File Pursuant to Rule 424(b)(1)
Registration File No. 333-109353
PROSPECTUS
JARDEN CORPORATION
OFFER TO EXCHANGE $30,000,000 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, WHICH HAVE ALSO BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
UNCONDITIONALLY GUARANTEED BY:
ALLTRISTA NEWCO CORPORATION, ALLTRISTA PLASTICS CORPORATION,
ALLTRISTA ZINC PRODUCTS, L.P., HEARTHMARK, LLC, QUOIN, LLC,
TILIA, INC., TILIA DIRECT, INC., TILIA INTERNATIONAL, INC.,
O.W.D. INCORPORATED,TUPPER LAKE PLASTICS, INCORPORATED,
X PROPERTIES, LLC AND LEHIGH CONSUMER PRODUCTS CORPORATION
---------------
MATERIAL TERMS OF THE EXCHANGE OFFER
o The exchange offer expires at 5:00 p.m., New York City time, on December 2,
2003, unless extended.
o We will exchange all outstanding old notes, which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), 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are validly tendered and not validly withdrawn for an equal principal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, 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 new notes shall be issued under and governed by an
Indenture, dated as of April 24, 2002, as amended (the "April 2002
Indenture"), among Jarden Corporation, the guarantors named therein and The
Bank of New York, instead of an Indenture, dated January 29, 2003, as
amended (the "January 2003 Indenture," together with the April 2002
Indenture, the "Indentures"), among Jarden Corporation, the guarantors
named therein and The Bank of New York. The Indentures are substantially
identical in their terms.
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 new 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."
---------------
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DESCRIPTION OF
THE RISKS YOU SHOULD CONSIDER WHEN EVALUATING THIS INVESTMENT.
---------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
---------------
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 OFFER FOR SALE OR 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 23, 2003.
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TABLE OF CONTENTS
Page
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................6
THE COMPANY...................................................................7
SUMMARY.......................................................................9
Summary of the Terms of the Exchange Offer.................................9
Summary of the Terms of the New Notes.....................................13
RISK FACTORS.................................................................15
RISKS RELATING TO THE NOTES...............................................15
Your right to receive payments on the new 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 of
their future borrowings................................................15
Since the new notes are unsecured, your right to enforce remedies is
limited by the rights of holders of secured debt.......................16
Not all of our subsidiaries will guarantee our obligations under the new
notes, and the assets of the non-guarantor subsidiaries may not be
available to make payments on the new notes............................16
Our significant indebtedness could adversely affect our financial health,
and prevent us from fulfilling our obligations under our debt..........16
We will require a significant amount of cash to service our indebtedness.
Our ability to generate cash depends on many factors beyond our
control................................................................17
The indenture related to the new notes, the old notes, and our senior
credit facility contain various covenants which limit our management's
discretion in the operation of our business............................18
We may not have the ability to raise the funds necessary to finance the
change of control offer required by the April 2002 Indenture and the
January 2003 Indenture.................................................18
A public market for the new notes may not develop......................19
Federal and state statutes allow courts, under specific circumstances,
to void guarantees and require security holders to return payments
received from guarantors...............................................19
Until consummation of the exchange offer, the new notes offered hereby
will be a separate series of securities than, and will not be fungible
with, the notes issued pursuant to the April 2002 Indenture............20
RISKS RELATING TO JARDEN..................................................21
Reductions, cancellations, or delays in customer purchases would
adversely affect our profitability.....................................21
We may be adversely affected by the trend towards retail trade
consolidation..........................................................21
Sales of some of our products are seasonal and weather related.........21
We depend on suppliers in Asia.........................................22
Competition in our industries may hinder our ability to execute our
business strategy, achieve profitability, or maintain relationships
with existing customers................................................23
If we fail to develop new or expand existing customer relationships,
our ability to grow our business will be impaired......................23
We cannot be certain that our product innovations and marketing
successes will continue................................................24
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We may experience difficulty in integrating acquired businesses,
which may interrupt our business operations.............................24
Our operations are subject to a number of Federal, state and local
environmental regulations...............................................24
We may be adversely affected by remediation obligations mandated by
applicable environmental laws...........................................24
We depend upon key personnel............................................25
We enter into contracts with the United States government and other
governments.............................................................25
Our operating results can be adversely affected by changes in the cost
or availability of raw materials........................................25
Our business could be adversely affected because of risks which are
particular to international operations..................................26
Our performance can fluctuate with the financial condition of the
retail industry.........................................................26
Claims made against us based on product liability could have a
material adverse effect on our business.................................26
Our failure to successfully protect our intellectual property rights
could have a material adverse effect on our business....................27
We depend on a single manufacturing facility for certain essential
products................................................................27
Certain of our employees are represented by labor unions................27
USE OF PROCEEDS...............................................................28
RATIO OF EARNINGS TO FIXED CHARGES............................................29
CAPITALIZATION................................................................30
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA...............................31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT....................................................................33
THE EXCHANGE OFFER............................................................35
Purpose of the Exchange Offer...........................................35
Resale of the New Notes.................................................35
Terms of the Exchange Offer.............................................36
Expiration Date; Extensions; Amendments.................................37
Interest on the New Notes...............................................38
Procedures for Tendering................................................38
Return of Notes.........................................................41
Book-Entry Transfer.....................................................41
Guaranteed Delivery Procedures..........................................41
Withdrawal of Tenders...................................................42
Conditions..............................................................42
Liquidated Damages......................................................43
Exchange Agent..........................................................44
Fees and Expenses.......................................................44
Consequence of Failures to Exchange.....................................45
DESCRIPTION OF THE NEW NOTES..................................................45
Brief Description of the New Notes and the Guarantees......................46
Principal, Maturity and Interest...........................................47
Methods of Receiving Payments on the Notes.................................47
Paying Agent and Registrar for the Notes...................................47
Transfer and Exchange......................................................47
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Subsidiary Guarantees......................................................48
Subordination..............................................................49
Optional Redemption........................................................50
Mandatory Redemption.......................................................51
Repurchase at the Option of Holders........................................51
Selection and Notice.......................................................55
Certain Covenants..........................................................55
Events of Default and Remedies.............................................66
No Personal Liability of Directors, Officers, Employees and Stockholders...68
Legal Defeasance and Covenant Defeasance...................................68
Amendment, Supplement and Waiver...........................................70
Satisfaction and Discharge.................................................72
Concerning the Trustee.....................................................72
Book-Entry, Delivery and Form..............................................73
Depositary Procedures......................................................73
Exchange of Book-Entry Notes for Certificated Notes........................76
Exchange of Certificated Notes for Global Notes............................76
Certain Definitions........................................................77
DESCRIPTION OF SENIOR INDEBTEDNESS............................................93
FEDERAL INCOME TAX CONSIDERATIONS.............................................99
PLAN OF DISTRIBUTION.........................................................103
WHERE YOU CAN FIND MORE INFORMATION..........................................105
EXPERTS......................................................................105
LEGAL MATTERS................................................................106
5
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 for the fiscal year ended December 31,
2002;
(b) Our quarterly report on Form 10-Q for the period ended June 30, 2003;
(c) Our quarterly report on Form 10-Q for the period ended March 31, 2003;
(d) Our current report on Form 8-K, Date of Event - January 7, 2003, filed
on January 10, 2003;
(e) Our current report on Form 8-K, Date of Event February 7, 2003, filed
on February 14, 2003;
(f) Our current report on Form 8-K/A, Date of Event - February 7, 2003,
filed on March 7, 2003;
(g) Our current report on Form 8-K, Date of Event - April 28, 2003, filed
on April 28, 2003;
(h) Our current report on Form 8-K, Date of Event - May 1, 2003, filed on
May 7, 2003;
(i) Our current report on Form 8-K, Date of Event - July 9, 2003, filed on
July 10, 2003;
(j) Our current report on Form 8-K, Date of Event - July 28, 2003, filed on
July 28, 2003;
(k) Our current report on Form 8-K, Date of Event - September 2, 2003,
filed on September 5, 2003;
(l) Our current report on Form 8-K, Date of Event - September 8, 2003,
filed on September 9, 2003;
(m) Our current report on Form 8-K, Date of Event - September 25, 2003,
filed on September 26, 2003; and
(n) Our definitive proxy statement on Schedule 14A filed on March 28, 2003.
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
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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 25, 2003, which is five business days before the date the
exchange offer expires.
THE COMPANY
We are a leading provider of niche consumer products used in and around the
home, under well-known brand names including Ball(R), Bernardin(R), Crawford(R),
Diamond(R), FoodSaver(R), Forster(R), Kerr(R), Lehigh(R) and Leslie-Locke(R). In
North America, we are the market leader in several targeted categories,
including branded retail plastic cutlery, home canning, home vacuum packaging,
kitchen matches, rope, cord and twine and toothpicks. Many of our products are
affordable, consumable and fundamental household staples, resulting in recurring
revenues. Our highly recognized brands, innovative products and multi-channel
distribution strategy, together with our strategic acquisitions, have resulted
in significant growth in revenue and profitability. In the year ended December
31, 2002, we generated $635.4 million, $104.8 million and $52.1 million in net
sales, operating income and net income, respectively on a pro forma basis, after
taking into effect our acquisitions of Tilia International, Inc., Diamond Brands
International, Inc. and Lehigh Consumer Products Corporation as though they were
effective as of January 1, 2002.
We have achieved leading market positions by selling branded consumer
products through a variety of distribution channels, including club, department
store, drug, grocery, hardware, home improvement, mass merchant and specialty
retailers, as well as direct to consumers. By leveraging our strong brand
portfolio, category management expertise and superior customer service, we have
established and continue to maintain long-term relationships with leading
retailers within these channels. We have long-standing relationships with each
of our top ten customers. For example, we have serviced Wal-Mart and Home Depot
since their openings in 1962 and 1978, respectively, and are currently category
manager at Wal-Mart for home canning-related products and at Home Depot for
cordage. Moreover, several of our leading brands, such as Diamond(R) kitchen
matches and Ball(R) jars, have been in continuous use for over 100 years. We
continue to expand our existing customer relationships and attract customers by
introducing new product line extensions and entering new product categories.
We operate three primary business segments, comprised of branded
consumables, consumer solutions and plastic consumables.
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Branded Consumables. We manufacture or source, market and distribute a
broad line of branded consumer products that includes craft items, food
preparation kits, home canning jars, jar closures, kitchen matches, plastic
cutlery, rope, cord and twine, storage and workshop accessories, toothpicks and
other accessories marketed under the Ball(R), Bernardin(R), Crawford(R),
Diamond(R), Forster(R), Kerr(R), Lehigh(R) and Leslie-Locke(R) brand names. We
deliver our branded consumable products to over 3,100 customers nationwide. On
September 2, 2003, we acquired all of the issued and outstanding stock of Lehigh
Consumer Products Corporation, the largest supplier of rope, cord and twine for
the U.S. consumer marketplace and a leader in innovative storage and
organization products for the home and garage as well as products in the
security door and fencing market.
Consumer Solutions. We source, market and distribute an array of home
vacuum packaging machines under the market leading FoodSaver(R) brand name, as
well as other products that service the needs of the consumer in the kitchen. We
believe that the FoodSaver(R) vacuum packaging system is superior to more
conventional means of food packaging, including freezer and storage bags and
plastic containers, in preventing dehydration, rancidity, mold, freezer burn and
hardening of food. The original FoodSaver(R) product was successfully launched
through infomercials and has since expanded its distribution channels to be
based primarily on retail customers. In addition to machines, we market and
distribute an expanding line of proprietary bags and bag rolls for use with
FoodSaver(R) machines, which represents a recurring revenue source, along with
accessories including canisters, jar sealers and wine stoppers.
Plastic Consumables. We manufacture, market and distribute a wide variety
of consumer and medical plastic products for customers and our other primary
segments. These products include closures, contact lens packaging, plastic
cutlery, refrigerator door liners, shotgun shell casings, surgical devices and
syringes. Many of these products are consumable in nature or represent
components of consumer products.
In addition to the three primary business segments described above, our
other business consists primarily of our zinc strip business, which is the
largest producer of zinc strip and fabricated products in the United States.
8
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. 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 May 8, 2003, we completed a
registered offering of the old
notes, which consisted of $30.0
million aggregate principal amount
of our 9 3/4% Senior Subordinated
Notes due 2012. The offering of the
old notes was registered under the
Securities Act. In connection with
the 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 shall be issued
pursuant to an Indenture, dated as
of April 24, 2002, as supplemented
by the First Supplemental Indenture
dated as of May 7, 2003, as further
supplemented by the Second
Supplemental Indenture dated as of
May 28, 2003, and as further
supplemented by the Third
Supplemental Indenture dated as of
September 25, 2003 (the "April 2002
Indenture), among Jarden
Corporation, the guarantors named
therein and The Bank of New York,
as trustee (which we refer to as
the "new notes"), for each $1,000
principal amount of our registered
9 3/4% Senior Subordinated Notes
due 2012, which were issued
pursuant to an Indenture, dated as
of January 29, 2003, as
supplemented by the First
Supplemental Indenture dated as of
May 8, 2003, as further
supplemented by the Second
Supplemental Indenture dated as of
May 28, 2003, as further
supplemented by the Third
Supplemental Indenture dated as of
August 28, 2003, and as further
supplemented by the Fourth
Supplemental Indenture dated as of
September 25, 2003 (the "January
2003 Indenture"; together with the
April 2002 Indenture, the
"Indentures"), between Jarden
Corporation and The Bank of New
York, as trustee (which we refer to
as the "old notes"). The Indentures
are substantially identical in
their terms.
9
We sometimes refer to the new notes
and the old notes together as the
"notes." Currently, $30.0 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 new notes
will be issued under and governed
by the April 2002 Indenture instead
of the January 2003 Indenture.
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
properly 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.
Expiration Date............................. The exchange offer will expire at
5:00 p.m., New York City time, on
December 2, 2003, 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.
10
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.
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 (1) make appropriate
arrangements to register ownership
of the old notes in your name; or
(2) obtain a properly completed
bond power from the registered
holder, before completing and
executing the letter of transmittal
and delivering your old notes.
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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 properly
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 reasons described
in the terms and conditions of the
exchange offer or if you properly
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 "Federal
Income Tax Considerations."
Exchange Agent.............................. The Bank of New York, the trustee
under the Indentures governing the
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 hold notes that are
governed by the January 2003
Indenture.
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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 new
notes. The terms of the new notes are substantially identical to those of the
old notes, except that the new notes shall be issued under and governed by the
April 2002 Indenture instead of the January 2003 Indenture. The new notes will
evidence the same debt as the old notes.
Issuer...................................... Jarden Corporation
Securities.................................. $30.0 million in aggregate
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, 2003
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 new
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 new 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, including
indebtedness under our amended
and restated senior credit
facility; and
o equally with all of our and
the guarantors' existing and
future unsecured senior
subordinated obligations,
including our 9 3/4% Senior
Subordinated Notes due 2012
issued pursuant to the April
2002 Indenture.
13
Optional Redemption......................... On or after May 1, 2007, we may
redeem some or all of the new 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 new 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 new 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
new notes that might be tendered by
holders of the new 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 April
2002 Indenture."
Certain Covenants........................... The April 2002 Indenture governing
the new notes will, among other
things, limit our and the ability
of certain 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.
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.
14
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
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NEW 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 OF THEIR FUTURE BORROWINGS.
The new 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
senior credit facility. As of September 25, 2003, the new notes and the
guarantees were subordinated to approximately $211.0 million of senior debt. In
addition, our senior credit facility currently permits up to approximately $63.5
million of additional borrowings, subject to compliance with the covenants and
conditions to borrowing under the senior credit facility, which borrowings would
be senior to the new notes and the guarantees. We will be permitted to borrow
substantial additional indebtedness, including senior debt, in the future.
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 new 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 April 2002 Indenture 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.
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SINCE THE NEW 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 senior credit facility is accelerated, the
lenders under the 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 senior credit facility before the holders of
unsecured debt, including the new notes.
NOT ALL OF OUR SUBSIDIARIES WILL GUARANTEE OUR OBLIGATIONS UNDER THE NEW NOTES,
AND THE ASSETS OF THE NON-GUARANTOR SUBSIDIARIES MAY NOT BE AVAILABLE TO MAKE
PAYMENTS ON THE NEW NOTES.
Our present and future domestic restricted subsidiaries will guarantee the
new notes. Payments on the new 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 new notes, unless those assets
are transferred by dividend or otherwise to us or a subsidiary guarantor.
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 new notes are effectively subordinated to all indebtedness and other
liabilities of the non-guarantor subsidiaries.
OUR SIGNIFICANT INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH, AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR DEBT.
We have a significant amount of indebtedness which could:
o make it more difficult for us to satisfy our obligations with respect
to our new notes;
o increase our vulnerability to general adverse economic and industry
conditions;
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
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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
giving effect to the Tilia, Diamond and Lehigh acquisitions and our amended and
restated senior credit facility:
JUNE 30, 2003
(unaudited)
(dollars in thousands)
Total debt............................................ $414,286
Total stockholders' equity............................ 96,384
--------
Total capitalization.................................. $510,670
========
Ratio of debt to total capitalization................. 81%
The terms of our amended and restated senior credit facility, the April 2002
Indenture, as supplemented, governing our 9 3/4% senior subordinated notes due
2012, and the January 2003 Indenture, as supplemented, governing our 9 3/4%
senior subordinated notes due 2012, allow us to issue and incur additional debt
upon satisfaction of certain conditions. If new debt is added to current debt
levels, the related risks described above could increase. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- The
Lehigh Acquisition and Related Financing, and Financial Condition, Liquidity and
Capital Resources" included in the Prospectus Supplement filed with the
Securities and Exchange Commission on September 8, 2003, and Item 5, "Amendment
and Restatement of Existing Credit Facility", of our Form 8-K, filed with the
Securities and Exchange Commission on September 5, 2003.
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 new notes, the old notes, and amounts borrowed under our amended
and restated 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
amended and restated 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
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 new notes,
the old 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.
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THE INDENTURE RELATED TO THE NEW NOTES, THE OLD 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, the April 2002 Indenture and the January 2003
Indenture 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 April 2002 Indenture, the January 2003 Indenture, 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.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE APRIL 2002 INDENTURE AND THE JANUARY 2003
INDENTURE.
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding notes under the April
2002 Indenture and the January 2003 Indenture. 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 these 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 notes following a change of control, we will be in default under
the April 2002 Indenture and the January 2003 Indenture, which will result in a
cross-default under our senior credit facility. Any future debt, including the
new notes, 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 April 2002 Indenture and the January
2003 Indenture.
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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. 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 new notes.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO
VOID GUARANTEES AND REQUIRE SECURITY HOLDERS 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 the guarantee; and
o either:
o was insolvent or rendered insolvent by reason of entering into a
guarantee; or
o was 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 new notes would be
solely creditors of our company and creditors of our other subsidiaries that
have validly guaranteed the new notes. The new notes then would be effectively
subordinated to all liabilities of the subsidiary whose guarantee was voided.
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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.
UNTIL CONSUMMATION OF THE EXCHANGE OFFER, THE NEW NOTES OFFERED HEREBY WILL
BE A SEPARATE SERIES OF SECURITIES THAN, AND WILL NOT BE FUNGIBLE WITH, THE
NOTES ISSUED PURSUANT TO THE APRIL 2002 INDENTURE.
The new notes offered hereby will be issued under and governed by the April
2002 Indenture. The old notes were issued pursuant to the January 2003
Indenture. As a result, the old notes are a separate series of securities than,
and will not be fungible with, the notes previously issued pursuant to the April
2002 Indenture. Consequently, the liquidity of, and trading prices of, the old
notes may be adversely affected. We have agreed to file a registration statement
in respect of an offer to exchange the old notes for notes issued under the
April 2002 Indenture. However, there can be no assurance that the exchange offer
will be consummated. If we fail to consummate the exchange offer within the time
period provided in the registration rights agreement, we will be obligated to
pay liquidated damages to the holders of the old notes.
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RISKS RELATING TO JARDEN
REDUCTIONS, CANCELLATIONS, OR DELAYS IN CUSTOMER PURCHASES WOULD ADVERSELY
AFFECT OUR PROFITABILITY.
Customers in our branded consumables business segment and many customers in
our plastic consumables business segment 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 effect on our gross profit margins and operating income.
On a historical basis in 2002, one customer, Wal-Mart, accounted for 18.7%
of our consolidated net sales. On a pro forma basis, giving effect to the Tilia,
Diamond and Lehigh acquisitions, Wal-Mart accounted for 18.9% of our 2002
consolidated net sales and Home Depot accounted for 13.0% of our 2002
consolidated net sales. 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.
Branded consumables and consumer solutions business segments 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 AND WEATHER RELATED.
Sales of certain of our products, particularly our branded consumables and
consumer solutions business segments, 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. Periods of drought, for
example, may adversely affect the supply and price of fruit, vegetables, and
other foods available for home canning. Sales of branded consumables and
consumer solutions 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.
21
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;
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.
22
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 plastic consumables segments and our other business
segments. 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.
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 plastic consumables 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.
Our growth 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.
23
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.
WE MAY EXPERIENCE DIFFICULTY IN INTEGRATING ACQUIRED BUSINESSES, WHICH MAY
INTERRUPT OUR BUSINESS OPERATIONS.
We have achieved growth through the acquisition of companies, including the
recent acquisition of Lehigh. There can be no assurance that we will be able to
integrate successfully the Lehigh business into our existing business without
substantial costs, delays or other operational or financial difficulties.
Additionally, the failure of Lehigh's business to achieve expected results,
diversion of our management's attention, and failure to retain key Lehigh
personnel, 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 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
24
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 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.
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.
25
OUR BUSINESS COULD BE ADVERSELY AFFECTED BECAUSE OF RISKS WHICH ARE PARTICULAR
TO INTERNATIONAL OPERATIONS.
Although not currently material to our operations, we anticipate that
international sales will be a growth area for our business. International
operations, including manufacturing and sourcing operations (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 branded consumables and consumer solution 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.
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.
Additionally, certain of the products manufactured and sold by Lehigh are
used in applications where the failure to use such products for their intended
purposes, the failure to use them properly, or their malfunction, generally
could result in greater injury than our other products.
26
OUR FAILURE TO SUCCESSFULLY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR BUSINESS.
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 are currently applying for patents on new bags and vacuum packaging
systems that we recently acquired.
Our Tilia subsidiaries, Tilia, Inc. and Tilia International, Inc., have
filed a complaint with the International Trade Commission against Applica
Consumer Products, Inc., Applica, Inc., The Rival Company, The Holmes Group,
Inc. and ZeroPack Co. Ltd., to enjoin the importation into the U.S. of certain
competitive home vacuum packaging products that we believe infringes on our
patented technology. If the International Trade Commission fails to issue an
injunction blocking the importation of these products, we believe that our
consumer solutions business may be irreparably harmed by (i) being forced to
sell products at reduced margins and (ii) having the entire market for home
vacuum packaging products disrupted by the introduction of low quality products,
and that we could suffer a material adverse effect on our business, results of
operations and financial condition.
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.
Approximately 400 of our employees are covered by four collective
bargaining agreements at three of our United States facilities. These agreements
expire at our jar closure facility (Muncie, Indiana) in October 2006, at our
kitchen, match and toothpick manufacturing facility (Cloquet, Minnesota) in
February 2006, and at our metals facility (Greeneville, Tennessee) in October
2003. We have not experienced a work stoppage during the past five years and
management believes that its relationships with our collective bargaining unions
are satisfactory.
27
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.
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.
The net proceeds from the offering of the old notes were used to reduce
amounts outstanding under our old senior credit facility, which has been paid in
full and therefore terminated.
28
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the five years ended December
31, 2002 are set forth below:
------------------------------------------------------------------------------------------
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
------------------------------------------------------------------------------------------
Ratio of earnings to
fixed charges 12.4 6.2 1.5 * 4.7 3.7
==========================================================================================
* For the actual year ended December 31, 2001, the calculated ratio of earnings
to fixed charges is less than 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)
29
CAPITALIZATION
The following table sets forth our cash and cash equivalents and
capitalization as of June 30, 2003 on an actual basis.
This table should be read in conjunction with "Use of Proceeds" and
"Selected Consolidated Historical Financial Data." It should also be read in
conjunction with our unaudited pro forma condensed consolidated financial
statements and our audited and unaudited financial statements, including the
related notes, included in and incorporated by reference into this prospectus.
As of June 30, 2003
--------------------------
Actual
--------------------------
(in thousands)
==========================
Cash and cash equivalents $ 4,704
==========================
Debt including current installments:
Senior credit facility
Revolving credit facility $ 6,300
Term loans 54,473
Senior subordinated notes due 2012 (net of unamortized discount) 179,844
Subordinated seller note due 2004 (net of unamortized discount) 5,294
Interest rate swap liabilities 8,375
--------------------------
Total debt 254,286
Total stockholders' equity 96,384
--------------------------
Total capitalization $ 350,670
==========================
30
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following table sets forth our selected financial data as of and for
the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and the six months
ended June 30, 2002 and 2003. The selected financial data set forth below for
the five years ended December 31, 2002 have been derived from our audited
consolidated financial statements and related notes thereto where applicable for
the respective periods presented. The selected financial data as of and for the
six months ended June 30, 2002 and 2003 has been derived from our unaudited
consolidated financial statements and related notes thereto where applicable for
the respective periods presented. The selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" as well as our consolidated financial statements and
notes thereto contained in, or incorporated by reference into, this prospectus.
These historical results are not necessarily indicative of the results to be
expected in the future. The results of Tilia International, Inc. and Diamond
Brands International, Inc. are included from April 1, 2002 and February 1, 2003,
respectively. The results of Lehigh Consumer Products Corporation are not
included in any of the historical periods presented.
AS OF AND FOR THE
AS OF AND FOR THE YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------ ------------------------
1998 (1) 1999 (2) 2000 (3) 2001 (4) 2002 (5) 2002 (5) 2003 (6)
--------- --------- --------- --------- --------- --------- ---------
STATEMENT OF OPERATIONS DATA: (dollars in thousands, except per share data)
Net sales $ 258,210 $ 356,525 $ 356,123 $ 304,276 $ 367,104 $ 152,177 $ 228,114
Costs and expenses
Cost of sales 187,295 256,201 274,248 232,634 216,629 97,520 140,264
Selling, general and
administrative expenses 38,052 54,923 56,109 52,552 85,366 32,808 56,306
Goodwill amortization 1,399 4,605 6,404 5,153 -- -- --
Special charges and
reorganization expenses,
net (7) 1,260 2,314 380 4,978 -- -- --
Loss (gain) on divestiture of
assets and product lines -- (19,678) -- 122,887 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 30,204 58,160 18,982 (113,928) 65,109 21,849 31,544
Interest expense, net 1,822 8,395 11,917 11,791 12,611 4,985 8,219
Loss from early extinguishment of
debt (8) -- 1,663 -- -- -- -- --
Income tax provision (benefit) (9) 10,785 18,823 2,402 (40,443) 16,189 1,584 9,144
Minority interest in gain (loss)
of consolidated subsidiary -- -- (259) 153 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations 17,597 29,279 4,922 (85,429) 36,309 15,280 14,181
Loss from discontinued operations (1,870) (87) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 15,727 $ 29,192 $ 4,922 $ (85,429) $ 36,309 $ 15,280 $ 14,181
========= ========= ========= ========= ========= ========= =========
Basic earnings (loss) per share (10):
Income (loss) from continuing
operations $ 1.24 $ 2.18 $ 0.39 $ (6.71) $ 2.60 $ 1.11 $ 1.00
Loss from discontinued operations (.13) (.01) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
$ 1.11 $ 2.17 $ 0.39 $ (6.71) $ 2.60 $ 1.11 $ 1.00
========= ========= ========= ========= ========= ========= =========
Diluted earnings (loss) per share (10):
Income (loss) from continuing
operations $ 1.22 $ 2.15 $ 0.39 $ (6.71) $ 2.52 $ 1.09 $ 0.96
Loss from discontinued operations (.13) (.01) -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
$ 1.09 $ 2.14 $ 0.39 $ (6.71) $ 2.52 $ 1.09 $ 0.96
========= ========= ========= ========= ========= ========= =========
OTHER FINANCIAL DATA:
EBITDA (11) $ 40,752 $ 74,194 $ 40,552 $ (95,284) $ 75,110 $ 26,638 $ 38,774
Cash flows from operating
activities (12) 27,388 22,324 19,144 39,857 69,551 47,153 15,193
Depreciation and amortization 10,548 17,697 21,311 18,797 10,001 4,789 7,230
Capital expenditures 11,909 16,628 13,637 9,707 9,277 3,070 4,569
BALANCE SHEET DATA (at end of period):
Cash and cash equivalents $ 21,454 $ 17,394 $ 3,303 $ 6,376 $ 56,779 $ 38,618 $ 4,704
Working capital 46,923 54,611 22,975 8,035 101,557 69,676 71,482
Total assets 166,974 340,364 310,429 162,234 366,765 337,668 440,746
Total debt 25,715 140,761 137,060 84,875 216,955 213,601 254,286
Total stockholders' equity 94,893 123,025 118,221 35,129 76,764 58,204 96,384
31
(1) 1998 includes a $1.3 million pretax charge to exit a plastic injection
molding facility.
(2) 1999 includes a $19.7 million pretax gain on the sale of the plastic
packaging product line and a $2.3 million pretax charge to exit a
plastic thermoforming facility.
(3) 2000 includes $1.6 million of pretax income associated with the
reduction in long-term performance-based compensation, $1.4 million in
pretax litigation charges, net of recoveries and $0.6 million of pretax
costs to evaluate strategic options.
(4) 2001 includes a $121.1 million pretax loss on the November 2001 sale of
thermoforming assets, a $2.3 million pretax charge associated with
corporate restructuring, a $1.4 million pretax loss on the November
2001 sale of our interest in Microlin, LLC, $2.6 million of pretax
separation costs related to the management reorganization, $1.4 million
of pretax costs to evaluate strategic options, $1.4 million of pretax
costs to exit facilities, a $2.4 million pretax charge for stock option
compensation, $4.1 million of pretax income associated with the
discharge of deferred compensation obligations and a $1.0 million
pretax gain related to an insurance recovery.
(5) The results of Tilia International, Inc. are included from April 1,
2002.
(6) The results of Diamond Brands International, Inc. are included from
February 1, 2003
(7) Special charges and reorganization expenses, net were comprised of
costs to evaluate strategic options, discharge of deferred compensation
obligations, separation costs for former officers, stock option
compensation, corporate restructuring costs, costs to exit facilities,
reduction of long-term performance based compensation, litigation
charges and items related to our divested thermoforming operations.
(8) Pursuant to our adoption of SFAS No. 145, results for the year ended
December 31, 1999 have been restated to give effect to the
reclassification of a charge of $1.6 million ($1.0 million, net of
taxes) arising from the early extinguishment of debt previously
presented as an extraordinary item.
(9) 2002 includes a net release of a $4.4 million tax valuation allowance.
Adjusting for the net release of the valuation allowance, our diluted
earnings per share for 2002 would have been $2.22.
(10) All earnings per share amounts have been adjusted to give effect to a
2-for-1 split of our outstanding shares of common stock that was
effected during the second quarter of 2002.
(11) For the year ended December 31, 2001, EBITDA includes a $122.9 million
loss on divestiture of assets and product lines. EBITDA is not intended
to represent cash flow from operations as defined by accounting
principles generally accepted in the United States and should not be
used as an alternative to net income as an indicator of operating
performance or to cash flow as a measure of liquidity. EBITDA is
included in this prospectus because it is a basis upon which our
management assesses financial performance. While EBITDA is frequently
used as a measure of operations and the ability to meet debt service
requirements, it is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in
the method of calculation. A reconciliation of the calculation of
EBITDA is presented below:
FOR THE SIX MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED JUNE 30,
----------------------------------------------------- -------------------
1998 (1) 1999 (2) 2000 (3) 2001 (4) 2002 (5) 2002 (5) 2003 (6)
-------- -------- -------- -------- -------- -------- --------
Income (loss) from continuing operations $ 17,597 $ 29,279 $ 4,922 $(85,429) $ 36,309 $ 15,280 $ 14,181
Interest expense, net 1,822 8,395 11,917 11,791 12,611 4,985 8,219
Income tax provision (benefit) 10,785 18,823 2,402 (40,443) 16,189 1,584 9,144
Depreciation and amortization 10,548 17,697 21,311 18,797 10,001 4,789 7,230
-------- -------- -------- -------- -------- -------- --------
EBITDA $ 40,752 $ 74,194 $ 40,552 $(95,284) $ 75,110 $ 26,638 $ 38,774
======== ======== ======== ======== ======== ======== ========
(12) For the year ended December 31, 2002, cash flows from operations
included $38.6 million of income tax refunds resulting primarily from
the 2001 loss on divestiture of assets.
32
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 2, 2003, by (i) each person or
entity known to us as a result of their filings pursuant to Sections 13(d) and
13(g) under the Securities Exchange Act of 1934, 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. The following table does not
include certain information regarding our common stock known to us as a result
of filings pursuant to Section 13(f) of the Securities Exchange Act of 1934.
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED (1) PERCENT (2)
- ---------------- --------- -----------
Bricoleur Capital Management LLC
12230 El Camino Real, Suite 100
San Diego, CA 92130................................................ 865,030 (3) 6%
Schroder Investment Management North America Inc.
875 Third Avenue, 22nd Floor
New York, NY 10022................................................. 851,900 (4) 6%
Martin E. Franklin................................................... 1,015,517 (5) 7%
Ian G.H. Ashken...................................................... 297,292 (6) 2%
Rene-Pierre Azria.................................................... 20,000 (7) *
Desiree DeStefano.................................................... 15,111 (8) *
Douglas W. Huemme.................................................... 37,350 (9) *
James E. Lillie...................................................... 38,400 (10) *
Richard L. Molen..................................................... 28,400 (11) *
Lynda W. Popwell..................................................... 39,850 (12) *
Irwin D. Simon....................................................... 20,000 (13) *
J. David Tolbert..................................................... 29,690 (14) *
Michael Whitcomb..................................................... 5,000 (15) *
Robert L. Wood....................................................... 50,000 (16) *
All directors and executive officers as a group (12 persons)......... 1,336,638 (17) 9%
- ----------------
* Less than 1%
(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.
(2) Percent is based on the 14,610,641 shares of common stock outstanding as of
September 2, 2003 and does not reflect Jarden's issuance of 3,220,000 shares of
common stock on September 30, 2003.
(3) Based solely on Schedule 13G filed with the Securities and Exchange
Commission on February 13, 2003.
(4) Based solely on Schedule 13G filed with the Securities and Exchange
Commission on February 5, 2003.
(5) Includes 250,000 shares of unvested restricted stock. Also includes 259,972
shares of common stock held
33
by Ian G.H. Ashken of which Mr. Franklin disclaims beneficial ownership. Mr.
Franklin entered into a voting agreement, dated as of August 22, 2002, with Mr.
Ashken, pursuant to which Mr. Franklin has the power to vote, or direct the
vote, over all of these 259,972 shares of common stock. Includes 125,000 shares
subject to outstanding options to purchase common stock which are exercisable
within 60 days.
(6) Includes 90,000 shares of unvested restricted stock. Mr. Ashken entered into
a voting agreement, dated as of August 22, 2002, with Mr. Franklin, pursuant to
which Mr. Franklin has the power to vote, or direct the vote, over the 259,972
shares of common stock held by Mr. Ashken. Also includes 37,500 shares subject
to outstanding options to purchase common stock which are exercisable within 60
days.
(7) Consists of 20,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(8) Includes 12,500 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(9) Includes 36,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(10) Includes 35,000 shares of unvested restricted stock.
(11) Includes 16,100 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(12) Includes 39,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(13) Consists of 20,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(14) Includes 18,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(15) Consists of 5,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(16) Includes 48,000 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days.
(17) Includes 377,100 shares subject to outstanding options to purchase common
stock which are exercisable within 60 days. Also includes 375,000 shares of
unvested restricted stock.
34
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We issued the old notes on May 8, 2003, CIBC world Markets Corp. and Banc
of America Securities LLC pursuant to an underwriting agreement, dated May 1,
2003, among Jarden, the guarantors, and the CIBC World Markets Corp. and Banc of
America Securities LLC. The underwriters 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 and our
subsidiary guarantors entered into a registration rights agreement with CIBC
World Markets Corp. and Banc of America Securities LLC on May 8, 2003.
Pursuant to the registration rights agreement, we and our subsidiary
guarantors agreed that we and they would:
o file an exchange offer registration statement with the Commission;
o use commercially reasonable efforts to cause the exchange offer
registration statement to be declared effective by the Commission; and
o will use commercially reasonable efforts to
(a) commence the Exchange Offer; and
(b) issue, within 365 days after the closing of the offering of the
old notes, new notes issued under the April 2002 Indenture in
exchange for all old notes tendered prior thereto in the exchange
offer;
provided that if we or any subsidiary guarantor files any other
registration statement (subject to certain customary exceptions) or
otherwise offers securities pursuant to any registration statement then
we and our subsidiary guarantors shall be required to file a
registration statement for the exchange offer contemporaneously
therewith, except if such offering is an equity offering and the
underwriter for such equity offering reasonably believes the filing of
the exchange offer registration statement is reasonably likely to have
an adverse effect on the equity offering.
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,
35
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 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 the new notes shall be issued under and governed by
the April 2002 Indenture instead of the January 2003 Indenture. The Indentures
are substantially identical in their terms.
36
As of the date of this prospectus, $30,000,000 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 January 2003
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
December 2, 2003, 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;
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."
37
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, 2003. 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 May 1, 2003.
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:
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.
38
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
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.
39
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.
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
40
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
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
41
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.
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
42
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.
LIQUIDATED DAMAGES
Pursuant to the registration rights agreement, if:
o we and or subsidiary guarantors fail to consummate the exchange offer
within 365 days after the close of the offering of the old notes; or
o we and our subsidiary guarantors fail to file, only if required by the
registration rights agreement, the exchange offer registration
statement at the time described above;
then, as the exclusive remedy of the holders of the old notes, we and our
subsidiary guarantors will pay liquidated damages to each holder of old notes,
with respect to the first 90-day period immediately following the occurrence of
the first default in an amount equal to $.05 per week per $1,000 principal
amount of old 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 old notes with respect to each
subsequent 90-day period until all defaults have been cured, up to a maximum
amount of liquidated damages for all defaults of $.50 per week per $1,000
principal amount of old notes.
All accrued liquidated damages will be paid by us and our subsidiary
guarantors on each date on which stated interest is payable to the holders of
the old notes.
Following the cure of all defaults, the accrual of liquidated damages will
cease.
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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 underwriter 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;
44
o all fees and disbursements of counsel for us, the guarantors and, as
discussed below, 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 underwriters 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 subject to the January 2003 Indenture.
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.
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 new notes shall be issued under and governed
by the April 2002 Indenture instead of the January 2003 Indenture.
The old notes were issued under the January 2003 Indenture. The new notes
will be issued under the April 2002 Indenture. The terms of the new notes
include those stated in the April 2002 Indenture and those made part of that
indenture by reference to the Trust Indenture Act of 1939, as amended. The April
2002 Indenture is substantively identical to the January 2003 Indenture.
The following description is a summary of the material provisions of the
April 2002 Indenture. It does not restate the agreement in its entirety. We urge
you to read the April 2002 Indenture because it, and not this description,
defines your rights as holders of the new notes. Copies of the April 2002
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
45
defined below under "--Certain Definitions" have the meanings assigned to them
in the April 2002 Indenture. In this description, the word "Jarden" refers only
to Jarden Corporation and not to any of its subsidiaries.
The registered holder of a new note will be treated as the owner of it for
all purposes. Only registered holders will have rights under the April 2002
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, including indebtedness under its
senior credit facility;
o will be pari passu in right of payment with all existing and
future senior subordinated indebtedness of Jarden, including the
2002 notes; and
o will be unconditionally guaranteed in full by all of Jarden's
domestic Restricted Subsidiaries, excluding the Inactive
Subsidiaries (defined below) and New Subsidiaries (defined
below), on a joint and several basis.
The Guarantees
Except as indicated below, the notes will be unconditionally guaranteed in
full by all of Jarden's domestic Restricted 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
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; and
o will be pari passu in right of payment with any existing and future
senior subordinated indebtedness of the Guarantor.
As indicated above and as discussed in detail below under the caption
"--Subordination," payments on the notes and under the guarantees of the notes
will be subordinated to the payment of Senior Debt. The April 2002 Indenture
will permit us and the Guarantors to incur additional Senior Debt.
46
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 April 2002 Indenture and will not guarantee the new
notes.
PRINCIPAL, MATURITY AND INTEREST
Jarden will issue in this exchange offer, notes in an aggregate principal
amount of approximately $30 million. All of the new notes issued under the April
2002 Indenture will be treated as a single class for all purposes under the
April 2002 Indenture, including, without limitation, waivers, amendments,
redemptions and offers to purchase. Jarden will issue new notes in denominations
of $1,000 and integral multiples of $1,000. The new notes will mature on May 1,
2012.
Interest on the new 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, 2003. 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 May 1, 2003 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 new 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 new 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
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
new notes, and Jarden or any of its Subsidiaries may act as paying agent or
registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange new notes in accordance with the April
2002 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 new notes. Holders will be required to pay all taxes due on
transfer. Jarden is not required to transfer or exchange any new note selected
for redemption. Also, Jarden is not required to transfer or exchange any new
note for a period of 15 days before a selection of new notes to be redeemed.
47
SUBSIDIARY GUARANTEES
The notes will be unconditionally guaranteed in full by each of Jarden's
current and future domestic Restricted Subsidiaries, other than the Inactive
Subsidiaries and the New 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
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
April 2002 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 April 2002
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 the
sale or other disposition complies with the "Asset Sale" provisions of
the April 2002 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 April 2002 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 April 2002 Indenture. See "--Repurchase at the Option of
Holders--Asset Sales" and "--Certain Covenants--Designation of
Restricted and Unrestricted Subsidiaries."
48
SUBORDINATION
The payment of principal, interest and premium and liquidated damages, if
any, on the new notes will be subordinated to the prior payment in full of all
Senior Debt of Jarden, including Senior Debt incurred after the date the old
notes were originally issued.
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 new notes will be entitled to
receive any payment with respect to the new notes (except that Holders of new
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 new 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).
Payments on the new 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.
49
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 new 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 new notes receives a payment in respect
of the new 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 new 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 debt securities
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.
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 new notes issued under the
April 2002 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 new notes issued
under the April 2002 Indenture remains outstanding immediately after
the occurrence of such redemption (excluding notes held by Jarden and
its Subsidiaries); and
50
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 new 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 new 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 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 April 2002 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 new notes repurchased plus accrued and unpaid
interest and liquidated damages, if any, on the new 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 new notes 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 April 2002 Indenture and
described in such notice. Jarden will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws and regulations thereunder to the extent those laws and regulations are
applicable in connection with the repurchase of the new 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 April 2002
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 April 2002 Indenture by virtue of such
conflict.
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On the Change of Control Payment Date, Jarden will, to the extent lawful:
o accept for payment all new notes or portions of new 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 new notes or portions of new notes properly
tendered; and
o deliver or cause to be delivered to the trustee the new notes properly
accepted together with an officers' certificate stating the aggregate
principal amount of new notes or portions of new notes being purchased
by Jarden.
The paying agent will promptly mail to each Holder of new 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 new 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
new 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 credit agreement provides 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 new 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 new notes. In such case, Jarden's failure to purchase
tendered new notes would constitute an Event of Default under the April 2002
Indenture, which would, in turn, also constitute a default under the credit
agreement. In such circumstances, the subordination provisions in the April 2002
Indenture would likely restrict payments to the 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 new
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
52
April 2002 Indenture are applicable. Except as described above with respect to a
Change of Control, the April 2002 Indenture does not contain provisions that
permit the Holders of the new notes to require that Jarden repurchase or redeem
the new 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
April 2002 Indenture applicable to a Change of Control Offer made by Jarden and
purchases all new 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 new notes to require Jarden to repurchase its new 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:
(i) any liabilities, as shown on Jarden's most recent
consolidated balance sheet, of Jarden or any Restricted Subsidiary
(other than contingent liabilities and liabilities that are by their
terms subordinated to the new 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;
(ii) 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
53
(iii) 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 April 2002 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 new notes and all holders of
other Indebtedness that is pari passu with the new notes containing provisions
similar to those set forth in the April 2002 Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets to purchase the maximum
principal amount of new 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 April 2002 Indenture. If the aggregate principal amount of new 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 credit agreement requires the consent of the lenders to most asset
sales and prohibits the retirement of the new 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
54
applicable in connection with each repurchase of new 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 April 2002 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 April 2002 Indenture by virtue of such conflict.
SELECTION AND NOTICE
If less than all of the new notes are to be redeemed at any time, the
trustee will select notes for redemption as follows:
o if the new notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the new notes are listed; or
o if the new 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 new notes or a
satisfaction and discharge of the April 2002 Indenture. Notices of redemption
may not be conditional.
If any new note is to be redeemed in part only, the notice of redemption
that relates to that new note will state the portion of the principal amount of
that new note that is to be redeemed. A new note in principal amount equal to
the unredeemed portion of the original new note will be issued in the name of
the Holder of new notes upon cancellation of the original new note. No new notes
can be redeemed in part if less than $1,000 would remain outstanding.
New 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 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
55
(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 new 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 April 24, 2002 (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 July 1, 2002 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
April 24, 2002 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
56
(c) with respect to Restricted Investments made by Jarden and its
Restricted Subsidiaries after April 24, 2002, 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 April 2002
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 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,
57
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 April 24, 2002.
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 April 2002 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 its 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 April 2002 Indenture;
(2) the incurrence by Jarden and its Restricted Subsidiaries of Existing
Indebtedness;
58
(3) the incurrence by Jarden and the Guarantors of Indebtedness represented
by the old notes and the related subsidiary guarantees to be issued on
the date of the April 2002 Indenture and the new notes and 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 which did not exceed $15.0 million pursuant
to promissory notes issued to the shareholders of Tilia in payment of a
portion of consideration for the Acquisition; provided that such
Indebtedness is subordinated to the 2002 notes to at least the same
extent as the 2002 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 April 2002
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
new 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);
59
(9) the incurrence by Jarden or any of its Restricted Subsidiaries of
Hedging Obligations 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 April 2002
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 Senior
Credit Facility outstanding on the date on which old notes were first issued and
authenticated under the January 2003 Indenture will be deemed to have been
incurred, for purposes of the April 2002 Indenture, 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
new 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.
60
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Jarden will not, and will not permit any of its Restricted Subsidiaries to,
directly or 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 Senior Credit
Facility as in effect on April 24, 2002 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 April 24, 2002;
(2) the April 2002 Indenture, the new 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 April 2002 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;
61
(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
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 new notes, the April 2002
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
62
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.
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;
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(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 April
2002 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 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 April 2002 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
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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 new notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the April 2002
Indenture or the new notes unless such consideration is offered to be paid and
is paid to all Holders of the new 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 Securities and Exchange Commission (the
"Commission"), so long as any new notes are outstanding, Jarden will furnish to
the Holders of new 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, Jarden and the Guarantors have agreed that, for so long as any
new notes remain outstanding, 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.
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AMENDMENT OF SUBORDINATED SELLER NOTES
Without the consent of the Holders of at least a majority in principal
amount of new 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 new notes to at least
the same extent as the new 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
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 due with respect to, the new notes, whether or not
prohibited by the subordination provisions of the April 2002 Indenture;
(2) default in payment when due of the principal of, or premium, if any, on
the new notes, whether or not prohibited by the subordination
provisions of the April 2002 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 the second bullet-point 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 new notes to comply with any of the other agreements
in the April 2002 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 April 2002 Indenture, if
that default:
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(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 April 2002 Indenture, any subsidiary
guarantee shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and effect
or any 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 April 2002
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 new notes may not enforce the April 2002 Indenture or the
new notes except as provided in the April 2002 Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
new notes may direct the trustee in its exercise of any trust or power. The
trustee may withhold from Holders of the new 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 new notes
then outstanding by notice to the trustee may on behalf of the Holders of all of
the new notes waive any existing Default or Event of Default and its
consequences under the April 2002 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 new 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
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premium that Jarden would have had to pay if Jarden then had elected to redeem
the new notes pursuant to the optional redemption provisions of the April 2002
Indenture, an equivalent premium will also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the new 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 new notes prior to
May 1, 2007, then the premium specified in the April 2002 Indenture will also
become immediately due and payable to the extent permitted by law upon the
acceleration of the new notes.
At any time after a declaration of acceleration under the April 2002
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 new 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 new notes, (B) all unpaid principal of (and premium, if any, on) any
outstanding new notes that has become due, other than by such declaration of
acceleration, and interest thereon at the rate borne by the new 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 new notes, and (D) all
sums paid or advanced by the trustee under the April 2002 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 new 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 April 2002 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 new notes, the April 2002 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 new notes by accepting a new note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the new 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 new notes and all
obligations of the Guarantors discharged with respect to their subsidiary
guarantees ("Legal Defeasance") except for:
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(1) 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 new notes when such payments are due from the
trust referred to below;
(2) Jarden's obligations with respect to the new notes concerning issuing
temporary new notes, registration of new notes, mutilated, destroyed,
lost or stolen new notes and the maintenance of an office or agency for
payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Jarden's and the Guarantors' obligations in connection therewith; and
(4) the Legal Defeasance provisions of the April 2002 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 April 2002 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 new 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 new notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Jarden must irrevocably deposit with the trustee, in trust, for the
benefit of the Holders of the new 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 new
notes on the stated maturity or on the applicable redemption date, as
the case may be, and Jarden must specify whether the new notes are
being defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Jarden has delivered to the trustee an
opinion of counsel reasonably acceptable to the trustee confirming that
(i) Jarden has received from, or there has been published by, the
Internal Revenue Service a ruling; or
(ii) since the date of the April 2002 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 new 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
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manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) 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 new 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;
(4) no Default or Event of Default has occurred and is continuing on the
date of such deposit and after giving effect thereto;
(5) 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 to which Jarden or any of its Subsidiaries is a
party or by which Jarden or any of its Subsidiaries is bound;
(6) 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 new notes over the other creditors of Jarden with the
intent of defeating, hindering, delaying or defrauding creditors of
Jarden or others; and
(7) 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.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the April 2002
Indenture and the new notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the new notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, new notes), and any
existing default or compliance with any provision of the April 2002 Indenture or
the new notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding new notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, new notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any new notes held by a non-consenting Holder):
(1) reduce the principal amount of new notes whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any new note or
alter the provisions with respect to the redemption of the new notes
(other than provisions relating to the covenants described above under
the caption "--Repurchase at the Option of Holders");
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(3) reduce the rate of or change the time for payment of interest on any
new note;
(4) 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 new notes (except a rescission of
acceleration of the new notes by the Holders of at least a majority in
aggregate principal amount of the new notes and a waiver of the payment
default that resulted from such acceleration);
(5) make any new note payable in money other than that stated in the new
notes;
(6) make any change in the provisions of the April 2002 Indenture relating
to waivers of past Defaults or the rights of Holders of new notes to
receive payments of principal of, or interest or premium or liquidated
damages, if any, on the new notes;
(7) waive a redemption payment with respect to any new note (other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its subsidiary
guarantee or the April 2002 Indenture, except in accordance with the
terms of the April 2002 Indenture; or
(9) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the April
2002 Indenture relating to subordination that adversely affects the rights of
the Holders of the new notes will require the consent of the Holders of at least
75% in aggregate principal amount of new 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 April 2002
Indenture or the new notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated new notes in addition to or in place of
certificated new notes;
(3) to provide for the assumption of Jarden's obligations to Holders of new
notes in the case of a merger or consolidation or sale of all or
substantially all of Jarden's assets;
(4) to make any change that would provide any additional rights or benefits
to the Holders of new notes or that does not adversely affect the legal
rights under the April 2002 Indenture of any such Holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the April 2002 Indenture under the Trust
Indenture Act.
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SATISFACTION AND DISCHARGE
The April 2002 Indenture will be discharged and will cease to be of further
effect as to all new notes issued thereunder, when:
(1) either:
(i) all new notes that have been authenticated, except lost, stolen
or destroyed new notes that have been replaced or paid and new
notes for whose payment money has been deposited in trust and
thereafter repaid to Jarden, have been delivered to the trustee
for cancellation; or
(ii) all new 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 new 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;
(2) 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;
(3) Jarden or any Guarantor has paid or caused to be paid all sums payable
by it under the April 2002 Indenture; and
(4) Jarden has delivered irrevocable instructions to the trustee under the
April 2002 Indenture to apply the deposited money toward the payment of
the new 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 April
2002 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.
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The Holders of a majority in principal amount of the then outstanding new
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 April 2002 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 April 2002
Indenture at the request of any Holder of new 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 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.
DEPOSITARY PROCEDURES
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 underwriters), 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:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the underwriters with portions of the
principal amount of the Global Notes; and
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(2) 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 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 April 2002 Indenture for any purpose.
Payments in respect of the principal of and premium and liquidated damages,
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 April 2002 Indenture. Jarden and the Trustee will treat the
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:
(1) 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
(2) 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
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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 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.
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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 notes in registered certificated form
("Certificated Notes") if:
(1) 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;
(2) Jarden, at its option, notifies the trustee in writing that it elects
to cause the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default or Event of Default with
respect to the new 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 April 2002 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 April 2002 Indenture) to the effect
that such transfer will comply with the appropriate transfer restrictions, if
any, applicable to such new notes.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the April 2002 Indenture.
Reference is made to the April 2002 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.
"Acquisition" means Jarden's acquisition of the business of Tilia which
closed on April 24, 2002.
"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 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 April 2002 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;
77
(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
(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;
78
(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:
(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
79
(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 for the year ended December 31, 2001, as shown in the
offering memorandum relating to the initial offering of the 2002 notes
in note (b) under the caption "Offering Memorandum Summary - Alltrista
Summary Consolidated Historical and Pro Forma Financial Data," to the
extent that such net adjustment was deducted in computing such
Consolidated Net Income;
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
80
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 April 24, 2002; 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.
"Designated Senior Debt" means:
(1) any Indebtedness outstanding under the Senior Credit Facility; and
(2) after payment in full of all Obligations under the Senior Credit
Facility, any other Senior Debt permitted under the April 2002
Indenture the outstanding principal
81
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 new 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
in existence on April 24, 2002, 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 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.
82
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 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
83
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 April 2002 Indenture, excluding the Inactive
Subsidiaries and the New Subsidiaries; and
(2) any other Subsidiary that executes a subsidiary guarantee in accordance
with the provisions of the April 2002 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;
84
(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
85
Payments," if the acquired Person becomes a Restricted Subsidiary as a result of
such acquisition and such 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.
"Non-Recourse Debt" means Indebtedness:
(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
86
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 were engaged on April 24, 2002, 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 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;
87
(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 April 2002 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 old notes and the
subsidiary guarantees are subordinated to Senior Debt under the April
2002 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;
(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
88
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock"
covering only the assets acquired with such Indebtedness;
(7) Liens existing on April 24, 2002;
(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 new
notes or the subsidiary guarantees, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity
date of the new notes, and is subordinated in right of payment to, the
new notes or the subsidiary guarantees on terms at least as favorable
to the Holders of new 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-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
89
"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 Credit Facility" means Jarden's existing credit facility as in
effect on the date of the April 2002 Indenture; as amended, amended and
restated, supplemented, modified, renewed, refunded, replaced or refinanced from
time to time.
"Senior Debt" means:
(1) all Indebtedness of Jarden or any Guarantor outstanding under the
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 April 2002 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 new notes or any subsidiary
guarantee; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
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Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(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
April 2002 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).
"Tilia" means Tilia International, Inc. and its subsidiaries, Tilia, Inc.
and Tilia Canada, Inc.
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"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, 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 April 2002 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.
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"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 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 September 2, 2003, we refinanced our existing senior indebtedness by
closing on an amendment and restatement to our existing credit facility (the
"Existing Agreement") pursuant to the Amended and Restated Credit Agreement,
dated as of September 2, 2003, among Jarden Corporation, Bank of America, N.A.,
as Administrative Agent, Swing Line Lender, and L/C Issuer, Canadian Imperial
Bank of Commerce, as Syndication Agent, National City Bank of Indiana and Fleet
National Bank, as Co-Documentation Agents, and the other Lenders party thereto
(the "Amended and Restated Credit Agreement").
Our Amended and Restated Credit Agreement, among other things, provides for
a senior credit facility for up to $280 million of senior secured loans,
consisting of a $70 million five-year revolving credit facility (the "Revolving
Credit Facility"), a $60 million five-year term loan facility (the "Term Loan A
Facility"), and a new $150 million five-year term loan facility (the "Term Loan
B Facility").
The Revolving Credit Facility includes up to an aggregate of $15 million in
standby and commercial letters of credit and up to an aggregate of $10 million
in swing line loans. As of September 2, 2003, we have not drawn any amounts
under the Revolving Credit Facility. We have used an amount of approximately
$7.1 million of availability under the Revolving Credit Facility for the
issuance of letters of credit.
As of September 2, 2003, $54.5 million was outstanding under the Term Loan
A Facility. Payments of principal under the Term Loan A Facility are payable
quarterly in accordance with a specified amortization schedule. The final
payment of all amounts outstanding under the Term Loan A Facility is due on
April 24, 2007.
As of September 2, 2003, we drew down the full amount of the $150 million
Term Loan B Facility. These funds were used principally to pay the cash
consideration for the Lehigh acquisition. Payments of principal under the Term
Loan B Facility are payable quarterly in accordance with a specified
amortization schedule. The final payment of all amounts outstanding under the
Term Loan B Facility is due on April 24, 2008.
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The Revolving Credit Facility, the Term Loan A Facility and the Term Loan B
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 0.50%, plus, (x) for loans under each of the Revolving Credit
Facility and the Term Loan A Facility, an applicable margin ranging from 0.75%
to 1.75% for Base Rate loans and from 2.00% to 2.75% for Eurodollar Rate loans,
and (y) for loans made under the Term Loan B Facility, 2.75% per annum with
respect to Eurodollar Rate loans and 1.75% per annum with respect to Base Rate
loans.
Interest under the Revolving Credit Facility, the Term Loan A Facility and
the Term Loan B Facility are payable quarterly if a loan is a Base Rate loan or
on a date which is one, two or three months from the date of disbursement, as
selected by us, if the loan is a Eurodollar Rate loan; provided, that for
six-month Eurodollar Rate loans, interest shall be paid quarterly.
The Amended and Restated 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;
o creating or suffering liens on our assets;
o completing certain mergers, consolidations, and with permitted
exceptions, acquisitions (other than the Lehigh Acquisition);
o declaring dividends;
o redeeming or prepaying other debt; and
o transactions with affiliates.
The Amended and Restated 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:
(i) $62,000,000;
(ii) an amount equal to 50% of our consolidated net income earned
in each fiscal quarter ending after June 30, 2003 (with no
deduction for a net loss in any such fiscal quarter); and
(iii) an amount equal to 100% of the aggregate increases in the
stockholders' equity of Jarden and our subsidiaries after
September 2, 2003, by reason
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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
---------------------------------------------------------------------------
June 30, 2003;
September 30, 2003;
December 31, 2003; 3.50 to 1.00
March 31, 2004;
June 30, 2004; and
September 30, 2004
---------------------------------------------------------------------------
December 31, 2004;
March 31, 2005; 3.25 to 1.00
June 30, 2005; and
September 30, 2005
---------------------------------------------------------------------------
December 31, 2005 and thereafter 3.00 to 1.00
---------------------------------------------------------------------------
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 Senior Leverage Ratio
---------------------------------------------------------------------------
June 30, 2003;
September 30, 2003;
December 31, 2003; 2.25 to 1.00
March 31, 2004;
June 30, 2004; and
September 30, 2004
---------------------------------------------------------------------------
December 31, 2004;
March 31, 2005; 2.00 to 1.00
June 30, 2005; and
September 30, 2005
---------------------------------------------------------------------------
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---------------------------------------------------------------------------
Four-Quarter Period ending closest to: Maximum Senior Leverage Ratio
---------------------------------------------------------------------------
December 31, 2005 and thereafter 1.75 to 1.00
---------------------------------------------------------------------------
; and
o our fixed charge ratio as of the end of any applicable period,
beginning with the period ending closest to June 30, 2003, may not be
less than 1.25 to 1.00.
However, the Amended and Restated 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 Amended and
Restated 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 on the loans
made under the Amended and Restated Credit Agreement when due;
o our failure to make payment on other indebtedness or contingent
liabilities when due;
o any material judgment or order entered against us;
o any inaccuracy in the representations and warranties;
o we incur any of certain specified liabilities under the Employee
Retirement Income Security Act of 1974;
o any of the loan documents under the Amended and Restated Credit
Agreement cease to be in full force and effect;
o failure to observe certain covenants under the Amended and Restated
Credit Agreement (including, e.g., the financial covenants);
o bankruptcy, insolvency or receivership proceedings with respect to
Jarden; and
o a change of control of Jarden.
The Amended and Restated Credit Agreement provides that we shall make
required prepayments of the Term Loan A, the Term Loan B and the Revolving Loan,
including, among other things, upon the happening of the following events:
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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, 2004, 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 Amended and Restated 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 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; provided, however, subject to certain exceptions
set forth in the Amended and Restated Credit Agreement, with respect to
private or public offerings of equity securities made on or prior to
February 29, 2004, such prepayment shall be equal to (i) 100 percent of
the first $50 million dollars of net proceeds of such equity issuance
after subtracting (a) the amount of such proceeds used for any
permitted acquisitions (as defined in the Amended and Restated Credit
Agreement) that we have completed within such period and (b) $50
million, and (ii) 50 percent of any remaining net proceeds of such
equity issuance;
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 $6,000,000, the Administrative Agent will have
received notice of such disposition from us not less than twenty
(20) days prior to the consummation of such disposition;
97
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 $10,000,000;
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 $10,000,000;
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 $50,000,000 and the net
proceeds therefrom are applied in accordance with the Amended and
Restated Credit Agreement;
o in the event that the net proceeds received from insurance carried with
respect to the collateral securing our obligations under the Amended
and Restated 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 Amended and Restated Credit Agreement,
the following domestic subsidiaries have agreed to guarantee our obligations
under the Amended and Restated Credit Agreement: Hearthmark, LLC (formerly known
as Hearthmark, Inc.), Alltrista Plastics Corporation, Alltrista Newco
Corporation, Alltrista Zinc Products, L.P., Tilia, Inc. (formerly known as
Alltrista Acquisition I, Inc.), Tilia Direct, Inc. (formerly known as
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Alltrista Acquisition II, Inc.), Tilia International, Inc. (formerly known as
Alltrista Acquisition III, Inc.) and Quoin, LLC (formerly known as Quoin
Corporation) (the "Guarantors").
Pursuant to a securities pledge agreement entered into in connection with
the Existing Agreement, as amended by the Consolidated Security Instrument
Amendment, dated as of September 2, 2003, among Jarden, the Guarantors, and Bank
of America, as Administrative Agent (the "Consolidated Security Instrument
Amendment") entered into in connection with the Amended and Restated Credit
Agreement, all obligations under the Amended and Restated 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 (other than Immaterial Subsidiaries (as defined in the Amended and
Restated Credit Agreement)), and 65% of the voting capital stock or 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, each entered into in connection
with the Existing Agreement, as each amended by the Consolidated Security
Instrument, the obligations under the Amended and Restated Credit Agreement are
also secured by a security interest in substantially all of the personal
property of us and our domestic subsidiaries that are not Immaterial
Subsidiaries.
The foregoing is a summary of the material provisions of the Amended and
Restated Credit Agreement and certain of the documents entered into by us and
certain of our subsidiaries in connection therewith which are incorporated
herein by reference. The summary does not restate the Amended and Restated
Credit Agreement and the documents entered into in connection therewith in their
entirety. We urge you to read the Amended and Restated Credit Agreement and the
documents related thereto for a complete understanding of the terms of such
agreements.
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 (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
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effect. We have not requested, and will not request, a ruling from the U.S.
Internal Revenue Service (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 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
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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 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.
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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, 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.
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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 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.
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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 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.
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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 Office 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 its
subsidiaries appearing in its Annual Report (Form 10-K) for the year ended
December 31, 2002, 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
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incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Diamond Brands International, Inc.
and its subsidiaries appearing in the Company's Current Report on Form 8-K/A
filed on March 7, 2003 for the year ended December 31, 2002, 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.
The consolidated financial statements of Lehigh Consumer Products
Corporation as of December 31, 2002 and for the year then ended, incorporated in
this Prospectus by reference to Jarden Corporation's Current Report on Form 8-K
dated September 5, 2003, have been so incorporated in reliance on the report of
PriceWaterhouseCoopers LLP, independent accountants, given on authority of said
firm as experts in auditing and accounting.
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.
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JARDEN CORPORATION
OFFER TO EXCHANGE $30,000,000 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 WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
UNCONDITIONALLY GUARANTEED BY:
ALLTRISTA NEWCO CORPORATION, ALLTRISTA PLASTICS CORPORATION,
ALLTRISTA ZINC PRODUCTS, L.P., HEARTHMARK, LLC, QUOIN, LLC,
TILIA, INC., TILIA DIRECT, INC., TILIA INTERNATIONAL, INC.,
O.W.D. INCORPORATED, TUPPER LAKE PLASTICS, INCORPORATED,
X PROPERTIES, LLC AND LEHIGH CONSUMER PRODUCTS CORPORATION
PROSPECTUS
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OCTOBER 23, 2003
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