Filed Pursuant to Rule 424(b)(1)
Registration No. 333-89862
PROSPECTUS
JARDEN CORPORATION
OFFER TO EXCHANGE $150,000,000 PRINCIPAL AMOUNT OF OUR
9 3/4% SENIOR SUBORDINATED NOTES DUE
2012, WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933,
FOR ANY AND ALL OF OUR OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2012
UNCONDITIONALLY GUARANTEED BY:
ALLTRISTA NEWCO CORPORATION, ALLTRISTA PLASTICS CORPORATION,
ALLTRISTA ZINC PRODUCTS, L.P., HEARTHMARK, INC., QUOIN
CORPORATION, TILIA, INC., TILIA DIRECT, INC.,
TILIA INTERNATIONAL, INC., TRIENDA CORPORATION
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MATERIAL TERMS OF THE EXCHANGE OFFER
o The exchange offer expires at 5:00 p.m., New York City time, on
November 27, 2002, unless extended.
o We will exchange all outstanding old notes that are validly tendered and
not validly withdrawn for an equal principal amount of a new series of
notes which are registered under the Securities Act of 1933, as amended
(the "Securities Act"), subject to the satisfaction or waiver of specified
conditions.
o The terms of the new notes are substantially identical to those of the old
notes, except that the special mandatory redemption provisions and the
transfer restrictions applicable to the old notes are not applicable to the
new notes.
o You may withdraw tenders of old notes at any time before the exchange offer
expires.
o The exchange of new notes for outstanding old notes should not be a taxable
event for U.S. Federal income tax purposes.
o We will not receive any proceeds from the exchange offer.
o We do not intend to apply for listing of any of the notes to be issued on
any securities exchange or to arrange for them to be quoted on any
quotation system.
o Our current and future domestic subsidiaries will unconditionally guarantee
in full, on a joint and several basis, our obligation to pay the principal
of, premium, if any, and interest on the new notes. See "Risk Factors -
Federal and state statutes allow courts, under specific circumstances, to
void guarantees and require noteholders to return payments received from
guarantors" and "Description of the New Notes - Subsidiary Guarantees."
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PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 22 FOR A DESCRIPTION OF
THE RISKS YOU SHOULD CONSIDER WHEN EVALUATING THIS INVESTMENT.
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES TO BE ISSUED IN THE EXCHANGE
OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
WE MAY AMEND OR SUPPLEMENT THIS PROSPECTUS FROM TIME TO TIME BY FILING
AMENDMENTS OR SUPPLEMENTS AS REQUIRED. YOU SHOULD READ THIS ENTIRE PROSPECTUS
(AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND RELATED DOCUMENTS) AND ANY
AMENDMENTS OR SUPPLEMENTS CAREFULLY BEFORE MAKING YOUR INVESTMENT DECISION.
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 IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
THE DATE OF THIS PROSPECTUS IS OCTOBER 28, 2002.
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TABLE OF CONTENTS
Page
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................................... 6
SUMMARY....................................................................................................... 7
Summary of the Terms of the Exchange Offer.................................................................. 7
Summary of the Terms of the New Notes....................................................................... 11
THE COMPANY................................................................................................... 14
RISK FACTORS.................................................................................................. 22
If you fail to exchange properly your old notes for new notes,
you will continue to hold notes subject to transfer restrictions.......................................... 22
Our significant indebtedness could adversely affect our financial
health, and prevent us from fulfilling our obligations under the notes.................................... 22
Your right to receive payments on the notes is junior to our existing
senior indebtedness and possibly all of our future borrowings. Further, the
guarantees of the new notes are junior to all of the guarantors' existing
senior indebtedness and possibly to all their future borrowings........................................... 23
Since the notes are unsecured, your right to enforce remedies
is limited by the rights of holders of secured debt....................................................... 24
Not all of our subsidiaries will guarantee our obligations under the
notes, and the assets of the non-guarantor subsidiaries may not be
available to make payments on the notes................................................................... 24
We will require a significant amount of cash to service our indebtedness.
Our ability to generate cash depends on many factors beyond our control................................... 25
The indenture related to the notes and our senior credit facility contain various
covenants which limit our management's discretion in the operation of our business........................ 25
We may not have the ability to raise the funds necessary to finance
the change of control offer required by the indenture..................................................... 26
A public market for the new notes may not develop........................................................... 26
Federal and state statutes allow courts, under specific circumstances, to
void guarantees and require noteholders to return payments received from guarantors....................... 26
Reductions, cancellations, or delays in customer purchases
would adversely affect our profitability.................................................................. 28
We may be adversely affected by the trend towards retail trade consolidation................................ 28
Sales of some of our products are seasonal.................................................................. 28
We depend on suppliers in Asia.............................................................................. 28
Competition in our industries may hinder our ability to execute our business
strategy, achieve profitability, or maintain relationships with existing customers........................ 29
If we fail to develop new or expand existing customer relationships, our
ability to grow our business will be impaired............................................................. 30
We cannot be certain that our product innovations and marketing successes will continue..................... 30
Jarden and Tilia have no combined operating history and there can be no assurance
that we will be able to successfully integrate Tilia's operations with our own............................ 30
We may experience difficulty in integrating acquired businesses, which
may interrupt our business operations..................................................................... 31
Our operations are subject to a number of Federal, state and
local environmental regulations........................................................................... 31
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Page
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We may be adversely affected by remediation obligations
mandated by applicable environmental laws................................................................. 31
We depend upon key personnel................................................................................ 32
We enter into contracts with the United States government and other governments............................. 32
Our operating results can be adversely affected by changes in the cost
or availability of raw materials.......................................................................... 32
Our business could be adversely affected because of risks which are
particular to international operations.................................................................... 33
Our performance can fluctuate with the financial condition of the retail industry........................... 33
Claims made against us based on product liability could have a material
adverse effect on our business............................................................................ 34
We depend on our patents and proprietary rights............................................................. 34
We depend on a single manufacturing facility for certain essential products................................. 34
Certain of our employees are represented by labor unions.................................................... 34
FORWARD LOOKING STATEMENTS.................................................................................... 35
USE OF PROCEEDS............................................................................................... 36
RATIO OF EARNINGS TO FIXED CHARGES............................................................................ 37
CAPITALIZATION................................................................................................ 37
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA................................................. 38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.............................................................................................. 41
THE EXCHANGE OFFER............................................................................................ 43
Purpose of the Exchange Offer............................................................................... 43
Resale of the New Notes..................................................................................... 43
Terms of the Exchange Offer................................................................................. 44
Expiration Date; Extensions; Amendments..................................................................... 45
Interest on the New Notes................................................................................... 46
Procedures for Tendering.................................................................................... 46
Return of Notes............................................................................................. 49
Book-Entry Transfer......................................................................................... 49
Guaranteed Delivery Procedures.............................................................................. 49
Withdrawal of Tenders....................................................................................... 50
Conditions.................................................................................................. 51
Shelf Registration.......................................................................................... 51
Liquidated Damages.......................................................................................... 52
Exchange Agent.............................................................................................. 53
Fees and Expenses........................................................................................... 53
Consequence of Failures to Exchange......................................................................... 54
DESCRIPTION OF THE NEW NOTES.................................................................................. 55
Brief Description of the New Notes and the Guarantees....................................................... 55
Principal, Maturity and Interest............................................................................ 56
Methods of Receiving Payments on the Notes.................................................................. 56
Paying Agent and Registrar for the Notes.................................................................... 56
Transfer and Exchange....................................................................................... 57
Subsidiary Guarantees....................................................................................... 57
Subordination............................................................................................... 58
Optional Redemption......................................................................................... 60
Mandatory Redemption........................................................................................ 60
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Repurchase at the Option of Holders......................................................................... 60
Selection and Notice........................................................................................ 64
Certain Covenants........................................................................................... 64
Events of Default and Remedies.............................................................................. 74
No Personal Liability of Directors, Officers, Employees and Stockholders.................................... 77
Legal Defeasance and Covenant Defeasance.................................................................... 77
Amendment, Supplement And Waiver............................................................................ 79
Satisfaction and Discharge.................................................................................. 80
Concerning the Trustee...................................................................................... 81
Book-Entry, Delivery and Form............................................................................... 81
Depository Procedures....................................................................................... 81
Exchange of Book-Entry Notes for Certificated Notes......................................................... 84
Exchange of Certificated Notes for Global Notes............................................................. 85
Certain Definitions......................................................................................... 85
DESCRIPTION OF SENIOR INDEBTEDNESS............................................................................101
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS....................................................................106
PLAN OF DISTRIBUTION..........................................................................................110
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS..........................................................................................112
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS...................................................................119
WHERE YOU CAN FIND MORE INFORMATION...........................................................................123
EXPERTS.......................................................................................................123
LEGAL MATTERS.................................................................................................124
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by us with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), are hereby incorporated by reference
in this prospectus, except as superseded or modified herein:
(a) Our annual report on Form 10-K/A for the fiscal year ended December 31,
2001;
(b) Our quarterly report on Form 10-Q/A for the period ended March 31,
2002;
(c) Our quarterly report on Form 10-Q/A for the period ended June 30, 2002;
(d) Our current report on Form 8-K, Date of Event - December 18, 2001,
filed on January 9, 2002;
(e) Our current report on Form 8-K, Date of Event - March 28, 2002, filed
on March 28, 2002;
(f) Our current report on Form 8-K, Date of Event - March 28, 2002, filed
on March 29, 2002;
(g) Our current report on Form 8-K, Date of Event - April 24, 2002, filed
on May 9, 2002;
(h) Our current report on Form 8-K, Date of Event - May 30, 2002, filed on
June 4, 2002;
(i) Our current report on Form 8-K, Date of Event - October 17, 2002, filed
on October 24, 2002; and
(j) Our definitive proxy statement on Schedule 14A filed on April 30, 2002.
All of such documents are on file with the Commission. In addition, all
documents filed by Jarden Corporation pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, subsequent to the date of this prospectus and prior
to termination of the exchange offer are incorporated by reference in this
prospectus and are a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated by reference herein
modifies or replaces such statement. Any statements so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
This prospectus incorporates herein by reference important business and
financial information about us that is not included in or delivered with this
prospectus. This information is available to you without charge upon written or
oral request. If you would like a copy of any of this information, please submit
your request to Jarden Corporation, 555 Theodore Fremd Avenue, Rye, NY 10580,
Attention: Corporate Secretary, or call (914) 967-9400. In addition, to obtain
timely delivery of any information you request, you must submit your request no
later than November 20, 2002, which is five business days before the date the
exchange offer expires.
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SUMMARY
This summary highlights material information from the prospectus. It may
not contain all of the information that is important to you. References in this
prospectus to "Jarden," "we," "us" and "our" refer to Jarden Corporation, which
was formerly known as Alltrista Corporation. We urge you to read and review
carefully this entire prospectus, and the other documents to which it refers, to
fully understand the terms of the new notes and the exchange offer.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
General..................................... On April 24, 2002, we completed a private offering of the old notes, which
consisted of $150.0 million aggregate principal amount of our 9 3/4% Senior
Subordinated Notes due 2012. In connection with the private offering, we entered
into a registration rights agreement in which we agreed, among other things, to
deliver this prospectus and to complete an exchange offer for the old notes.
The Exchange Offer.......................... We are offering to exchange $1,000 principal amount of our registered 9 3/4%
Senior Subordinated Notes due 2012, which we refer to as the "new notes," for each
$1,000 principal amount of our unregistered 9 3/4% Senior Subordinated Notes due
2012, which we refer to as the "old notes."
We sometimes refer to the new notes and the old notes together as the "notes."
Currently, $150.0 million principal amount of old notes are outstanding. The terms
of the new notes are identical in all material respects to the terms of the old
notes, except that the special mandatory redemption provisions and the transfer
restrictions applicable to the old notes are not applicable to the new notes.
Old notes may be tendered only in $1,000 increments. Subject to the satisfaction
or waiver of specified conditions, we will exchange the new notes for all old
notes that are validly tendered and not withdrawn prior to the expiration of the
exchange offer. See "The Exchange Offer -- Terms of the Exchange Offer."
Upon completion of the exchange offer, there may be no market for the old notes
and you may have difficulty selling them. See "Risk Factors - If you fail to
exchange
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properly your old notes for new notes, you will continue to hold notes subject to
transfer restrictions."
Expiration Date............................. The exchange offer will expire at 5:00 p.m., New York City time, on November 27, 2002,
unless extended, in which case the expiration date will mean the latest date and time
to which we extend the exchange offer.
Conditions to the Exchange Offer............ The exchange offer is not subject to conditions other than that:
o it shall not violate applicable law or any applicable interpretation of the
staff of the Commission,
o no action or proceeding shall have been instituted or threatened in any court
or by any governmental agency which might materially impair our ability to
proceed with the exchange offer, or
o all governmental approvals which we deem necessary for the completion of the
exchange offer shall have been obtained.
The exchange offer is not conditioned upon any minimum principal amount of old
notes being tendered for exchange.
Procedures for Tendering Old Notes.......... If you wish to tender your old notes for new notes pursuant to the exchange offer,
you must transmit to The Bank of New York, as exchange agent, on or before the
expiration date, either:
o a computer-generated message transmitted through The Depository Trust Company's
Automated Tender Offer Program system and received by the exchange agent and
forming a part of a confirmation of book-entry transfer in which you
acknowledge and agree to be bound by the terms of the letter of transmittal; or
o a properly completed and duly executed letter of transmittal, which accompanies
this prospectus, or a facsimile of the letter of transmittal, together with
your old notes and any other required documentation, to the exchange agent at
its address listed in this prospectus and on the front cover of the letter of
transmittal.
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If you cannot satisfy either of these procedures on a timely basis, then you
should comply with the guaranteed delivery procedures described below. By
executing the letter of transmittal, you will make the representations to us
described under "The Exchange Offer-Procedures for Tendering."
Special Procedures for Beneficial Owners.... If you are a beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender your old notes in the exchange offer, you should contact the registered
holder promptly and instruct the registered holder to tender on your behalf. If
you wish to tender on your own behalf, you must either:
o make appropriate arrangements to register ownership of the old notes in your
name; or
o obtain a properly completed bond power from the registered holder, before
completing and executing the letter of transmittal and delivering your old
notes.
Guaranteed Delivery Procedures.............. If you wish to tender your old notes and time will not permit the documents
required by the letter of transmittal to reach the exchange agent before the
expiration date, or the procedure for book-entry transfer cannot be completed on a
timely basis, you must tender your old notes according to the guaranteed delivery
procedure described in this prospectus under "The Exchange Offer-Guaranteed
Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes....................... Subject to the satisfaction or waiver of the conditions to the exchange offer, we
will accept for exchange any and all old notes which are validly tendered in the
exchange offer and not withdrawn before 5:00 p.m., New York City time, on the
expiration date.
Withdrawal Rights........................... You may withdraw the tender of your old notes at any time before 5:00 p.m., New
York City time, on the expiration date, by complying with the procedures for
withdrawal described in this prospectus under "The Exchange Offer-Withdrawal of
Tenders."
Return of Notes............................. If we do not accept any tendered old notes for the
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reasons described in the terms and conditions of the exchange offer or if you
withdraw any tendered old notes or submit old notes for a greater principal amount
than you desire to exchange, we will return the unaccepted, withdrawn or
non-exchanged old notes without expense to you as promptly as practicable after
the expiration or termination of the exchange offer. See "The Exchange
Offer-Return of Notes."
Certain Federal Income Tax Consequences..... The exchange of old notes for new notes should not be a taxable event for United
States Federal income tax purposes. For a discussion of the material Federal
income tax consequences relating to the exchange of notes, see "Certain Federal
Income Tax Considerations."
Exchange Agent.............................. The Bank of New York, the trustee under the indenture governing the old notes, is
serving as the exchange agent.
Consequence of Failure to Exchange Notes.... If you do not exchange your old notes for new notes, you will continue to be
subject to the restrictions on transfer provided in the old notes and in the
indenture governing the old notes. In general, the old notes may not be offered or
sold, unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable state
securities laws. We do not currently plan to register the old notes under the
Securities Act.
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SUMMARY OF THE TERMS OF THE NEW NOTES
The summary below describes the material terms of the new notes. Some
of the terms and conditions described below are subject to important limitations
and exceptions. The "Description of the New Notes" section of this prospectus
contains a more detailed description of the terms and conditions of the notes.
The terms of the new notes are substantially identical to those of the old
notes, except that the special mandatory redemption provisions and the transfer
restrictions applicable to the old notes are not applicable to the new notes.
The new notes will evidence the same debt as the old notes. The new notes and
the old notes will be governed by the same indenture.
Issuer...................................... Jarden Corporation.
Securities.................................. $150.0 million in principal amount of 9 3/4% Senior Subordinated Notes due 2012.
Maturity.................................... May 1, 2012.
Interest.................................... Annual rate: 9 3/4%.
Payment frequency: every six months on May 1 and November 1.
First payment: November 1, 2002.
Guarantees.................................. The notes will be unconditionally guaranteed in full on a senior subordinated
basis by each of our existing and future domestic restricted subsidiaries. If we
cannot make payments on the notes when they are due, the guarantors must make them
instead. See "Risk Factors - Federal and state statutes allow courts, under
specific circumstances, to void guarantees and require noteholders to return
payments received from guarantors" and "Description of the New Notes - Subsidiary
Guarantees."
Ranking.................................... The notes and the guarantees will be unsecured senior subordinated obligations.
Accordingly, they will rank:
o behind all of our and the guarantors' existing and future senior debt;
o equally with all our and the guarantors' existing and future unsecured senior
subordinated obligations issued under the indenture and which do not expressly
provide that they are subordinated to the notes; and
o ahead of any of our and the guarantors' future debt that expressly provides
that it is subordinated to the
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notes.
On a pro forma basis as of March 31, 2002, the notes and the guarantees would have
been subordinated to approximately $50.0 million of senior debt. In addition,
there would have been approximately $50.0 million of unused commitments under our
new senior credit facility.
Optional Redemption......................... On or after May 1, 2007, we may redeem some or all of the notes at any time at the
redemption prices listed under "Description of the New Notes--Optional
Redemption."
Prior to May 1, 2005, we may redeem up to 35% of the notes with the proceeds from
certain public equity offerings at the redemption price listed under "Description
of the New Notes--Optional Redemption."
Mandatory Offer to Repurchase................ If we sell certain assets or experience certain types of changes of control, we
must offer to repurchase the notes at the prices listed in the section
"Description of the New Notes--Repurchase at the Option of Holders." There can be
no assurance that we will have available funds sufficient to repurchase all of the
notes that might be tendered by holders of the notes seeking to accept the
repurchase offer. See Risk Factors-We may not have the ability to raise the funds
necessary to finance the change of control offer required by the indenture."
Certain Covenants........................... The indenture governing the notes will, among other things, limit our
and the ability of our subsidiaries to:
o incur additional indebtedness;
o pay dividends or distributions on, or redeem or repurchase, capital stock;
o make investments;
o engage in certain transactions with affiliates;
o incur liens;
o transfer or sell assets; and
o consolidate, merge or transfer all or substantially all of our assets.
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For more details, see "Description of the New Notes."
Use of Proceeds............................. We will not receive any proceeds from the exchange offer.
YOU SHOULD REFER TO THE SECTION ENTITLED "RISK FACTORS" FOR AN
EXPLANATION OF MATERIAL RISKS OF INVESTING IN THE NEW NOTES.
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THE COMPANY
Jarden Corporation, formerly known as Alltrista Corporation, is a
leading provider of niche consumer products used in home food preservation. We
operate two distinct business groups, consumer products and material based. Our
consumer products group markets and distributes the FoodSaver(R) line, which is
the U.S. market leader in home vacuum packaging systems and accessories and is
the leading North American manufacturer, distributor and marketer of home
canning and related products, primarily under the Ball(R), Kerr(R) and
Bernardin(R) brands. Our materials based group is the country's largest producer
of zinc strip and is a plastics manufacturer .
During 2001, we repositioned our growth strategy to focus on consumer
products. Alltrista Consumer Products manufactures, markets and distributes a
broad line of home food preservation and preparation products that includes
recognized brand name home canning jars, jar closures and other accessories
(including fruit pectin, Fruit-Fresh(R) brand fruit protector, pickle mixes and
tomato mixes). As of April 24, 2002, through the acquisition of Tilia
International, Inc. and its subsidiaries ("Tilia"), our consumer products group
markets and distributes the FoodSaver(R) vacuum packaging system. Vacuum
packaging is the process of removing air from a container to create a vacuum,
and then sealing the container so that air cannot re-enter.
Our materials based group is comprised of three business segments:
metals, injection molded plastics, and other. Our metals business is the sole
source supplier of copper plated zinc penny blanks to both the United States
Mint and the Royal Canadian Mint. In addition, we manufacture a line of
industrial zinc items used in the plumbing, automotive, electrical component and
European architectural markets, and the Lifejacket(R) anti-corrosion system. Our
plastic injection molding business manufactures precision custom components for
major companies in the healthcare and consumer products industries including
CIBA Vision Corporation, Johnson & Johnson, Meridian Diagnostics, Inc., The
Scotts Company and Winchester Ammunition. The other segment includes the
manufacturing of non-injection molded plastic parts and other immaterial
business activities.
CONSUMER PRODUCTS GROUP
The consumer products group is comprised of two segments: vacuum
packaging and domestic consumables.
Our domestic consumables segment manufactures, markets and distributes
a line of home food preservation products to serve value, mid-tier and premium
oriented customers, which products include home canning jars, jar closures, home
canning tools, and other accessories. These products are marketed under the
well-known Ball(R), Bernardin(R), Golden Harvest(R), and Kerr(R) brand names. We
also market and distribute related food products, including fruit pectin,
Fruit-Fresh(R) brand fruit protector, pickle mixes, tomato mixes and all-in-one
canning kits, including a jam pectin kit and jelly and salsa kits. In addition,
we market a line of housewares under the Golden Harvest(R) brand, including
tumblers, beverage tappers and other glassware.
We also provide patented vacuum packaging systems for household use
marketed under the FoodSaver(R) brand. Our seven models of compact, patented
counter-top FoodSaver(R) appliances incorporate a vacuum pump and bag sealer to
keep foods fresh and are sold at prices ranging from approximately $100 to
almost $300. We market our FoodSaver(R) appliances in tandem with
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our patented FoodSaver(R) bags and rolls and complementary accessories,
including canisters, containers, lids, jar sealers and bottle stoppers.
Customers
Our customers are a diverse group of wholesalers and retailers in the
United States and Canada. Our principal customers include grocery stores, mass
merchants, and hardware stores, but we also sell through sporting goods and
outdoor stores and specialty retailers. We have been Wal-Mart's category manager
for the home canning segment since 1998. In this role, we are responsible for
the home canning section within the store, including inventory management, the
introduction of new items, and the creation of various reports to track
inventory, sales, and margins. In addition to these channels of distribution,
vacuum packaging products are sold directly to individual consumers through
direct-to-consumer channels. Our direct-to-consumer sales have primarily been
made through infomercials and catalogs.
Sales and Marketing
Our consumer products sales are made in the United States and Canada
through food brokers and manufacturer representative organizations as well as
through our internal sales force and house accounts. We employ regional sales
managers located in key geographic areas who oversee the sales and retail
activities of food brokerage firms and independent manufacturer representatives.
Distribution and Fulfillment
We utilize company-operated and independent warehouses located in
various regions of the United States and Canada to distribute our products. The
largest of these warehouses is located in Muncie, Indiana and is operated by an
outsourced provider, which utilizes highly automated packaging equipment
allowing us to maintain our efficient and effective logistics and freight
management processes. We also work with an outsourced provider for the delivery
of our products in order to ensure that as many shipments as possible are
processed as full truckloads, saving significant freight costs.
Manufacturing
We manufacture the metal closures for our home canning jars at our
Muncie, Indiana facility. Lithographed tin plated steel sheet is cut and formed
to produce the lids and bands. Liquid plastisol, which we formulate, is applied
to lids, forming an airtight seal, which is necessary for safe and effective
home canning. Finished products are packaged for integration with glass jars or
sold in multi-packs as replacement lids.
Vacuum packaging products are sourced through a network of independent
manufacturers. Appliances are currently sourced through three facilities in
China; bags and rolls are currently sourced through suppliers in Korea and the
United States; and accessories are sourced from Taiwan, China and the United
States. Our own research and development department designs and engineers
products in the United States and sets strict engineering specifications for the
third-party manufacturers. We maintain ownership over all necessary production
molds.
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Intellectual Property
Management believes that none of our active trademarks or patents is
essential to the successful operation of our business as a whole. However, one
or more trademarks or patents may be material in relation to individual products
or product lines such as our property rights to use the Ball(R), FoodSaver(R),
Fruit-Fresh(R), Golden Harvest(R), and Kerr(R) brand names and the Bernardin(R)
trade name in connection with certain goods to be sold, including home food
preservation supplies, kitchen housewares and packaged foods for human
consumption.
We hold patents throughout many primary worldwide markets on both the
design of the FoodSaver(R) appliance itself as well as on many of its
components. Our patent on the FoodSaver(R) vacuum seal appliance expires in
2009, and our patent on FoodSaver(R) bags expires in 2005. The key elements of
the bag are a unique waffle pattern that facilitates air removal, an oxygen
barrier layer that prevents air from entering the bag and a heat resistant outer
layer to allow easy sealing without burn-through. In addition, we have
registered the VacLoc, SaverMate, VacuTop and VacuSave names with the U.S.
Patent and Trademark Office and in several countries throughout the world. In
addition, we have developed a proprietary two-piece closure system incorporating
a plastisol sealant that differentiates our jar lids from our competitors' lids.
Pursuant to the terms of the 1993 distribution agreement with Ball
Corporation, we were granted a license to use the Ball(R) brand name for our
consumer products. In the event of a change of control of Jarden which has not
received the approval of a majority of our board of directors or causes us to be
controlled or majority owned by a competitor of Ball, Ball has the option to
terminate our license to use the Ball(R) brand name. Pursuant to the terms of an
agreement with Kerr Group, Inc., we have a perpetual exclusive, worldwide
license to use the Kerr(R) brand name in our consumer products division.
However, in the event of a change of control of Jarden which has not received
the approval of a majority of our board of directors, Kerr has the option to
terminate our license to use the Kerr(R) brand name.
Raw Materials
Most of our glass canning jars are supplied under an agreement with
Anchor Glass Container Corporation. Such glass materials are also available from
a variety of other sources at competitive prices. The tin plate raw material
used in the manufacture of our home canning jar lids and closures is supplied by
multiple vendors and is currently available from a variety of sources at
competitive prices. Historically, the raw materials and components that are
necessary for the manufacture of our products have been available in the
quantities that we require.
Competition
We are the leading provider of home canning products and related
accessories and our brands represent a significant portion of the sales in this
niche market. In addition to the competitors in our niche market, we compete
with companies who specialize in other food preservation mediums such as
freezing and dehydration.
Our vacuum packaging appliances compete with marketers of
"conventional" food storage solutions, such as plastic bags and containers. In
addition, our competitors include manufacturers of sealing appliances that
heat-seal bags, but, we believe, do not create a vacuum seal
16
comparable to ours. There are also several companies that manufacture industrial
and commercial vacuum packaging products, but we do not believe that these
manufacturers have attempted to enter the household marketplace.
MATERIALS BASED GROUP
Our materials based group is currently comprised of three business
segments: metals, injection molded plastics, and other.
METALS
We believe our zinc strip business is the largest producer of zinc
strip and fabricated products in the United States. We are the sole source
supplier of copper plated zinc penny blanks to both the United States Mint and
the Royal Canadian Mint and are currently exploring opportunities with several
other countries. In addition, we manufacture a line of industrial zinc items
used in the plumbing, automotive, electrical component and European
architectural markets, and the Lifejacket(R) anti-corrosion system. Our
anticorrosion zinc Lifejacket(R) is gaining recognition as a cost-effective
solution to arrest the corrosion of the reinforcement steel within poured
concrete structures. We are affected by fluctuations in penny blank requirements
of the United States Department of the Treasury and the Federal Reserve System.
Although the future use of the penny as legal tender has been debated in recent
years, management believes that the zinc based coinage will remain an important
part of the currency system for the foreseeable future.
Sales and Marketing
Our sales and marketing staff consists of individuals with considerable
technical background in the field of metallurgy. These individuals focus on
leveraging our core capabilities in zinc metallurgy and electrochemistry to
exploit new market opportunities. The sales and marketing staff works closely
with our engineering and technical services group to deliver products to the
customer. We maintain a website which contains technical information regarding
the advantageous physical properties of zinc versus other metals.
Manufacturing
In our Greenville, Tennessee facility, we manufacture alloys of zinc
strip and fabricated zinc products in a number of configurations for our
customers. We have five lines used to slit the coils into widths specific by
customers. Many customers require less than the full master coil diameters, so
the large coils are broken down into the requested diameters at the time they
are slit. We also produce coin blanks stamped from slit coils using one of five
high-speed presses. The stamped blanks are then rimmed and put into one of three
electroplating lines where the copper coating is applied.
Raw Materials
We purchase special high-grade zinc ingot and a variety of metals,
including copper, lead, titanium, magnesium, manganese and other alloys, to
produce the zinc alloys we use in our various applications. These alloys have
been developed by our technical staff to meet the specific
17
physical and chemical characteristics of the finished product applications. We
purchase zinc ingot based on market prices quoted on the London Metals Exchange
(month-end average price) from a variety of suppliers. Certain customers,
including the United States Mint, provide their own purchased zinc that is
utilized to manufacture product at a toll conversion price. We purchase copper
for both alloying and plating purposes based on market prices quoted on the New
York Commodities and Metals Exchange. As with zinc ingot, the United States Mint
supplies the required copper for one-cent coin blanks. We also purchase a
variety of chemicals for production and waste treatment, primarily for use in
copper plating. Prices for chemicals are negotiated with suppliers based on
market supply and demand conditions and volume purchase levels.
INJECTION MOLDED PLASTICS
We manufacture precision custom injection molded components for major
companies in the healthcare and consumer products industries. We also own
Yorker(R) Closures, a proprietary product line of plastic closures. Products for
the healthcare industry include items such as intravenous harness components and
surgical devices. Products for manufacturers of consumer goods primarily include
packaging and sport shooting ammunition components.
Customers
We supply shotgun shell components to Winchester Ammunition and various
healthcare products (such as contact lens cases) to CIBA Vision Corporation,
Ethicon, Inc., Johnson & Johnson, CB Fleet Company, Inc., and Meridian
Diagnostics, Inc. and consumer products for The Scotts Company, among others.
Sales and Marketing
We concentrate our marketing efforts in those markets that require high
levels of precision, quality, and engineering expertise. There is potential for
continued growth in all product lines, especially in the health care market,
where our quality, service and "clean room" molding operations are critical
competitive factors.
Manufacturing
We manufacture at three facilities located in Greenville, South
Carolina; Reedsville, Pennsylvania; and Springfield, Missouri. The
injection-molding process involves converting plastic resin pellets to a fluid
state through elevated temperature and pressure, at which point the resin is
injected into a mold where it is then formed into a finished part. Molded parts
are usually small, intricate components that are produced using multi-cavity
tooling. Post-molding operations employ robotics and automation for assembly and
packaging.
Raw Materials
We purchase resin from regular commercial sources of supply and, in
most cases, multiple sources. The supply and demand for plastic resins are
subject to cyclical and other market factors.
18
Competition
The market for injection molded plastics is highly competitive. We
concentrate our marketing efforts in those markets that require high levels of
precision, quality, engineering expertise and cleanliness. We have
differentiated ourselves from our competitors by developing long-lasting
relationships with a number of specialty tooling manufacturers and by possessing
strong design capabilities. We believe that the quality and cleanliness of our
facilities provides another competitive advantage for us. As a result, we
believe that we will continue to capture new injection molding programs as they
come to market, as well as benefit from continued outsourcing trends among
original equipment manufacturers.
OTHER
Effective November 26, 2001, we sold our underperforming thermoformed
plastics operations consisting of the assets of our Triangle, TriEnda and
Synergy World divisions (the "TPD Assets") to Wilbert, Inc. for $21.0 million in
cash, a $1.9 million noninterest-bearing one-year note, and the assumption of
certain identified liabilities. We recorded a pre-tax loss of $121.1 million in
2001 related to the sale.
Effective November 1, 2001, we sold our majority interest in Microlin,
LLC, a developer of proprietary battery and fluid delivery technology, for
$1,000 in cash plus contingent consideration based upon future performance
through December 31, 2012 and the cancellation of future funding requirements.
We recorded a pre-tax loss of $1.4 million in 2001 related to the sale.
Currently, our other business primarily manufactures thermoformed
plastic white goods for a variety of customers in our Fort Smith, Arkansas
facility. We also manufacture and sell extruded plastic sheet and roll stock
products in smooth, textured and laminated finishes for a variety of customers.
Additionally, we produce plastic tables for original equipment manufacturers in
our Fort Smith plant and have a proprietary line of tables selling under the
Vision(TM) brand that are primarily sold to the hospitality and institutional
markets. Our customers are primarily other equipment manufacturers.
19
Our products are produced through a thermoforming process.
Thermoforming is an operation in which plastic sheet is converted into a formed
product through single- or twin-sheet vacuum or pressure formed in conjunction
with the application of heat. After the product is formed, the process of
removing the excess material, or trimming, is generally performed by automated
equipment programmed to execute the appropriate steps to produce the finished
part to the customer's specifications.
We purchase resin directly for use in the manufacture of extruded sheet
and also purchase plastic sheet from third-party suppliers in those instances
where we are unable to provide for our needs internally. These raw materials are
obtained from regular commercial sources of supply and, in most cases, multiple
sources. The supply and demand for plastic resins are subject to cyclical and
other market factors. Certain of our customers purchase the resin on our behalf
thereby providing us protection from price fluctuations.
GOVERNMENT CONTRACTS
We enter into contracts with the United States Government which contain
termination provisions customary for government contracts. See "Metals" under
the materials based group discussion above. The United States Government retains
the right to terminate such contracts at its convenience. However, if the
contract is terminated, we are entitled to be reimbursed for allowable costs and
profits to the date of termination relating to authorized work performed to such
date. The United States Government contracts are also subject to reduction or
modification in the event of changes in government requirements or budgetary
constraints. Since entering into a contract with us in 1981, the United States
Government has not terminated the penny blank supply arrangement.
ENVIRONMENTAL MATTERS
Our operations are subject to Federal, state and local environmental
and health and safety laws and regulations, including those that impose
workplace standards and regulate the discharge of pollutants into the
environment and establish standards for the handling, generation, emission,
release, discharge, treatment, storage and disposal of materials and substances
including solid and hazardous wastes. We believe that we are in material
compliance with such laws and regulations. Further, the cost of maintaining
compliance has not, and we believe, in the future, will not, have a material
adverse effect on our business, results of operations or financial condition.
Due to the nature of our operations and the frequently changing nature of
environmental compliance standards and technology, we cannot predict with any
certainty that future material capital or operating expenditures will not be
required in order to comply with applicable environmental laws and regulations.
20
In addition to operational standards, environmental laws also impose
obligations on various entities to clean up contaminated properties or to pay
for the cost of such remediation, often upon parties that did not actually cause
the contamination. We have attempted to limit our exposure to such liabilities
through contractual indemnities and other mechanisms. We do not believe that any
of our existing remediation obligations, including at third-party sites where we
have been named a potentially responsible party, will have a material adverse
effect upon our business, results of operations or financial condition.
EMPLOYEES
As of June 30, 2002, we employed approximately 950 people.
Approximately 215 union workers are covered by two collective bargaining
agreements at our metals and domestic consumables manufacturing facilities.
These agreements expire at the domestic consumables facility (Muncie, Indiana)
on October 15, 2006, and at the metals facility (Greeneville, Tennessee) on
October 4, 2003.
We have not experienced a work stoppage during the past five years.
Management believes that its relationships with our employees and collective
bargaining unions are satisfactory.
* * *
Our principal executive offices are located at 555 Theodore Fremd
Avenue, Rye, New York, 10580.
21
RISK FACTORS
Our business, operations and financial condition are subject to various
risks. The material risks are described below, and you should take these risks
into account in evaluating us or any investment decision involving us or in
deciding whether to tender your old notes in exchange for new notes in this
exchange offer. This section does not describe all risks applicable to us, our
industry or our business, and it is intended only as a summary of the material
risk factors. The risk factors set forth below are generally applicable to the
old notes as well as the new notes.
RISKS RELATING TO THE NOTES
IF YOU FAIL TO EXCHANGE PROPERLY YOUR OLD NOTES FOR NEW NOTES, YOU WILL CONTINUE
TO HOLD NOTES SUBJECT TO TRANSFER RESTRICTIONS.
The new notes will be issued in exchange for old notes only after
timely receipt by the exchange agent of the old notes, a properly completed and
duly executed letter of transmittal and all other required documents. Therefore,
if you desire to tender your old notes in exchange for new notes, you should
allow sufficient time to ensure timely delivery. Your failure to follow these
procedures may result in delay in receiving new notes on a timely basis or in
your loss of the right to receive new notes. Neither we nor the exchange agent
is under any duty to give notification of defects or irregularities with respect
to tenders of old notes for exchange. If you tender old notes in the exchange
offer for the purpose of participating in a distribution of the new notes, you
will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer-Procedures for Tendering" and "Plan of Distribution".
If you do not exchange your old notes for new notes pursuant to the
exchange offer, you will continue to be subject to the restrictions on transfer
of the old notes as set forth in the legend on the old notes. In general, the
old notes may not be offered or sold unless registered under the Securities Act,
or pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. We do not currently intend
to register the old notes under the Securities Act. To the extent that old notes
are tendered and accepted in the exchange offer, the trading market for
untendered and tendered but unaccepted old notes could be adversely affected.
OUR SIGNIFICANT INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH, AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE NOTES.
As a result of the acquisition of Tilia, we have a significant amount
of indebtedness. Our significant indebtedness could:
o make it more difficult for us to satisfy our obligations with
respect to the notes;
o increase our vulnerability to general adverse economic and industry
conditions;
22
o 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, acquisitions and investments and other general
corporate purposes;
o limit our flexibility in planning for, or reacting to, changes in
our business and the markets in which we operate;
o place us at a competitive disadvantage compared to our competitors
that have less debt; and
o limit, among other things, our ability to borrow additional funds.
The following table sets forth our total debt, total stockholders'
equity, total capitalization and ratio of debt to total capitalization on a pro
forma basis:
June 30, 2002
-------------
(Unaudited)
(Dollars in Thousands)
Total debt $213,601
Total stockholders' equity 58,204
-----------------------
Total capitalization $271,805
=======================
Ratio of debt to total 79%
capitalization
The terms of the indenture governing the notes and the new senior credit
facility allow us to issue and incur additional debt upon satisfaction of
certain conditions. See "Description of Senior Indebtedness" for a description
of our new senior credit facility. If new debt is added to current debt levels,
the related risks described above could increase.
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR EXISTING SENIOR
INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER, THE GUARANTEES
OF THE NEW NOTES ARE JUNIOR TO ALL OF THE GUARANTORS' EXISTING SENIOR
INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS.
The notes and the guarantees rank behind all of our and the guarantors'
existing senior indebtedness and all of our and the guarantors' future senior
indebtedness. See "Description of Senior Indebtedness" for a description of our
new senior credit facility. On a pro forma basis as of March 31, 2002, the notes
and the guarantees would have been subordinated to approximately $50.0 million
of senior debt. In addition, our new senior credit facility would have permitted
up to approximately $50.0 million of additional borrowings, subject to
compliance with the covenants and conditions to borrowing under the new senior
credit facility, which borrowings would be senior to the notes and the
guarantees. We will be permitted to borrow substantial additional indebtedness,
including senior debt, in the future.
23
As a result of this subordination, upon any distribution to our
creditors or the creditors of the guarantors in a bankruptcy, liquidation or
reorganization or similar proceedings relating to us or the guarantors or our or
the guarantors' property, the holders of our senior debt and the senior debt of
the guarantors will be entitled to be paid in full in cash before any payment
may be made with respect to the notes or the guarantees.
In addition, all payments on the new notes and the guarantees will be
blocked in the event of a payment default on senior debt and may be blocked for
up to 179 consecutive days in the event of certain non-payment defaults on
designated senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the guarantors, the indenture relating to the new
notes will require that amounts otherwise payable to holders of the new notes in
a bankruptcy or similar proceeding be paid to holders of senior debt instead
until the holders of senior debt are paid in full. As a result, holders of the
new notes may not receive all amounts owed to them and may receive less,
ratably, than holders of trade payables and other unsubordinated indebtedness in
any such proceeding.
SINCE THE NOTES ARE UNSECURED, YOUR RIGHT TO ENFORCE REMEDIES IS LIMITED BY THE
RIGHTS OF HOLDERS OF SECURED DEBT.
In addition to being contractually subordinated to all existing and
future senior indebtedness, our obligations under the new notes will be
unsecured while obligations under our senior credit facility will be secured by
substantially all of our assets and those of our subsidiaries. If we become
insolvent or are liquidated, or if payment under the new senior credit facility
is accelerated, the lenders under the new senior credit facility are entitled to
exercise the remedies available to a secured lender under applicable law. These
lenders have a claim on all assets securing the new senior credit facility
before the holders of unsecured debt, including the notes.
NOT ALL OF OUR SUBSIDIARIES WILL GUARANTEE OUR OBLIGATIONS UNDER THE NOTES, AND
THE ASSETS OF THE NON-GUARANTOR SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE
PAYMENTS ON THE NOTES.
Our present and future domestic restricted subsidiaries will guarantee
the notes. Payments on the notes are only required to be made by us and the
subsidiary guarantors. As a result, no payments are required to be made from
assets of subsidiaries that do not guarantee the notes, unless those assets are
transferred by dividend or otherwise to us or a subsidiary guarantor. On a pro
forma basis, as of and for the year ended December 31, 2001, the aggregate total
assets and net sales of our foreign subsidiaries, which represent all of our
non-guarantor subsidiaries, were $14.3 million and $15.3 million, respectively,
or 4.6% and 3.6%, respectively, of our total assets and net sales.
In the event of a bankruptcy, liquidation or reorganization of any of
the non-guarantor subsidiaries, holders of their liabilities, including their
trade creditors, will be entitled to payment of their claims from the assets of
those subsidiaries before any assets are made available for distribution to us.
As a result, the notes are effectively subordinated to all indebtedness and
other liabilities of the non-guarantor subsidiaries.
24
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 make payments on and to refinance our indebtedness,
including the notes and amounts borrowed under our senior credit facility, and
to fund planned capital expenditures and expansion efforts and strategic
acquisitions we may make in the future, if any, will depend on our ability to
generate cash in the future. This, to a certain extent, is subject to general
economic, financial, competitive and other factors that are beyond our control.
Based on our current level of operations, we believe our cash flow from
operations, together with available cash and available borrowings under our
senior credit facility, will be adequate to meet future liquidity needs for at
least the next twelve months. However, we cannot assure you that our business
will generate sufficient cash flow from operations in the future, that our
currently anticipated growth in revenues and cash flow will be realized on
schedule or that future borrowings will be available to us under the new senior
credit facility in an amount sufficient to enable us to service indebtedness,
including the new notes, or to fund other liquidity needs. We may need to
refinance all or a portion of our indebtedness, including the notes and our
senior credit facility, on or before maturity. We cannot assure you that we will
be able to do so on commercially reasonable terms or at all.
THE INDENTURE RELATED TO THE NOTES AND OUR SENIOR CREDIT FACILITY CONTAIN
VARIOUS COVENANTS WHICH LIMIT OUR MANAGEMENT'S DISCRETION IN THE OPERATION OF
OUR BUSINESS.
Our senior credit facility and the indenture related to the notes
contain various provisions that limit our management's discretion by restricting
our and our subsidiaries' ability to, among other things:
o incur additional indebtedness;
o pay dividends or distributions on, or redeem or repurchase, capital
stock;
o make investments;
o engage in transactions with affiliates;
o incur liens;
o transfer or sell assets; and
o consolidate, merge or transfer all or substantially all of our
assets.
In addition, our senior credit facility requires us to meet certain
financial ratios. Any failure to comply with the restrictions of our senior
credit facility, the indenture related to the notes or any other subsequent
financing agreements may result in an event of default. An event of default may
allow the creditors, if the agreements so provide, to accelerate the related
debt as well as any other debt to which a cross-acceleration or cross-default
provision applies. In addition, the lenders may be able to terminate any
commitments they had made to supply us with further funds.
25
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 certain specific kinds of change of control
events, we will be required to offer to repurchase all outstanding new notes.
However, it is possible that we will not have sufficient funds at the time of
the change of control to make the required repurchase of notes. In addition,
restrictions in our senior credit facility prohibit repurchases of the notes
unless a waiver is obtained from the lenders or our senior credit facility is
repaid in full. If we fail to repurchase the new notes following a change of
control, we will be in default under the indenture related to the new notes,
which will result in a cross-default under our senior credit facility. Any
future debt which we incur may also contain restrictions on repayment of the
notes. In addition, certain important corporate events, such as leveraged
recapitalizations, that would increase the level of our indebtedness would not
constitute a change of control under the indenture related to the notes.
A PUBLIC MARKET FOR THE NEW NOTES MAY NOT DEVELOP.
There can be no assurance that a public market for the new notes will
develop or, if such a market develops, as to the liquidity of the market. If a
market were to develop, the new notes could trade at prices that may be higher
or lower than their principal amount. We do not intend to apply for listing of
the new notes on any securities exchange or for quotation of the new notes on
any automated quotation system. The initial purchasers, Banc of America
Securities LLC, CIBC World Markets Corp., and NatCity Investments Inc., have
previously made a market in the old notes, and we have been advised that the
initial purchasers currently intend to make a market in the new notes, as
permitted by applicable laws and regulations, after consummation of the exchange
offer. The initial purchasers are not obligated, however, to make a market in
the old notes or the new notes, and any market-making activity may be
discontinued at any time without notice at the sole discretion of the initial
purchasers. If an active public market does not develop or continue, the market
price and liquidity of the new notes may be adversely affected.
In addition, the liquidity of the trading market in the new notes, and
the market price quoted for the new notes, may be adversely affected by changes
in the overall market for high-yield securities and by changes in our financial
performance or prospects or in the prospects for companies in our industry
generally. As a result, you cannot be sure that an active trading market will
develop for the notes.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS.
If a bankruptcy case or lawsuit is initiated by unpaid creditors of any
guarantor, the debt represented by the guarantees entered into by the guarantors
may be reviewed under the Federal bankruptcy law and comparable provisions of
state fraudulent transfer laws. Under these laws, a guarantee could be voided,
or claims in respect of the guarantee could be subordinated to certain
obligations of a guarantor if, among other things, the guarantor, at the time it
entered into the guarantee:
o received less than reasonably equivalent value or fair consideration
for entering into
26
the guarantee; and
o either:
o was insolvent or rendered insolvent by reason of entering into a
guarantee; or
o as engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
o intended to incur, or believed that it would incur, debts or
contingent liabilities beyond its ability to pay them as they
become due.
In addition, any payment by a guarantor could be voided and required to
be returned to the guarantor or to a fund for the benefit of the guarantor's
creditors under those circumstances.
If a guarantee of a subsidiary were voided as a fraudulent conveyance
or held unenforceable for any other reason, holders of the notes would be solely
creditors of our company and creditors of our other subsidiaries that have
validly guaranteed the notes. The notes then would be effectively subordinated
to all liabilities of the subsidiary whose guarantee was voided.
The measures of insolvency for purposes of these fraudulent transfer
laws will vary depending upon the law applied in any proceeding to determine
whether a fraudulent transfer has occurred. Generally, however, a guarantor
would be considered insolvent if:
o the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets; or
o the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature; or
o it could not pay its debts or contingent liabilities as they become
due.
If the claims of the holders of the new notes against any subsidiary
were subordinated in favor of other creditors of the subsidiary, the other
creditors would be entitled to be paid in full before any payment could be made
on the new notes. If one or more of the guarantees is voided or subordinated, we
cannot assure you that after providing for all prior claims there would be
sufficient assets remaining to satisfy the claims of the holders of the new
notes.
Based upon financial and other information, we believe that the
guarantees are being incurred for proper proposes and in good faith and that we,
and our subsidiaries that are guarantors, on a consolidated basis, are solvent
and will continue to be solvent after this offering is completed, will have
sufficient capital for carrying on our business after the issuance of the new
notes and will be able to pay our debts as they mature. We cannot assure you,
however, as to the standard a court would apply in making these determinations
or that a court would agree with our conclusions in this regard.
27
RISKS RELATING TO JARDEN
REDUCTIONS, CANCELLATIONS, OR DELAYS IN CUSTOMER PURCHASES WOULD ADVERSELY
AFFECT OUR PROFITABILITY.
Customers in our consumer products group, and many customers in our
materials based group, generally do not enter into long-term contracts or
commitments with us. As a result, these customers may cancel their orders,
change purchase quantities from forecast volumes, or delay purchases for a
number of reasons beyond our control. Significant or numerous cancellations,
reductions, or delays in purchases by customers could have a material adverse
effect on our business, results of operations and financial condition. In
addition, because many of our costs are fixed, a reduction in customer demand
could have an adverse affect on our gross profit margins and operating income.
Sales to one customer in our consumer products group, Wal-Mart Stores,
Inc. and its affiliates, accounted for approximately 8% of our 2001 consolidated
net sales and approximately 17% of our 2001 consolidated net sales on a pro
forma basis. In addition, sales to one customer in our materials based group
accounted for approximately 8% of our 2001 consolidated net sales and
approximately 6% of our 2001 consolidated net sales on a pro forma basis. A
significant reduction in purchases from either of these customers could have a
material adverse effect on our business, results of operations and financial
condition.
WE MAY BE ADVERSELY AFFECTED BY THE TREND TOWARDS RETAIL TRADE CONSOLIDATION.
With the growing trend towards retail trade consolidation, we are
increasingly dependent upon key retailers whose bargaining strength is growing.
Our consumer products businesses may be negatively affected by changes in the
policies of our retailer customers, such as inventory destocking, limitations on
access to shelf space, price demands and other conditions.
SALES OF SOME OF OUR PRODUCTS ARE SEASONAL.
Sales of certain of our products, particularly our consumer products,
are seasonal. Sales of our home canning products generally reflect the pattern
of the growing season, and sales of our FoodSaver(R) products generally are
strongest in the fourth quarter preceding the holiday season. Sales of these
products may be negatively impacted by unfavorable weather conditions and other
market trends. Sales of our consumer products may also be adversely affected by
the trend toward decreasing prices and increasing quality of purchased preserved
food products. Either or both of these factors could have a material adverse
effect on our business, results of operations and financial condition.
WE DEPEND ON SUPPLIERS IN ASIA.
The vast majority of our FoodSaver(R) products are manufactured by
third party suppliers in China and Korea. Any adverse change in, among other
things, any of the following could have a material adverse effect on our
business, results of operations and financial condition:
o our relationship with these suppliers;
o the financial condition of these suppliers;
28
o our ability to import outsourced products; or
o these suppliers' ability to manufacture and deliver outsourced
products on a timely basis.
We cannot assure you that we could quickly or effectively replace any
of our suppliers if the need arose, and we cannot assure you that we could
retrieve tooling and molds possessed by any of our suppliers. Our dependence on
these few suppliers could also adversely affect our ability to react quickly and
effectively to changes in the market for our products. In addition,
international manufacturing is subject to significant risks, including, among
other things:
o labor unrest;
o political instability;
o restrictions on transfer of funds;
o domestic and international customs and tariffs;
o unexpected changes in regulatory environments; and
o potentially adverse tax consequences.
Labor in China has historically been readily available at relatively
low cost as compared to labor costs applicable in other nations. China has
experienced rapid social, political and economic change in recent years. We
cannot assure you that labor will continue to be available to us in China at
costs consistent with historical levels. A substantial increase in labor costs
in China could have a material adverse effect on our business, results of
operations and financial condition. Although China currently enjoys "most
favored nation" trading status with the United States, the U.S. government has
in the past proposed to revoke such status and to impose higher tariffs on
products imported from China. We cannot assure you that our business will not be
affected by the aforementioned risks, each of which could have a material
adverse effect on our business, results of operations and financial condition.
COMPETITION IN OUR INDUSTRIES MAY HINDER OUR ABILITY TO EXECUTE OUR BUSINESS
STRATEGY, ACHIEVE PROFITABILITY, OR MAINTAIN RELATIONSHIPS WITH EXISTING
CUSTOMERS.
We operate in highly competitive industries. We compete against
numerous other domestic and foreign companies, many of which are more
established in their industries and have substantially greater revenue or
resources than we do. We also face competition from the manufacturing
operations of our current and potential customers in our materials based group.
A shift away from outsourcing on behalf of our current or potential customers
could have a material adverse effect on our business, results of operations and
financial condition. Competition could cause price reductions, reduced profits
or losses, or loss of market share, any of which could have a material adverse
effect on our business.
29
To compete effectively in the future in the consumer products
industry, among other things, we must:
o maintain strict quality standards;
o develop new products that appeal to consumers; and
o deliver products on a reliable basis at competitive prices.
To compete effectively in the future in the materials based industry,
among other things, we must:
o provide technologically advanced manufacturing services;
o maintain strict quality standards;
o respond flexibly and rapidly to customers' design and schedule
changes; and
o deliver products on a reliable basis at competitive prices.
Our inability to do any of these things could have a material adverse
effect on our business, results of operations and financial condition.
IF WE FAIL TO DEVELOP NEW OR EXPAND EXISTING CUSTOMER RELATIONSHIPS, OUR ABILITY
TO GROW OUR BUSINESS WILL BE IMPAIRED.
Growth in our consumer products and materials based groups depends to
a significant degree upon our ability to develop new customer relationships and
to expand existing relationships with current customers. We cannot guarantee
that new customers will be found, that any such new relationships will be
successful when they are in place, or that business with current customers will
increase. Failure to develop and expand such relationships could have a material
adverse effect on our business, results of operations and financial condition.
WE CANNOT BE CERTAIN THAT OUR PRODUCT INNOVATIONS AND MARKETING SUCCESSES WILL
CONTINUE.
We believe that our future success will depend, in part, upon our
ability to continue to introduce innovative designs in our existing products and
to develop, manufacture and market new products. We cannot assure you that we
will be successful in the introduction, marketing and manufacturing of any new
products or product innovations, or develop and introduce in a timely manner
innovations to our existing products which satisfy customer needs or achieve
market acceptance. Our failure to develop new products and introduce them
successfully and in a timely manner would harm our ability to grow our business
and could have a material adverse effect on our business, results of operations
and financial condition.
JARDEN AND TILIA HAVE NO COMBINED OPERATING HISTORY AND THERE CAN BE NO
ASSURANCE THAT WE WILL BE ABLE TO SUCCESSFULLY INTEGRATE TILIA'S OPERATIONS WITH
OUR OWN.
Prior to our acquisition of Tilia, Tilia was operated as a separate independent
entity, and there
30
can be no assurance that we will be able to integrate the operations of Tilia
successfully or to institute the necessary systems and procedures, including
accounting and financial reporting systems, to manage the combined enterprise on
a profitable basis. There can be no assurance that our management group will be
able to manage the combined entity effectively or to implement successfully our
acquisition and internal growth operating strategies. The pro forma financial
results contained herein cover periods in which Jarden and Tilia were not under
common control and may not be indicative of our future financial or operating
results. Our inability to integrate Tilia successfully could have a material
adverse effect on our business, results of operations and financial condition.
WE MAY EXPERIENCE DIFFICULTY IN INTEGRATING ACQUIRED BUSINESSES, WHICH MAY
INTERRUPT OUR BUSINESS OPERATIONS.
We intend to grow through the acquisition of additional companies,
including the acquisition of substantially all of the assets of Tilia. We expect
to face competition for acquisition candidates, which may limit the number of
opportunities and may lead to higher acquisition prices. There can be no
assurance that we will be able to identify, acquire, or manage profitably
additional businesses or to integrate successfully any acquired businesses into
our existing business without substantial costs, delays or other operational or
financial difficulties. Further, acquisitions involve a number of special risks,
including failure of the acquired business to achieve expected results,
diversion of management's attention, failure to retain key personnel of the
acquired business and risks associated with unanticipated events or liabilities,
some or all of which could have a material adverse effect on our business,
results of operations and financial condition.
OUR OPERATIONS ARE SUBJECT TO A NUMBER OF FEDERAL, STATE AND LOCAL ENVIRONMENTAL
REGULATIONS.
Our operations are subject to Federal, state and local environmental and health
and safety laws and regulations including those that impose workplace standards
and regulate the discharge of pollutants into the environment and establish
standards for the handling, generation, emission, release, discharge, treatment,
storage and disposal of materials and substances including solid and hazardous
wastes. We believe that we are in material compliance with such laws and
regulations and that the cost of maintaining compliance will not have a material
adverse effect on our business, results of operations or financial condition.
While we do not anticipate having to make, and historically have not had to
make, significant capital expenditures in order to comply with applicable
environmental laws and regulations, due to the nature of our operations and the
frequently changing nature of environmental compliance standards and technology,
we cannot predict with any certainty that future material capital expenditures
will not be required.
WE MAY BE ADVERSELY AFFECTED BY REMEDIATION OBLIGATIONS MANDATED BY APPLICABLE
ENVIRONMENTAL LAWS.
In addition to operational standards, environmental laws also impose obligations
on various entities to clean up contaminated properties or to pay for the cost
of such remediation, often upon parties that did not actually cause the
contamination. Accordingly, we may become liable, either contractually or by
operation of law, for remediation costs even if the contaminated property is not
presently owned or operated by us, is a landfill or other location where we have
disposed
31
wastes, or if the contamination was caused by third parties during or prior to
our ownership or operation of the property. Given the nature of the past
industrial operations conducted by us and others at these properties, there can
be no assurance that all potential instances of soil or groundwater
contamination have been identified, even for those properties where an
environmental site assessment has been conducted. We do not believe that any of
our existing remediation obligations, including at third-party sites where we
have been named a potentially responsible party, will require material capital
or operating expenditures or will otherwise have a material adverse effect upon
our business, results of operations or financial condition. However, future
events, such as changes in existing laws or policies or their enforcement, or
the discovery of currently unknown contamination, may give rise to additional
remediation liabilities that may be material.
WE DEPEND UPON KEY PERSONNEL.
We are highly dependent on the continuing efforts of our executive
officers, including Martin E. Franklin, our Chairman and Chief Executive
Officer, and Ian G.H. Ashken, our Vice Chairman and Chief Financial Officer, and
we likely will depend on the senior management of any significant business we
acquire in the future. Our business, results of operations and financial
condition could be materially adversely affected by the loss of any of these
persons and the inability to attract and retain qualified replacements.
WE ENTER INTO CONTRACTS WITH THE UNITED STATES GOVERNMENT AND OTHER GOVERNMENTS.
We have entered into a contract with the United States government to
supply penny blanks to the United States Mint. We have also entered into a
contract with the Canadian government to supply penny blanks to the Royal
Canadian Mint. These contracts contain termination provisions customary for
government contracts. The United States government and Canadian government
retain the right to terminate these contracts at their convenience. These
contracts are also subject to reduction or modification in the event of changes
in government requirements or budgetary constraints.
Our largest metals customer is the United States Mint, which comprised
approximately 8% of our 2001 consolidated net sales (approximately 6% on a pro
forma basis). The United States Mint announced in the fourth quarter of 2001
that it was implementing an inventory reduction program for all coinage. In
addition, several times in recent years, proposed legislation has been
introduced which, if passed, could reduce or eliminate the circulation of the
penny. If production, use or demand for the U.S. penny is reduced, it could have
a material adverse effect on our business, results of operations and financial
condition.
OUR OPERATING RESULTS CAN BE ADVERSELY AFFECTED BY CHANGES IN THE COST OR
AVAILABILITY OF RAW MATERIALS.
Pricing and availability of raw materials for use in our businesses can
be volatile due to numerous factors beyond our control, including general,
domestic and international economic conditions, labor costs, production levels,
competition, import duties and tariffs and currency exchange rates. This
volatility can significantly affect the availability and cost of raw materials
for us, and may, therefore, have a material adverse effect on our business,
results of operations and financial condition.
32
During periods of rising prices of raw materials, there can be no
assurance that we will be able to pass any portion of such increases on to
customers. Conversely, when raw material prices decline, customer demands for
lower prices could result in lower sale prices and, to the extent we have
existing inventory, lower margins. As a result, fluctuations in raw material
prices could have a material adverse effect on our business, results of
operations and financial condition.
Some of the products we manufacture require particular types of glass,
plastic, metal or other materials. Supply shortages for a particular type of
material can delay production or cause increases in the cost of manufacturing
our products. This could have a material adverse effect on our business, results
of operations and financial condition.
OUR BUSINESS COULD BE ADVERSELY AFFECTED BECAUSE OF RISKS WHICH ARE PARTICULAR
TO INTERNATIONAL OPERATIONS.
On a pro forma basis, approximately 10.8% of Jarden's net sales in
2001 were derived from sales outside of the United States. In addition, we
anticipate that international sales will be a growth area for our consumer
products business. International sales (and the international operations of our
customers) are subject to inherent risks which could adversely affect us,
including, among other things:
o fluctuations in the value of currencies;
o unexpected changes in and the burdens and costs of compliance with a
variety of foreign laws;
o political and economic instability;
o increases in duties and taxation; and
o reversal of the current policies (including favorable tax and
lending policies) encouraging foreign investment or foreign trade by
our host countries.
OUR PERFORMANCE CAN FLUCTUATE WITH THE FINANCIAL CONDITION OF THE RETAIL
INDUSTRY.
We sell our consumer products to retailers, including food, hardware,
catalog and mass merchants, in the United States and Canada. A significant
deterioration in the financial condition of our major customers could have a
material adverse effect on our sales and profitability. We continually monitor
and evaluate the credit status of our customers and attempt to adjust sales
terms as appropriate. Despite these efforts, a bankruptcy filing by a key
customer could have a material adverse effect on our business, results of
operations and financial condition.
In addition, as a result of the desire of retailers to more closely
manage inventory levels, there is a growing trend among retailers to make
purchases on a "just-in-time" basis. This requires us to shorten our lead time
for production in certain cases and more closely anticipate demand, which could
in the future require the carrying of additional inventories.
33
CLAIMS MADE AGAINST US BASED ON PRODUCT LIABILITY COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS.
As a producer and marketer of consumer products, we are subject to the
risk of claims for product liability. We maintain product liability insurance,
but there is a risk that our coverage will not be sufficient to insure against
all claims which may be brought against us, or that we will not be able to
maintain that coverage or obtain additional insurance covering existing or new
products. If a product liability claim exceeding our insurance coverage were to
be successfully asserted against us, it could have a material adverse effect on
our business, results of operations and financial condition.
WE DEPEND ON OUR PATENTS AND PROPRIETARY RIGHTS.
Our success with our proprietary products depends, in part, on our
ability to protect our current and future technologies and products and to
defend our intellectual property rights. If we fail to adequately protect our
intellectual property rights, competitors may manufacture and market products
similar to ours. We cannot be sure that we will receive patents for any of our
patent applications or that any existing or future patents that we receive or
license will provide competitive advantages for our products. We also cannot be
sure that competitors will not challenge, invalidate or avoid the application of
any existing or future patents that we receive or license. In addition, patent
rights may not prevent our competitors from developing, using or selling
products that are similar or functionally equivalent to our products.
Furthermore, the patents we maintain on the bags used for vacuum sealing expire
in 2005 and the patents we maintain on our home vacuum packaging systems expire
in 2009.
WE DEPEND ON A SINGLE MANUFACTURING FACILITY FOR CERTAIN ESSENTIAL PRODUCTS.
Certain of our products, including some using specially designed
machines and proprietary cutting technology, are manufactured at a sole
company-owned manufacturing facility. These facilities are subject to the normal
hazards that could result in material damage to such facilities. Damage to any
of these facilities, or prolonged interruption in the operations of any of these
facilities for repairs or other reasons, could have a material adverse effect on
our business, results of operations and financial condition.
CERTAIN OF OUR EMPLOYEES ARE REPRESENTED BY LABOR UNIONS.
As of December 31, 2001, approximately 215 of our employees were
covered by collective bargaining agreements. These agreements expire at our
domestic consumables facility (Muncie, Indiana) on October 15, 2006 and at our
metals facility (Greeneville, Tennessee) on October 4, 2003. While we have not
experienced a work stoppage, slowdown or strike during the past five years and
management believes that its relationships with our collective bargaining units
are good, no assurance can be made that we will not experience a work stoppage,
slowdown or strike in the future. A work stoppage, slowdown or strike by our
employees, or the employees of our suppliers or customers, could have a material
adverse effect on our business, results of operations and financial condition.
34
FORWARD LOOKING STATEMENTS
Certain statements we make in this prospectus, and other written or
oral statements by us or our authorized officers on our behalf, may constitute
"forward looking statements" within the meaning of the Federal securities laws.
Forward-looking statements include statements concerning our plans, objectives,
goals, strategies, future events, future revenues or performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions, our
competitive strengths and weaknesses, our business strategy and the trends we
anticipate in the industry and economies in which we operate and other
information that is not historical information. Words or phrases such as
"estimates," "expects," "anticipates," "projects," "plans," "intends,"
"believes" and variations of such words or similar expressions are intended to
identify forward-looking statements. All forward-looking statements, including,
without limitation, our examination of historical operating trends, are based
upon our current expectations and various assumptions. Our expectations, beliefs
and projections are expressed in good faith, and we believe there is a
reasonable basis for them, but we cannot assure you that our expectations,
beliefs and projections will be realized.
Before you invest in the new notes, you should be aware that the
occurrence of the events described in the immediately above section captioned
"Risk Factors" and otherwise discussed elsewhere in this prospectus or in
materials incorporated in this prospectus by reference to our other filings with
the Commission, could have a material adverse affect on our business, financial
condition and results of operation.
The data included in this prospectus regarding markets and ranking,
including the size of certain markets and our position and the position of our
competitors within these markets, are based on independent industry
publications, reports of government agencies or other published industry sources
or our estimates based on management's knowledge and experience in the markets
in which we operate. Our estimates have been based on information provided by
customers, suppliers, trade and business organizations and other contacts in the
markets in which we operate. We believe these estimates to be accurate as of the
date of this prospectus. However, this information may prove to be inaccurate
because of the method by which we obtained some of the data for our estimates or
because this information cannot always be verified with complete certainty due
to the limits on the availability and reliability of raw data, the voluntary
nature of the data gathering process and other limitations and uncertainties
inherent in a survey of market size. As a result, you should be aware that
market, ranking and other similar data included in this prospectus, and
estimates and beliefs based on that data, may not be reliable.
35
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement that we entered into relating to the old notes. We
will not receive any proceeds from the exchange offer. You will receive, in
exchange for old notes tendered by you in the exchange offer, new notes in like
principal amount. The old notes surrendered in exchange for the new notes will
be retired and cancelled and cannot be reissued. Accordingly, the issuance of
the new notes will not result in any increase of our outstanding debt.
We received approximately $143.5 million of net proceeds from the sale
of the old notes. The net proceeds from the offering of the old notes were used
principally to acquire the business of Tilia, to pay related fees and expenses,
and for cash on hand. Our old credit facility was partially repaid using
proceeds from the offering. The old credit facility was to mature on March 31,
2004 and the interest was based upon fixed increments over the adjusted LIBOR or
the agent bank's alternate borrowing rate as defined in the old credit
agreement. The resulting weighted average interest rate at the time of the
refinancing was less than 5%. See "Description of Senior Indebtedness" for a
description of our new credit facility.
36
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the five years ended
December 31, 2001 are set forth below:
------------------------------------------------------------------------------------------
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
------------------------------------------------------------------------------------------
Ratio of earnings to
fixed charges 10.5 12.4 6.2 1.5 * 3.4
==========================================================================================
* For the actual year ended December 31, 2001, the calculated ratio of earnings to fixed charges is less the one-to-
one and represents a deficiency of approximately $125.6 million.
The ratios of earnings to fixed charges are calculated as follows:
(income before income taxes and minority interest) + (fixed charges) - (capitalized interest)
- ---------------------------------------------------------------------------------------------
(fixed charges)
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization, both on an actual basis and as adjusted to give effect to:
o the November 2001 sales of our thermoformed plastics operations,
comprised of the assets of our Triangle, TriEnda and Synergy World
divisions, including the receipt in 2002 of $38 million of related
tax refunds; and
o the April 2002 acquisition of substantially all the assets of
Tilia including the related refinancing of our senior credit
facility and the offering of the old notes.
This table should be read in conjunction with "Use of Proceeds,"
"Selected Consolidated Historical and Pro Forma Financial Data," "Unaudited Pro
Forma Condensed Consolidated Financial Statements" and the consolidated
financial statements of Jarden, including the related notes, incorporated by
reference herein.
As of June 30, 2002
--------------------------
Actual
--------------------------
(in thousands)
==========================
Cash and cash equivalents $ 38,618
==========================
Debt including current installments
Existing credit facility $ -
New senior credit facility
Revolving credit facility -
Term loan 50,000
Senior subordinated notes due 2012 (net of unamortized discount) 148,955
Subordinated seller note due 2003 (net of unamortized discount) 9,602
Subordinated seller note due 2004 (including accrued interest) 5,044
--------------------------
Total debt 213,601
Total stockholders' equity 58,204
--------------------------
Total capitalization $ 271,805
==========================
37
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following table sets forth Jarden's selected financial data as of
and for each of the years ended December 31, 1997, 1998, 1999, 2000 and 2001.
The selected historical financial data set forth below has been derived from
Jarden's audited consolidated financial statements and related notes for the
respective fiscal years, incorporated by reference herein, and should be read in
conjunction with those financial statements and notes thereto. The selected
financial data as of and for the six months ended June 30, 2002 are derived from
unaudited financial statements and should be read in conjunction with our
Quarterly Report on Form 10-Q for the period ended June 30, 2002 incorporated
herein by reference. The results of Tilia are included from April 1, 2002. Pro
forma and interim financial information for the Tilia acquisition and related
financings can be found on page 112.
On a stand alone basis, without the consolidation of its subsidiaries,
Jarden has no independent assets or operations. The guarantees by its
subsidiaries of the Notes are full and unconditional and joint and several. The
subsidiaries that are not guarantors of the Notes are minor. There are no
significant restrictions on our or the guarantors' ability to obtain funds from
their respective subsidiaries by dividend or loan.
38
For the six month
As of and for the year ended December 31, period ended
----------------------------------------------------------- ---------------------
July 1, June 30,
1997 1998 1999 2000 2001 2001 2002
--------- --------- ---------- ---------- ---------- ---------- ---------
(dollars in thousands, except per share data)
Net sales $249,604 $258,489 $ 358,031 $ 357,356 $ 304,978 $159,625 $152,677
Costs and expenses
Cost of sales 183,371 188,174 257,308 275,571 233,676 120,013 97,904
Selling, general and
administrative expenses 34,868 37,452 55,322 56,019 52,212 26,724 32,924
Goodwill amortization 1,265 1,399 4,605 6,404 5,153 3,250 -
Special charges (credits) and - 1,260 2,314 380 4,978 -
reorganization expenses (b) (3,668)
Loss (gain) on
divestiture of assets and - - (19,678) - 122,887 - -
product lines
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before interest,
taxes and minority interest 30,100 30,204 58,160 18,982 (113,928) 13,756 21,849
Interest expense, net 2,256 1,822 8,395 11,917 11,791 6,171 4,985
Income tax provision (benefit) 10,603 10,785 19,458 2,302 (40,443) 2,890 1,584
Minority interest in gain (loss)
of consolidated subsidiary - - - (259) 153 (178) -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations 17,241 17,597 30,307 4,922 (85,429) 4,873 15,280
Loss from discontinued
operations (2,404) (1,870) (87) - - - -
Extraordinary loss from early
extinguishment of debt (net
of income taxes) - - (1,028) - - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) $ 14,837 $ 15,727 $ 29,192 $ 4,922 $ (85,429) $ 4,873 $ 15,280
========== ========== ========== ========== ========== ========== ==========
Basic earnings (loss ) per share (c):
Income (loss) from continuing
operations $ 1.16 $ 1.24 $ 2.25 $ .39 $ (6.71) $ .38 $ 1.11
Loss from discontinued operations (.16) (.13) (.01) - - - -
Extraordinary loss from early
extinguishment of debt (net
of income taxes) - - (.07) - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 1.00 $ 1.11 $ 2.17 $ .39 $ (6.71) $ .38 $ 1.11
========== ========== ========== ========== ========== ========== ==========
Diluted earnings (loss)
per share (c):
Income (loss) from continuing
operations $ 1.14 $ 1.22 $ 2.22 $ .39 $ (6.71) $ .38 $ 1.09
Loss from discontinued
operations (.16) (.13) (.01) - - - -
Extraordinary loss from early
extinguishment of debt (net
of income taxes) - - (.07) - - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ .98 $ 1.09 $ 2.14 $ .39 $ (6.71) $ .38 $ 1.09
========== ========== ========== ========== ========== ========== ==========
OTHER DATA
Depreciation and amortization $ 10,385 $ 10,548 $ 17,697 $ 21,311 $ 18,797 $ 10,836 $ 4,789
Capital expenditures 7,897 11,909 16,628 13,637 9,707 6,551 3,070
BALANCE SHEET DATA (AT END OF PERIOD)
Cash and cash equivalents $ 26,641 $ 21,454 $ 17,394 $ 3,303 $ 6,376 380 $ 38,618
Working capital 53,759 46,923 54,611 22,975 8,035 17,248 69,676
Total assets 166,577 165,831 338,751 308,739 161,303 307,438 337,668
Total debt 30,000 25,715 140,761 137,060 84,875 109,001 213,601
Total stockholders' equity 97,309 94,893 123,025 118,221 35,129 122,681 58,204
TRANSITIONAL DISCLOSURES
REQUIRED BY SFAS 142 (b)
Reported income (loss) before
extraordinary item $ 30,220 $ 4,922 $ (85,429) 4,873
Add back: Goodwill
amortization net of tax 2,768 4,227 3,494 2,006
expense ----------- ----------- ----------- ------------
Adjusted income (loss) before
extraordinary item $ 32,988 $ 9,149 $ (81,935) $ 6,879
----------- ----------- ----------- ------------
Basic earnings(loss) per
share (c):
Reported income (loss) before
extraordinary item $ 2.24 $ .39 $ (6.71) $ .38
Add back: Goodwill
amortization net of tax .21 .33 .27 .16
expense ----------- ----------- ----------- ------------
39
------------------------------------------------
Adjusted income (loss) before
extraordinary item $2.45 $ .72 $ (6.44) $.54
----------- ----------- ----------- ------------
Diluted earnings(loss) per
share (c):
Reported net income (loss) before
extraordinary item $ 2.22 $ .39 $ (6.71) $.38
Add back: Goodwill
amortization net of tax
expense .20 .33 .27 .16
----------- ----------- ----------- ------------
Adjusted income (loss) before
extraordinary item $2.42 $ .72 $ (6.44) $.54
----------- ----------- ----------- ------------
Reported net income (loss) $ 29,192 $4,922 $(85,429) $ 4,873
Add back: Goodwill
amortization net of tax
expense 2,768 4,227 3,494 2,006
----------- ----------- ----------- ------------
Adjusted net income (loss) $ 31,960 $9,149 $(81,935) $ 6,879
----------- ----------- ----------- ------------
Basic earnings(loss) per
share (c): $ 2.17 $ .39 $ (6.71) $.38
Reported net income (loss) .21 .33 .27 .16
----------- ----------- ----------- ------------
Add back: Goodwill
amortization net of tax
expense $ 2.38 $ .72 $ (6.44) $.54
----------- ----------- ----------- ------------
Adjusted net income (loss)
Diluted earnings(loss) per
Reported net income (loss) $ 2.14 .39 $ (6.71) $.38
Add back: Goodwill
amortization net of tax
expense .20 .33 .27 .16
----------- ----------- ----------- ------------
Adjusted net income (loss) $ 2.34 $ .72 $ (6.44) $.54
----------- ----------- ----------- ------------
(a) Special charges (credits) and reorganization expenses were comprised of the
following (in millions):
1998 1999 2000 2001
---- ---- ---- ----
Costs to evaluate strategic options................................... $-- $-- $0.6 $1.4
Discharge of deferred compensation obligations........................ -- -- -- (4.1)
Separation costs for former officers.................................. -- -- -- 2.6
Stock option compensation............................................. -- -- -- 2.4
Corporate restructuring costs......................................... -- -- -- 2.3
Costs to exit facilities.............................................. -- 2.3 -- 0.8
Reduction of long-term performance-based compensation................. -- -- (1.6) --
Litigation charges.................................................... -- -- 1.4 --
Items related to divested operations.................................. 1.3 -- -- (0.4)
------- ------- ------ ------
$1.3 $2.3 $0.4 $5.0
==== ==== ==== ======
(b) In July 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards No. 141 (SFAS 141), Business
Combinations, and No. 142 (SFAS 142), Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill and intangible assets deemed to have indefinite lives will
no longer be amortized but will be subject to annual impairment tests in
accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives. The Company applied the new rules on
accounting for goodwill and other intangible assets beginning in first
quarter of 2002 and has six months from the date of adoption to perform the
first of the required impairment tests of goodwill and indefinite lived
intangible assets. The Company has completed the first tests and, based on
the results, was not required to record any changes related to the adoption
of SFAS 142. The required transitional information is only presented for the
years ended December 31, 1999, 2000, 2001 and the six months ended June 30,
2001.
(c) All earnings per share amounts have been adjusted to give effect to a
2-for-1 split of the Company's outstanding shares of common stock that was
effected during the second quarter of 2002.
40
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of September 30, 2002, by (i) each person or
entity known to us owning beneficially 5% or more of our Common Stock, (ii) each
of our directors and nominees for directors, (iii) each of our executive
officers and (iv) all directors and executive officers as a group. Unless
otherwise noted shares are owned directly or indirectly with sole voting and
investment power.
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED (1) PERCENT (1)
- ---------------- ------------ -----------
First Manhattan Co.
437 Madison Avenue
New York, NY 10022................................................ 1,268,444 (2) 8.9%
Dimension Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401............................................ 987,700 (3) 6.9%
Kennedy Capital Management, Inc.
10829 Olive Blvd.
St. Louis, MO 63141............................................... 953,400 (4) 6.7%
Martin E. Franklin................................................ 1,224,341 (5) 8.6%
Ian G.H. Ashken................................................... 358,652 (6) 2.5%
Douglas W. Huemme................................................. 45,350 (7) *
Richard L. Molen.................................................. 52,800 (8) *
Lynda W. Popwell.................................................. 48,850 (9) *
David L. Swift.................................................... 54,200 (10) *
J. David Tolbert.................................................. 17,994 (11) *
Robert L. Wood.................................................... 46,000 (7) *
Irwin D. Simon.................................................... -0- *
All directors, nominees for directors, and executive officers as a 1,489,535 10.2%
group (9 persons).................................................
- ---------------
* Less than 1%
41
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any share of Common Stock that such person has the right to
acquire within 60 days. The number of shares beneficially owned reflected
in this table and in the footnotes thereto give effect to the 2-for-1
split of our shares of common stock pursuant to which stockholders of
record at the close of business on May 20, 2002 received, on or about June
3, 2002, one additional share of our common stock for every share of our
common stock held. Percent of class is based on the Common Stock
outstanding and entitled to vote as of September 30, 2002. There were
14,298,843 shares outstanding and entitled to vote as of September 30,
2002.
(2) Based solely on Schedule 13G/A filed with the Securities and Exchange
Commission on February 5, 2002. The Schedule 13G/A further reports that
First Manhattan Co. has sole dispositive and voting power with respect to
36,100 of such shares, shared dispositive power with respect to 1,232,344
of such shares, and shared voting power with respect to 1,212,564 of such
shares.
(3) Based solely on Schedule 13G filed with the Securities and Exchange
Commission on February 12, 2002.
(4) Based solely on Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2002.
(5) Includes 100,000 shares of unvested restricted stock and 358,652 shares
beneficially owned by Mr. Ian Ashken for which Mr. Franklin has the power
to vote or to direct the vote pursuant to a Voting Agreement. See note 6
below.
(6) Includes 40,000 shares of unvested restricted stock. Pursuant to a Voting
Agreement, Martin E. Franklin has the power to vote or to direct the vote
of all of Mr. Ashken's beneficially owned shares. See note 5 above.
(7) Includes 44,000 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days.
(8) Includes 52,100 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days.
(9) Includes 48,000 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days.
(10) Includes 52,800 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days.
(11) Includes 10,750 shares subject to outstanding options to purchase Common
Stock which are exercisable within 60 days.
42
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We issued the old notes on April 24, 2002, to Banc of America
Securities LLC, CIBC World Markets Corp., and NatCity Investments Inc., the
initial purchasers, pursuant to a purchase agreement, dated April 10, 2002,
among Jarden, the guarantors, and the initial purchasers. The initial purchasers
subsequently sold the old notes to "qualified institutional buyers", as defined
in Rule 144A under the Securities Act, in reliance on Rule 144A, and outside the
United States under Regulation S of the Securities Act. As a condition to the
sale of the old notes, we entered into a registration rights agreement with the
initial purchasers on April 24, 2002.
Pursuant to the registration rights agreement, we agreed that we would:
o file a registration statement with the Commission with respect to
the new notes no later than 60 days after the date of initial
issuance of the old notes;
o use our best efforts to cause the registration statement to be
declared effective by the Commission at the earliest possible time
but in no event later than 180 days after the date of initial
issuance of the old notes;
o use our best efforts to consummate the exchange offer at the
earliest practicable day after the effective date of the
registration statement of the new notes but in no event later than
30 business days after the effective date of the registration
statement;
o file a shelf registration statement for the resale of the new
notes if we cannot effect an exchange offer and in certain other
circumstances;
o use our best efforts to cause the shelf registration statement, if
necessary, to be declared effective; and
o use our best efforts to keep the shelf registration statement
continuously effective for a period of at least two years subject
to certain provisions of the registration rights agreement.
Upon the effectiveness of the registration statement, we will offer the
new notes in exchange for the old notes.
RESALE OF THE NEW NOTES
Based upon an interpretation by the staff of the Commission contained
in no-action letters issued to third parties, we believe that you may exchange
old notes for new notes in the ordinary course of business. For further
information on the Commission's position, see Exxon Capital Holdings
Corporation, available April 13, 1989, Morgan Stanley & Co. Incorporated,
available June 5, 1991 and Shearman & Sterling, available July 2, 1993, and
other interpretive letters to similar effect. You will be allowed to resell new
notes to the public without further
43
registration under the Securities Act and without delivering to purchasers of
the new notes a prospectus that satisfies the requirements of Section 10 of the
Securities Act so long as you do not participate, do not intend to participate,
and have no arrangement with any person to participate, in a distribution of the
new notes. However, the foregoing does not apply to you if you are:
o a broker-dealer who purchases the new notes directly from us to
resell pursuant to Rule 144A or any other available exemption
under the Securities Act; or
o an "affiliate" of ours within the meaning of Rule 405 under the
Securities Act.
In addition, if:
o you are a broker-dealer; or
o you acquire new notes in the exchange offer for the purpose of
distributing or participating in the distribution of the new
notes,
you cannot rely on the position of the staff of the Commission contained in the
no-action letters mentioned above 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, which the broker-dealer acquired as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of the 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. A broker-dealer may use
this prospectus, as it may be amended or supplemented from time to time, in
connection with resales of new notes received in exchange for old notes which
the broker-dealer acquired as a result of market-making or other trading
activities.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this
prospectus and in the letter of transmittal, we will accept any and all
outstanding old notes validly tendered and not withdrawn before the expiration
date for an equal amount of new notes which are registered under the Securities
Act, subject to the satisfaction of certain conditions. We will issue $1,000
principal amount of new notes in exchange for each $1,000 principal amount of
outstanding old notes surrendered pursuant to the exchange offer. You may tender
old notes only in integral multiples of $1,000.
The form and terms of the new notes are the same as the form and terms
of the old notes except that:
o we have registered the new notes under the Securities Act and,
therefore, the new notes will not bear legends restricting their
transfer; and
44
o holders of the new notes will not be entitled to any special
mandatory redemption provisions.
The new notes will evidence the same debt as the old notes and will be
issued under the same indenture, so the new notes and the old notes will be
treated as a single class of debt securities under the indenture.
As of the date of this prospectus, $150,000,000 in aggregate principal
amount of the old notes is outstanding. Only registered holders of the old
notes, or their legal representative or attorney-in-fact, as reflected on the
records of the trustee under the indenture, may participate in the exchange
offer. We will not set a fixed record date for determining registered holders of
the old notes entitled to participate in the exchange offer.
You do not have any appraisal or dissenters' rights under 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, the Exchange Act and the rules
and regulations of the Commission.
We will be deemed to have accepted validly tendered old notes when, as
and if we had given oral or written notice of acceptance to the exchange agent.
The exchange agent will act as your agent for the purposes of receiving the new
notes from us.
If you tender old notes in the exchange offer, you will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
letter of transmittal. We will pay all charges and expenses, other than
applicable taxes, in connection with the exchange offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" will mean 5:00 p.m., New York City time, on
November 27, 2002, unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" will mean the latest date and time to
which we extend the exchange offer. To extend the exchange offer, we will:
o notify the exchange agent of any extension orally or in writing;
and
o notify the registered holders of the old notes by means of a press
release or other public announcement, each before 9:00 a.m., New
York City time, on the next business day after the previously
scheduled expiration date.
We reserve the right, in our reasonable discretion:
o to delay accepting any old notes until such time as the conditions
listed under "-Conditions" are satisfied or waived;
o to extend the exchange offer;
45
o if any conditions listed below under "-Conditions" are not
satisfied, to terminate the exchange offer by giving oral or
written notice to the exchange agent; or
o to waive any conditions in any respect, by giving oral or written
notice to the exchange agent.
If we terminate the exchange offer, we will return the old notes
deposited by the holder of the old notes in accordance with the procedures
described in this prospectus under "-Return of Notes."
Any delay in acceptance, extension, or termination will be followed as
soon as practicable by a press release or other public announcement or
post-effective amendment.
If the exchange offer is amended in a manner determined by us to
constitute a material change, we will promptly disclose that amendment by means
of a prospectus supplement or post-effective amendment that will be distributed
to the holders. We will also extend the exchange offer for a period of five to
ten business days, depending upon the significance of the amendment and the
manner of disclosure to the holders, if the exchange offer would otherwise
expire during the five to ten business day period.
INTEREST ON THE NEW NOTES
The new notes will each accrue interest on the same terms as the old
notes. Interest on the notes will accrue at the rate of 9 3/4% per annum and
will be payable semi-annually in arrears on May 1 and November 1, commencing on
November 1, 2002. Jarden will make each interest payment to the Holders of
record on the immediately preceding April 15 and October 15. Old notes accepted
for exchange will not receive accrued interest thereon at the time of exchange.
However, each new note will bear interest from the most recent date to which
interest has been paid on the old notes, or if no interest has been paid on the
old notes or the new notes, from April 24, 2002.
PROCEDURES FOR TENDERING
You may tender old notes in the exchange offer only if you are a
registered holder of old notes. To tender in the exchange offer, you must:
o complete, sign and date the letter of transmittal or a facsimile
of the letter of transmittal;
o have the signatures guaranteed if required by the letter of
transmittal; and
o mail or otherwise deliver the letter of transmittal or the
facsimile of the letter of transmittal to the exchange agent at
the address listed below under "-Exchange Agent" for receipt
before the expiration date.
In addition, either:
46
o the exchange agent must receive certificates for the old notes
along with the letter of transmittal into its account at the
depositary pursuant to the procedure for book-entry transfer
described below before the expiration date;
o the exchange agent must receive a timely confirmation of a
book-entry transfer of the old notes, if the procedure is
available, into its account at the depositary pursuant to the
procedure for book-entry transfer described below before the
expiration date; or
o you must comply with the guaranteed delivery procedures described
below.
Your tender, if not withdrawn before the expiration date, will
constitute an agreement between you and us in accordance with the terms and
subject to the conditions described in this prospectus and in the letter of
transmittal.
The method of delivery of old notes and the letter of transmittal and
all other required documents to the exchange agent is at your election and risk.
We recommend that instead of delivery by mail, you use an overnight or hand
delivery service, properly insured. In all cases, you should allow sufficient
time to assure delivery to the exchange agent before the expiration date. You
should not send letters of transmittal or old notes to us. You may request your
respective brokers, dealers, commercial banks, trust companies or nominees to
effect the transactions described above for you.
If you are a beneficial owner of old notes whose old notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your old notes, you should contact the
registered holder promptly and instruct the registered holder to tender on your
behalf. If you wish to tender on your own behalf, before completing and
executing the letter of transmittal and delivering the old notes you must
either:
o make appropriate arrangements to register ownership of the old
notes in your name; or
o obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time. Unless
the old notes are tendered:
o by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on the letter of transmittal; or
o for the account of:
o a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc.;
o a commercial bank or trust company located or having an
office or correspondent in the United States; or
47
o an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act that is a member of one
of the recognized signature guarantee programs identified in
the letter of transmittal,
an eligible guarantor institution must guarantee the signatures on a letter of
transmittal or a notice of withdrawal described below under "-Withdrawal of
Tenders".
If the letter of transmittal is signed by a person other than the
registered holder, the old notes must be endorsed or accompanied by a properly
completed bond power, signed by the registered holder as the registered holder's
name appears on the old notes.
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, they
should so indicate when signing, and unless waived by us, they must submit
evidence satisfactory to us of their authority to so act with the letter of
transmittal.
The exchange agent and the depositary have confirmed that any financial
institution that is a participant in the depositary's system may utilize the
depositary's Automated Tender Offer Program ("ATOP") to tender notes. Holders of
old notes utilizing the ATOP system must transmit to the exchange agent, on or
before the expiration date, a computer-generated message through the ATOP system
that is received by the exchange agent and which forms a part of a confirmation
of book-entry transfer in which you acknowledge and agree to be bound by the
terms of the letter of transmittal.
We will determine in our sole discretion all questions as to the
validity, form, eligibility, including time of receipt, acceptance and
withdrawal of tendered old notes, which determination will be final and binding.
We reserve the absolute right to reject any and all old notes not properly
tendered or any old notes our acceptance of which would, in the opinion of our
counsel, be unlawful. We also reserve the right 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, you must cure any defects or irregularities in
connection with tenders of old notes within the time we determine. Although we
intend to notify you of defects or irregularities with respect to tenders of old
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give you that notification. Unless waived, we will not
deem tenders of old notes to have been made until you cure the defects or
irregularities.
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 in the exchange offer, we reserve
the right in our sole discretion to purchase or make offers for any old notes
that remain outstanding after the expiration date. We also reserve the right to
terminate the exchange offer, as described below under "-Conditions", 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 of those
purchases or offers could differ from the terms of the exchange offer.
48
If you wish to tender old notes in exchange for new notes in the
exchange offer, we will require you to represent that:
o you are not an affiliate of ours;
o you are not a broker-dealer tendering old notes acquired for your
own account directly from us;
o you will acquire any new notes in the ordinary course of your
business; and
o you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding to participate in, a distribution
of the new notes to be issued in the exchange offer.
In addition, in connection with the resale of new notes, any
participating broker-dealer who acquired the old notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The Commission has taken the
position that participating broker-dealers may fulfill their prospectus delivery
requirements with respect to the new notes, other than a resale of an unsold
allotment from the original sale of the Notes, with the prospectus contained in
the registration statement.
RETURN OF NOTES
If we do not accept any tendered old notes for any reason described in
the terms and conditions of the exchange offer or if you withdraw any tendered
old notes or submit old notes for a greater principal amount than you desire to
exchange, we will return the unaccepted, withdrawn or non-exchanged old notes
without expense to you as promptly as practicable after the expiration or
termination of the exchange offer. In the case of old notes tendered by
book-entry transfer into the exchange agent's account at the depositary pursuant
to the book-entry transfer procedures described below, we will credit the old
notes to an account maintained with the depositary as promptly as practicable.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with
respect to the old notes at the depositary for purposes of the exchange offer
within two business days after the date of this prospectus, and any financial
institution that is a participant in the depositary's systems may make
book-entry delivery of old notes by causing the depositary to transfer the old
notes into the exchange agent's account at the depositary in accordance with the
depositary's procedures for transfer. However, although delivery of old notes
may be effected through book-entry transfer at the depositary, you must transmit
and the exchange agent must receive, the letter of transmittal or a facsimile of
the letter of transmittal, with any required signature guarantees and any other
required documents, at the address below under "-Exchange Agent" on or before
the expiration date or pursuant to the guaranteed delivery procedures described
below.
GUARANTEED DELIVERY PROCEDURES
49
If you wish to tender your old notes, but time will not permit a letter
of transmittal, certificates representing the old notes to be tendered or other
required documents to reach the exchange agent before the expiration date, or if
the procedure for book-entry transfer cannot be completed on or before the
expiration date, you may effect a tender if:
o the tender is made by or through an eligible guarantor
institution;
o before the expiration date, the exchange agent receives from the
eligible guarantor institution a properly completed and duly
executed notice of guaranteed delivery, substantially in the form
provided by us, that:
o states the name and address of the holder of the old notes,
the name(s) in which the old notes are registered and the
principal amount of old notes tendered,
o states that the tender is being made by that notice of
guaranteed delivery, and
o guarantees that, within three New York Stock Exchange trading
days after the expiration date, the eligible guarantor
institution will deposit with the exchange agent the letter
of transmittal, together with the certificates representing
the old notes in proper form for transfer or a confirmation
of a book-entry transfer, as the case may be, and any other
documents required by the letter of transmittal; and
o within three New York Stock Exchange trading days after the
expiration date, the exchange agent receives a properly executed
letter of transmittal, as well as the certificates 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.
Upon request, the exchange agent will send to you a notice of
guaranteed delivery if you wish to tender your old notes according to the
guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw
tenders of old notes at any time before 5:00 p.m., New York City time, on the
expiration date.
To withdraw a tender of old notes in the exchange offer, the exchange
agent must receive a written or facsimile transmission notice of withdrawal at
its address listed in this prospectus before the expiration date. Any notice of
withdrawal must:
o specify the name of the person who deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn, including the principal
amount of the old notes; and
o be signed in the same manner as the original signature on the
letter of transmittal by which the old notes were tendered,
including any required signature guarantees.
50
We will determine in our sole discretion all questions as to the
validity, form and eligibility of the notices, and our determination will be
final and binding on all parties. We will not deem any properly withdrawn old
notes to have been validly tendered for purposes of the exchange offer, and we
will not issue new notes with respect to those old notes, unless you validly
re-tender the withdrawn old notes. You may re-tender properly withdrawn old
notes by following one of the procedures described above under "-Procedures for
Tendering" at any time before the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange the new notes for, any old notes,
and may terminate the exchange offer as provided in this prospectus before the
acceptance of the old notes, if:
o the exchange offer violates applicable law, rules or regulations
or an applicable interpretation of the staff of the Commission;
o an action or proceeding has been instituted or threatened in any
court or by any governmental agency which might materially impair
our ability to proceed with the exchange offer (the term
"threatened" means a written demand or statement has been made, or
a written notice has been given, that would lead a prudent person
to conclude that such an action or proceeding is likely to be
asserted, commenced, taken, or otherwise pursued in the future);
or
o all governmental approvals which we deem necessary for the
completion of the exchange offer have not been obtained.
If we determine in our reasonable discretion that any of these
conditions are not satisfied, we may:
o refuse to accept any old notes and return all tendered old notes
to you;
o extend the exchange offer and retain all old notes tendered before
the exchange offer expires, subject, however, to your rights to
withdraw the old notes; or
o waive the unsatisfied conditions with respect to the exchange
offer and accept all properly tendered old notes that have not
been withdrawn.
If the waiver constitutes a material change to the exchange offer, we
will promptly disclose the waiver by means of a prospectus supplement that we
will distribute to the registered holders of the old notes.
SHELF REGISTRATION
Pursuant to the registration rights agreement, in the event that:
51
o we are not required to file a registration statement or permitted
to consummate the exchange offer because the exchange offer is not
permitted by applicable law or Commission policy; or
o a holder of old notes (as defined in the registration rights
agreement) so requests under certain circumstances,
we will file with the Commission a shelf registration statement to register for
public resale the old notes held by you if you provide us with the necessary
information for inclusion in the shelf registration statement.
LIQUIDATED DAMAGES
Pursuant to the registration rights agreement, if:
o we do not file the registration statement with the Commission on
or prior to the 60th day following the issuance of the old notes;
o we do not cause the registration statement to become effective on
or prior to the 180th day following the date of initial issuance
of the old notes;
o we do not complete the exchange offer on or prior to the 30th
business day after the effective date of the registration
statement for the new notes;
o we are obligated to file a shelf registration statement and we do
not file the shelf registration statement with the Commission on
or prior to the 60th day following the date on which we have
notice of the filing obligation;
o we are obligated to file a shelf registration statement and the
Commission does not declare the shelf registration statement
effective on or prior to the 120th day following the deadline for
filing the shelf registration statement; or
o the registration statement or the shelf registration statement, as
the case may be, is declared effective but thereafter ceases to be
effective or useable for its intended purpose without being
succeeded immediately by a post-effective amendment to such
registration statement that cures such failure and is declared
effective,
with each of the items above constituting a "registration default", we agreed to
pay liquidated damages to the holders, with respect to the first 90-day period
immediately following the occurrence of the first registration default in an
amount equal to $.05 per week per $1,000 principal amount of notes held by such
holder. The amount of the liquidated damages will increase by an additional $.05
per week per $1,000 principal amount of notes with respect to each subsequent
90-day period until all registration defaults have been cured, up to a maximum
amount of liquidated damages for all registration defaults of $.50 per week per
$1,000 principal amount of old notes. Following the cure of all registration
defaults, the accrual of liquidated damages will cease.
52
EXCHANGE AGENT
We have appointed The Bank of New York as exchange agent for the exchange offer.
You should direct questions and requests for assistance, requests for additional
copies of this prospectus or the letter of transmittal and requests for a notice
of guaranteed delivery to the exchange agent addressed as follows:
By Registered or Certified Mail:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street- 7 East
New York, New York 10286
Attn.: Diane Amoroso
Telephone # 212-815-3738
Fax # 212-298-1915
By Hand/Overnight Delivery:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street- 7 East
New York, New York 10286
Attn.: Diane Amoroso
Delivery to an address other than the one stated above or transmission
via a facsimile number other than the one stated above will not constitute a
valid delivery.
FEES AND EXPENSES
We will bear all expenses incident to our or the guarantors'
performance of or compliance with the registration rights agreement, regardless
of whether this registration statement becomes effective, including without
limitation:
o all registration and filing fees and expenses (including filings
made by any initial purchaser or holder of notes with the National
Association of Securities Dealers, Inc. (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and
its counsel that may be required by the rules and regulations of
the NASD));
o all fees and expenses for compliance with Federal and state
securities laws;
o all expenses of printing (including printing certificates for the
new notes to be issued in the exchange offer and printing of
prospectuses), messenger and delivery services and telephone;
o all fees and disbursements of counsel for us, the guarantors and,
as discussed below,
53
the holders of old notes; and
o all fees and disbursements of our and the guarantors' independent
certified public accountants.
We will bear our and the guarantors' internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any person, including special experts, retained by us or
the guarantors.
In connection with any registration statement required by the
registration rights agreement, we and the guarantors will reimburse the initial
purchasers and the holders of notes being tendered in the exchange offer and/or
resold pursuant to the "Plan of Distribution" contained in prospectus or
registered pursuant to a shelf registration statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel.
CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the exchange offer is voluntary. We urge you to
consult your financial and tax advisors in making your decisions on what action
to take. Old notes that are not exchanged for new notes pursuant to the exchange
offer will remain restricted securities. Accordingly, those old notes may be
resold only:
o to a person whom the seller reasonably believes is a qualified
institutional buyer in a transaction meeting the requirements of
Rule 144A under the Securities Act;
o in a transaction meeting the requirements of Rule 144 under the
Securities Act;
o outside the United States to a foreign person in a transaction
meeting the requirements of Rule 903 or 904 of Regulation S under
the Securities Act;
o in accordance with another exemption from the registration
requirements of the Securities Act and based upon an opinion of
counsel if we so request;
o to us; or
o pursuant to an effective registration statement.
In each case, the old notes may be resold only in accordance with any
applicable blue sky or securities laws of any state of the United States or any
other applicable jurisdiction.
The foregoing description of the exchange offer contained a summary of
certain provisions of the registration rights agreement, which is incorporated
herein by reference. It does not restate that agreement in its entirety. We urge
you to read the registration rights agreement in its entirety because it, and
not this description, defines your registration rights as holders of the notes.
54
DESCRIPTION OF THE NEW NOTES
The form and terms of the new notes and the old notes are identical in
all material respects, except that the special mandatory redemption provisions
and the transfer restrictions applicable to the old notes do not apply to the
new notes.
The old notes were, and the new notes will be, issued under an
indenture dated as of April 24, 2002 between Jarden Corporation, the guarantors,
and The Bank of New York, as Trustee. The terms of the new 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 following description is a summary of the material provisions of
the indenture. It does not restate the agreement in its entirety. We urge you to
read the indenture because it, and not this description, defines your rights as
holders of the notes. Copies of the indenture are available as set forth below
under "Where You Can Find More Information." You can find the definitions of
certain terms used in this description under the subheading "--Certain
Definitions." Certain defined terms used in this description but not defined
below under "--Certain Definitions" have the meanings assigned to them in the
indenture. In this description, the word "Jarden" refers only to Jarden
Corporation and not to any of its subsidiaries.
The registered holder of a note will be treated as the owner of it for
all purposes. Only registered holders will have rights under the indenture.
BRIEF DESCRIPTION OF THE NEW NOTES AND THE GUARANTEES
The New Notes
The new notes:
o will be general unsecured obligations of Jarden;
o will be subordinated in right of payment to all existing and
future Senior Debt of Jarden;
o will be pari passu in right of payment with any future senior
subordinated indebtedness of Jarden issued under the indenture;
and
o will be unconditionally guaranteed in full by the Guarantors on a
joint and several basis. See "Risk Factors - Federal and state
statutes allow courts, under specific circumstances, to void
guarantees and require noteholders to return payments received
from guarantors" and "Description of the New Notes - Subsidiary
Guarantees."
The Guarantees
The new notes will be unconditionally guaranteed in full by all of
Jarden's domestic subsidiaries on a joint and several basis. See "Risk Factors -
Federal and state statutes allow courts, under specific circumstances, to void
guarantees and require noteholders to return
55
payments received from guarantors" and "Description of the New Notes -
Subsidiary Guarantees."
Each guarantee of the new notes:
o will be a general unsecured obligation of the Guarantor;
o will be subordinated in right of payment to all existing and
future Senior Debt of the Guarantor issued under the indenture;
and
o will be pari passu in right of payment with any future senior
subordinated indebtedness of the Guarantor.
As indicated above and as discussed in detail below under the caption
"--Subordination," payments on the new notes and under the guarantees of the
notes will be subordinated to the payment of Senior Debt. The indenture will
permit us and the Guarantors to incur additional Senior Debt.
As of the date of the indenture, all of our subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "--Certain Covenants--Designation of Restricted and
Unrestricted Subsidiaries," we will be permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the indenture and will
not guarantee the notes.
PRINCIPAL, MATURITY AND INTEREST
Jarden will issue in this offering new notes in an aggregate principal
amount of approximately $150.0 million. All notes issued under the indenture
will be treated as a single class for all purposes under the indenture,
including, without limitation, waivers, amendments, redemptions and offers to
purchase. Jarden will issue notes in denominations of $1,000 and integral
multiples of $1,000. The notes will mature on May 1, 2012.
Interest on the notes will accrue at the rate of 9 3/4% per annum and
will be payable semi-annually in arrears on May 1 and November 1, commencing on
November 1, 2002. Jarden will make each interest payment to the Holders of
record on the immediately preceding April 15 and October 15. Interest on the new
notes will accrue from the date of original issuance or, if interest has already
been paid, from the date it was most recently paid. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a Holder of $1.0 million or more of notes has given wire transfer
instructions to Jarden, Jarden will pay all principal, interest and premium and
Liquidated Damages, if any, on that Holder's notes in accordance with those
instructions. All other payments on notes will be made at the office or agency
of the paying agent and registrar unless Jarden elects to make interest payments
by check mailed to the Holders at their address set forth in the register of
Holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
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The trustee will initially act as paying agent and registrar. Jarden
may change the paying agent or registrar without prior notice to the Holders of
the notes, and Jarden or any of its Subsidiaries may act as paying agent or
registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the
indenture. The registrar and the trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents in connection
with a transfer of notes. Holders will be required to pay all taxes due on
transfer. Jarden is not required to transfer or exchange any note selected for
redemption. Also, Jarden is not required to transfer or exchange any note for a
period of 15 days before a selection of notes to be redeemed.
SUBSIDIARY GUARANTEES
The notes will be unconditionally guaranteed in full by each of
Jarden's current and future Domestic Subsidiaries. These Subsidiary Guarantees
will be joint and several obligations of the Guarantors. Each Subsidiary
Guarantee will be subordinated to the prior payment in full of all Senior Debt
of that Guarantor. The obligations of each Guarantor under its Subsidiary
Guarantee will be limited as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance under applicable law. See "Risk
Factors--Federal and State statutes allow courts, under specific circumstances,
to void guarantees and require noteholders to return payments received from
guarantors."
A Guarantor may not sell or otherwise dispose of all or substantially
all of its assets to, or consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person), another Person, other than Jarden or
another Guarantor, unless:
o immediately after giving effect to that transaction, no Default or
Event of Default exists; and
o either:
o the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such
consolidation or merger assumes all the obligations of that
Guarantor under the indenture, its Subsidiary Guarantee and
the registration rights agreement pursuant to a supplemental
indenture satisfactory to the trustee; or
o the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the
indenture.
The Subsidiary Guarantee of a Guarantor will be released:
o in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by
way of merger or consolidation) to a Person that is not (either
before or after giving effect to such transaction) a Subsidiary of
Jarden, if
57
the sale or other disposition complies with the "Asset Sale"
provisions of the indenture;
o in connection with any sale of all of the Capital Stock of a
Guarantor to a Person that is not (either before or after giving
effect to such transaction) a Subsidiary of Jarden, if the sale
complies with the "Asset Sale" provisions of the indenture; or
o if Jarden designates any Restricted Subsidiary that is a Guarantor
as an Unrestricted Subsidiary in accordance with the applicable
provisions of the indenture.
See "--Repurchase at the Option of Holders--Asset Sales" and "--Certain
Covenants-- Designation of Restricted and Unrestricted Subsidiaries."
SUBORDINATION
The payment of principal, interest and premium and Liquidated Damages,
if any, on the notes will be subordinated to the prior payment in full of all
Senior Debt of Jarden, including Senior Debt incurred after the date of the
indenture.
In the event of any distribution to creditors of Jarden:
o in a liquidation or dissolution of Jarden;
o in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to Jarden or its property;
o in an assignment for the benefit of creditors; or
o in any marshaling of Jarden's assets and liabilities;
the holders of Senior Debt will be entitled to receive payment in full of all
Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of notes will be entitled to receive
any payment with respect to the notes (except that Holders of notes may receive
and retain Permitted Junior Securities and payments made from the trust
described under "--Legal Defeasance and Covenant Defeasance").
Jarden also may not make any payment in respect of the notes (except in
Permitted Junior Securities or from the trust described under "--Legal
Defeasance and Covenant Defeasance") if:
o a payment default on Designated Senior Debt occurs and is
continuing beyond any applicable grace period; or
o any other default occurs and is continuing on any series of
Designated Senior Debt that permits holders of that series of
Designated Senior Debt to accelerate its maturity and the trustee
and Jarden receive a notice of such default (a "Payment Blockage
Notice") from the holders of any Designated Senior Debt (or their
representative).
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Payments on the notes may and will be resumed:
o in the case of a payment default, upon the date on which such
default is cured or waived; and
o in the case of a nonpayment default, upon the earlier of the date
on which such nonpayment default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Debt has
been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
o 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
o all scheduled payments of principal, interest and premium and
Liquidated Damages, if any, on the notes that have come due have
been paid in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee will be, or be made, the
basis for a subsequent Payment Blockage Notice.
If the trustee or any Holder of the notes receives a payment in respect
of the notes (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") when:
o the payment is prohibited by these subordination provisions; and
o the trustee or the Holder has actual knowledge that the payment is
prohibited
the trustee or the Holder, as the case may be, will hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the trustee or the Holder, as the case may be,
will deliver the amounts in trust to the holders of Senior Debt or their proper
representative.
Jarden must promptly notify holders of Senior Debt (or their
representatives) upon the occurrence of an Event of Default.
As a result of the subordination provisions described above, in the
event of a bankruptcy, liquidation or reorganization of Jarden, Holders of notes
may recover less ratably than creditors of Jarden who are holders of Senior
Debt. See "Risk Factors-- Your right to receive payments on the notes is junior
to our existing senior indebtedness and possibly all of our future borrowings.
Further, the guarantees of the new notes are junior to all of the guarantors'
existing senior indebtedness and possibly to all their future borrowings."
The obligations of each Guarantor under its Subsidiary Guarantee will
be subordinated to the Senior Debt of that Guarantor on the same terms described
above.
59
OPTIONAL REDEMPTION
At any time prior to May 1, 2005, Jarden may on any one or more
occasions redeem up to 35% of the aggregate principal amount of notes issued
under the indenture at a redemption price of 109.750% of the principal amount,
plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; provided that:
o at least 65% of the aggregate principal amount of notes issued
under the indenture remains outstanding immediately after the
occurrence of such redemption (excluding notes held by Jarden and
its Subsidiaries); and
o the redemption occurs within 45 days of the date of the closing of
such Public Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be
redeemable at Jarden's option prior to May 1, 2007.
After May 1, 2007, Jarden may redeem all or a part of the notes upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, on the notes redeemed, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2007.......................................... 104.875%
2008.......................................... 103.250%
2009.......................................... 101.625%
2010 and thereafter........................... 100.000%
MANDATORY REDEMPTION
Jarden is not required to make any mandatory redemption or sinking fund payments
with respect to the new notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, each Holder of notes will have the right
to require Jarden to repurchase all or any part (equal to $1,000 or an integral
multiple of $1,000) of that Holder's notes pursuant to a Change of Control Offer
on the terms set forth in the indenture. In the Change of Control Offer, Jarden
will offer a Change of Control Payment in cash equal to 101% of the aggregate
principal amount of notes repurchased plus accrued and unpaid interest and
Liquidated Damages, if any, on the notes repurchased, to the date of purchase.
Within ten days following any Change of Control, Jarden will mail a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase notes
60
on the Change of Control Payment Date specified in the notice, which date will
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed, pursuant to the procedures required by the indenture and described in
such notice. Jarden will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the Change of
Control provisions of the indenture, Jarden will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Change of Control provisions of the indenture by virtue of
such conflict.
On the Change of Control Payment Date, Jarden will, to the extent
lawful:
o accept for payment all notes or portions of notes properly
tendered pursuant to the Change of Control Offer;
o deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes
properly tendered; and
o deliver or cause to be delivered to the trustee the notes properly
accepted together with an officers' certificate stating the
aggregate principal amount of notes or portions of notes being
purchased by Jarden.
The paying agent will promptly mail to each Holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000.
If a Change of Control Offer is made, there can be no assurance that
Jarden will have available funds sufficient to pay the purchase price for all of
the notes that might be tendered by Holders seeking to accept the Change of
Control Offer. The failure of Jarden to make or consummate the Change of Control
Offer or pay the applicable Change of Control purchase price when due would
result in an Event of Default and would give the trustee and the Holders the
rights described under "--Events of Default and Remedies."
Jarden's new credit agreement will provide that certain change of
control events with respect to Jarden will constitute a default thereunder and
will prohibit Jarden from consummating a Change of Control Offer. Any future
credit agreements or other agreements relating to Senior Debt to which Jarden
becomes a party may contain similar provisions. If a Change of Control occurs,
Jarden could seek a waiver of any resulting default and, if required, the
consent of its lenders to the purchase of notes or could attempt to refinance
the borrowings that contains such prohibition. If Jarden is not successful in
obtaining a waiver of any change of control default and the consent of the
lenders or in refinancing such borrowings, such Senior Debt will be in default,
and Jarden will remain prohibited from purchasing notes. In such case, Jarden's
failure to purchase tendered notes would constitute an Event of Default under
the indenture, which would, in turn, also constitute a default under the new
credit agreement. In such circumstances, the subordination provisions in the
indenture would likely restrict payments to the
61
Holders.
Prior to mailing the notice referred to above, but in any event within
70 days following a Change of Control, Jarden will either repay all outstanding
Senior Debt or obtain the requisite waivers and consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of notes
required by this covenant. Jarden will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The provisions described above that require Jarden to make a Change of
Control Offer following a Change of Control will be applicable whether or not
any other provisions of the indenture are applicable. Except as described above
with respect to a Change of Control, the indenture does not contain provisions
that permit the Holders of the notes to require that Jarden repurchase or redeem
the notes in the event of a takeover, recapitalization or similar transaction.
Jarden will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by Jarden and
purchases all notes properly tendered and not withdrawn under the Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of Jarden and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
Holder of notes to require Jarden to repurchase its notes as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of Jarden and its Subsidiaries taken as a whole to another Person or group may
be uncertain.
Asset Sales
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
o Jarden or the Restricted Subsidiary receives consideration at the
time of the Asset Sale at least equal to the fair market value of
the assets or Equity Interests issued or sold or otherwise
disposed of;
o the fair market value is determined by Jarden's Board of Directors
and evidenced by a resolution of the Board of Directors set forth
in an officers' certificate delivered to the trustee; and
o at least 75% of the consideration received in the Asset Sale by
Jarden or such Restricted Subsidiary is in the form of cash. For
purposes of this provision, each of the following will be deemed
to be cash:
o any liabilities, as shown on Jarden's most recent
consolidated balance sheet, of
62
Jarden or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms
subordinated to the notes or any Subsidiary Guarantee) that
are assumed by the transferee of any such assets pursuant to
a customary novation agreement that releases Jarden or such
Restricted Subsidiary from further liability;
o any securities, notes or other obligations received by Jarden
or any such Restricted Subsidiary from such transferee that
within 30 days are converted by Jarden or such Restricted
Subsidiary into cash, to the extent of the cash received in
that conversion; and
o long-term assets that are used or useful in a Permitted
Business.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, Jarden may apply those Net Proceeds at its option:
o to repay Senior Debt and, if the Senior Debt repaid is revolving
credit Indebtedness, to correspondingly reduce commitments with
respect thereto to the extent required by such revolving credit
Indebtedness;
o to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business;
o to make a capital expenditure; or
o to acquire other long-term assets that are used or useful in a
Permitted Business.
Pending the final application of any Net Proceeds, Jarden may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." Within 30
days after the aggregate amount of Excess Proceeds exceeds $5.0 million, Jarden
will make an Asset Sale Offer to all Holders of notes and all holders of other
Indebtedness that is pari passu with the notes containing provisions similar to
those set forth in the indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount plus accrued and unpaid interest and Liquidated Damages, if
any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, Jarden may use those
Excess Proceeds for any purpose not otherwise prohibited by the indenture. If
the aggregate principal amount of notes and other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
trustee will select the notes and such other pari passu Indebtedness to be
purchased on a pro rata basis based upon the aggregate principal amount of each
that was properly tendered. Upon completion of each Asset Sale Offer, the amount
of Excess Proceeds will be reset at zero.
Jarden's new credit agreement will require the consent of the lenders
to most asset sales
63
and will prohibit the retirement of the notes and other indebtedness that ranks
junior to such Senior Debt. Any future credit agreements or other agreements
relating to Senior Debt to which Jarden becomes a party may contain similar
provisions or may require prepayment of such Senior Debt with all or a portion
of the proceeds of such asset sales. In such case, it is likely that Jarden
would apply the net proceeds to retire Senior Debt or, to the extent permitted
under such agreements, acquire assets for use in a Permitted Business.
Jarden will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of the indenture, Jarden will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under the Asset Sale provisions of the indenture by virtue of such conflict.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the
trustee will select notes for redemption as follows:
o if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national
securities exchange on which the notes are listed; or
o if the notes are not listed on any national securities exchange,
on a pro rata basis, by lot or by such method as the trustee deems
fair and appropriate.
In the event of a redemption pursuant to the provisions described above
under "--Optional Redemption," notices of redemption will be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of notes to be redeemed at its registered address, except that
redemption notices may be mailed more than 60 days prior to a redemption date if
the notice is issued in connection with a defeasance of the notes or a
satisfaction and discharge of the indenture. Notices of redemption may not be
conditional.
If any note is to be redeemed in part only, the notice of redemption
that relates to that note will state the portion of the principal amount of that
note that is to be redeemed. A new note in principal amount equal to the
unredeemed portion of the original note will be issued in the name of the Holder
of notes upon cancellation of the original note. No notes can be redeemed in
part if less than $1,000 would remain outstanding.
Notes called for redemption become due on the date fixed for
redemption. On and after the redemption date, interest ceases to accrue on notes
or portions of them called for redemption.
CERTAIN COVENANTS
Restricted Payments
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, directly or
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indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Jarden's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving Jarden
or any of its Restricted Subsidiaries) or to the direct or indirect
holders of Jarden's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified
Stock) of Jarden or to Jarden or a Restricted Subsidiary of Jarden);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Jarden) any Equity Interests of Jarden;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the notes or the Subsidiary Guarantees, except a
payment of interest (including any amount comparable to Liquidated
Damages) or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions
set forth in these clauses (1) through (4) above being collectively
referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or
would occur as a consequence of such Restricted Payment; and
(2) Jarden would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Jarden and its Restricted
Subsidiaries after the date of the indenture (excluding Restricted
Payments permitted by clauses (2), (3), (4) and (5) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Jarden for the period (taken
as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of the indenture to the end of
Jarden's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus
(b) 100% of the aggregate net cash proceeds received by Jarden since
the date of the
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indenture as a contribution to its common equity capital or from the
issue or sale of Equity Interests of Jarden (other than Disqualified
Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of
Jarden that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of Jarden), plus
(c) with respect to Restricted Investments made by Jarden and its
Restricted Subsidiaries after the date of the indenture, an amount
equal to the net reduction in such Restricted Investments resulting
from payments of interest on Indebtedness, dividends, repayments of
loans or advances or other transfers of assets, in each case to Jarden
or any such Restricted Subsidiary from any such Investment, or from the
net cash proceeds from the sale of any such Investment, or from a
redesignation of an Unrestricted Subsidiary to a Restricted Subsidiary,
but only if and to the extent such amounts are not included in the
calculation of Consolidated Net Income and not to exceed the amount of
the Restricted Investment previously made by Jarden or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary; provided that any
amounts in excess of the amount of the Restricted Investment previously
made may be included in the calculation of Consolidated Net Income
otherwise available under clause (a), plus;
(d) $5.0 million.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of the dividend, if at the date of declaration the dividend
payment would have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Jarden or any Guarantor or
of any Equity Interests of Jarden in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of Jarden) of, Equity Interests of Jarden (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition will be excluded from clause (3)(b) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Jarden or any Guarantor in exchange for, or out
of the net cash proceeds received from, the substantially concurrent sale of
Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of Jarden to
the holders of its Equity Interests on a pro rata basis and the redemption,
purchase, cancellation or other retirement of Equity Interests in a
Restricted Subsidiary held by any Person other than Jarden or a Subsidiary
of Jarden;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Jarden or any Restricted Subsidiary of
Jarden held by any member of Jarden's (or
66
any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement, stock option agreement or similar agreement;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests may not exceed $1.0 million in any
twelve-month period and $5.0 million in the aggregate; and
(6) prepayments on the subordinated seller note due 2004 in accordance
with its terms as in effect on the date of the indenture.
The amount of all Restricted Payments (other than cash) will be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by Jarden or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant will be
determined by the Board of Directors whose resolution with respect thereto will
be delivered to the trustee. The Board of Directors' determination must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if the fair market value exceeds $1.0 million.
Not later than the date of making any Restricted Payment, Jarden will deliver to
the trustee an officers' certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
this "Restricted Payments" covenant were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
Incurrence Of Indebtedness And Issuance Of Preferred Stock
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and Jarden
will not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that Jarden may incur Indebtedness
(including Acquired Debt), and Jarden's Restricted Subsidiaries may incur
Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for
Jarden's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such preferred stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the preferred stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by Jarden and any of its Restricted Subsidiaries of
Indebtedness and letters of credit under the New Senior Credit Facility in
an aggregate principal amount at any one time outstanding under this clause
(1) (with letters of credit being deemed to have a principal amount equal to
the maximum potential liability of Jarden and its Restricted Subsidiaries
thereunder) not to exceed $100.0 million less the aggregate amount of all
commitment reductions with respect to any revolving credit borrowings that
have been made by Jarden or any of its Restricted Subsidiaries since the
date of the indenture;
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(2) the incurrence by Jarden and its Restricted Subsidiaries of
Existing Indebtedness;
(3) the incurrence by Jarden and the Guarantors of Indebtedness
represented by the notes and the related Subsidiary Guarantees to be issued
on the date of the indenture and the exchange notes and the related
Subsidiary Guarantees to be issued pursuant to the registration rights
agreement;
(4) the incurrence by Jarden or any of its Restricted Subsidiaries of
Indebtedness of Tilia assumed as part of the Acquisition; provided that such
Indebtedness was not incurred in connection with or in contemplation of the
Acquisition;
(5) the incurrence by Jarden or any of its Restricted Subsidiaries of
Indebtedness in an amount not to exceed $15.0 million pursuant to promissory
notes issued to the shareholders of Tilia in payment of a portion of the
consideration for the Acquisition; provided that such Indebtedness is
subordinated to the notes to at least the same extent as the notes are
subordinated to Senior Debt;
(6) the incurrence by Jarden or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage financings
or purchase money obligations, in each case, incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of Jarden
or such Restricted Subsidiary, in an aggregate principal amount, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (6), not to exceed
$10.0 million at any time outstanding;
(7) the incurrence by Jarden or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(4), (5), (6), (7) or (12) of this paragraph;
(8) the incurrence by Jarden or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Jarden and any of its
Subsidiaries; provided, however, that:
(a) if Jarden or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
notes, in the case of Jarden, or the Subsidiary Guarantee, in the case
of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
Jarden or a Restricted Subsidiary of Jarden and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not either Jarden
or a Restricted Subsidiary of Jarden; will be deemed, in each case, to
constitute an incurrence of such Indebtedness by Jarden or such
Restricted Subsidiary, as the case may be, that was not permitted by
this clause (8);
(9) the incurrence by Jarden or any of its Restricted Subsidiaries of
Hedging Obligations
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that are incurred for the purpose of fixing, swapping or hedging interest
rate risk with respect to any Indebtedness that is permitted by the terms of
the indenture to be outstanding;
(10) the guarantee by Jarden or any of its Restricted Subsidiaries of
Indebtedness of Jarden or a Restricted Subsidiary of Jarden that was
permitted to be incurred by another provision of this covenant;
(11) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or
an issuance of Disqualified Stock for purposes of this covenant; provided,
in each such case, that the amount thereof is included in Fixed Charges of
Jarden as accrued; and
(12) the incurrence by Jarden or any of its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value,
as applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (12), not to exceed $25.0 million.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (12) above, or
is entitled to be incurred pursuant to the first paragraph of this covenant,
Jarden will be permitted to classify such item of Indebtedness on the date
of its incurrence, or later reclassify all or a portion of such item of
Indebtedness, in any manner that complies with this covenant. Indebtedness
under the New Senior Credit Facility outstanding on the date on which notes
are first issued and authenticated under the indenture will be deemed to
have been incurred on such date in reliance on the exception provided by
clause (1) of the definition of Permitted Debt.
No Layering of Debt
Jarden will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of Jarden and senior in any respect in right of
payment to the notes. No Guarantor will incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to the Senior Debt of such Guarantor and senior in any respect
in right of payment to such Guarantor's Subsidiary Guarantee.
Liens
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind securing Indebtedness for money borrowed on any asset now owned or
hereafter acquired, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, directly or
69
indirectly, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
to Jarden or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to Jarden or any of its Restricted Subsidiaries;
(2) make loans or advances to Jarden or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Jarden or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) agreements governing Existing Indebtedness and the New Senior
Credit Facility as in effect on the date of the indenture and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of those agreements; provided that
the amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in those agreements on the date of
the indenture;
(2) the indenture, the notes and the Subsidiary Guarantees;
(3) applicable law;
(4) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Jarden or any of its Restricted Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness or Capital
Stock was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired; provided that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of the
indenture to be incurred;
(5) customary non-assignment provisions in leases, licenses and other
agreements entered into in the ordinary course of business and consistent
with past practices;
(6) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on that property of the nature
described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained
in the agreements governing the Indebtedness being
70
refinanced;
(9) Liens securing Indebtedness otherwise permitted to be incurred
under the provisions of the covenant described above under the caption
"--Liens" that limit the right of the debtor to dispose of the assets
subject to such liens;
(10) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary
course of business; and
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
Jarden may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not Jarden is the surviving corporation); or
(2) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of Jarden and its Subsidiaries taken as a whole,
in one or more related transactions, to another Person; unless:
(1) either: (a) Jarden is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than
Jarden) or to which such sale, assignment, transfer, conveyance or other
disposition has been made is a corporation organized or existing under the
laws of the United States, any state of the United States or the District of
Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than Jarden) or the Person to which such sale, assignment,
transfer, conveyance or other disposition has been made assumes all the
obligations of Jarden under the notes, the indenture and the registration
rights agreement pursuant to agreements reasonably satisfactory to the
trustee;
(3) immediately after such transaction, no Default or Event of Default
exists; and
(4) Jarden or the Person formed by or surviving any such consolidation
or merger (if other than Jarden), or to which such sale, assignment,
transfer, conveyance or other disposition has been made will, on the date of
such transaction after giving pro forma effect thereto and any related
financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock."
In addition, Jarden may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among Jarden and any of its Restricted
Subsidiaries that are Guarantors.
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Transactions With Affiliates
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that are no less favorable to
Jarden or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Jarden or such Restricted Subsidiary
with an unrelated Person; and
(2) Jarden delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an
officers' certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to Jarden of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment or consulting agreement entered into by Jarden or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of Jarden or such Restricted Subsidiary;
(2) transactions between or among Jarden and/or its Restricted
Subsidiaries;
(3) transactions with a Person that is an Affiliate of Jarden solely
because Jarden owns an Equity Interest in, or controls, such Person;
(4) payment of reasonable fees and compensation to, and indemnity
provided on behalf of, directors and officers of Jarden;
(5) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of Jarden;
(6) Restricted Payments that are permitted by the provisions of the
indenture described above under the caption "--Restricted Payments";
(7) transfers of accounts receivable and related assets to a
Receivables Subsidiary in connection with a Qualified Receivables
Transaction and the charging of fees and expenses in
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the ordinary course of business in connection with such transfers; and
(8) Permitted Investments.
Business Activities
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, engage in any business activities other than in a Permitted Business.
Additional Subsidiary Guarantees
If Jarden or any of its Subsidiaries acquires or creates a Domestic
Subsidiary after the date of the indenture, then that newly acquired or created
Domestic Subsidiary will become a Guarantor and execute a Subsidiary Guarantee
and deliver an opinion of counsel satisfactory to the trustee within 30 days of
the date on which it was acquired or created.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Jarden and its
Restricted Subsidiaries in the Subsidiary to be designated will be deemed to be
an Investment made as of the time of the designation and will reduce the amount
available for Restricted Payments under the first paragraph of the covenant
described above under the caption "--Restricted Payments" or Permitted
Investments, as determined by Jarden. That designation will only be permitted if
the Investment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. Upon its
designation as an Unrestricted Subsidiary, it will cease to be a Guarantor and
its Subsidiary Guarantee will be released.
The Board of Directors may redesignate any Unrestricted Subsidiary to
be a Restricted Subsidiary if the redesignation would not cause a Default. If an
Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, an amount
equal to the lesser of the aggregate fair market value of all outstanding
Investments owned by Jarden and its Restricted Subsidiaries in the Subsidiary to
be redesignated and the amount of all such Investments will be deemed to be
recovered in cash as of the time of the redesignation and will increase the
amounts available for (1) Restricted Payments under the first paragraph of the
covenant described above under the caption "--Restricted Payments" and (2)
Permitted Investments in proportion to the amount of Jarden's and its Restricted
Subsidiaries' Investments in such Subsidiary that were Restricted Payments and
Permitted Investments. Upon any such redesignation or other designation as a
Restricted Subsidiary, such Subsidiary will become a Guarantor and execute a
Subsidiary Guarantee.
Payments For Consent
Jarden will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions
73
of the indenture or the notes unless such consideration is offered to be paid
and is paid to all Holders of the notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Reports
Whether or not required by the Commission, so long as any notes are
outstanding, Jarden will furnish to the Holders of notes, within the time
periods specified in the Commission's rules and regulations (together with any
extensions granted by the Commission):
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if Jarden 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 on the annual
financial statements by Jarden's certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if Jarden were required to file such reports.
If Jarden has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of Jarden and
its Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of Jarden.
In addition, following the consummation of the exchange offer
contemplated by the registration rights agreement, whether or not required by
the Commission, Jarden will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the Commission for public
availability (unless the Commission will not accept such a filing) within the
time periods specified in the Commission's rules and regulations (together with
any extensions granted by the Commission) and make such information available to
securities analysts and prospective investors upon request. In addition, Jarden
and the Guarantors have agreed that, for so long as any notes (other than new
notes) remain outstanding, they will furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Amendment Of Subordinated Seller Notes
Without the consent of the Holders of at least a majority in principal
amount of notes then outstanding, Jarden will not agree to amend or modify the
subordinated seller notes in any manner that would result in the subordinated
seller notes not being subordinated to the notes to at least the same extent as
the notes are subordinated to Senior Debt, or that would accelerate any payment
of the subordinated seller notes or increase the interest rate on the
subordinated seller notes.
EVENTS OF DEFAULT AND REMEDIES
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Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the notes, whether or not prohibited by the
subordination provisions of the indenture;
(2) default in payment when due of the principal of, or premium, if
any, on the notes, whether or not prohibited by the subordination provisions of
the indenture;
(3) failure by Jarden or any of its Subsidiaries to comply with the
provisions described under the captions "--Repurchase at the Option of
Holders--Change of Control," "--Repurchase at the Option of Holders-- Asset
Sales" (other than the requirement that the resolution of the Board of Directors
pursuant to clause (2) of the first paragraph of such provision be set forth in
an officers' certificate delivered to the trustee, with respect to which the
Event of Default described in clause (5) of the paragraph will apply), or
"--Certain Covenants--Merger, Consolidation or Sale of Assets";
(4) failure by Jarden or any of its Subsidiaries to comply with the
provisions described under the captions "--Certain Covenants--Restricted
Payments" or "--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock," and such failure continues for 30 days;
(5) failure by Jarden or any of its Subsidiaries for 60 days after
notice by the trustee or Holders of at least 25% in principal amount of the then
outstanding notes to comply with any of the other agreements in the indenture;
(6) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Jarden or any of its Restricted Subsidiaries
(or the payment of which is guaranteed by Jarden or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity,
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more;
(7) failure by Jarden or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $10.0 million (to the extent not
insured), which judgments are not paid, discharged or stayed for a period of 60
days;
(8) except as permitted by the indenture, any Subsidiary Guarantee
shall be held in any
75
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor, or any Person acting on behalf
of any Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and
(9) certain events of bankruptcy or insolvency described in the
indenture with respect to Jarden, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary.
In the case of an Event of Default arising from an event of bankruptcy
or insolvency described in clause (9) above, all outstanding notes will become
due and payable immediately without further action or notice. If any other Event
of Default occurs and is continuing, the trustee or the Holders of at least 25%
in principal amount of the then outstanding notes may declare all the notes to
be due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except
as provided in the indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding notes may direct the
trustee in its exercise of any trust or power. The trustee may withhold from
Holders of the notes notice of any continuing Default or Event of Default if it
determines that withholding notice is in their interest, except a Default or
Event of Default relating to the payment of principal (including redemption or
purchase price) or interest or Liquidated Damages.
The Holders of a majority in aggregate principal amount of the notes
then outstanding by notice to the trustee may on behalf of the Holders of all of
the notes waive any existing Default or Event of Default and its consequences
under the indenture except a continuing Default or Event of Default in the
payment of interest or Liquidated Damages on, or the principal (including
redemption or purchase price) of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Jarden with the
intention of avoiding payment of the premium that Jarden would have had to pay
if Jarden then had elected to redeem the notes pursuant to the optional
redemption provisions of the indenture, an equivalent premium will also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the notes. If an Event of Default occurs prior to May 1, 2007,
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of Jarden with the intention of avoiding the prohibition on redemption of
the notes prior to May 1, 2007, then the premium specified in the indenture will
also become immediately due and payable to the extent permitted by law upon the
acceleration of the notes.
At any time after a declaration of acceleration under the indenture,
but before a judgment or decree for payment of the money due has been obtained
by the trustee, the Holders of a majority in aggregate principal amount of the
outstanding notes, by written notice to Jarden and the trustee, may rescind such
declaration and its consequences if: (i) Jarden has paid or deposited with the
trustee a sum sufficient to pay (A) all overdue interest on all notes, (B) all
unpaid principal of (and premium, if any, on) any outstanding notes that has
become due, other than by such declaration of acceleration, and interest thereon
at the rate borne by the notes, (C) to the extent that payment of such interest
is lawful, interest upon overdue interest and overdue principal at the rate
borne by the notes, and (D) all sums paid or advanced by the trustee under
76
the indenture and the reasonable compensation, expenses, disbursements and
advances of the trustee, its agents and counsel; and (ii) all Events of Default,
other than the non-payment of amounts of principal of (or premium, if any, on),
or interest on, the notes that have become due solely by such declaration of
acceleration, have been cured or waived. No such rescission will affect any
subsequent default or impair any right consequent thereon.
Jarden is required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any Default or
Event of Default, Jarden is required to deliver to the trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Jarden
or any Guarantor, as such, will have any liability for any obligations of Jarden
or the Guarantors under the notes, the indenture, the Subsidiary Guarantees, or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the notes. The waiver may not be effective to waive liabilities
under the Federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Jarden may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes and all obligations
of the Guarantors discharged with respect to their Subsidiary Guarantees ("Legal
Defeasance") except for:
o the rights of Holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium and Liquidated
Damages, if any, on such notes when such payments are due from the
trust referred to below;
o Jarden's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes and the maintenance of an office or agency for
payment and money for security payments held in trust;
o the rights, powers, trusts, duties and immunities of the trustee,
and Jarden's and the Guarantors' obligations in connection
therewith; and
o the Legal Defeasance provisions of the indenture.
In addition, Jarden may, at its option and at any time, elect to have
the obligations of Jarden and the Guarantors released with respect to certain
covenants (including its obligation to make Change of Control Offers and Asset
Sale Offers) that are described in the indenture ("Covenant Defeasance") and
thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "--Events of
Default and Remedies" will no longer constitute an Event of Default with respect
to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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o Jarden must irrevocably deposit with the trustee, in trust, for
the benefit of the Holders of the notes, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in
U.S. dollars and non-callable Government Securities, in amounts as
will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, and
interest and premium and Liquidated Damages, if any, on the
outstanding notes on the stated maturity or on the applicable
redemption date, as the case may be, and Jarden must specify
whether the notes are being defeased to maturity or to a
particular redemption date;
o in the case of Legal Defeasance, Jarden has delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that
o Jarden has received from, or there has been published by, the
Internal Revenue Service a ruling; or
o since the date of the indenture, there has been a change in
the applicable Federal income tax law,
in either case to the effect that, and based thereon such opinion
of counsel will confirm that, the Holders of the outstanding notes
will not recognize income, gain or loss for Federal income tax
purposes as a result of such Legal Defeasance and will be subject
to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal
Defeasance had not occurred;
o in the case of Covenant Defeasance, Jarden has delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the Holders of the outstanding notes will not
recognize income, gain or loss for Federal income tax purposes as
a result of such Covenant Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant
Defeasance had not occurred;
o no Default or Event of Default has occurred and is continuing on
the date of such deposit and after giving effect thereto;
o such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which Jarden
or any of its Subsidiaries is a party or by which Jarden or any of
its Subsidiaries is bound;
o Jarden must deliver to the trustee an officers' certificate
stating that the deposit was not made by Jarden with the intent of
preferring the Holders of notes over the other creditors of Jarden
with the intent of defeating, hindering, delaying or defrauding
creditors of Jarden or others; and
o Jarden must deliver to the trustee an officers' certificate and an
opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the
indenture and the notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any notes held by a non-consenting Holder):
o reduce the principal amount of notes whose Holders must consent to
an amendment, supplement or waiver;
o reduce the principal of or change the fixed maturity of any note
or alter the provisions with respect to the redemption of the
notes (other than provisions relating to the covenants described
above under the caption "--Repurchase at the Option of Holders");
o reduce the rate of or change the time for payment of interest on
any note;
o waive a Default or Event of Default in the payment of principal
(including redemption or purchase price) of, or interest or
premium, or Liquidated Damages, if any, on the notes (except a
rescission of acceleration of the notes by the Holders of at least
a majority in aggregate principal amount of the notes and a waiver
of the payment default that resulted from such acceleration);
o make any note payable in money other than that stated in the
notes;
o make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of notes to
receive payments of principal of, or interest or premium or
Liquidated Damages, if any, on the notes;
o waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders");
o release any Guarantor from any of its obligations under its
Subsidiary Guarantee or the indenture, except in accordance with
the terms of the indenture; or
o make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the
indenture relating to subordination that adversely affects the rights of the
Holders of the notes will require the consent
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of the Holders of at least 75% in aggregate principal amount of notes then
outstanding.
Notwithstanding the preceding, without the consent of any Holder of
notes, Jarden, the Guarantors and the trustee may amend or supplement the
indenture or the notes:
o to cure any ambiguity, defect or inconsistency;
o to provide for uncertificated notes in addition to or in place of
certificated notes;
o to provide for the assumption of Jarden's obligations to Holders
of notes in the case of a merger or consolidation or sale of all
or substantially all of Jarden's assets;
o to make any change that would provide any additional rights or
benefits to the Holders of notes or that does not adversely affect
the legal rights under the indenture of any such Holder; or
o to comply with requirements of the Commission in order to effect
or maintain the qualification of the indenture under the Trust
Indenture Act.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect
as to all notes issued thereunder, when:
o either:
o all notes that have been authenticated, except lost, stolen
or destroyed notes that have been replaced or paid and notes
for whose payment money has been deposited in trust and
thereafter repaid to Jarden, have been delivered to the
trustee for cancellation; or
o all notes that have not been delivered to the trustee for
cancellation have become due and payable by reason of the
mailing of a notice of redemption or otherwise or will become
due and payable within one year and Jarden or any Guarantor
has irrevocably deposited or caused to be deposited with the
trustee as trust funds in trust solely for the benefit of the
Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as will be
sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire indebtedness on the
notes not delivered to the trustee for cancellation for
principal, premium and Liquidated Damages, if any, and
accrued interest to the date of maturity or redemption;
o no Default or Event of Default has occurred and is continuing on
the date of the deposit or will occur as a result of the deposit
and the deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which Jarden
or any Guarantor is a party or by which Jarden or any Guarantor is
bound;
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o Jarden or any Guarantor has paid or caused to be paid all sums
payable by it under the indenture; and
o Jarden has delivered irrevocable instructions to the trustee under
the indenture to apply the deposited money toward the payment of
the notes at maturity or the redemption date, as the case may be.
In addition, Jarden must deliver an officers' certificate and an
opinion of counsel to the trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Jarden or any Guarantor, the
indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
occurs and is continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of notes, unless such Holder has offered to the trustee security and
indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The new notes will be represented by one or more permanent global
certificates in definitive, fully registered form without interest coupons (the
"Global Notes"). The Global Notes will be deposited upon issuance with the
Trustee as custodian for The Depository Trust Company ("DTC"), in New York, New
York, and registered in the name of DTC or its nominee for credit to an account
of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Notes may not be exchanged
for new notes in certificated form except in the limited circumstances described
below. See "-Exchange of Book-Entry Notes for Certificated Notes".
Transfer of beneficial interests in the Global Notes will be subject to
the applicable rules and procedures of DTC and its direct or indirect
participants (including, if applicable, those of the Euroclear System
("Euroclear") and Clearstream Banking societe anonyme ("Clearstream")), which
may change from time to time.
DEPOSITORY PROCEDURES
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DTC is a limited-purpose trust company created to hold securities for
its participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations. Access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
and transfer of ownership interests of each actual purchaser of each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
Pursuant to procedures established by DTC:
o upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the initial purchasers with portions of
the principal amount of the Global Notes; and
o ownership of such interests in the Global Notes will be maintained
by DTC (with respect to the Participants) or by the Participants
and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Clearstream) which are Participants in
such system.
All interests in a Global Note, including those held through Euroclear
or Clearstream, will be subject to the procedures and requirements of DTC. Those
interests held through Euroclear or Clearstream will also be subject to the
procedures and requirements of these systems. The laws of some states require
that certain persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer beneficial interests in a
Global Note to such persons will be limited to that extent. Because DTC can act
only on behalf of Participants, which in turn act on behalf of Indirect
Participants, the ability of a person having beneficial interests in a Global
Note to pledge such interests to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests. For
certain other restrictions on the transferability of the new notes, see
"-Exchange of Book-Entry Notes for Certificated Notes".
Except as described below, owners of interests in the Global Notes will
not have new notes registered in their names, will not receive physical delivery
of new notes in certificated form and will not be considered the registered
owners or holders thereof under the indenture for any purpose.
Payments in respect of the principal of and premium, if any, and
interest on a Global Note registered in the name of DTC or its nominee will be
payable by the Trustee to DTC in its capacity as the registered holder under the
Indenture. Jarden and the Trustee will treat the
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persons in whose names the new notes, including the Global Notes, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither Jarden, the Trustee nor any
agent of Jarden or the Trustee has or will have any responsibility or liability
for:
o any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payment made on account of
beneficial ownership interests in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the
beneficial ownership interests in the Global Notes; or
o any other matter relating to the actions and practices of DTC or
any of its Participants or Indirect Participants.
DTC has advised Jarden that its current practice, upon receipt of any
payment in respect of securities such as the new notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in the principal amount of beneficial interests in the relevant
security as shown on the records of DTC unless DTC has reason to believe it will
not receive payment on such payment date. Payments by the Participants and the
Indirect Participants to the beneficial owners of new notes will be governed by
standing instructions and customary practices and will be the responsibility of
the Participants or the Indirect Participants and will not be the responsibility
of DTC, the Trustee or Jarden. Neither Jarden nor the Trustee will be liable for
any delay by DTC or any of its Participants in identifying the beneficial owners
of the new notes, and Jarden and the Trustee may conclusively rely on and will
be protected in relying on instructions from DTC or its nominee for all
purposes.
Except for trades involving only Euroclear and Clearstream
participants, interests in the Global Notes are expected to be eligible to trade
in DTC's Same-Day Funds Settlement System and secondary market trading activity
in such interests will therefore settle in immediately available funds, subject
in all cases to the rules and procedures of DTC and its Participants.
Transfers between Participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds, and transfers
between participants in Euroclear and Clearstream will be affected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one
hand, and Euroclear or Clearstream participants, on the other hand, will be
effected through DTC in accordance with DTC 's rules on behalf of Euroclear and
Clearstream, as the case may be, by their depositories. Cross-market
transactions will require delivery of instructions to Euroclear or Clearstream,
as the case may be, by the counterparty in that system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
that system. Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositories to take action to effect final settlement on its behalf
by delivering or receiving interests in the relevant Global Note in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear
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and Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear
or Clearstream participant purchasing an interest in a Global Note from a
Participant in DTC will be credited and reported to the relevant Euroclear or
Clearstream participant, during the securities settlement processing day (which
must be a business day for Euroclear and Clearstream) immediately following the
settlement date of DTC. DTC has advised Jarden that cash received in Euroclear
or Clearstream as a result of sales of interests in a Global Note by or through
a Euroclear or Clearstream participant to a Participant in DTC will be received
with value on the settlement date of DTC but will be available in the relevant
Euroclear or Clearstream cash account only as of the business day of Euroclear
or Clearstream following DTC's settlement date.
DTC has advised Jarden that it will take any action permitted to be
taken by a Holder of new notes only at the direction of one or more Participants
to whose account with DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the new notes as to
which such Participant or Participants has or have given such direction. If
there is an Event of Default under the new notes, DTC reserves the right to
exchange the Global Notes for legended new notes in certificated form, and to
distribute the new notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Notes among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform such procedures, and the procedures may be
discontinued at any time. Neither Jarden nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or Clearstream or their
respective Participants or Indirect Participants of their respective obligations
under the rules and procedures governing their operations.
According to DTC, the foregoing information with respect to DTC has
been provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
The information in this section concerning DTC, Euroclear and
Clearstream and their book-entry systems has been obtained from sources that
Jarden believes to be reliable.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for new notes in registered certificated
form ("Certificated Notes") if:
o DTC (a) notifies Jarden that it is unwilling or unable to continue
as depositary for the Global Notes or (b) has ceased to be a
clearing agency registered under the Exchange Act and, in either
case, Jarden fails to appoint a successor depositary;
o Jarden, at its option, notifies the trustee in writing that it
elects to cause the issuance of the Certificated Notes; or
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o there has occurred and is continuing a Default or Event of Default
with respect to the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures).
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the trustee a written
certificate (in the form provided in the indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions, if any,
applicable to such notes.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture.
Reference is made to the indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging
with or into, or becoming a Subsidiary of, such specified Person;
and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory and accounts receivable in
the ordinary course of business consistent with past practices;
provided that the sale, conveyance or other
85
disposition of all or substantially all of the assets of Jarden
and its Subsidiaries taken as a whole will be governed by the
provisions of the indenture described above under the caption
"--Repurchase at the Option of Holders--Change of Control" and/or
the provisions described above under the caption "--Certain
Covenants--Merger, Consolidation or Sale of Assets" and not by the
provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of Jarden's Restricted
Subsidiaries or the sale of Equity Interests in any of its
Restricted Subsidiaries.
Notwithstanding the preceding, none of the following items will be
deemed to be an Asset Sale:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $1.0
million;
(2) a transfer of assets between or among Jarden and its Subsidiaries,
(3) an issuance of Equity Interests by a Subsidiary to Jarden or to
another Subsidiary;
(4) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents or
Government Securities;
(6) transfers of accounts receivable and related assets by Jarden or
any of its Restricted Subsidiaries to a Receivables Subsidiary in
connection with a Qualified Receivables Transaction; and
(7) a Restricted Payment or Permitted Investment that is permitted by
the covenant described above under the caption "--Certain
Covenants--Restricted Payments."
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership or limited liability company, the
Board of Directors of the general partner or managing member of the
partnership; and
86
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions
of assets of, the issuing Person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality of the
United States government (provided that the full faith and credit of
the United States is pledged in support of those securities) having
maturities of not more than six months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any domestic commercial bank having
capital and surplus in excess of $500.0 million and a Thomson Bank
Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in
each case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of
this definition.
"Change of Control" means the occurrence of any of the following:
87
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of Jarden and its Restricted Subsidiaries taken as
a whole to any "person" (as that term is used in Section 13(d)(3) of
the Exchange Act) other than a Permitted Holder;
(2) the adoption of a plan relating to the liquidation or dissolution
of Jarden;
(3) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person"
(as defined above), other than a Permitted Holder, becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the
Voting Stock of Jarden, measured by voting power rather than number of
shares; or
(4) the first day on which a majority of the members of the Board of
Directors of Jarden are not Continuing Directors.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period, plus
(without duplication):
(1) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in
connection with an Asset Sale, to the extent such losses were deducted
in computing such Consolidated Net Income;
(2) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net
Income;
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and
net of the effect of all payments made or received pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income;
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; and
(5) the net adjustment to EBITDA to calculate adjusted EBITDA on a pro
forma basis
88
for the year ended December 31, 2001;
minus non-cash items increasing such Consolidated Net Income for such period,
other than any items that represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period, in each case, on a
consolidated basis and determined in accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the
income or profits, depreciation and amortization and other non-cash expenses,
and net adjustment to EBITDA of a Subsidiary of Jarden will be added to
Consolidated Net Income to compute Consolidated Cash Flow of Jarden only to the
extent that a corresponding amount would be permitted at the date of
determination to be dividended to Jarden by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
(1) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of
dividends or distributions paid in cash to the specified Person or a
Restricted Subsidiary of the Person;
(2) the Net Income of any Restricted Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders;
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition will
be excluded; and
(4) the cumulative effect of a change in accounting principles will be
excluded.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of Jarden who:
(1) was a member of such Board of Directors on the date of the
indenture; or
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
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"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the New Senior Credit Facility;
and
(2) after payment in full of all Obligations under the New Senior
Credit Facility, any other Senior Debt permitted under the indenture
the outstanding principal amount of which is $25.0 million or more and
that has been designated by Jarden as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder of the Capital Stock, in whole or in part, on or prior to the date that
is 91 days after the date on which the notes mature. Notwithstanding the
preceding sentence, any Capital Stock that would constitute Disqualified Stock
solely because the holders of the Capital Stock have the right to require Jarden
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such
Capital Stock provide that Jarden may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with the covenant described above under the caption "--Certain
Covenants--Restricted Payments."
"Domestic Subsidiary" means any Restricted Subsidiary of Jarden that
was formed under the laws of the United States or any state of the United States
or the District of Columbia or that guarantees or otherwise provides direct
credit support for any Indebtedness of Jarden.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of Jarden and its
Subsidiaries (other than Indebtedness under the New Senior Credit Facility) in
existence on the date of the indenture, until such amounts are repaid.
"Family" shall mean, with respect to any Person, (i) the current and
former spouses of such Person and (ii) the ancestors, siblings and descendants,
whether by blood or adoption, of such Person.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person
and its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees, repays, repurchases or redeems any Indebtedness (other than ordinary
working capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio will be
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calculated giving pro forma effect to such incurrence, assumption, Guarantee,
repayment, repurchase or redemption of Indebtedness, or such issuance,
repurchase or redemption of preferred stock, and the use of the proceeds
therefrom as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(1) acquisitions that have been made by the specified Person or any of
its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during
the four-quarter reference period or subsequent to such reference
period and on or prior to the Calculation Date will be given pro forma
effect as if they had occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period
will be calculated on a pro forma basis in accordance with Regulation
S-X under the Securities Act, but without giving effect to clause (3)
of the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, will be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any Disqualified Stock of such Person or any
preferred stock of its Restricted Subsidiaries, other than dividends
payable solely in Equity Interests (other than
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Disqualified Stock) of Jarden or to Jarden or a Restricted Subsidiary
of Jarden, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined marginal
Federal, state and local income tax rate of such Person (taking into
account the deductibility of state and local taxes for Federal income
tax purposes), expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) each of Jarden's direct and indirect Domestic Subsidiaries existing
on the date of the indenture; and
(2) any other Subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the indenture;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) in respect of banker's acceptances;
(4) representing Capital Lease Obligations;
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(5) representing the balance deferred and unpaid of the purchase price
of any property, except any such balance that constitutes an accrued
expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount;
(2) the principal amount of the Indebtedness, together with any
interest on the Indebtedness that is more than 30 days past due, in the
case of any other Indebtedness;
(3) the lesser of the Indebtedness and the fair market value of the
collateral asset, in the case of any Indebtedness of others secured by
a Lien on any asset of the specified Person; and
(4) the lesser of the primary Indebtedness and any stated limit on
recourse under the Guarantee, in the case of Indebtedness of others
secured by a Guarantee of the specified Person.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to directors,
officers, employees and consultants made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Jarden or any Subsidiary of Jarden sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of Jarden such that, after giving
effect to any such sale or disposition, such Person is no longer a Subsidiary of
Jarden, Jarden will be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of Jarden's Investments in
such Subsidiary that were not sold or disposed of in an amount determined as
provided in the final paragraph of the covenant described above under the
caption "--Certain Covenants--Restricted Payments." The acquisition by Jarden or
any of its Restricted Subsidiaries of a Person that holds an Investment in a
third Person will be deemed to be an Investment by Jarden or such Restricted
Subsidiary in such third Person in an amount equal to the fair market value of
the Investments held by the acquired Person in such third Person in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "--Certain Covenants--Restricted Payments," if the acquired
Person becomes a Restricted Subsidiary as a result of such acquisition and such
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third Person does not become a Restricted Subsidiary as a result of such
acquisition.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in any asset.
"Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with: (a) any
Asset Sale; or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and
(2) any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by Jarden or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (a) the direct costs
relating to such Asset Sale, including, without limitation, legal, accounting
and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, (b) taxes paid or payable as a result of
the Asset Sale, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, (c) amounts required to
be applied to the repayment of Indebtedness, other than Senior Debt secured by a
Lien on the asset or assets that were the subject of such Asset Sale, and any
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP, including pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, and (d) amounts required to be paid to any Person (other than Jarden or
any Restricted Subsidiary) owning a beneficial interest in the assets that are
subject to the Asset Sale.
"New Senior Credit Facility" means (1) prior to the consummation of the
Acquisition, Jarden's existing credit facility as in effect on the date of the
indenture; and (2) following the consummation of the Acquisition, that certain
Credit Agreement, dated as of the Closing Date, by and among Jarden, Bank of
America, N.A., as administrative agent, Banc of America Securities LLC, as
co-lead arranger, and CIBC World Markets Corp., as co-lead arranger, providing
for $50.0 million of term loan borrowings and up to $50.0 million of revolving
credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, amended and restated, supplemented, modified, renewed,
refunded, replaced or refinanced from time to time.
"Non-Recourse Debt" means Indebtedness:
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(1) as to which neither Jarden nor any of its Restricted Subsidiaries
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness) or (b) is
directly or indirectly liable as a guarantor or otherwise;
(2) no default with respect to which (including any rights that the
holders of the Indebtedness may have to take enforcement action against
an Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness of Jarden or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment of the Indebtedness to be accelerated or payable
prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of Jarden or any of
its Restricted Subsidiaries (other than Equity Interests in an
Unrestricted Subsidiary).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means any business in which Jarden and its
Restricted Subsidiaries or Tilia were engaged on the date of the indenture, any
other business in the consumer products industry, including without limitation
food products, and any business reasonably related or complementary thereto.
"Permitted Holder" means (i) Martin E. Franklin or Ian Ashken; (ii) any
member of the Family of Martin E. Franklin or Ian Ashken; (iii) any
conservatorship, custodianship or decedent's estate of any Person specified in
the foregoing clause (i) or (ii); (iv) any trust established for the benefit of
any Person specified in the foregoing clause (i) or (ii); or (v) any
corporation, limited liability company, partnership or other entity, the
controlling equity interests in which are held by or for the benefit of any one
or more Person specified in the foregoing clause (i) or (ii).
"Permitted Investments" means:
(1) any Investment in Jarden or in a Restricted Subsidiary of Jarden;
(2) any Investment in Cash Equivalents;
(3) any Investment by Jarden or any Subsidiary of Jarden in a Person,
if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Jarden;
or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets
to, or is liquidated into, Jarden or a Restricted Subsidiary
of Jarden;
(4) any Investment made as a result of the receipt of non-cash
consideration from an
95
Asset Sale that was made pursuant to and in compliance with the
covenant described above under the caption "--Repurchase at the Option
of Holders--Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Jarden;
(6) accounts receivable and any Investments received in compromise of
obligations incurred in the ordinary course of trade creditors or
customers that were incurred in the ordinary course of business,
including pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of any trade creditor or customer or
upon foreclosure on any secured Investment;
(7) Hedging Obligations;
(8) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (8) since the date
of the indenture not to exceed $10.0 million in original amount at any
time outstanding; and
(9) Investments by Jarden or a Restricted Subsidiary of Jarden in a
Receivables Subsidiary in connection with a Qualified Receivables
Transaction.
"Permitted Junior Securities" means:
(1) Equity Interests in Jarden or any Guarantor or any successor to
either of the foregoing; or
(2) debt securities that are subordinated to all Senior Debt and any
debt securities issued in exchange for Senior Debt to substantially the
same extent as, or to a greater extent than, the notes and the
Subsidiary Guarantees are subordinated to Senior Debt under the
indenture.
"Permitted Liens" means:
(1) Liens on assets of Jarden and its Restricted Subsidiaries securing
Senior Debt;
(2) Liens in favor of Jarden and its Restricted Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with Jarden or any Restricted
Subsidiary of Jarden; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend
to any assets other than those of the Person merged into or
consolidated with Jarden or the Restricted Subsidiary;
(4) Liens on property existing at the time of acquisition of the
property by Jarden or any Restricted Subsidiary of Jarden; provided
that such Liens were in existence prior to the contemplation of such
acquisition;
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(5) Liens securing reimbursement obligations with respect to letters of
credit and surety or performance bonds issued in the ordinary course of
business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (6) of the second paragraph of the covenant
entitled "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock" covering only the assets acquired with such
Indebtedness;
(7) Liens existing on the date of the indenture;
(8) Liens on Equity Interests in Unrestricted Subsidiaries that secure
Non-Recourse Debt; and
(9) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods.
"Permitted Refinancing Indebtedness" means any Indebtedness of Jarden
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Jarden or any of its Restricted Subsidiaries (other
than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all expenses and
premiums incurred in connection therewith, including consent fees);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes
or the Subsidiary Guarantees, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of the
notes, and is subordinated in right of payment to, the notes or the
Subsidiary Guarantees on terms at least as favorable to the Holders of
notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(4) such Indebtedness is incurred either by Jarden, by the Restricted
Subsidiary that is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded or by any
intermediate Restricted Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-
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stock company, trust, unincorporated organization, limited liability company or
government or other entity.
"Public Equity Offering" means an offer and sale of Capital Stock
(other than Disqualified Stock) of Jarden pursuant to a registration statement
that has been declared effective by the Commission pursuant to the Securities
Act (other than a registration statement on Form S-8 or otherwise relating to
equity securities issuable under any employee benefit plan of Jarden).
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by Jarden or any of its Restricted
Subsidiaries pursuant to which Jarden or such Restricted Subsidiary may sell,
convey or otherwise transfer to a Receivables Subsidiary accounts receivable
(whether now existing or arising in the future) and any assets related thereto,
including without limitation, all collateral securing such accounts receivable,
all guarantees or other obligations in respect of such accounts receivable,
proceeds of such accounts receivable and all other assets that are customarily
transferred, or in respect of which security interests are customarily granted,
in connection with an asset securitization transaction involving accounts
receivable.
"Receivables Subsidiary" means an Unrestricted Subsidiary of Jarden
that engages in no activities other than in connection with financing of
accounts receivable and that is designated by the Board of Directors of Jarden
as a Receivables Subsidiary. For purposes of the foregoing and the definition of
"Unrestricted Subsidiary," the making of Standard Securitization Undertakings by
Jarden or any of its Restricted Subsidiaries shall not be deemed inconsistent
with qualifying as an Unrestricted Subsidiary. Any such designation by the Board
of Directors of Jarden shall be evidenced to the trustee by filing with the
trustee a certified copy of the resolution of the Board of Directors of the
issuer giving effect to such designation and an officers' certificate
certifying, to the best of such officer's knowledge and belief after consulting
with counsel, that such designation complied with the foregoing conditions.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Senior Debt" means:
(1) all Indebtedness of Jarden or any Guarantor outstanding under the
New Senior Credit Facility and all Hedging Obligations with respect
thereto;
(2) any other Indebtedness of Jarden or any Guarantor permitted to be
incurred under the terms of the indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is
subordinated to any Senior Debt or on a parity with or subordinated in
right of payment to the notes or any Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include:
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(1) any liability for Federal, state, local or other taxes owed or
owing;
(2) any intercompany Indebtedness of Jarden or any of its Subsidiaries
to Jarden or any of its Affiliates;
(3) any trade payables;
(4) the portion of any Indebtedness that is incurred in violation of
the indenture; or
(5) Indebtedness which, when incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is
without recourse to Jarden or any Guarantor.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Standard Securitization Undertaking" means representations,
warranties, covenants and indemnities entered into by Jarden or any Restricted
Subsidiary of Jarden that are reasonably customary in accounts receivable
transactions.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which the payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and will not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or
controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person
or (b) the only general partners of which are that Person or one or
more Subsidiaries of that Person (or any combination thereof).
"Unrestricted Subsidiary" means any Subsidiary of Jarden that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Jarden or any Restricted Subsidiary of Jarden unless
the terms of any such agreement, contract,
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arrangement or understanding are no less favorable to Jarden or such
Restricted Subsidiary than those that might be obtained at the time
from Persons who are not Affiliates of Jarden;
(3) is a Person with respect to which neither Jarden nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Jarden or any of its Restricted
Subsidiaries; and
(5) has at least one director on its Board of Directors that is not a
director or executive officer of Jarden or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Jarden or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of Jarden as an Unrestricted Subsidiary
will be evidenced to the trustee by filing with the trustee a certified copy of
the Board Resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the
"--Certain Covenants--Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for
purposes of the indenture and (i) will be deemed to be redesignated as a
Restricted Subsidiary and (ii) any Indebtedness of such Subsidiary will be
deemed to be incurred by a Restricted Subsidiary of Jarden as of such date and,
if such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock," Jarden will be in default of such
covenant. The Board of Directors of Jarden may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Jarden of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation will only be permitted if (1) such Indebtedness
is permitted under the covenant described under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation. Upon any such
designation as a Restricted Subsidiary, such Subsidiary, if it is a Domestic
Subsidiary, will become a Guarantor and execute a supplemental indenture.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the
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number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment; by
(2) the then outstanding principal amount of such Indebtedness.
DESCRIPTION OF SENIOR INDEBTEDNESS
On April 24, 2002, we refinanced our existing senior indebtedness with
a new $100 million senior secured credit facility (the "Credit Facility")
pursuant to the terms of a Credit Agreement (the "Credit Agreement"), with Bank
of America, N.A., as Administrative Agent (the "Administrative Agent"), Swing
Line Lender, and L/C Issuer, Canadian Imperial Bank of Commerce, as Syndication
Agent, National City Bank of Indiana, as Documentation Agent, and the other
Lenders party thereto, including The Bank of New York, Fleet National Bank,
Harris Trust and Savings Bank, U.S. Bank National Association, Allfirst Bank,
Transamerica Business Capital Corporation, and Union Federal Bank of
Indianapolis.
The Credit Agreement, among other things, provides for a new senior
credit facility for up to $100 million of senior secured loans, consisting of a
$50 million five-year revolving credit facility (the "Revolving Credit
Facility") and a $50 million five-year term loan facility (the "Term Loan
Facility").
The Revolving Credit Facility includes up to an aggregate of $10
million in standby and commercial letters of credit and up to an aggregate of
$10 million in swing line loans. As of June 30, 2002, we had not drawn any of
the $50 million available under the Revolving Credit Facility, although we used
$2.6 million of availability in connection with pre-existing letters of credit.
The Term Loan Facility was drawn in full, in the amount of $50 million,
at the closing of the Credit Facility and such principal amount remains
outstanding as of June 30, 2002. Principal and interest under the Term Loan
Facility are payable quarterly, in accordance with a specified amortization
schedule, with the final payment of all amounts outstanding thereunder being due
on April 24, 2007.
The Revolving Credit Facility and the Term Loan Facility bear interest
at a rate equal to (i) the Eurodollar Rate (as determined by the Administrative
Agent) pursuant to an agreed formula or (ii) a Base Rate equal to the higher of
(a) the Bank of America prime rate and (b) the federal funds rate plus .50%,
plus, in each case, an applicable margin ranging from .75% to 1.50% for Base
Rate loans and from 2.00% to 2.75% for Eurodollar Rate loans.
The Credit Agreement contains certain restrictions on the conduct of
our business, including, among other things, restrictions, generally, on:
o incurring debt;
o disposing of certain assets;
o making investments;
o exceeding certain agreed capital expenditures;
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o creating or suffering liens on our assets;
o completing certain mergers, consolidations, and with permitted
exceptions, acquisitions;
o declaring dividends;
o redeeming or prepaying other debt; and
o transactions with affiliates.
The Credit Agreement also requires us to maintain the following
financial covenants:
o our consolidated net worth may not be at any time less than the
sum of:
o $30,000,000;
o an amount equal to 50% of our consolidated net income earned
in each fiscal quarter ending after December 31, 2001 (with
no deduction for a net loss in any such fiscal quarter); and
o an amount equal to 100% of the aggregate increases in the
stockholders' equity of Jarden and our subsidiaries after
April 24, 2002 by reason of the issuance and sale of our
capital stock (including upon any conversion of our debt
securities into our capital stock);
o our total leverage ratio as of the end of any four-quarter period
may not be greater than the ratio set forth below opposite such
four-quarter period:
----------------------------------------------------------------------------------------------
Four-Quarter Period ending closest to: Maximum Total Leverage Ratio
----------------------------------------------------------------------------------------------
September 30, 2002;
December 31, 2002;
March 31, 2003;
June 30, 2003; and 3.50 to 1.00
September 30, 2003
----------------------------------------------------------------------------------------------
December 31, 2003;
March 31, 2004;
June 30, 2004; and 3.25 to 1.00
September 30, 2004
----------------------------------------------------------------------------------------------
December 31, 2004 and thereafter 3.00 to 1.00
----------------------------------------------------------------------------------------------
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o our senior leverage ratio as of the end of any four-quarter period
may not be greater than the ratio set forth below opposite such
four-quarter period:
----------------------------------------------------------------------------------------------
Four-Quarter Period ending closest to: Maximum Total Leverage Ratio
----------------------------------------------------------------------------------------------
September 30, 2002;
December 31, 2002; and 2.00 to 1.00
March 31, 2003
----------------------------------------------------------------------------------------------
June 30, 2003;
September 30, 2003;
December 30, 2003;
March 31, 2004; 1.75 to 1.00
June 30, 2004 and
September 30, 2004
----------------------------------------------------------------------------------------------
December 31, 2004 and thereafter 1.50 to 1.00
------------------------------------------------- --------------------------------------------
; and
o our fixed charge ratio as of the end of any applicable period,
beginning with the period ending closest to September 30, 2002,
may not be less than 1.25 to 1.00.
However, the Credit Agreement does not make any significant
restrictions on our or our Domestic Subsidiaries' ability to obtain funds from
their respective subsidiaries by dividend or loan.
The occurrence of certain events or conditions described in the Credit
Agreement (subject to grace periods in certain cases) constitutes an event of
default. If an event of default occurs, the Administrative Agent may, at the
request or consent of the Lenders, among other things, declare the entire
outstanding balance of principal and interest of all outstanding loans to be
immediately due and payable. The events of default include, among other things:
o our failure to pay any principal, interest, or other fees when
due;
o any material judgment or order entered against us;
o any inaccuracy in the representations and warranties;
o failure to observe certain covenants under the Credit Agreement
(including, e.g., the financial covenants);
o bankruptcy, insolvency or receivership proceedings with respect to
Jarden; and
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o a change of control of Jarden.
The Credit Agreement provides that we shall make required prepayments
of the Term Loan and Revolving Loan, including, among other things, upon the
happening of the following events:
o in the event that our total leverage ratio is greater than 3.00 to
1.00 as of the end of any fiscal year, beginning with the fiscal
year ending December 31, 2002, we must make a prepayment in an
amount equal to fifty percent (50%) of the amount of excess cash
flow, each such prepayment to be made on the date our and our
subsidiaries' financial statements for such fiscal year are
required to be delivered (or if earlier, the date such financial
statements are delivered) pursuant to the Credit Agreement;
o we must make, or must cause each applicable subsidiary to make, a
prepayment with respect to each private or public offering of
equity securities of Jarden or any of our subsidiaries (other than
Equity Securities issued to Jarden or a Guarantor) in an amount
equal to fifty percent (50%) of the net proceeds of each issuance
of equity securities of the Jarden or any of our subsidiaries,
each such prepayment to be made within ten (10) business days of
receipt of such proceeds and upon not less than five (5) business
days' prior written notice to the Administrative Agent; however,
no prepayment shall be required of the first $10,000,000 of net
proceeds in each fiscal year of Jarden realized from (x) the
issuance of equity securities in connection with the exercise of
any option, warrant or other convertible security of Jarden or any
of our subsidiaries or (y) the issuance, award or grant of equity
securities to eligible participants under a stock plan of Jarden.
o we must make, or must cause each applicable subsidiary to make, a
prepayment in an amount equal to one hundred percent (100%) of the
net proceeds from each Disposition (as defined below) other than
certain Permitted Dispositions (as defined below), each such
prepayment to be made within ten (10) business days of receipt of
the net proceeds thereof and upon not less than five (5) business
days' prior written notice to the Administrative Agent.
Disposition means the sale, transfer, license or other disposition
(including any sale and leaseback transaction) of any property by
any person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated therewith. A
Disposition shall not include (a "Permitted Disposition"):
o Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of
business;
o Dispositions of inventory in the ordinary course of business;
o Dispositions by Jarden or any of our subsidiaries of
equipment or real property which is replaced by equipment or
real property of substantially equivalent or greater utility
and value within ninety (90) days of the date of disposition
thereof, provided that if the fair market value of the
property so disposed of is greater than $3,000,000, the
Administrative Agent will have received notice of such
104
disposition from the Borrower not less than twenty (20) days
prior to the consummation of such disposition;
o Dispositions of property (i) by any of our subsidiaries to a
Guarantor, (ii) by us or any Guarantor to any Guarantor, and
(iii) by any of our subsidiaries that is not a Guarantor to
any other of our subsidiaries that is not a Guarantor;
o any of our subsidiaries may merge with or transfer
substantially all its assets (upon voluntary liquidation or
otherwise) to any Guarantor, provided that, if a merger, the
Guarantor must be the continuing or surviving person, and
provided further that if a transfer of assets in the form of
a sale by a subsidiary that is not a Guarantor, the sale
shall be at fair market value and the aggregate amount of all
such sales will not exceed $5,000,000;
o any of our subsidiaries substantially all of whose assets
consist of other subsidiaries' securities or other equity
securities in any person may merge with or transfer
substantially all its assets (upon voluntary liquidation or
otherwise) to us, provided that, if a merger, we will be the
continuing or surviving person, and provided further that if
a transfer of assets in the form of a sale by a subsidiary
that is not a Guarantor, the sale will be at fair market
value and the aggregate amount of all such sales will not
exceed $5,000,000;
o any of our subsidiaries that is not a Guarantor may merge
with or sell substantially all its assets (upon voluntary
liquidation or otherwise) to any one or more subsidiaries
that is not a Guarantor; and
o Dispositions not otherwise permitted by above, so long as the
aggregate fair market value of all such property so disposed
in any fiscal year of Jarden does not exceed $35,000,000 and
the net proceeds therefrom are applied in accordance with the
Credit Agreement;
o In the event that the net proceeds received from insurance carried
with respect to the collateral securing our obligations under the
Credit Agreement and the other loan documents is not completely
and fully utilized for the repair or replacement of such
collateral, we must make, or must cause each applicable subsidiary
to make, a prepayment in an amount equal to one hundred percent
(100%) of the net proceeds received with respect to such insurance
that is not so utilized.
In connection with entering into the Credit Agreement, all of our
Domestic Subsidiaries, including Hearthmark, Inc., Alltrista Plastics
Corporation, Alltrista Newco Corporation, Alltrista Zinc Products, L.P., TriEnda
Corporation, Tilia, Inc. (formerly known as Alltrista Acquisition I, Inc.),
Tilia Direct, Inc. (formerly known as Alltrista Acquisition II, Inc.), and Tilia
International, Inc. (formerly known as Alltrista Acquisition III, Inc.), and
Quoin Corporation, have agreed to guarantee our obligations under the Credit
Agreement.
Pursuant to the Securities Pledge Agreement, all obligations under the
Credit Agreement are secured by a security interest in all of the capital stock
or other equity interests of each of our existing or future direct or indirect
domestic subsidiaries, and 65% of the voting capital stock or
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other equity interests and 100% of the nonvoting stock or other equity interests
of each of our (or any of our direct or indirect domestic subsidiaries')
existing or future direct foreign subsidiaries. Pursuant to the terms of a
Security Agreement and an Intellectual Property Security Agreement, the
obligations under the Credit Agreement are also secured by a security interest
in substantially all of the assets and properties of Jarden and the Domestic
Subsidiaries.
The foregoing is a summary of the material provisions of the Credit
Agreement and certain of the documents entered into by us and the Domestic
Subsidiaries in connection therewith which are incorporated herein by reference.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes the material U.S. Federal
income tax consequences of the exchange, ownership and disposition of the notes.
This discussion only deals with persons that hold notes as a capital asset
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended, or the Code, and that purchase the notes for cash at original issue at
the initial offering price. This discussion does not address the U.S. Federal
income tax consequences that may be relevant to a particular holder subject to
special treatment under certain U.S. Federal income tax laws (for example,
persons subject to the alternative minimum tax provisions of the Code). Also,
this discussion is not intended to be wholly applicable to all categories of
investors, some of which, such as dealers in securities or foreign currency,
banks, trusts, insurance companies, tax-exempt organizations (employment,
charitable or other), persons that hold notes as part of a hedging or conversion
transaction or a straddle, persons deemed to sell notes under the constructive
sale provisions of the Code, persons that have a functional currency other than
the U.S. dollar and investors in pass-through entities, may be subject to
special rules.
This discussion is based on the Code, the final, temporary and proposed
Treasury regulations promulgated thereunder, administrative pronouncements and
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly with retroactive effect. We have not requested, and
will not request, a ruling from the U.S. Internal Revenue Service, or the IRS,
with respect to any of the U.S. Federal income tax consequences described below.
There can be no assurance that the IRS will not disagree with or challenge any
of the conclusions set forth herein.
Holders of the new notes should consult their own tax advisors
concerning the application of U.S. Federal income tax laws, as well as the laws
of any state, local or foreign taxing jurisdiction, to their particular
situations.
U.S. HOLDERS
The following discussion is limited to persons that are U.S. Holders.
For these purposes, "U.S. Holder" means the beneficial owner of a note that for
U.S. Federal income tax purposes is (i) an individual who is a citizen or
resident of the United States, (ii) a corporation or other entity taxable as a
corporation that is created or organized under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to U.S. Federal income tax regardless of its source, (iv) a
trust subject to the primary supervision of a United States court and the
control of one or more U.S. persons or (v) a person whose worldwide
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income or gain is otherwise subject to U.S. Federal income tax on a net income
basis. If a partnership or other entity taxable as a partnership holds the
notes, the tax treatment of a partner will generally depend on the status of the
partner and the activities of the partnership. Such partner should consult its
tax advisor as to the tax consequences.
Exchange Offer
The exchange of old notes for the new notes pursuant to the exchange
offer should not constitute a taxable event for U.S. Federal income tax
purposes. As a result:
o a U.S. Holder of notes should not recognize taxable gain or loss
as a result of the exchange of old notes for the new notes
pursuant to the exchange offer;
o the holding period of the new notes should include the holding
period of the old notes surrendered in exchange therefor; and
o a U.S. Holder's adjusted tax basis in the new notes should be the
same as such U.S. Holder's adjusted tax basis in the old notes
surrendered in exchange therefor.
Interest
A U.S. Holder must generally include interest on a note in its ordinary
income at the time such interest is received or accrued, in accordance with such
U.S. Holder's method of accounting for U.S. Federal income tax purposes.
Sale, Exchange or Redemption of Notes
Upon the sale, exchange or redemption of a note, a U.S. Holder
generally will recognize taxable gain or loss equal to the difference between
(i) the amount realized on such disposition and (ii) such U.S. Holder's adjusted
tax basis in the note. Notwithstanding the foregoing, any amounts realized in
connection with any sale, exchange or redemption with respect to accrued
interest not previously included in income will be treated as ordinary interest
income. A U.S. Holder's adjusted tax basis in a note generally will equal the
cost of such note less any principal payments received by such holder.
Contingent Payments
In certain circumstances, we may be obligated to pay you amounts in
excess of the stated interest and principal payable on the notes. The obligation
to make such payments, including liquidated damages and redemption premiums
payable in certain circumstances, may implicate the provisions of Treasury
regulations relating to "contingent payment debt instruments". If the notes were
deemed to be contingent payment debt instruments, U.S. Holders might, among
other things, be required to treat any gain recognized on the sale or other
disposition of a note as ordinary income, subject to tax at a maximum Federal
rate of 38.6%, rather than as capital gain which may be subject to tax at a
maximum Federal rate of 20%. The regulations applicable to contingent payment
debt instruments have not been the subject of authoritative interpretation and
therefore the scope of the regulations is not certain. Jarden intends to take
the position that the likelihood that such payments will be made is remote and
therefore the notes are not subject to
107
the rules governing contingent payment debt instruments. This determination will
be binding on a holder unless such holder explicitly discloses on a statement
attached to the holder's timely filed U.S. Federal income tax return for the
taxable year that includes the acquisition date of the note that such holder's
determination is different. Purchasers of notes are urged to consult their tax
advisors regarding the possible application of the contingent payment debt
instrument rules to the notes.
Information Reporting and Backup Withholding
A U.S. Holder of notes may be subject to backup withholding, currently
at a rate of 30%, but subject to gradual reduction to 28% by year 2006 (the
"Applicable Backup Withholding Rate"), with respect to "reportable payments,"
which includes interest and principal paid on or the gross proceeds of a sale,
exchange or redemption of the notes. The payor of any reportable payments will
be required to deduct and withhold the Applicable Backup Withholding Rate from
such payments if (i) the payee fails to establish that it is entitled to an
exemption, (ii) the payee fails to furnish its correct Taxpayer Identification
Number ("TIN") to the payor in the prescribed manner, (iii) the IRS notifies the
payor that the TIN furnished by the payee is incorrect, (iv) the payee has
failed properly to report the receipt of reportable payments and the IRS has
notified the payor that backup withholding is required or (v) the payee fails to
certify under penalties of perjury that such payee is not subject to backup
withholding. If any one of these events occurs with respect to a U.S. Holder of
notes, Jarden or its paying or other withholding agent will be required to
withhold the Applicable Backup Withholding Rate from any payments of principal
and interest on a note.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules will be allowed as a refund or credit against such holder's
U.S. Federal income tax liability, so long as the required information is
provided timely to the IRS. Jarden, its paying agent or other withholding agent
generally will report to a U.S. Holder of notes and to the IRS the amount of any
reportable payments made in respect of the notes for each calendar year and the
amount of tax withheld, if any, with respect to such payments.
NON-U.S. HOLDERS
If you are a "Non-U.S. Holder," as defined below, this section applies to you. A
Non-U.S. Holder means any beneficial owner of a new note that is not a United
States holder. The rules governing the United States Federal income and estate
taxation of a Non-U.S. Holder are complex, and no attempt will be made herein to
provide more than a summary of those rules. Special rules may apply to a
Non-U.S. Holder if such holder is a controlled foreign corporation, passive
foreign investment company or foreign personal holding company and therefore
subject to special treatment under the Internal Revenue Code. IF YOU ARE A
NON-U.S. HOLDER, YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISORS TO DETERMINE THE
EFFECT ON YOU OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS WITH REGARD TO AN
INVESTMENT IN THE NEW NOTES, INCLUDING ANY REPORTING REQUIREMENTS.
Interest
Subject to the discussion of backup withholding below, payments of
interest on a note to a Non-U.S. Holder generally will not be subject to U.S.
Federal income or withholding tax,
108
provided that (i) the holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of Jarden that are
entitled to vote, (ii) the holder is not (a) a controlled foreign corporation
that is related to Jarden through stock ownership or (b) a bank receiving
interest on a loan entered into in the ordinary course of business, (iii) such
interest is not effectively connected with the conduct by the Non-U.S. Holder of
a trade or business within the United States and (iv) Jarden or its paying agent
receives appropriate documentation establishing that the Non-U.S. Holder is not
a U.S. person.
A Non-U.S. Holder that does not qualify for exemption from withholding
under the preceding paragraph generally will be subject to withholding of U.S.
Federal income tax at a 30% rate (or lower applicable treaty rate) on payments
of interest on the notes.
If interest on the notes is effectively connected with the conduct by
an Non-U.S. Holder of a trade or business within the United States, such
interest will be subject to U.S. Federal income tax on a net income basis at the
rate applicable to U.S. persons generally (and, with respect to corporate
holders, may also be subject to a 30% branch profits tax). If interest is
subject to U.S. Federal income tax on a net income basis in accordance with
these rules, such payments will not be subject to U.S. withholding tax so long
as the relevant Non-U.S. Holder provides Jarden or its paying agent with the
appropriate documentation.
Sale, Exchange or Redemption of Notes
Subject to the discussion of backup withholding, any gain realized by a
Non-U.S. Holder on the sale, exchange or redemption of a note generally will not
be subject to U.S. Federal income tax, unless (i) such gain is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business within
the United States, (ii) the Non-U.S. Holder is an individual who is present in
the United States for 183 days or more in the taxable year of disposition and
certain other conditions are satisfied or (iii) the Non-U.S. Holder is subject
to tax pursuant to the provisions of U.S. Federal income tax law applicable to
certain expatriates.
Information Reporting and Backup Withholding
Backup withholding and information reporting generally will not apply
to interest payments made to a Non-U.S. Holder in respect of the notes if such
Non-U.S. Holder furnishes Jarden or its paying agent with appropriate
documentation of such holder's non-U.S. status.
The payment of proceeds from a Non-U.S. Holder's disposition of notes
to or through the U.S. office of any broker, domestic or foreign, will be
subject to information reporting and possible backup withholding unless such
holder certifies as to its non-U.S. status under penalties of perjury or
otherwise establishes an exemption, provided that the broker does not have
actual knowledge that such holder is a U.S. person or that the conditions of an
exemption are not, in fact, satisfied. The payment of the proceeds from a
Non-U.S. Holder's disposition of a note to or through a non-U.S. office of
either a U.S. broker or a non-U.S. broker that is a U.S.-related person will be
subject to information reporting, but not backup withholding, unless such broker
has documentary evidence in its files that such Non-U.S. Holder is not a U.S.
person and the broker has no knowledge to the contrary, or the Non-U.S. Holder
establishes an exemption. For this purpose, a "U.S.-related person" is (i) a
controlled foreign corporation for U.S. Federal income tax purposes, (ii) a
foreign person 50% or more of whose gross income from all sources
109
for the three-year period ending with the close of its taxable year preceding
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
U.S. trade or business or (iii) a foreign partnership that is either engaged in
the conduct of a trade or business in the U.S. or of which 50% or more of its
income or capital interests are held by U.S. persons. Neither information
reporting nor backup withholding will apply to a payment of the proceeds of a
Non-U.S. Holder's disposition of notes by or through a non-U.S. office of a
non-U.S. broker that is not a U.S.-related person. Copies of any information
returns filed with the IRS may be made available by the IRS, under the
provisions of a specific treaty or agreement, to the taxing authorities of the
country in which the Non-U.S. Holder resides.
Any amounts withheld under the backup withholding rules from a payment
to a Non-U.S. Holder will be allowed as a refund or a credit against such
Non-U.S. Holder's U.S. Federal income tax liability, provided that the requisite
procedures are followed.
Prospective purchasers of notes are urged to consult their own tax
advisors with respect to the application to their particular situations of U.S.
Federal income tax laws, as well as the laws of any state, local or foreign
taxing jurisdiction.
PLAN OF DISTRIBUTION
We are not using any underwriters for this exchange offer.
Each 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 these new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
the old notes were acquired as a result of market-making activities or other
trading activities.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other persons. New notes received by broker-dealers for
their own account pursuant 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 these methods of resale, at market prices prevailing at the time of resale,
at prices related to the prevailing market prices, or negotiated prices. Any
resale of new notes may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of any new notes. Any
broker-dealer that resells new notes that were received by it for its own
account pursuant to the exchange offer and any broker-dealer that participates
in a distribution of the new notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any of these resales of new
notes or any commissions or concessions received by any of these persons may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
We and the guarantors will use our best efforts to keep this
registration statement
110
continuously effective, supplemented and amended to the extent necessary to
ensure that it is available for resales of notes acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of the
registration rights agreement, the Securities Act and the policies, rules and
regulations of the Commission, for a period ending on the earlier of
o 180 days from the date on which this registration statement is
declared effective and
o the date on which a broker-dealer is no longer required to deliver
a prospectus in connection with market-making or other trading
activities.
We and the guarantors will provide sufficient copies of the latest
version of this prospectus to broker-dealers promptly upon request at any time
during the 180-day (or shorter as provided in the foregoing sentence) period in
order to facilitate such resales.
We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the notes, other than
commissions or concessions of any brokers or dealers, and will indemnify the
holders of the notes, including any broker-dealer, against certain liabilities,
including certain liabilities under the Securities Act.
By its acceptance of the exchange offer, any broker-dealer that
receives new notes pursuant to the exchange offer agrees to notify us before
using the prospectus in connection with the sale or transfer of new notes. The
broker-dealer further acknowledges and agrees that, upon receipt of notice from
us of the happening of any event which makes any statement in the prospectus
untrue in any material respect or which requests the making of any changes in
the prospectus to make the statements in the prospectus not misleading or which
may impose upon us disclosure obligations that may have a material adverse
effect on us, which notice we agree to deliver promptly to the broker-dealer,
the broker-dealer will suspend use of the prospectus until we have notified the
broker-dealer that delivery of the prospectus may resume and have furnished
copies of any amendment or supplement to the prospectus to the broker-dealer.
111
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial information as of and for the year
ended December 31, 2001, for the three months ended March 31, 2002 and for the
six months ended June 30, 2002 has been derived from our audited and unaudited
consolidated financial statements as of such date and for such period and gives
pro forma effect to (collectively, the "Transactions"):
o the November 2001 sales of our thermoformed plastics operations
(the "Dispositions"), comprised of the assets of our Triangle,
TriEnda and Synergy World divisions, including the receipt in 2002
of $38 million of related tax refunds (the "Tax Refund"); and
o the April 2002 acquisition (the "Acquisition") of substantially
all the assets of Tilia International, Inc. and its subsidiaries
including the related refinancing of our senior credit facility
and the offering of the old notes.
The unaudited pro forma financial information is not necessarily indicative of
our results of operations or financial position had the events reflected herein
actually been consummated at the assumed dates, nor is it necessarily indicative
of our results of operations or financial position for any future period. The
unaudited pro forma financial information should be read in conjunction with the
consolidated financial statements, including the related notes, included
elsewhere in this prospectus.
The pro forma adjustments related to the purchase price allocation and financing
of the Acquisition are preliminary and are subject to revision as additional
information becomes available. Revisions to the preliminary purchase price
allocation and financing of the Acquisition may have a significant impact on the
unaudited pro forma information.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2002
PRO FORMA PRO FORMA
JARDEN TILIA ADJUSTMENTS COMBINED
------------------------------------------ ---------------
(dollars in thousands)
ASSETS
Current assets
Cash and cash equivalents $ 4,614 $ 28,374 $ (14,712)(a) $ 18,276
Accounts receivable, net 24,259 14,945 39,204
Income taxes receivable 1,605 1,605
Inventories, net 34,818 18,273 53,091
Deferred taxes on income 3,660 5,632 9,292
Other current assets 3,394 4,719 8,113
------------------------------------------ ---------------
Total current assets 72,350 71,943 (14,712) 129,581
------------------------------------------ ---------------
Property, plant and equipment, net 42,154 3,685 45,839
Goodwill, net 15,487 96,448 (b) 111,935
Deferred taxes on income 10,271 122 10,393
Other assets 5,364 1,115 12,000 (c) 18,265
(214)(d)
------------------------------------------ ---------------
Total assets $ 145,626 $ 76,865 $ 93,522 $ 316,013
========================================== ===============
LIABILITIES AND EQUITY
Current liabilities
Short-term and current portion of long-term debt $ 12,433 $ - $ (12,433)(e) $ -
Accounts payable 21,433 1,073 22,506
Other current liabilities 16,128 14,240 30,368
------------------------------------------ ---------------
Total current liabilities 49,994 15,313 (12,433) 52,874
------------------------------------------ ---------------
Noncurrent liabilities
Long-term debt 44,933 (44,933)(e) 212,654
50,000 (f)
15,000 (g)
147,654 (h)
Other noncurrent liabilities ------------------------------------------ ---------------
4,184 4,184
------------------------------------------ ---------------
Total noncurrent liabilities 49,117 - 167,721 216,838
Equity 46,515 61,552 (61,552)(i) 46,301
(214)(d)
------------------------------------------ ---------------
Total liabilities and equity $ 145,626 $ 76,865 $ 93,522 $ 316,013
========================================== ===============
113
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 20002
ACQUISITION-
RELATED
PRO FORMA PRO FORMA
JARDEN(1) TILIA(2) ADJUSTMENTS(3) COMBINED
-------- ------- --------------- ---------
(dollars in thousands, except per share data)
Net sales ........................................ $152,677 $38,525 $ -- $191,202
Costs and expenses
Cost of sales .................................. 97,904 19,343 117,247
Selling, general and administrative expenses ... 32,924 13,468 250 (j) 46,642
------- ------- ------- -------
Operating earnings (loss) ........................ 21,849 5,714 (250) 27,313
Interest expense, net ............................ 4,985 (52) (1,232)(k) 8,270
4,344 (l)
225 (m)
------- ------- ------- -------
Income (loss) before taxes ....................... 16,864 5,766 (3,587) 19,043
Income tax provision (benefit) ................... 1,584 1,801 (973)(n) 2,412
------- ------- ------- -------
Net income (loss) ................................ $15,280 $ 3,965 $(2,614) $16,631
======= ======= ======= =======
Basic earnings (loss) per share (4) .............. $ 1.11 $ 1.21
Diluted earnings (loss) per share (4) ............ $ 1.09 $ 1.18
Weighted average shares outstanding (4):
Basic .......................................... 13,723 13,723
Diluted ........................................ 14,058 14,058
(1) Amounts in the Jarden column represent Jarden's actual results for the six
months ended June 30, 2002, which include Tilia from April 1, 2002.
(2) Amounts in the Tilia column represent Tilia's actual results for the three
months ended March 31, 2002, which are not included in Jarden's reported
results.
(3) Amounts in the Acquisition-Related Pro Forma Adjustments column represent
adjustments related to the Tilia acquisition for the three months ended
March 31, 2002, the period for which Tilia was not included in Jarden's
reported results.
(4) All earnings per share and weighted average share amounts have been
adjusted to give effect to a 2-for-1 split of the Company's outstanding
shares of common stock that was effected during the second quarter of 2002.
114
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2002
ACQUISITION-
RELATED
PRO FORMA PRO FORMA
JARDEN TILIA ADJUSTMENTS COMBINED
-------------------------------------------- ---------------
(dollars in thousands, except per share data)
Net sales $ 47,565 $ 38,525 $ - $ 86,090
Costs and expenses
Cost of sales 35,053 19,343 54,396
Selling, general and administrative expenses 8,378 13,468 250 (j) 22,096
-------------------------------------------- --------------
Operating earnings (loss) 4,134 5,714 (250) 9,598
Interest expense, net 1,232 (52) (1,232)(k) 4,517
4,344 (l)
225 (m)
-------------------------------------------- --------------
Income (loss) before taxes 2,902 5,766 (3,587) 5,081
Income tax provision (benefit) (4,291) 1,801 (973)(n) (3,463)
-------------------------------------------- ---------------
Net income (loss) $ 7,193 $ 3,965 $ (2,614) $ 8,544
============================================ ===============
Basic earnings (loss) per share $ .54 $ .64
Diluted earnings (loss) per share $ .54 $ .64
Weighted average shares outstanding:
Basic 13,432 13,432
Diluted 13,678 13,678
All earnings per share and weighted average share amounts have been adjusted to
give effect to a 2-for-1 split of the Company's outstanding shares of common
stock that was effected during the second quarter of 2002.
115
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
DISPOSITIONS- ACQUISITION-
RELATED RELATED
PRO FORMA JARDEN PRO FORMA PRO FORMA
JARDEN ADJUSTMENTS PRO FORMA TILIA ADJUSTMENTS COMBINED
----------------------------- ------------------------------------------ -----------
(dollars in thousands except per share data)
Net sales $ 304,978 $ (62,588)(o) $ 241,679 $ 183,825 $ - $ 425,504
(711)(p)
Costs and expenses
Cost of sales 233,676 (60,901)(o) 172,775 89,668 262,443
Selling, general and administrative
expenses 52,212 (9,061)(o) 41,481 61,718 1,000 (j) 104,199
(1,670)(p)
Goodwill amortization 5,153 (4,044)(j) 1,109 1,109
Special charges (credits) and
reorganization expenses 4,978 345 (o) 5,323 803 6,126
Loss on divestitures of assets 122,887 (122,426)(q) 461 461
----------------------------- ------------------------------------------ -----------
Operating earnings (loss) (113,928) 134,458 20,530 31,636 (1,000) 51,166
Interest expense, net 11,791 (3,602)(r) 8,189 344 (8,189)(k) 19,994
18,750 (l)
900 (m)
--------------------------------------------------------------------------- -----------
Income (loss) before taxes and minority
interest (125,719) 138,060 12,341 31,292 (12,461) 31,172
Income tax provision (benefit) (40,443) 44,352 (s) 3,909 8,513 (1,512)(t) 10,910
Minority interest in loss of consolidated
subsidiary 153 (153)(t) - -
----------------------------- ------------------------------------------ -----------
Net income (loss) $ (85,429) $ 93,861 $ 8,432 $ 22,779 $ (10,949) $ 20,262
============================= ========================================== ===========
Basic earnings (loss) per share $ (6.71) $ .66 $ 1.59
Diluted earnings (loss) per share $ (6.71) $ .66 $ 1.59
Weighted average shares outstanding:
Basic 12,726 12,726 12,726
Diluted 12,726 12,754 12,754
All earnings per share and weighted average share amounts have been adjusted to
give effect to a 2-for-1 split of the Company's outstanding shares of common
stock that was effected during the second quarter of 2002.
116
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Balance sheet adjustments:
(a) Adjustment to reflect the use of cash on hand to fund a portion of the
purchase price of Tilia. Amount is calculated as follows:
Sources of cash:
Proceeds from the Offering of the Notes (see Note (h)) $147,654
Proceeds from new credit facility (see note (f) 50,000
-----------
Total sources of cash: $197,654
-----------
Uses of cash:
Purchase price including estimated expenses, net of
seller debt (See Note (b) and Note (g)) $148,000
Estimated expenses related to the new credit facility
(See Note (c)) 2,000
Estimated expenses related to the Offering of the
Notes (see Note (c)) 5,000
Repay old credit facility (see note (e)) 57,366
-----------
Total uses of cash $212,366
-----------
-----------
NET USE OF CASH ON HAND TO FUND TRANSACTIONS $ 14,712
-----------
b) Adjustment to reflect estimated goodwill to be recorded with the
Acquisition calculated as the purchase price plus related expenses ($163
million) related to the Acquisition less the net equity of Tilia and
amounts allocated to specifically identifiable intangible assets ($5.0
million).
(c) Adjustment to reflect the following:
(i.) estimated fair value of Tilia's identifiable intangible assets
(primarily patents) of $5.0 million to be amortized over an average
five-year life;
(ii.) estimated expenses of this offering of $5.0 million to be amortized
over the ten-year term of the Senior Subordinated Notes due 2012;
and
(iii.) estimated expenses of the new senior credit facility of $2.0 million
to be amortized over the five-year term.
(d) Adjustment to reflect the write-off of remaining debt issue costs relating
to Jarden's existing senior credit facility.
(e) Adjustment to reflect the repayment of Jarden's existing credit facility in
conjunction with the issuance of the new senior credit facility and old
notes.
(f) Adjustment to reflect the initial borrowing under the new senior credit
facility in conjunction with the Acquisition.
117
(g) Adjustment to reflect the subordinated seller notes to be issued in
conjunction with the Transactions:
(i.) $10.0 million non-interest bearing note due March 31, 2003, and
(ii.) $5.0 million note due in 2004.
(h) Adjustment to reflect the issuance of the Senior Subordinated Notes due
2012 at 98.436% of par value.
(i) Adjustment to reflect the elimination of the existing stockholders' equity
of Tilia.
Statement of operations adjustments:
(j) Adjustment to reflect the amortization of estimated identifiable intangible
assets. See note (c)(i) above.
(k) Adjustment to reflect the elimination of historical Jarden interest
expense.
(l) Adjustment to reflect pro forma interest expense relating to:
(i.) the new senior credit facility based upon Jarden's 2001 effective
borrowing rates for the periods presented;
(ii.) the interest bearing subordinated seller note described in note
(f)(ii) above based upon Jarden's effective borrowing rates for the
periods presented; and
(iii.) the 9 3/4% Senior Subordinated Notes due 2012.
The annualized effect of a 1/8% change in interest rates would be $81.
(m) Adjustment to reflect amortization of debt issue costs for both the new
senior credit facility and the Senior Subordinated Notes due 2012. See
note (c) above.
(n) Adjustment to reflect an effective tax rate of 38%.
(o) Adjustment to reflect the elimination of the operating results of the
assets of our Triangle, TriEnda and Synergy World divisions.
(p) Adjustment to reflect the elimination of the operating results of Microlin,
LLC.
(q) Adjustment to reflect the elimination of the loss on the Dispositions.
Defined.
(r) Adjustment to reflect the elimination of interest expense related to the
debt repayment resulting from the Tax Refunds.
(s) Adjustment to reflect an effective tax rate of 35.0%.
(t) Adjustment to reflect the elimination of the minority interest's share in
the loss of Microlin, LLC.
118
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands)
Three months ended March 31,
2002 2001
-------------- -------------
Net sales $38,525 $40,650
Costs and expenses
Cost of sales 19,343 19,006
Selling, general and administrative expenses 13,468 14,518
-------------- -------------
Operating earnings 5,714 7,126
Interest income, net (52) 112
-------------- -------------
Income before taxes 5,766 7,014
Income tax expense 1,801 1,837
-------------- -------------
Net income $ 3,965 $ 5,177
============== =============
See accompanying notes to unaudited consolidated financial statements.
119
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
March 31, December 31,
2002 2001
------------------- -------------------
ASSETS
Current assets
Cash and cash equivalents $ 28,374 $ 18,915
Accounts receivable, net 14,945 22,982
Inventories, net 18,273 22,089
Deferred taxes on income 5,632 5,632
Other current assets 4,719 4,251
------------------- -------------------
Total current assets 71,943 73,869
------------------- -------------------
Property, plant and equipment, net $ 3,685 $ 3,267
Deferred taxes on income 122 122
Other assets 1,115 1,146
------------------- -------------------
Total assets $ 76,865 $ 78,404
=================== ===================
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 1,073 3,536
Other current liabilities 14,240 17,304
------------------- -------------------
Total current liabilities 15,313 20,840
------------------- -------------------
Equity 61,552 57,564
------------------- -------------------
Total liabilities and equity $ 76,865 $ 78,404
=================== ===================
See accompanying notes to unaudited consolidated financial statements.
120
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
Three months ended
March 31,
2002 2001
-------------- -------------
Cash flows from operating activities
Net income $ 3,965 $ 5,177
Reconciliation of net income to net cash provided by
Operating activities:
Depreciation and amortization 471 327
Other, net (87) (133)
Changes in working capital components 5,962 (5,128)
-------------- -------------
Net cash provided by operating activities 10,311 243
-------------- -------------
Cash flows from financing activities
Proceeds from issuance of common stock 22 89
-------------- -------------
Net cash provided by financing activities 22 89
-------------- -------------
Cash flows from investing activities
Additions to property, plant and equipment (874) (431)
-------------- -------------
Net cash used in investing activities (874) (431)
-------------- -------------
Net increase (decrease) in cash $ 9,459 $ (99)
Cash and cash equivalents, beginning of period 18,915 375
-------------- -------------
Cash and cash equivalents, end of period $ 28,374 $ 276
============== =============
See accompanying notes to unaudited consolidated financial statements.
121
TILIA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Certain information and footnote disclosures, including significant
accounting policies normally included in financial statements prepared
in accordance with accounting principles generally accepted in the
United States, have been condensed or omitted. In the opinion of
management, the accompanying unaudited consolidated financial
statements include all adjustments necessary for a fair presentation of
the results for the interim periods presented. Results of operations
for the periods shown are not necessarily indicative of results for the
year, particularly in view of the seasonality for home food
preservation products. The accompanying unaudited consolidated
financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Tilia International, Inc. and Subsidiaries, incorporated
by reference hereto.
2. Subsequent events
On April 24, 2002, the business of Tilia International, Inc. and its
subsidiaries Tilia, Inc. and Tilia Canada, Inc. (collectively "Tilia"),
was acquired by Jarden Corporation (f/k/a Alltrista Corporation)
pursuant to an asset purchase agreement (the "Acquisition"). Pursuant
to the Acquisition, Tilia was acquired for approximately $145 million
in cash and $15 million in seller debt financing. In addition, the
Acquisition includes an earn-out provision with a potential payment in
cash or Company common stock of up to $25 million payable in 2005,
provided that certain earnings performance targets are met.
122
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act,
and in accordance therewith we are required to file periodic reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information filed by us can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, as well as the Regional Offices of the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, at the prescribed rates. The Commission also maintains a site on
the World Wide Web that contains reports, proxy and information statements and
other information regarding registrants that file electronically. The address of
such site is http://www.sec.gov. The telephone number of the Commission is
800-SEC-0330. In addition, similar information can be inspected at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
With respect to the new notes, this prospectus omits certain
information that is contained in the registration statement on file with the
Commission, of which this prospectus is a part. For further information with
respect to us and our new notes, reference is made to the registration
statement, including the exhibits incorporated therein by reference or filed
therewith. Statements herein contained concerning the provisions of any document
are not necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit or incorporated by reference to the
registration statement. The registration statement and the exhibits may be
inspected without charge at the offices of the Commission or copies thereof
obtained at prescribed rates from the public reference section of the Commission
at the addresses set forth above.
You should rely on the information contained in this prospectus and in
the registration statement as well as other information you deem relevant. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. This prospectus is an offer to sell, or a
solicitation of offers to buy, securities only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or any sale or exchange of securities, however, we have a duty
to update that information while this prospectus is in use by you where, among
other things, any facts or circumstances arise which, individually or in the
aggregate, represent a fundamental change in the information contained in this
prospectus or any material information with respect to the plan of distribution
was not previously disclosed in the prospectus or there is any material change
to such information in the prospectus. This prospectus does not offer to sell or
solicit any offer to buy any securities other than the new notes to which it
relates, nor does it offer to buy any of these notes in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such
jurisdiction.
EXPERTS
The consolidated financial statements of Jarden Corporation and
subsidiaries (formerly "Alltrista Corporation and subsidiaries") appearing in
its Annual Report (Form 10-K/A) for the year ended December 31, 2001, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
123
The consolidated financial statements of Tilia International, Inc. and
its subsidiaries incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto. Arthur
Andersen LLP has not consented to the inclusion of their report in this
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen
LLP has not consented to the inclusion of their report in this prospectus, you
will not be able to recover against Arthur Andersen LLP under Section 11 of the
Securities Act for any untrue statements of a material fact contained in the
financial statements audited by Arthur Andersen LLP or any omissions to state a
material fact required to be stated therein.
LEGAL MATTERS
The validity of the new notes to be issued pursuant to the exchange
offer will be passed upon for us by Kane Kessler, P.C., New York, New York.
124
- --------------------------------------------------------------------------------
JARDEN CORPORATION
OFFER TO EXCHANGE $150,000,000 PRINCIPAL AMOUNT OF OUR
9 3/4% SENIOR SUBORDINATED NOTES DUE 2012,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OF OUR OUTSTANDING
9 3/4% SENIOR SUBORDINATED NOTES DUE 2012
UNCONDITIONALLY GUARANTEED BY:
ALLTRISTA NEWCO CORPORATION, ALLTRISTA PLASTICS CORPORATION, ALLTRISTA ZINC
PRODUCTS, L.P., HEARTHMARK, INC., QUOIN CORPORATION, TILIA, INC.,
TILIA DIRECT, INC., TILIA INTERNATIONAL, INC., TRIENDA CORPORATION
------------------------
PROSPECTUS
------------------------
OCTOBER 28, 2002
- --------------------------------------------------------------------------------
125