requested by such holder, in an aggregate
principal amount equal to and in exchange for the unpurchased portion of
the note so tendered.
An offer to purchase shall be governed by and effected in accordance with
the provisions above pertaining to any offer.
"Permitted holder" means:
(1) Dr. F. Patrick Smith, Kenneth W.R. Baker and (a) entities
controlled by such persons, (b) trusts for the benefit of such individual
persons or the spouses, issue. parents or other relatives of such
individual persons and (c) in the event of the death of any such individual
person, heirs or testamentary legatees of such Person; and
(2) Tekni-Plex Partners and entities controlled by such person.
For purposes of this definition, "control," as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.
"Permitted investments" means:
(1) investments in marketable, direct obligations issued or guaranteed
by the United States of America, or any governmental entity or agency or
political subdivision thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof), maturing
within one year of the date of purchase;
(2) investments in commercial paper issued by corporations or
financial institutions maturing within 180 days from the date of the
original issue thereof, and rated "P-1" or better by Moody's or "A-1" or
better by S&P or an equivalent rating or better by any other nationally
recognized securities rating agency;
(3) investments in certificates of deposit issued or acceptances
accepted by or guaranteed by any bank or trust company organized under the
laws of the United States of America, any state thereof, the District of
Columbia, Canada or any province thereof, in each case having a combined
capital, surplus and undivided profits totaling more than $500,000,000,
maturing within one year of the date of purchase;
(4) investments representing capital stock or obligations issued or
otherwise transferred to us or any of our restricted subsidiaries in the
course of the good faith settlement of claims against any other Person or
by reason of a composition or readjustment of debt or a reorganization of
any of our debtors or those of any of our restricted subsidiaries;
(5) deposits, including interest-bearing deposits, maintained in the
ordinary course of business in banks;
(6) any investment in any person; provided, however, that (a) after
giving effect to any such investment such person shall become our
restricted subsidiary or (b) such person is merged with or into, or
substantially all of such person's assets are transferred to, us or any of
our restricted subsidiaries;
51
(7) receivables and prepaid expenses, in each ease arising in the
ordinary course of business; provided, however, that such receivables and
prepaid expenses would be recorded as assets of such person in accordance
with GAAP;
(8) endorsements for collection or deposit in the ordinary course of
business by such person of bank drafts and similar negotiable instruments
of such other Person received as payment for ordinary course of business
trade receivables;
(9) any interest swap or hedging obligation with an unaffiliated
person otherwise permitted by the indenture;
(10) investments received as consideration for an asset disposition in
compliance with the provisions of the indenture described under "--
Covenants -- Limitation on Certain Asset Dispositions" above;
(11) investments in restricted subsidiaries or by virtue of which a
person becomes a restricted subsidiary (including under circumstances in
which equity interests in a restricted subsidiary are acquired from third
parties subsequent to such person becoming a restricted subsidiary pursuant
to the terms of any merger or acquisition or similar agreement in existence
at the time such person became a restricted subsidiary); and
(12) loans and advances to our employees or those of any of our
restricted subsidiaries in the ordinary course of business.
"Person" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred stock", as applied to the capital stock of any person, means
capital stock of such person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
person, to shares of capital stock of any other class of such person.
"Purchase date" has the meaning set forth in the definition of "offer to
purchase" above.
"Recapitalization" means the transactions contemplated to occur prior to,
on and immediately after June 21, 2000 by the recapitalization agreement dated
as of April 12, 2000 among us, Tekni-Plex Partners LLC, MST/TP Partners, L.P.
and the other parties thereto (including the exhibits thereto).
"Related person" of any person means any other person directly or
indirectly owning (1) 5% or more of the outstanding common stock of such person
(or, in the case of a person that is not a corporation, 5% or more of the equity
interest in such person) or (2) 5% or more of the combined voting power of the
Voting Stock of such person.
"Restricted subsidiary" means any of our subsidiaries other than an
unrestricted subsidiary.
"S&P" means Standard & Poor's Ratings Group or any successor to its debt
rating business.
"Senior debt" means, with respect to any person at any date:
(1) in the case of us or a guarantor, all indebtedness and other
obligations under the credit agreement, including, without limitation,
principal, premium, if any, and interest on such indebtedness and all other
amounts due on or in connection with such indebtedness including all
charges, fees and expenses;
(2) all other indebtedness of such person for money borrowed,
including principal, premium, if any, and interest on such indebtedness,
unless the instrument under which such indebtedness for money borrowed is
created, incurred, assumed or guaranteed expressly provides that such
indebtedness for money borrowed is not senior or superior in right of
payment to the notes, and all renewals, extensions, modifications,
amendments, refinancing or replacements thereof and all other indebtedness
of such
52
person of the types referred to in clauses (3), (4) (not including
obligations issued or assumed as the deferred purchase price of services)
and (6) of the definition of indebtedness; and
(3) all interest on any indebtedness referred to in clauses (1) and
(2) accruing during, or which would accrue but for, the pendency of any
bankruptcy or insolvency proceeding, whether or not allowed thereunder.
Notwithstanding the foregoing, senior debt shall not include:
(1) indebtedness which is pursuant to its terms or any agreement
relating thereto or by operation of law subordinated or junior in right of
payment or otherwise to any other indebtedness of such person; provided,
however, that no indebtedness shall be deemed to be subordinate or junior
in right of payment or otherwise to any other indebtedness of a person
solely by reason of such other indebtedness being secured and such
indebtedness not being secured;
(2) the notes;
(3) any indebtedness of such person to any of its subsidiaries;
(4) indebtedness incurred in violation of the provisions of the
indenture described under "-- Covenants -- Limitation on Indebtedness";
provided, however, that indebtedness under the credit agreement shall be
deemed not to have been incurred in violation of such provisions for
purposes of this clause (4) if the holder(s) of such indebtedness or their
agent or representative shall have received a representation from us to the
effect that the incurrence of such indebtedness does not violate such
provision; and
(5) any indebtedness which, when incurred and without respect to any
election under Section 1111(b) of the Bankruptcy Code, is without recourse
to us.
"Subordinated indebtedness" means any indebtedness (whether outstanding on
the date hereof or hereafter incurred) which is by its terms expressly
subordinate or junior in right of payment to the notes.
"Subsidiary" of any person means:
(1) a corporation more than 50% of the outstanding voting stock of
which is owned, directly or indirectly, by such person or by one or more
other subsidiaries of such person or by such person and one or more other
subsidiaries thereof; or
(2) any other person (other than a corporation) in which such person,
or one or more other subsidiaries of such person or such person and one or
more other subsidiaries thereof, directly or indirectly, have at least a
majority ownership and voting power relating to the policies, management
and affairs thereof.
"Unrestricted subsidiary" means:
(1) any subsidiary of ours formed or acquired after June 21, 2000 that
at the time of determination is designated an unrestricted subsidiary by
the board of directors in the manner provided below; and
(2) any subsidiary of an unrestricted subsidiary.
Any such designation by the board of directors will be evidenced to the
trustee by promptly filing with the trustee a copy of the board resolution
giving effect to such designation and an officers' certificate certifying that
such designation complied with the foregoing provisions.
Our board of directors may not designate any subsidiary of ours to be an
unrestricted subsidiary if, after such designation:
(1) we or any other restricted subsidiary (a) provides credit support
for, or a guarantee of, any indebtedness of such subsidiary (including any
undertaking, agreement or instrument evidencing such indebtedness) or (b)
is directly or indirectly liable for any indebtedness of such subsidiary;
(2) a default with respect to any indebtedness of such subsidiary
(including any right which the holders thereof may have to take enforcement
action against such subsidiary) would permit (upon notice,
53
lapse of time or both) any holder of any other indebtedness of ours or of
any restricted subsidiary to declare a default on such other indebtedness
or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity; or
(3) such subsidiary owns any capital stock of, or owns or holds any
lien on any property of, any restricted subsidiary which is not a
subsidiary of the subsidiary to be so designated.
"Voting stock" of any person means the capital stock of such person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Davis Polk & Wardwell, the following are the material
United States federal income tax consequences of ownership and disposition of
the notes. This discussion only applies to:
- notes purchased by those initial holders who exchange old notes for new
notes pursuant to the exchange offer and purchased the old notes at the
"issue price", which was the first price to the public (not including
bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers) at which a
substantial amount of the old notes was sold for money;
- notes held as capital assets for United States federal income tax
purposes; and
- notes held by holders that are for United States federal income tax
purposes:
- citizens or residents of the United States;
- corporations, or other entities taxable as corporations for United
States federal income tax purposes, created or organized in or under the
laws of the United States or of any political subdivision thereof; or
- estates or trusts whose income is subject to United States federal
income taxation regardless of its source.
This discussion does not describe all of the tax consequences that may be
relevant to a holder's particular circumstances or to holders subject to special
rules, such as:
- certain financial institutions;
- insurance companies;
- tax-exempt organizations;
- dealers in securities or foreign currencies;
- persons holding notes as part of a hedge;
- holders whose functional currency is not the U.S. dollar;
- United States expatriates;
- partnerships or other entities classified as partnerships for U.S.
federal income tax purposes; or
- persons subject to the alternative minimum tax.
This discussion is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and final, temporary and proposed Treasury regulations, changes to any
of which subsequent to the date of this prospectus may affect the tax
consequences described herein, possibly on a retroactive basis.
54
HOLDERS OF NOTES ARE URGED TO CONSULT THEIR TAX ADVISERS WITH REGARD TO THE
APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR
SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION.
EXCHANGE OF NOTES
The exchange of old notes for new notes pursuant to the exchange offer will
not result in any United States federal income tax consequences to holders. When
a holder exchanges an old note for a new note pursuant to the exchange offer,
the holder will have the same adjusted basis and holding period in the new note
as in the old note immediately before the exchange.
HOLDERS CONSIDERING THIS EXCHANGE OFFER ARE URGED TO CONSULT THEIR TAX
ADVISERS WITH REGARD TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
INTEREST INCOME
The notes were not issued with "original issue discount" within the meaning
of Section 1273 of the Code. A holder will recognize interest paid on a note as
ordinary income at the time it accrues or is received in accordance with the
holder's method of accounting for United States federal income tax purposes.
DISPOSITION OF NOTES
Upon the sale, exchange (other than the exchange of an old note for a new
note) or retirement of a note, a holder will recognize taxable gain or loss
equal to the difference between the amount realized on the disposition of the
note (excluding any amount attributable to accrued but unpaid interest, which is
treated as interest income as described in the previous paragraph) and the
holder's adjusted tax basis in the note. A holder's adjusted tax basis in a note
will generally equal the cost of the note to the holder, reduced by any
principal payments received by the holder. Gain or loss realized on the sale,
exchange or retirement of a note will be capital gain or loss and will be
long-term capital gain or loss if at the time of sale, exchange or retirement
the note has been held for more than one year. Holders should consult their tax
advisors regarding the treatment of capital gains and losses.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information returns may be filed with the Internal Revenue Service in
connection with payments on the notes and the proceeds from a sale or other
disposition of the notes. A holder may be subject to backup withholding on these
payments if the holder fails to provide its taxpayer identification number and
comply with certain certification procedures, or fails to establish an exemption
from backup withholding otherwise. The amount of any backup withholding will be
allowed as a credit against the holder's United Sates federal income tax
liability and may entitle the holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
Prior to the exchange offer, there has been no market for any of the new
notes. The old notes are eligible for trading in the Private Offerings, Resales
and Trading through Automatic Linkages ("PORTAL") market. There can be no
assurance that an active trading market will develop for, or as to the liquidity
of, any of the old notes or the new notes.
Each participating broker-dealer that receives new notes for its own
account pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such new notes. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
participating broker-dealer in connection with resales of new notes received in
exchange for old notes where such old notes were acquired as a result of
market-making activities or other trading activities. We have agreed that for a
period of
55
180 days after the expiration date, we will make this prospectus, as amended or
supplemented, available to any participating broker-dealer for use in connection
with any such resale.
We will not receive any proceeds from any sales of the new notes by
participating broker-dealers. New notes received by participating broker-dealers
for their own account pursuant to the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the new notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
participating broker-dealer and/or the purchasers of any such new notes. Any
participating broker-dealer that resells the new notes that were received by it
for its own account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such new notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of new notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a participating broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for Tekni-Plex
by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements and schedules of Tekni-Plex
incorporated by reference in this prospectus have been audited by BDO Seidman,
LLP, independent certified public accountants, to the extent and for the periods
set forth in their report incorporated by reference, and are incorporated herein
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act, and
we file periodic reports and other information with the SEC. Our obligation to
file periodic reports and other information with the SEC will be suspended if
the notes are held of record by fewer than 300 holders as of the beginning of
any fiscal year of Tekni-Plex. We have also agreed that, whether or not we are
required to do so by the rules and regulations of the SEC, for so long as any of
the notes remain outstanding, we will furnish to the noteholders and following
the consummation of the exchange offer file with the SEC (unless the SEC will
not accept such a filing);
- all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if we were
required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereon by our certified
independent accountants and
- all reports that would be required to be filed with the SEC on Form 8-K
if we were required to file such reports.
In addition, for so long as any of the notes remain outstanding, we will
make available to any prospective purchaser of the notes or beneficial owner of
the notes in connection with any sale thereof the information required by Rule
144(d)(4) under the Securities Act. Under the indenture, we will file with the
trustee annual, quarterly and other reports within 15 days after we file such
reports with the SEC. Further, to the extent that we furnish annual, quarterly
or other financial reports to stockholders generally, we will mail such reports
to holders of notes. We will furnish annual and quarterly financial reports to
our stockholders and will mail such reports to holders of notes pursuant to the
indenture. Annual reports delivered to the trustee and the noteholders will
contain financial information that has been examined and reported upon, with an
opinion
56
expressed by an independent public or certified public accountant. We will also
furnish such other reports as may be required by law.
WE WILL PROMPTLY PROVIDE WITHOUT CHARGE TO YOU, UPON ORAL OR WRITTEN
REQUEST, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THE INFORMATION NO LATER
THAN , 2003, OR FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE, IF THE
EXCHANGE OFFER IS EXTENDED. REQUESTS SHOULD BE DIRECTED TO:
TEKNI-PLEX, INC.
260 NORTH DENTON TAP ROAD
COPPELL, TEXAS 75019
TELEPHONE: (972) 304-5077
FACSIMILE: (972) 304-6297
Our SEC filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at its public reference facilities:
Public Reference Room Office
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference section of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on
the operations of the public reference facilities.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference or deemed incorporated by reference is considered to
be part of this prospectus. Information that we file with the SEC after the date
of this prospectus will update and supersede this information. We incorporate by
reference the documents listed below:
- Our Annual Report on Form 10-K for the year ended June 28, 2002.
- Our Annual Report on Form 10-K/A for the year ended June 28, 2002.
- Our Quarterly Report on Form 10-Q for the quarter ended September 27,
2002.
- Our Quarterly Report on Form 10-Q/A for the quarter ended September 27,
2002.
- Our Quarterly Report on Form 10-Q for the quarter ended December 27,
2002.
- Our Quarterly Report on Form 10-Q/A for the quarter ended December 27,
2002.
- Our Quarterly Report on Form 10-Q for the quarter ended March 28, 2003.
A copy of our most recent annual report on Form 10-K and 10-K/A and
quarterly reports on Form 10-Q accompany this prospectus as well as being
incorporated into this prospectus by reference.
57
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$40,000,000
TEKNI-PLEX, INC.
OFFER TO EXCHANGE ALL OUTSTANDING
12 3/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2010
FOR
12 3/4% SENIOR SUBORDINATED NOTES DUE 2010
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms that are sufficiently broad
to permit indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
Tekni-Plex's certificate of incorporation contains a provision eliminating the
personal liability of its directors to the company or its shareowners for breach
of fiduciary duty as a director to the fullest extent permitted by applicable
law. Tekni-Plex's bylaws provide for the mandatory indemnification of our
directors and officers to the maximum extent permitted by Delaware law.
Tekni-Plex's bylaws also provide (i) that we may expand the scope of the
indemnification by individual contracts with our directors and officers, and
(ii) that we shall not be required by law, if the proceeding in which
indemnification is sought was brought by a director or officer, it was
authorized in advance by our board of directors, the indemnification is provided
by us, in our sole discretion pursuant to powers vested in us under the Delaware
law, or the indemnification is required by individual contract. In addition, our
bylaws give us the power to indemnify our employees and agents to the maximum
extent permitted by Delaware law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<Table>
<Caption>
3.1 Restated Certificate of Incorporation of Tekni-Plex, Inc.*
3.2 Amended and Restated By-laws of Tekni-Plex, Inc.*
3.3 Certificate of Incorporation of PureTec Corporation.*
3.4 By-laws of PureTec Corporation*
3.5 Certificate of Incorporation of Tri-Seal Holdings, Inc.*
3.6 By-laws of Tri-Seal Holding, Inc.*
3.7 Certificate of Incorporation of Natvar Holdings, Inc.*
3.8 By-laws of Natvar Holdings.*
3.9 Certificate of Incorporation of Plastic Specialities and
Technologies, Inc.*
3.10 By-laws of Plastic Specialities and Technologies, Inc.*
3.11 Certificate of Incorporation of Plastic Specialities and
Technologies Investments, Inc.*
3.12 By-laws of Plastic Specialities and Technologies
Investments, Inc.*
3.13 Certificate of Incorporation of Burlington Resins, Inc.*
3.14 By-laws of Burlington Resins, Inc.*
3.15 Certificate of Incorporation of Pure Tech APR, Inc.*
3.16 By-laws of Pure Tech APR, Inc.*
3.17 Certificate of Incorporation of TPI Acquisition Subsidiary,
Inc.**
3.18 By-laws of TPI Acquisition Subsidiary, Inc.**
3.19 Certificate of Incorporation of Coast Recycling North, Inc.*
3.20 By-laws of Coast Recycling North, Inc.*
3.21 Certificate of Incorporation of Distributors Recycling,
Inc.*
3.22 By-laws of Distributors Recycling, Inc.*
3.23 Certificate of Incorporation of REI Distributors, Inc.*
3.24 By-laws of REI Distributors, Inc.*
3.25 Certificate of Incorporation of Pure Tech Recycling of
California.*
3.26 By-laws of Pure Tech Recycling of California.*
</Table>
II-1
<Table>
<Caption>
3.27 Certificate of Incorporation of Alumet Smelting Corp.*
3.28 By-laws of Alumet Smelting Corp.*
3.29 Certificate of Incorporation of TP/Elm Acquisition
Subsidiary, Inc.**
3.30 By-laws of TP/Elm Acquisition Subsidiary, Inc.**
4.1 Indenture, dated as of June 21, 2000 among Tekni-Plex, Inc.,
the Guarantors listed therein and HSBC Bank USA, as
Trustee.*
4.2 First Supplemental Indenture, dated as of May 6, 2002 among
Tekni-Plex, Inc., TPI Acquisition Subsidiary, Inc. and HSBC
Bank USA, as Trustee**
4.3 Second Supplemental Indenture, dated as of August 22, 2002
among Tekni-Plex, Inc., TP/Elm Acquisition Subsidiary, Inc.
and HSBC Bank USA, as Trustee**
4.4 Senior Subordinated Note and Guarantee (original not
included; form of Note and Guarantee included in Exhibit
4.1).
4.5 Purchase Agreement, dated as of May 1, 2002 among
Tekni-Plex, Inc., the Guarantors listed therein, and Lehman
Brothers Inc.**
4.6 Registration Right Agreement, dated as of May 6, 2002 among
Tekni-Plex, Inc., the Guarantors listed therein and Lehman
Brothers Inc.**
5 Opinion of Davis Polk & Wardwell.****
8 Opinion of Davis Polk & Wardwell as to tax matters.****
10.1 Credit Agreement, dated as of June 21, 2000, among
Tekni-Plex, Inc., the Guarantors party thereto, the Lenders
party thereto, the LC Issuing Banks referred to therein and
Morgan Guaranty Trust Company of New York.*
12.1 Statement regarding Computation of Ratios.****
13.1 Annual Report on Form 10-K for the year ended June 28,
2002***
13.2 Annual Report on Form 10-K/A for the year ended June 28,
2002.****
13.3 Quarterly Report on Form 10-Q for the quarter ended
September 27, 2002.****
13.4 Quarterly Report on Form 10-Q/A for the quarter ended
September 27, 2002.****
13.5 Quarterly Report on Form 10-Q for the quarter ended December
27, 2002****
13.6 Quarterly Report on Form 10-Q/A for the quarter ended
December 27, 2002.****
13.7 Quarterly Report on Form 10-Q for the quarter ended March
28, 2003,****
23.1 Consent of BDO Seidman LLP.****
23.2 Consents of Davis Polk & Wardwell (included in Exhibits 5
and 8).
24.1 Power of Attorney (included on page II-4).
25.1 Statement of Eligibility of Trustee, HSBC Bank USA, on Form
T-1.****
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
99.4 Form of Exchange Agent Agreement.**
99.5 Instruction to Registered Holders and/or Book-Entry Transfer
Facility Participants.**
99.6 Broker's Letter to Clients.**
99.7 Exchange Offer Cover Letter.**
</Table>
- ---------------
* Filed previously as an Exhibit to our Registration Statement on Form S-4
(File No. 333-43800) filed on August 15, 2000.
** Filed previously as an Exhibit to our Registration Statement on Form S-4
(File No. 333-98561) filed on August 22, 2002.
*** Filed previously as an Exhibit to Amendment No. 1 of our Registration
Statement on Form S-4 (File No. 333-98561) filed on October 25, 2002.
**** Filed herewith.
II-2
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act or 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement 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.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes 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 other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not subject of and included in
the registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Tekni-Plex, Inc., a Delaware corporation, has duly caused Amendment No. 2 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
TEKNI-PLEX, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive Officer
------------------------------------------------
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating Officer
------------------------------------------------ (principal financial and accounting officer)
Kenneth W.R. Baker
ARTHUR P. WITT* Director and Corporate Secretary
------------------------------------------------
Arthur P. Witt
J. ANDREW MCWETHY* Director
------------------------------------------------
J. Andrew McWethy
MICHAEL F. CRONIN* Director
------------------------------------------------
Michael F. Cronin
JOHN S. GEER* Director
------------------------------------------------
John S. Geer
*By: /s/ F. PATRICK SMITH
------------------------------------------
F. Patrick Smith
Attorney-in-fact
</Table>
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
PureTec Corporation, a Delaware corporation, has duly caused Amendment No. 2 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
PURETEC CORPORATION
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive Officer
------------------------------------------------
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating Officer
------------------------------------------------ (principal financial and accounting officer)
Kenneth W.R. Baker
</Table>
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Tri-Seal Holdings, Inc., a Delaware corporation, has duly caused Amendment No. 2
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
TRI-SEAL HOLDINGS, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive Officer
------------------------------------------------
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating Officer
------------------------------------------------ (principal financial and accounting officer)
Kenneth W.R. Baker
</Table>
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Natvar Holdings, Inc., a Delaware corporation, has duly caused Amendment No. 2
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
NATVAR HOLDINGS, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Plastics Specialties and Technologies, Inc., a Delaware corporation, has duly
caused Amendment No. 2 to this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
PLASTICS SPECIALTIES AND TECHNOLOGIES,
INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Plastics Specialties and Technologies Investments, Inc., a Delaware corporation,
has duly caused Amendment No. 2 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Coppell, Texas on
May 21, 2003.
PLASTICS SPECIALTIES AND TECHNOLOGIES
INVESTMENTS, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st of May, 2003 by
the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Burlington Resins, Inc., a Delaware corporation, has duly caused Amendment No. 2
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
BURLINGTON RESINS, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Pure Tech APR, Inc., a New York corporation, has duly caused Amendment No. 2 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
PURE TECH APR, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, TPI
Acquisition Subsidiary, Inc., a Delaware corporation, has duly caused Amendment
No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
TPI ACQUISITION SUBSIDIARY, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Coast Recycling North, Inc., a California corporation, has duly caused Amendment
No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
COAST RECYCLING NORTH, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Distributors Recycling, Inc., a New Jersey corporation, has duly caused
Amendment No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
DISTRIBUTORS RECYCLING, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- --------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- --------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, REI
Distributors, Inc., a New Jersey corporation, has duly caused Amendment No. 2 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
REI DISTRIBUTORS, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- ----------------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
PureTech Recycling of California, a California corporation, has duly caused
Amendment No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
PURE TECH RECYCLING OF CALIFORNIA
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- ----------------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Alumet Smelting Corp., a New Jersey corporation, has duly caused Amendment No. 2
to this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coppell, Texas on May 21, 2003.
ALUMET SMELTING CORP.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W.R. BAKER Director, President and Chief Operating
- ----------------------------------------------------- Officer (principal financial and accounting
Kenneth W.R. Baker officer)
</Table>
II-17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
TP/Elm Acquisition Subsidiary, Inc., a Delaware corporation, has duly caused
Amendment No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Coppell, Texas on May 21, 2003.
TP/ELM ACQUISITION SUBSIDIARY, INC.
By: /s/ F. PATRICK SMITH
------------------------------------
Name: F. Patrick Smith
Title: Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2
to this Registration Statement has been signed below on the 21st day of May,
2003 by the following persons in the capacities indicated.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ F. PATRICK SMITH Chairman of the Board and Chief Executive
- ----------------------------------------------------- Officer
F. Patrick Smith
/s/ KENNETH W. R. BAKER Director, President and Chief Operating
- ----------------------------------------------------- Officer (principal financial and accounting
Kenneth W. R. Baker officer)
</Table>
II-18
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
3.1 Restated Certificate of Incorporation of Tekni-Plex, Inc.*
3.2 Amended and Restated By-laws of Tekni-Plex, Inc.*
3.3 Certificate of Incorporation of PureTec Corporation.*
3.4 By-laws of PureTec Corporation.*
3.5 Certificate of Incorporation of Tri-Seal Holdings, Inc.*
3.6 By-laws of Tri Seal Holdings, Inc.*
3.7 Certificate of Incorporation of Natvar Holdings, Inc.*
3.8 By-laws of Natvar Holdings.*
3.9 Certificate of Incorporation of Plastic Specialities and
Technologies, Inc.*
3.10 By-laws of Plastic Specialities and Technologies, Inc.*
3.11 Certificate of Incorporation of Plastic Specialities and
Technologies Investments, Inc.*
3.12 By-laws of Plastic Specialities and Technologies
Investments, Inc.*
3.13 Certificate of Incorporation of Burlington Resins, Inc.*
3.14 By-laws of Burlington Resins, Inc.*
3.15 Certificate of Incorporation of Pure Tech APR, Inc.*
3.16 By-laws of Pure Tech APR, Inc.*
3.17 Certificate of Incorporation of TPI Acquisition Subsidiary,
Inc.**
3.18 By-laws of TPI Acquisition Subsidiary, Inc.**
3.19 Certificate of Incorporation of Coast Recycling North, Inc.*
3.20 By-laws of Coast Recycling North, Inc.*
3.21 Certificate of Incorporation of Distributors Recycling,
Inc.*
3.22 By-laws of Distributors Recycling, Inc.*
3.23 Certificate of Incorporation of REI Distributors, Inc.*
3.24 By-laws of REI Distributors, Inc.*
3.25 Certificate of Incorporation of Pure Tech Recycling of
California.*
3.26 By-laws of Pure Tech Recycling of California.*
3.27 Certificate of Incorporation of Alumet Smelting Corp.*
3.28 By-laws of Alumet Smelting Corp.*
3.29 Certificate of Incorporation of TP/Elm Acquisition
Subsidiary, Inc.**
3.30 By-laws of TP/Elm Acquisition Subsidiary, Inc.**
4.1 Indenture, dated as of June 21, 2000 among Tekni-Plex, Inc.,
the Guarantors listed therein and HSBC Bank USA, as
Trustee.*
4.2 First Supplemental Indenture, dated as of May 6, 2002 among
Tekni-Plex, Inc., TPI Acquisition Subsidiary, Inc. and HSBC
Bank USA, as Trustee**
4.3 Second Supplemental Indenture, dated as of August 22, 2002
among Tekni-Plex, Inc., TP/Elm Acquisition Subsidiary, Inc.
and HSBC Bank USA, as Trustee**
4.4 Senior Subordinated Note and Guarantee (original not
included; form of Note and Guarantee included in Exhibit
4.1).
4.5 Purchase Agreement, dated as of May 1, 2002 among
Tekni-Plex, Inc., the Guarantors listed therein, and Lehman
Brothers Inc.**
4.6 Registration Right Agreement, dated as of May 6, 2002 among
Tekni-Plex, Inc., the Guarantors listed therein and Lehman
Brothers Inc.**
5 Opinion of Davis Polk & Wardwell.****
8 Opinion of Davis Polk & Wardwell as to tax matters.****
10.1 Credit Agreement, dated as of June 21, 2000, among
Tekni-Plex, Inc., the Guarantors party thereto, the Lenders
party thereto, the LC Issuing Banks referred to therein and
Morgan Guaranty Trust Company of New York.*
</Table>
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION PAGE
- ------- ----------- ----
12.1 Statement regarding Computation of Ratios.****
13.1 Annual Report on Form 10-K for the year ended June 28,
2002.***
13.2 Annual Report on Form 10-K/A for the year ended June 28,
2002.****
13.3 Quarterly Report on Form 10-Q for the quarter ended
September 27, 2002.****
13.4 Quarterly Report on Form 10-Q/A for the quarter ended
September 27, 2002.****
13.5 Quarterly Report on Form 10-Q for the quarter ended December
27, 2002.****
13.6 Quarterly Report on Form 10-Q/A for the quarter ended
December 27, 2002.****
13.7 Quarterly Report on Form 10-Q for the quarter ended March
28, 2003.****
23.1 Consent of BDO Seidman LLP.****
23.2 Consents of Davis Polk & Wardwell (included in Exhibits 5
and 8).
24.1 Power of Attorney (included on page II-4).
25.1 Statement of Eligibility of Trustee, HSBC Bank USA, on Form
T-1.****
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
99.4 Form of Exchange Agent Agreement.**
99.5 Instruction to Registered Holders and/or Book-Entry Transfer
Facility Participants.**
99.6 Broker's Letter to Clients.**
99.7 Exchange Offer Cover Letter.**
</Table>
- ---------------
* Filed previously as an Exhibit to our Registration Statement on Form S-4
(File No. 333-43800) filed on August 15, 2000.
** Filed previously as an Exhibit to our Registration Statement on Form S-4
(File No. 333-98561) filed on August 22, 2002.
*** Filed previously as an Exhibit to Amendment No. 1 to our Registration
Statement on Form S-4 (File No. 333-98561) filed on October 25, 2002.
**** Filed herewith.