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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANCHOR GLASS CONTAINER CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 59-3417812
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Anchor Plaza, 4343 Anchor Plaza Parkway, Tampa, FL 33634-7513
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 813-884-0000
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Securities registered pursuant to Section 12(b) of the Act:
None
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Securities registered pursuant to section 12(g) of the Act:
Class A Common Stock, par value $0.10 per share
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Series A 10% Cumulative Convertible Preferred Stock, par value $0.10 per share
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X].
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of voting and non-voting stock
held by non-affiliates: At this time, there is no market
for any of the stock. See Part II, Item 5.
Number of shares outstanding of each class of common
stock at March 27, 1998: Class A - 490,898 shares,
Class B - 902,615 and Class C - none.
DOCUMENTS INCORPORATED BY REFERENCE
None
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PART I
ITEM 1. BUSINESS.
COMPANY OVERVIEW
Anchor Glass Container Corporation ("Anchor" "New Anchor" or the
"Company") is the third largest manufacturer of glass containers in the United
States. Anchor produces a diverse line of flint (clear), amber, green and other
colored glass containers of various types, designs and sizes. The Company
manufactures and sells its products to many of the leading producers of beer,
liquor, food, juice, tea, soda and mineral water.
The Company, a majority-owned subsidiary of Consumers Packaging Inc.
("Consumers"), was formed in January 1997 to acquire certain assets and assume
certain liabilities of the former Anchor Glass Container Corporation ("Old
Anchor"), now Anchor Resolution Corp., which was a debtor-in-possession under
Chapter 11 of the United States Bankruptcy Code of 1978, as amended (the
"Bankruptcy Code"). The Company purchased eleven operating glass container
manufacturing facilities and other related assets (the "Anchor Acquisition").
Prior to the Anchor Acquisition on February 5, 1997, the Company did not conduct
any operations. Consumers, Canada's only glass container manufacturer, currently
owns approximately 59% of New Anchor indirectly on a fully diluted basis.
Consumers U.S., Inc. ("Consumers U.S.") was also formed in January 1997 by
Consumers as a holding company for Anchor. Old Anchor was formed by members of
the management of the Glass Container Division of Anchor Hocking Corporation
(the "Glass Container Division") and persons associated with Wesray Corporation
to carry out the leveraged acquisition in 1983 of the business and certain of
the assets of the Glass Container Division. Old Anchor acquired Midland Glass
Company, Inc. in 1984 and Diamond Bathurst, Inc. in 1987.
In November 1989, Vitro S.A. ("Vitro") acquired substantially all of
the stock of Old Anchor. Simultaneously, Vitro acquired all of the stock of
Latchford Glass Company, which was subsequently merged into Old Anchor. In
September 1996, Old Anchor filed for protection under Chapter 11 of the
Bankruptcy Code.
RECENT DEVELOPMENTS
The Anchor Acquisition. The purchase price paid by the Company for the
Anchor Acquisition is subject to adjustment. On June 13, 1997, Old Anchor
delivered to the Company the closing balance sheet, which indicated that Old
Anchor believed that it was entitled to additional payments totaling
approximately $76.3 million from the Company and Owens Brockway Glass Container
Inc. ("Owens"), who together with New Anchor, acquired substantially all of the
assets and assumed certain liabilities from Old Anchor. On July 28, 1997, the
Company delivered its notice of disagreement to Old Anchor, which requested a
reduction of the purchase price of approximately $96.8 million. Since that time,
the parties have been negotiating the amount of the adjustment, and have reached
a proposed settlement (the "Proposed Settlement"). The Proposed Settlement
requires the payment by the Company to Old Anchor of an additional $1.0 million
in cash and the issuance of 1,225,000 warrants to purchase additional shares of
common stock, together valued at approximately $7.1 million, recorded as an
adjustment to goodwill. In addition, the Company will issue 525,000 warrants to
purchase additional shares of common stock to an affiliate of Consumers U.S.,
valued at approximately $2.6 million, recorded as an expense. None of the
warrants to be issued will require any payment upon exercise. The effect of the
Proposed Settlement has been reflected in the financial statements for the
period ended December 31, 1997. The Proposed Settlement is subject to final
approval of the Company, Old Anchor and the bankruptcy court.
The First Mortgage Notes and Exchange Offer. On April 17, 1997, Anchor
issued $150.0 million aggregate principal amount of its 11 1/4% First Mortgage
Notes due 2005 (the "First
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Mortgage Notes") and used a portion of the net proceeds therefrom to repay all
amounts outstanding under the $130.0 million loan facility, (the "Anchor Loan
Facility") and advances outstanding under the $110.0 million revolving credit
facility (the "Revolving Credit Facility"). Upon the effectiveness of its
registration statement on Form S-4, the Company commenced an offer to exchange
the First Mortgage Notes for a like principal amount of new 11 1/4% First
Mortgage Notes due 2005. The exchange offer expires March 30, 1998.
The Senior Note Offering. In March 1998, the Company issued $50.0
million aggregate principal amount of its 9 7/8% Senior Notes due 2008 (the
"Senior Notes"). The Senior Notes are senior unsecured obligations ranking pari
passu in right of payment with all existing and future senior indebtedness of
the Company. Proceeds of the offering will be used for capital expenditures
necessary to meet customer needs and general corporate purposes.
PRODUCTS
The table below provides a summary by product group of net sales (in
millions of dollars) and approximate percentage of net sales by product group
for Old Anchor for the years 1995 and 1996 and for the Company for the period
from February 5, 1997 to December 31, 1997.
<TABLE>
<CAPTION>
Old Anchor New Anchor
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February 5 to
Products 1995 1996 December 31, 1997
- -------- ---------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Beer $377.1 39.4% $304.7 37.4% $202.0 35.5%
Liquor/Wine 202.6 21.2 200.4 24.6 125.8 22.1
Food 172.1 18.0 166.0 20.4 113.5 19.9
Tea 104.7 10.9 61.0 7.5 43.8 7.7
Beverage/Water 60.1 6.3 42.1 5.2 37.3 6.6
Other 40.0 4.2 40.2 4.9 47.0 8.2
------ ------ ------ ------ ------ ------
Total $956.6 100.0% $814.4 100.0% $569.4 100.0%
====== ====== ====== ====== ====== ======
</TABLE>
There can be no assurance that the information provided in the
preceding table is indicative of the glass container product mix of the Company
for 1998 or in subsequent years. Management's strategy is to focus on shifting
its product mix towards those products management believes likely to both
improve operating results and increase unit volume.
CUSTOMERS
The Company produces glass containers mainly for a broad base of
customers in the food and beverage industries in the United States. The
Company's ten largest continuing customers include well-known brand names such
as The Stroh Brewery Company ("Stroh's"), Anheuser-Busch Companies, Inc.
("Anheuser-Busch"), Latrobe (Rolling Rock), The Coca-Cola Trading Company
(non-carbonated), PepsiCo, Inc., Triarc Mistic, Saxco International, Inc.,
Specialty Products Company (Nabisco), Jim Beam Brands and Hunt-Wesson. The
majority of the Company's glass container designs are produced to customer
specifications and sold on a contract basis.
The Company's two largest customers, Stroh's and Anheuser-Busch,
accounted for approximately 15.6% and 8.8% of its net sales for the period from
February 5, 1997 to December 31, 1997, respectively. The loss of either of such
customers could have a material adverse effect of the Company's business,
results of operations and financial condition. The Company's ten largest
customers, named above, accounted for approximately 45% of net sales for the
period from February 5, 1997 to December 31, 1997.
Anchor has entered into a contract with Stroh's to become the exclusive
producer of all glass beer containers for Stroh's product in the United States.
In addition, following the Anchor
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Acquisition, the Company secured a purchase order with Anheuser-Busch to produce
approximately 4.0 million gross during 1997, which represented approximately
12.0% of the Company's 1997 volume. For 1998, Anchor has secured another
purchase order with Anheuser-Busch to produce, subject to Anheuser-Busch's
requirements, approximately 9.9 million gross, which represents approximately
25% of the Company's 1998 volume under contract. During 1996, Anheuser-Busch
substantially reduced its purchases from Old Anchor to 6.8 million gross and,
before the Anchor Acquisition, had indicated its intention to further decrease
its business with Old Anchor after 1996. Anheuser-Busch renegotiates with the
Company each year for the next year's purchase orders. Accordingly, past
purchase orders placed by Anheuser-Busch are not necessarily indicative of
future purchase orders.
MARKETING AND DISTRIBUTION
The Company's products are primarily marketed by an internal sales and
marketing organization that consists of 13 direct sales people and 27 business
managers who are organized into teams with responsibility for each specific
product line. Old Anchor's sales force was principally compensated based on
increase of sales volume without regard to margin. Management has implemented a
sales compensation program based on improving margin at the plant level as well
as increases in sales volume. In addition, Mr. Ghaznavi has extensive industry
and customer networks. From 1995 through 1997, he served as Chairman of the
Board of Trustees of the Glass Packaging Institute, the leading industry
organization that includes as its members manufacturers representing over 95% of
North America's glass container production and he remains a member of its board.
As a result of the Company's affiliation with Consumers and Glenshaw Glass
Company, Inc. ("Glenshaw"), Consumers and Glenshaw sales personnel will also
market the capabilities of Anchor with respect to certain production in exchange
for a market-based commission. See Item 13. - Certain Relationships and Related
Transactions.
Certain production has been and will continue to be reallocated among
the Company's ongoing plants in order to maximize machine capability and
geographic proximity to customers. In addition, Anchor intends to capitalize on
its affiliation with Consumers, with certain U.S. customers formerly served by
Consumers having their production shifted to U.S.-based Anchor facilities closer
to such customers and certain Canadian customers formerly served by Anchor
having their production shifted to Canadian-based Consumers facilities closer to
such customers, in each case in exchange for a market-based commission payable
to the entity shifting its existing production or responsible for the new
business. With reduced shipping distances as a result of this reallocation of
production, Anchor believes it will be able to reduce shipping time to
customers, decrease levels of breakage incurred in shipping product over longer
distance and improve efficiency at its plants resulting in faster and higher
quality production and service for its customers.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and
other beverage industries, in which demand is stronger during the summer months,
the Company's shipment volume is expected to be higher in the second and third
quarters. Consequently, the Company normally builds inventory during the first
quarter in anticipation of seasonal demands during the second and third
quarters. Historically, the Company has scheduled shutdowns of its plants for
furnace rebuilds and machine repairs in the first and fourth quarters of the
year to coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns adversely affect profitability during the first and
fourth quarters. The Company is reviewing alternatives to reduce downtime during
these periods in order to minimize disruption to the production process and its
negative effect on profitability.
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SUPPLIERS AND RAW MATERIALS
Sand, soda ash, limestone, cullet and corrugated packaging materials
are the principal materials used by the Company. All of these materials are
available from a number of suppliers and the Company is not dependent upon any
single supplier for any of these materials. Management believes that adequate
quantities of these materials are and will be available from various suppliers.
Material increases in the cost of any of these items could have a significant
impact on the Company's operating results.
All of the Company's glass melting furnaces are equipped to burn
natural gas, which is the primary fuel used at its manufacturing facilities.
Backup systems are in place at most facilities to permit the use of fuel oil or
propane should that become necessary. Electricity is used in certain instances
for supplementary melting. Although natural gas remains generally less expensive
than electricity, prices for natural gas have fluctuated in recent years, with
significant increases in 1993, declines in 1994, and moderate increases, after
some significant fluctuations, in 1995, 1996 and 1997. While certain of these
energy sources may become increasingly in short supply, or subject to
governmental allocation or excise taxes, the Company cannot predict the effects,
if any, of such events on its future operations. In addition, the Company
utilizes a natural gas risk management program to hedge future requirements and
to minimize fluctuation in the price of natural gas.
COMPETITION
The glass container industry is a mature, low growth industry. This low
growth combined with excess capacity in the industry have made pricing an
important competitive factor. In addition to price, Anchor and the other
companies in the glass container manufacturing industry compete on the basis of
quality, reliability of delivery and general customer service. The Company's
principal competitors are Owens and Ball-Foster Glass Container Co., L.L.C.
("Ball-Foster"). These competitors are larger and have greater financial and
other resources than the Company. The glass container industry in the United
States is highly concentrated, with the three largest producers in 1997, which
included Anchor, estimated to have accounted for 94% of 1997 domestic volume by
management's estimate. Owens has a relatively large research and development
staff and has in place numerous technology licensing agreements with other glass
producers, including the Company. See "--Intellectual Property."
The Company's business consists exclusively of the manufacture and sale
of glass containers. Certain other glass container manufacturers engage in more
diversified business activities than the Company (including the manufacture and
sales of plastic and metal containers). In addition, plastics and other forms of
alternative packaging have made substantial inroads into the container markets
in recent years and will continue to affect demand for glass container products.
According to industry sources, unit sales in the U.S. glass container
manufacturing industry in 1996 were down 2.1% from 1995. The compound annual
decline in unit shipments from 1991 to 1996 was approximately 1.5%. Competitive
pressures from alternative forms of packaging, including plastics, as well as
consolidation in the glass container industry, have resulted in excess capacity
and have led to severe pricing pressures on glass container manufacturers.
Further, management believes that consistent productivity improvements among
glass and glass alternatives can be expected to decrease capacity utilization
rates for the industry or result in additional plant closures.
While competitive pressures from plastics are expected to remain
intense, management has identified several product segments where it believes
that there are still growth opportunities. In general, management believes that
the beer segment provides stronger potential for growth than the food segment
which has seen declines of over 7.0% in each of 1995 and 1996. In particular,
sales of glass beer containers, were up approximately 3.7% in 1997 and have
experienced comparable growth rates over the past five years. Glass beer bottles
are also
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expected to continue to benefit from consumer preferences for a more
sophisticated appearing container.
QUALITY CONTROL
The Company maintains a program of quality control with respect to
suppliers, line performance and packaging integrity for glass containers. The
Company's production lines are equipped with a variety of automatic and
electronic devices that inspect containers for dimensional conformity, flaws in
the glass and various other performance attributes. Additionally, products are
sample inspected and tested by Company employees on the production line for
dimensions and performance and are also inspected and audited after packaging.
Containers which do not meet quality standards are crushed and recycled as
cullet.
The Company monitors and updates its inspection programs to keep pace
with modern technologies and customer demands. The Company maintains its own
laboratory where samples of glass and raw materials from its plants are
routinely chemically and electronically analyzed to monitor compliance with
quality standards. Laboratories are also maintained at each manufacturing
facility to test various physical characteristics of products.
INTELLECTUAL PROPERTY
Pursuant to a Technology Assistance and License Agreement between Owens
and Consumers, the Company is entitled to use patents, trade secrets and other
technical information of Owens relating to glass manufacturing technology. The
agreement, entered into in February 1997, provides for a term of up to ten
years.
While the Company holds various patents, trademarks and copyrights of
its own, it believes its business is not dependent upon any one of such patents,
trademarks or copyrights.
EMPLOYEES
As of March 15, 1998, the Company employed approximately 3,000 persons
on a full-time basis. Approximately 500 of these employees are salaried office,
supervisory and sales personnel. The remaining employees are represented
principally by two unions, Glass Molders, Pottery, Plastics and Allied Workers
(the "GMP"), which represents approximately 90% of the Company's hourly
employees, and the American Flint Glass Workers Union (the "AFGWU"), which
represents approximately 10% of the Company's hourly employees. The Company's
two labor contracts with the GMP and its two labor contracts with the AFGWU have
three year terms expiring on March 31, 1999 and August 31, 1999, respectively.
Old Anchor was granted a deferral of the scheduled 1996 wage increase under its
collective bargaining agreements. The Company granted the 1996 increase
effective as of the date of the Anchor Acquisition, and the 1997 increase
effective as of April 1, 1997. These two increases represent an approximate 7%
increase in wage rates as of April 1, 1997 as compared to 1996 wage rates.
Old Anchor had not experienced a work stoppage since an industry-wide
strike in 1968. The Company considers its employee relations to be good.
ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS
Environmental Regulation and Compliance. The Company's operations are
subject to increasingly complex and detailed Federal, state and local laws and
regulations including, but not limited to, the Federal Water Pollution Control
Act of 1972, as amended, the U.S. Clean Air Act, as amended, and the Federal
Resource Conservation and Recovery Act, as amended, that are designed to protect
the environment. Among the activities subject to regulation are the disposal of
checker slag (furnace residue usually removed during furnace rebuilds), the
disposal of
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furnace bricks containing chromium, the disposal of waste, the discharge of
water used to clean machines and cooling water, dust produced by the batch
mixing process, underground storage tanks and, air emissions produced by
furnaces. In addition, the Company is required to obtain and maintain permits in
connection with its operations. Many environmental laws and regulations provide
for substantial fines and criminal sanctions for violations. The Company
believes it is in material compliance with applicable environmental laws and
regulations. It is difficult to predict the future development of such laws and
regulations or their impact on future earnings and operations, but the Company
anticipates that these standards will continue to require increased capital
expenditures. There can be no assurance that material costs or liabilities will
not be incurred.
Certain environmental laws, such as the U.S. Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA" or Superfund")
and analogous State laws provide for strict, joint and several liability for
investigation and remediation of releases of hazardous substances into the
environment. Such laws may apply to properties presently or formerly owned or
operated by an entity or its predecessors, as well as to conditions at
properties at which wastes attributable to an entity or its predecessors were
disposed. There can be no assurance that the Company or entities for which it
may be responsible will not incur such liability in a manner that could have a
material adverse effect on the financial condition or results of operations of
the Company. See Item 3. Legal Proceedings.
Employee Health and Safety Regulations. The Company's operations are
subject to a variety of worker safety laws. The U.S. Occupational Safety and
Health Act of 1970 ("OSHA") and analogous laws mandate general requirements for
safe workplaces for all employees. The Company believes that it is operating in
material compliance with applicable employees health and safety laws.
Deposit and Recycling Legislation. In recent years, legislation has
been introduced at the Federal, state and local levels that would require a
deposit or tax, or impose other restrictions, on the sales or use of certain
containers, particularly beer and carbonated soft drink containers. To date, 10
states have enacted some form of deposit legislation, although no such new
legislation has been enacted since 1986. The enactment of additional laws or
comparable administrative actions that would require a deposit on beer or soft
drink containers, or otherwise restrict their use, could have a material adverse
effect on the Company's business. In jurisdictions where deposit legislation has
been enacted, the consumption of beverages in glass bottles has generally
declined due largely to the preference of retailers for handling returned cans
and plastic bottles. Container deposit legislation continues to be considered
from time to time at various governmental levels.
In lieu of this type of deposit legislation, several states have
enacted various anti-littering recycling laws that do not involve the return of
containers to retailers. The use of recycled glass, and recycling in general,
are not expected to have a material adverse effect on the Company's operations.
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ITEM 2. PROPERTIES.
The Company's administrative and executive offices are located in
Tampa, Florida. The Company owns and operates nine glass manufacturing plants.
The Company also leases a building located in Streator, Illinois, that is used
as a machine shop to rebuild glass-forming related machinery and one mold shop
located in Zanesville, Ohio, as well as additional warehouses for finished
products in various cities throughout the United States. Substantially all of
the Company's owned and leased properties are pledged as collateral securing the
Company's obligations under the First Mortgage Notes.
As part of its long-term business strategy, the Company closed its
Houston plant effective as of February 1997 and its Dayville plant effective as
of April 1997. Two furnaces and five machines have also been removed from
service, one furnace and one machine at the Company's Jacksonville plant and one
furnace and four machines at its Connellsville plant. In addition, management
will continue to monitor business conditions and utilization of plant capacity
to determine the appropriateness of further plant closings.
The following table sets forth certain information about the facilities
owned and being operated by the Company as of December 31, 1997.
<TABLE>
<CAPTION>
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NUMBER OF NUMBER OF BUILDING AREA
LOCATION (1) FURNACES MACHINES (SQUARE FEET)
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<S> <C> <C> <C>
Operating Plants:
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Jacksonville, Florida (2) 3 5 624,000
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Warner Robins, Georgia 2 8 864,000
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Lawrenceburg, Indiana 1 4 504,000
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Winchester, Indiana 2 6 627,000
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Shakopee, Minnesota 2 6 360,000
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Salem, New Jersey (3) 3 6 733,000
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Elmira, new York 2 6 912,000
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Henryetta, Oklahoma 2 6 664,000
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Connellsville, Pennsylvania (4) 2 4 624,000
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</TABLE>
- ------------------
1) Keyser, West Virginia, Gas City, Indiana, Cliffwood, New Jersey,
Royersford, Pennsylvania, Chattanooga, Tennessee, Houston, Texas and
Dayville, Connecticut are closed plants that are part of the collateral
securing the First Mortgage Notes and the Company's obligations under the
related indenture.
2) The Company removed one furnace and one machine from production at this
facility in February 1997.
3) A portion of the site on which this facility is located is leased pursuant
to several long-term leases.
4) The Company removed one furnace and four machines from production at this
facility in February 1997.
Headquarters Lease. In connection with the Anchor Acquisition, the
Company assumed and amended Old Anchor's lease of the headquarters facility
located in Tampa, Florida and a related option to purchase. In January 1998, the
Company exercised its option to purchase and assigned the option to a third
party purchaser of the facility. The Company has entered into a lease pursuant
to which the Company will lease a portion of the headquarters facility for an
initial term of ten years.
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ITEM 3. LEGAL PROCEEDINGS.
The Company is, and from time to time may be, a party to routine legal
proceedings incidental to the operation of its business. The outcome of these
proceedings is not expected to have a material adverse effect on the financial
condition or operating results of the Company, based on the Company's current
understanding of the relevant facts and law.
The Company is engaged in investigation and remediation projects at
plants currently being operated and at closed facilities. In addition, Old
Anchor was named as a potentially responsible party (a "PRP") under CERCLA with
respect to a number of sites. Of these sites, the Company has assumed
responsibility with respect to four sites that are currently active. While the
Company may be jointly and severally liable for costs related to these sites, in
most cases, it is only one of a number of PRP's who are also jointly and
severally liable. With respect to the four currently active sites for which the
Company has assumed responsibility, the Company estimates that its share of the
aggregate cleanup costs of such sites should not exceed $2.0 million, and that
the likely range after taking into consideration the contributions anticipated
from other potentially responsible parties could be significantly less. However,
no assurance can be given that the cleanup costs of such sites will not exceed
$2.0 million or that the Company will have these funds available. The Company
has established reserves of approximately $16.0 million for environmental costs
which it believes are adequate to address the anticipated costs of remediation
of these operated and closed facilities and its liability as a PRP under CERCLA.
The timing and magnitude of such costs cannot always be determined with
certainty due to, among other things, incomplete information with respect to
environmental conditions at certain sites, new and amended environmental laws
and regulations, and uncertainties regarding the timing of remedial
expenditures.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common equity securities consist of Classes A, B, and C
Common Stock and Series A and Series B Preferred Stock (collectively, the
"Securities"). There is no established public trading market for any of the
Securities. The Company intends to apply for listing of the Series A Preferred
Stock and the Class A Common Stock on the Nasdaq Stock Market's National Market
("Nasdaq"). However, the Company and the Securities do not currently meet the
requirements for such listing, and there can be no assurance of the liquidity of
any markets that may develop for the Series A Preferred Stock and the Class A
Common Stock, of the ability of the holders of such Series A Preferred Stock and
the Class A Common Stock to sell such securities, or of the price at which
holders of the Series A Preferred Stock and the Class A Common Stock would be
able to sell such securities.
As of March 20, 1998, there were four registered holders of 2,239,320
shares of Series A Preferred Stock, which are convertible into 9,330,500 shares
of Class A Common Stock; one registered holder of 3,360,000 shares of Series B
Preferred Stock, which are convertible into 15,272,727 shares of Class B Common
Stock; one registered holder of Class A Common Stock; one registered holder of
Class B Common Stock; and no registered holders of Class C Common Stock. Smith
Barney Inc., one of the holders of both the Series A Preferred Stock and Class A
Common Stock, holds such securities in escrow for certain creditors of Old
Anchor. See "Item 12. Principal Stockholders." As of March 20, 1998, 2,107,843
shares of Class C Common Stock, which is nonvoting until February 5, 2000, were
issuable upon the exercise of currently exercisable warrants, which are held by
two institutional investors.
The Company has never paid dividends on its Common Stock and currently
has no intention to do so in the future. The holders of the Series A Preferred
Stock are entitled to receive, when and as declared by the Board of Directors of
the Company out of legally available funds, cumulative dividends, payable
quarterly in cash, at an annual rate of 10% of the liquidation value thereof.
The holders of the Series B Preferred Stock are entitled to receive cumulative
dividends payable quarterly in kind at an annual rate of 8% of the liquidation
value thereof. For a discussion regarding limitations on the Company's ability
to pay dividends, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
RECENT SALES OF UNREGISTERED SECURITIES
On various dates since January 1997, the Company sold and issued
902,615 shares of Class B Common Stock, valued at $5.00 per share, and
3,609,611 shares of Series B Preferred Stock (including shares issuable as paid
in kind dividends), valued at $25.00 per share. These shares were issued in an
offering not involving a public offering pursuant to Section 4 (2) of the
Securities Act to Consumers U.S. As a condition to each of the above sales, the
purchaser consented to placement of a restrictive legend on the certificate
representing the securities.
In addition, in connection with the Anchor Acquisition, the Company
issued: (i) 490,898 shares of Class A Common Stock, valued at $5.00 per share,
and 1,879,320 shares of Series A Preferred Stock, valued at $25.00 per share, to
Smith Barney Inc., as escrow agent for certain creditors of Old Anchor, (ii) an
aggregate of 360,000 shares of Series A Preferred Stock, valued at $25.00 per
share, to three defined benefit plans maintained by Old Anchor and (iii)
warrants (with no payment due upon exercise) exercisable for 2,107,843 shares of
Class C Common Stock, valued at $5.00 per share, to two institutional purchasers
as compensation for providing the interim financing for the Anchor Acquisition
and placement of the Notes. The warrants for Class C Common Stock were issued in
an offering not involving a public offering pursuant to Section 4 (2) of the
Securities Act. As a condition to such sales, the purchasers consented to a
placement of
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a restrictive legend on the certificates representing the warrants. All of the
shares of Class A Common Stock and Series A Preferred Stock were issued in
reliance on the exemption from the registration requirements of the Securities
Act contained in Section 1145 of the Bankruptcy Code.
In April 1997, the Company issued $150.0 million aggregate principal
amount of the First Mortgage Notes to a group of "qualified institutional
buyers" (as such term is used in Rule 144A under the Securities Act). The First
Mortgage Notes were issued in reliance on the exemptions from the registration
requirements of the Securities Act provided by Rule 144A and Regulation S under
the Securities Act. The initial purchasers were "accredited investors" as that
term is defined in Regulation D of the Securities Act. The sale and issuance of
these securities was exempt from the registration of the Securities Act pursuant
to Rule 506 Regulation D promulgated thereunder.
In March 1998, the Company issued $50.0 million aggregate principal
amount of the Senior Notes to a group of "qualified institutional buyers" (as
such term is used in Rule 144A under the Securities Act). The Senior Notes were
issued in reliance on the exemptions from the registration requirements of the
Securities Act provided by Rule 144A and Regulation S under the Securities Act.
The initial purchasers were "accredited investors" as that term is defined in
Regulation D of the Securities Act. The sale and issuance of these securities
was exempt from the registration of the Securities Act pursuant to Rule 506
Regulation D promulgated thereunder.
11
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth certain historical financial information
of the Company. The selected financial data for the period from February 5, 1997
to December 31, 1997 has been derived from the Company's audited financial
statements included elsewhere in the Form 10-K. The following information should
be read in conjunction with the Company's financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 5, 1997 TO
DECEMBER 31, 1997(1)
----------------------
(dollars in thousands,
except per share)
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 569,441
Cost of products sold 523,709
Selling and administrative expenses 25,120
---------
Income from operations 20,612
Other expense, net (2,602)
Interest expense (18,281)
---------
Loss before extraordinary item (271)
Extraordinary item(2) (11,200)
---------
Net loss $ (11,471)
=========
Preferred stock dividends $ (11,302)
=========
Loss before extraordinary item applicable to common stock $ (11,573)
=========
Loss applicable to common stock $ (22,773)
=========
Basic net loss per share applicable to common stock before
extraordinary item $ (3.62)
=========
Basic net loss per share applicable to common stock $ (7.11)
=========
BALANCE SHEET DATA (at end of period):
Accounts receivable $ 56,940
Inventories 120,123
Total assets 627,568
Total debt 163,793
Total stockholders' equity 85,912
OTHER FINANCIAL DATA:
Net cash provided by operating activities $ 25,483
Net cash used in investing activities (257,255)
Net cash provided by financing activities 232,832
Depreciation and amortization 51,132
Capital expenditures 41,634
</TABLE>
- ----------------------------------------------------
1) The Anchor Acquisition was consummated on February 5, 1997.
2) Extraordinary item in the period from February 5, 1997 to December 31, 1997
resulted from the write-off of financing costs related to debt
extinguished.
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Company was formed in January 1997 to consummate the Anchor
Acquisition. On February 5, 1997, pursuant to an Asset Purchase Agreement, the
Company and Owens acquired substantially all of the assets of, and assumed
certain liabilities, of Old Anchor. In the Anchor Acquisition, the Company
purchased eleven operating glass container manufacturing facilities and other
related assets. Prior to the Anchor Acquisition, the Company had no operations
and therefore the following discussion represents activity from February 5, 1997
through December 31, 1997 (the "1997 Period"). Accordingly, operations for the
Company for the 1997 Period are not directly comparable to operations of Old
Anchor for 1996.
RESULTS OF OPERATIONS
Net Sales. Net sales for the 47 weeks in the 1997 Period for the
continuing plants operated by the Company were approximately $569.4 million, or
approximately $12.1 million per week. Net sales for the same nine plants for
1996 (52 weeks) under Old Anchor were approximately $722.7, or $13.9 million per
week. Net sales per week decreased principally as a result of lower sales of
beer products by the Company.
Cost of Products Sold. The Company's cost of products sold in the 1997
Period was $523.7 million (or 92.0% of net sales), while Old Anchor's cost of
products sold in 1996 was $831.6 million (or 102.1% of net sales) in 1996.
Despite closing four plants in 1995 and 1996, Old Anchor still maintained excess
capacity which reduced its ability to withstand the adverse industry conditions
prevailing in 1996. In an attempt to fill excess capacity, some of Old Anchor's
lost volume was replaced with smaller orders requiring shorter production runs
as well as more frequent retooling and color changes, which led to higher unit
costs and lower margins. Following the Anchor Acquisition, the Company closed
its Houston and Dayville plants and removed from production two furnaces, one at
each of two other plants. By reducing excess capacity and through a better
utilization of the Company's workforce during the 1997 Period, wage increases of
approximately 7% during the 1997 Period had only a limited impact.
Selling and Administrative Expenses. Selling and administrative
expenses for the 1997 Period were approximately $25.1 million (or 4.4% of net
sales), while Old Anchor's selling and administrative expenses were $39.6
million in 1996 (or 4.8% of net sales). This slight decline in selling and
administrative expenses as a percentage of net sales reflects lower personnel
and fringe benefit costs primarily as a result of the headquarters cost
reductions which occurred in March 1997.
Net Income (Loss). The Company had a net loss in the 1997 Period of
approximately $11.5 million, including an extraordinary loss of approximately
$11.2 million as result of the write-off of certain financing fees in connection
with the refinancing of the Anchor Loan Facility. Despite lower net sales per
week in the 1997 Period compared to Old Anchor's net sales per week in 1996,
income form operations during the 1997 Period for the continuing plants was
approximately $20.6 million, while Old Anchor has a loss from operations in 1996
from these same plants of $63.2 million, principally as a result of the return
to higher margin business and reduced cost of products sold and selling and
administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
In the 1997 Period, operating activities provided $25.5 million in
cash, reflecting the loss before extraordinary item adjusted for changes in
working capital items. Cash consumed in investing activities for the 1997 Period
was $257.3 million, principally reflecting the cash component
13
<PAGE> 14
of the Anchor Acquisition. Additionally, in February 1997, the Company
contributed $9.0 million in cash to the Company's defined benefit pension plans.
Capital expenditures in the 1997 Period were $41.6 million. Cash increased from
financing activities for the 1997 Period by $232.8 million reflecting the
issuance of capital stock and borrowings in connection with the Anchor
Acquisition.
Capital expenditures required for environmental compliance were
approximately $0.8 million for 1997 and are anticipated to be approximately $1.7
million annually in 1998 and 1999. However, there can be no assurance that
future changes in such laws, regulations or interpretations thereof or the
nature of the Company's operations will not require the Company to make
significant additional capital expenditures to ensure compliance in the future.
The purchase price of the Anchor Acquisition was approximately $250.0
million and was comprised of: approximately $200.5 million in cash, $47.0
million face amount (1,879,320 shares) of Series A Preferred Stock and $2.5
million of common stock (490,898 shares) of Class A Common Stock. However, the
purchase price paid by the Company is subject to adjustment. On June 13, 1997,
Old Anchor delivered to the Company the unaudited Closing Balance Sheet, which
indicated that Old Anchor believed that it was entitled to additional payments
from the Company and Owens totaling approximately $76.3 million. On July 28,
1997, the Company delivered its notice of disagreement to Old Anchor, which
requested a reduction to the purchase price of approximately $96.8 million.
Since that time, the parties have been negotiating the amount of the adjustment,
and have reached a proposed settlement (the "Proposed Settlement"). The Proposed
Settlement requires the payment by the Company to Old Anchor of an additional
$1.0 million in cash and the issuance of 1,225,000 warrants for the purchase of
additional shares of common stock, together valued at $7.1 million. In addition,
the Company will issue 525,000 warrants to purchase additional shares of common
stock to an affiliate of Consumers U.S., valued at $2.6 million. None of the
warrants to be issued will require any payment upon exercise. The Proposed
Settlement is subject to final approval by the Company, Old Anchor and the
bankruptcy court.
The Company obtained the cash portion of the purchase price from an
$85.0 million cash investment by Consumers U.S. in $84.0 million face amount
(3,360,000 shares) of Series B Preferred Stock and $1.0 million of Class B
Common Stock and borrowings under the $130.0 million Anchor Loan Facility.
In conjunction with the Anchor Acquisition, the Company entered into a
credit agreement providing for a $110.0 million Revolving Credit Facility. At
March 20, 1998, advances outstanding under the Revolving Credit Facility were
$5.9 million and the total outstanding letters of credit on this facility were
$11.1 million.
On April 17, 1997, the Company completed an offering of $150.0 million
aggregate principal amount of First Mortgage Notes. The First Mortgage Notes are
senior secured obligations of the Company, ranking senior in right of payment to
all existing and future subordinate indebtedness of the Company and pari passu
with all existing and future senior indebtedness of the Company. The First
Mortgage Notes are guaranteed by Consumers U.S. Proceeds from the issuance of
the First Mortgage Notes, net of fees, were approximately $144.0 million and
were used to repay $130.0 million outstanding under the Anchor Loan Facility and
$8.8 million outstanding under the Revolving Credit Facility, with the balance
used for general corporate purposes. In connection with the refinancing of the
Anchor Loan Facility with the First Mortgage Notes, the Company issued 702,615
shares of Class B Common Stock to Consumers and 702,614 warrants to the initial
purchasers. The warrants and common stock are each valued at $5.00 per share.
As a result of its failure to have an exchange offer registration
statement declared effective and to have exchanged all First Mortgage Notes
validly tendered, the Company has paid additional interest on the First Mortgage
Notes. The amount of additional interest that the Company has paid has ranged
from 0.5% in October 1997 to 1.5% in
14
<PAGE> 15
February 1998. This additional interest is expected to be nonrecurring and not
significant to the Company's continuing operations.
In March 1998, the Company issued $50.0 million aggregate principal
amount of its 9 7/8% Senior Notes due 2008. The Senior Notes are senior
unsecured obligations ranking pari passu in right of payment with all existing
and future senior indebtedness of the Company. Proceeds of the offering will be
used for capital expenditures necessary to expand to meet customer needs and
general corporate purposes.
The First Mortgage Notes Indenture and the Senior Notes Indenture
contain certain covenants that restrict the Company from taking various actions,
including, subject to specified exceptions, the incurrence of additional
indebtedness, the granting of additional liens, the making of investments, the
payment of dividends and other restricted payments, mergers, acquisitions and
other fundamental corporate changes, capital expenditures, operating lease
payments and transactions with affiliates. The Revolving Credit Facility also
contains certain financial covenants that require the Company to meet and
maintain certain financial tests and minimum ratios, including a minimum working
capital ratio, a minimum consolidated net worth test and a minimum interest
coverage ratio.
The Company may enter into a new revolving credit facility that will
provide for revolving credit loans, and the issuance of letters of credit, in an
aggregate amount not to exceed the lessor of $125.0 million and the borrowing
base in effect. The new revolving credit facility will also contain certain
customary covenants contained in the Revolving Credit Facility, including an
event of default upon a change of control and upon a default under the Notes
and/or certain other Indebtedness of Anchor. The new revolving credit facility
will also require Anchor to meet and maintain certain financial tests and
minimum ratios, including minimum leverage ratio, a minimum consolidated net
worth test and a minimum interest coverage ratio.
The Company expects significant expenditures in the 1998, including
interest expense on the First Mortgage Notes, the Senior Notes and the Revolving
Credit Facility, required pension plan contributions of $17.0 million, payment
in respect of the Company's supply agreement with The Stroh Brewery Company of
$7.0 million, capital expenditures of approximately $55.0 million and closing
costs associated with the closed manufacturing facilities of approximately $11.0
million. In addition, the Company is required to make pension plan contributions
for underfundings of $13.9 million in 1999 and $40.5 million to be contributed
over the three years thereafter. Also, as a result of the valuation performed by
an independent appraiser of the Series A Preferred Stock contributed to the
plans, which was completed in November 1997, the Company is required to make an
additional pension contribution of $0.7 million in 1998. Peak needs are in
spring and fall at which time working capital borrowings are estimated to be
$20.0 million higher than at other times of the year. The Company's principal
sources of liquidity through 1998 are expected to be funds derived from
operations, proceeds from the Senior Note offering, borrowings under the
Revolving Credit Facility and proceeds from asset sales.
15
<PAGE> 16
IMPACT OF INFLATION
The impact of inflation on the costs of the Company, and the ability to
pass on cost increases in the form of increased sales prices, is dependent upon
market conditions. While the general level of inflation in the domestic economy
has been at relatively low levels, the Company has begun to pass on inflationary
cost increases either as a result of contractual arrangements permitting the
pass on of cost increases or as the result of recent negotiations with various
customers.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and
soft drink industries, in which demand is stronger during the summer months, the
Company's shipment volume is expected to be higher in the second and third
quarters. Consequently, the Company will build inventory during the first
quarter in anticipation of seasonal demands during the second and third
quarters. In addition, the Company will schedule shutdowns of its plants for
furnace rebuilds and machine repairs in the first and fourth quarters of the
year to coincide with scheduled holiday and vacation time under its labor union
contracts. These shutdowns and seasonal sales patterns adversely affect
profitability during the first and fourth quarters. The Company is reviewing
alternatives to reduce downtime during these periods in order to minimize
disruption to the production process and its negative effect on profitability.
YEAR 2000
The Company's plan is to achieve Year 2000 compliance while integrating
the operations of the Company and Consumers. The Company's information systems
cover a broad spectrum of software applications and hardware custom designed for
its manufacturing processes and are similar to those of Consumers. Consumers,
after an extensive study of its general technology needs, decided to upgrade its
information systems from a platform based on large IBM mainframes to a platform
based on mid-range database servers. This upgrade will resolve any Year 2000
issues. To better integrate its information systems with those of Consumers, the
Company will begin a similar upgrade of its systems in the second quarter of
1998 with a planned implementation date of March 1999, which management believes
provides sufficient time to resolve any unexpected issues. Certain of these
upgrades are included in the capital expenditure budget.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
With the exception of the historical information contained in this
report, the matters described herein contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or
achievements, and may contain the words "believe," "anticipate," "expect,"
"estimate," "intend," "project," "will be," "will likely continue," "will likely
result," or words or phrases of similar meaning. Forward-looking statements
involve risks and uncertainties (including, but not limited to, economic,
competitive, governmental and technological factors outside the control of the
Company) which may cause actual results to differ materially from the
forward-looking statements. These risks and uncertainties may include the
ability of management to implement its business strategy in view of the
Company's limited operating history and the recent insolvency of Old Anchor; the
highly competitive nature of the glass container market and the intense
competition from makers of alternative forms of packaging; the Company's focus
on the beer industry and its dependence on certain key customers; the seasonal
nature of brewing, iced tea and other beverage industries; the Company's
dependence on certain executive officers; and changes in environmental and other
government regulations. The Company operates in a very competitive environment
in which new risk factors can emerge from time to time. It is not possible for
management to predict all such risk factors, nor can it assess the impact of all
such risk factors on the Company's business or the extent to which any factor,
or a combination of factors, any cause actual results to differ materially from
those contained in forward-looking statements. Given these risks and
uncertainties, readers are cautioned not to place undue reliance on
forward-looking statement.
16
<PAGE> 17
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
17
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Index to Financial Statements of New Anchor F-1
Report of Independent Public Accountants F-2
Statement of Operations -
Period from February 5, 1997 to December 31, 1997 F-3
Balance Sheet-
December 31, 1997 F-4
Statement of Cash Flows -
Period from February 5, 1997 to December 31, 1997 F-6
Statement of Stockholders' Equity -
Period from February 5, 1997 to December 31, 1997 F-8
Notes to Financial Statements F-9
Index to Financial Information of Old Anchor at H-1
Report of Independent Public Accountants H-2
Consolidated Statements of Operations -
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-3
Consolidated Balance Sheets-
February 4, 1997 and December 31, 1996 H-4
Consolidated Statements of Cash Flows -
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-6
Consolidated Statements of Stockholder's
Equity (Deficiency in Assets)-
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-8
Notes to Consolidated Financial Statements H-9
</TABLE>
18
<PAGE> 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Old Anchor's consolidated balance sheet as of December 31, 1996 and its
consolidated statements of operations, cash flows and stockholder's equity
(deficiency in assets) for each of the two years in the period ended December
31, 1996 included in this Form 10-K have been previously audited by Deloitte &
Touche LLP ("Deloitte"), independent accountants to Old Anchor (whose report
disclaimed an opinion on the 1996 consolidated financial statements of Old
Anchor and included explanatory paragraphs referring to the bankruptcy
proceedings of the Company and to the remaining deficiency in assets after the
sale of substantially all of the assets and business of the Company and the
substantial doubt that it raises relative to the ability of the Company to
continue as a going concern). Pursuant to the Asset Purchase Agreement, the
purchase price for the Anchor Acquisition is subject to adjustment based on an
audited balance sheet (the "Closing Balance Sheet"). As discussed under "Item 1.
Business - Recent Developments" the parties are in settlement negotiations
regarding the appropriate adjustment. As Deloitte was engaged to audit the
Closing Balance Sheet (however, an audit opinion has not been issued) and
continues to be the independent accountants to Old Anchor, Old Anchor informed
the Company that it was inappropriate for Deloitte to provide its consent to the
use of its audit report for these periods. Accordingly, Arthur Andersen LLP
audited the financial statements of Old Anchor for these periods. There
have not been any disagreements with Deloitte on any matter of accounting
principles, financial statement disclosure or auditing scope or procedures.
19
<PAGE> 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers. The following table sets forth
certain information regarding each of the Company's directors and executive
officers.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
NAME AGE POSITION
--------------------------------------------------------------------------------------------------
<S> <C> <C>
John J. Ghaznavi 62 Chairman, Chief Executive Officer and Director
--------------------------------------------------------------------------------------------------
Richard M. Deneau 51 President and Chief Operating Officer
--------------------------------------------------------------------------------------------------
M. William Lightner, Jr. 63 Senior Vice President-Finance, Chief Financial Officer,
Treasurer and Director
--------------------------------------------------------------------------------------------------
David T. Gutowski 50 Senior Vice President-Administration and Director
--------------------------------------------------------------------------------------------------
C. Kent May 58 Senior Vice President, General Counsel, Secretary and
Director
--------------------------------------------------------------------------------------------------
Paul H. Farrar 63 Director
--------------------------------------------------------------------------------------------------
Roger L. Erb 55 Senior Vice President-Operations
--------------------------------------------------------------------------------------------------
Gordon S. Love 48 Senior Vice President-Sales and Marketing
--------------------------------------------------------------------------------------------------
Edward M. Jonas 59 Controller
--------------------------------------------------------------------------------------------------
Eugene K. Pool 62 Vice President, Associate General Counsel and Assistant
Secretary
--------------------------------------------------------------------------------------------------
John F. Robichaud 52 Vice President-Order Management and Scheduling Logistics
--------------------------------------------------------------------------------------------------
George C. Lusby, III 54 Industry Vice President-Sales and Market
--------------------------------------------------------------------------------------------------
John L. Day 51 Industry Vice President-Sales and Market
--------------------------------------------------------------------------------------------------
Gregory C. Sinatro 46 Industry Vice President-Sales and Market
--------------------------------------------------------------------------------------------------
</TABLE>
Term of Office. Each director serves until such director's successor is
elected and qualified or until such director's earlier resignation, retirement,
disqualification, removal from office or death. Each Officer serves until the
first meeting of the Board of Directors following the next annual meeting of the
stockholders and until such officer's successor is chosen and qualified.
John J. Ghaznavi became Chairman of the Board and Chief Executive
Officer of the Company in January 1997. He has been Chairman and Chief Executive
Officer of each of Consumers, Glenshaw and G&G since 1993, 1988 and 1987,
respectively. Mr. Ghaznavi currently serves as Chairman of the Board of Trustees
of the Glass Packaging Institute.
Richard M. Deneau assumed his duties as President and Chief Operating
Officer of the Company in July 1997. From January 1996 until June 1997, Mr.
Deneau was Senior Vice President and Chief Operating Officer of Ball-Foster.
From October 1992 to January 1996, he was Senior Vice President in charge of
domestic beverage can operations of American National Can Company. Prior to
October 1992, Mr. Deneau was Senior Vice President of Sales at American National
Can Company's division and the predecessor of Ball-Foster, Foster Forbes
("Foster-Forbes").
M. William Lightner, Jr. joined the Company in January 1997 as a
director and Vice President, Treasurer and Chief Financial Officer. He became
Vice President-Finance in March 1997 and Senior Vice President-Finance in June
1997. Since July 1994, Mr. Lightner has been Vice President of Finance and Chief
Financial Officer of Consumers. From 1989 to 1992, Mr. Lightner served as
Chairman of MICA Resources, a privately held aluminum processor and brokerage
company. Mr. Lightner was a partner with Arthur Andersen & Co. from 1969 to
1989.
20
<PAGE> 21
David T. Gutowski joined the Company in January 1997 as a director and
as a Vice President and become Vice President-Administration in March 1997 and
Senior Vice President-Administration in June 1997. He has been a director of
Consumers since 1993. Mr. Gutowski served as Treasurer and Chief Financial
Officer of G&G since 1988.
C. Kent May became a director of the Company in January 1997 and became
Vice President, General Counsel and Secretary of the Company in March 1997. He
became Senior Vice President in June 1997. Mr. May has served as a director of
Consumers since 1993 and he was appointed General Counsel of Consumers in March
1997. Mr. May has been an associate, partner of member of the law firm of Eckert
Seamans Cherin & Mellott, LLC since 1964, and served as the managing partner of
such firm from 1991 to 1996.
Paul H. Farrar became a director of the Company in February 1997 and
has served as a director of Consumers since 1994. Mr. Farrar has been Chairman
of Adelaide Capital Corporation, an investment company, since 1994, and he
served as Senior Vice President of Canadian Imperial Bank of Commerce, a
Canadian chartered bank from 1986 to December 1993.
Roger L. Erb became Senior Vice President-Operations of the Company in
October 1997. From September 1995 until June 1997, Mr. Erb was Senior Vice
President of Technical Services at Ball-Foster. Prior thereto, he was employed
at Foster Forbes, serving as Senior Vice President of Technical Services from
June 1994 to September 1995, Senior Vice President of Operations from January
1993 to June 1994, and Vice President of Technical Services prior to 1993.
Gordon S. Love became Senior Vice President-Sales and Marketing of the
Company in July 1997. From October 1996 until June 1997, Mr. Love was Vice
President of Sales for Beer and Liquor at Ball-Foster. From September 1995 until
October 1996, he was Senior Vice President of Beverage Sales at Ball-Foster.
Prior thereto, he was employed at Foster Forbes, serving as Senior Vice
President of Sales and Marketing from July 1993 to September 1995, Vice
President of Sales from October 1992 to July 1993, and Beer Product Manager
prior to October 1992.
Edward M. Jonas joined the Company in February 1997 and became
Controller of the Company in March 1997. Mr. Jonas joined the predecessor to Old
Anchor in 1968 and was Comptroller of Old Anchor from 1983 through early 1995.
Eugene K. Pool joined Old Anchor in June 1988 as Senior Counsel. Mr.
Pool was appointed Assistant Secretary of Old Anchor in 1988, Associate General
Counsel of Old Anchor in 1991 and Vice President-Associate General Counsel of
Old Anchor in 1995. In February 1997, Mr. Pool became Assistant Secretary of the
Company and in March 1997, he became Vice President and Associate General
Counsel for the Company.
John F. Robichaud joined the Company in September 1997 as Vice
President-Order Management and Scheduling Logistics. From 1992 until September
1997 he was Director of Logistics for Consumers and from 1986 to 1992 was
Director of Marketing for Consumers.
George C. Lusby III joined the Company in March 1997 as Industry Vice
President of Sales and Marketing. Mr. Lusby has served as Vice President of
Sales and Marketing and as a director of Glenshaw since 1987.
John L. Day became Industry Vice President of Sales and Marketing for
the Company in March 1997. From September 1993 to February 1997, Mr. Day served
as Vice President-Beer Sales of Old Anchor and from August 1990 to September
1993, he served as Director of Sales of Old Anchor.
Gregory C. Sinatro became Industry Vice President of Sales and
Marketing for the Company in March 1997. From October 1994 to February 1997, Mr.
Sinatro served as Senior Vice
21
<PAGE> 22
President of Food/Consumer Products of Old Anchor and from January 1989 to
September 1994, he served as Vice President-Consumers Products Division of Old
Anchor.
BOARD OF DIRECTORS OF THE COMPANY
Classification of Board. Pursuant to the Amended and Restated
Certificate of Incorporation (the "Restated Charter") of the Company, until
February 5, 2000, the holders of the Class A Common Stock are entitled to elect
four directors (the "Class A Directors") and the holders of the Class B Common
Stock are entitled to elect five directors (the "Class B Directors"). The Class
A Directors have not yet been designated. Messrs. Ghaznavi, Lightner, Gutowski,
Farrar and May are Class B Directors. In connection with the Proposed
Settlement, it is expected that the certificate of incorporation of the Company
will be amended to increase the number of directors to be elected by the holders
of Class B Common Stock.
From and after February 5, 2000, the Board of Directors has discretion
to determine the number of directors (each a "Director") constituting the Board
of Directors, and such number of Directors will be divided into three classes,
as nearly equal in the number of Directors as possible. The term of Directors of
the first, second and third class will expire at the first, second and third
annual meeting after their election, respectively. At each annual meeting, the
number of Directors constituting the class whose term has expired at the time of
such meeting will be elected to hold office until the third succeeding annual
meeting.
Until February 5, 2000, Class A Directors may be removed with or
without cause only by the holders of Class A Common Stock and Class B Directors
may be removed with or without cause only by the holders of Class B Common
Stock. Thereafter, all classes of Common Stock (as defined) of the Company will
be consolidated into one class of Common Stock, and, pursuant to the Bylaws of
the Company (the "Bylaws"), Directors may be removed only with cause by the
affirmative vote of the holders of 75% of the outstanding shares of capital
stock of the Company then entitled to vote at an election of Directors.
The foregoing provisions of the Restated Charter and the Bylaws are
subject to the rights, if any, of any series of preferred stock of the Company
to elect additional Directors under circumstances specified in the certificate
of designation relating to such preferred stock.
Officers of the Company serve at the discretion of the Board of
Directors.
22
<PAGE> 23
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION
Summary Compensation Table
Included in the table below, is compensation awarded to, earned by or paid,
during the period from February 5, 1997 to December 31, 1997, to the Company's
Chief Executive Officer and the four most highly compensated executive officers
who were serving as officers at the end of 1997.
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------
(2) (3) Other Annual (4) All Other
--- ---------------- ---------------
Name and Principal Position Year Salary ($) Bonus ($) Compensation($) Compensation $)
--------------------------- ---- ---------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John J. Ghaznavi
Chairman, Chief Executive
Officer (1) 1997 $ -- $ -- $ -- $ --
Richard M. Deneau
President, Chief Operating
Officer 1997 246,703(5) -- -- 23,991
David T. Gutowski
Senior Vice President-
Administration 1997 171,701 -- -- 42,091
George C. Lusby
Industry Vice President-
Sales and Marketing 1997 157,518 -- -- 3,238
C. Kent May
Senior Vice President-General
Counsel and Secretary 1997 153,419 -- -- --
</TABLE>
- -------------------------------------------------------------------------------
(1) Mr. Ghaznavi received no compensation from the Company. The Company is a
party to a Management Agreement with G&G, whereby, G&G provides specified
managerial services for the Company and is entitled to receive an annual
management fee of up to $3.0 million.
(2) Salary is shown as earned in the fiscal year, however certain amounts have
been paid in the following year.
(3) No information is provided in the column labeled "Other annual
compensation" since the aggregate amount of perquisites for the period
presented is less than the lessor of $50,000 or 10% of total annual salary
and bonus reported for each of the named officers.
(4) Information provided in the column labeled "All other compensation"
includes moving expenses paid by the Company.
(5) This amount represents Mr. Deneau's salary from the date of the
commencement of his employment with the Company, June 1, 1997, through
the end of the fiscal year.
ANNUAL INCENTIVE PLAN
The Anchor Glass Container Corporation Annual Incentive Plan is
designed to compensate salaried employees of Anchor for performance with respect
to planned business objectives. Participants will be compensated based on the
achievement of predetermined goals of Anchor. Plan participation is limited to
salaried employees within the organization. Eligible participants are designated
at the beginning of each fiscal year as approved by the Compensation Committee.
The Plan began January 1, 1998.
23
<PAGE> 24
DIRECTOR AND EMPLOYEE INCENTIVE STOCK OPTION PLAN OF CONSUMERS
The Director and Employee Incentive Stock Option Plan, 1996, as
amended, of Consumers, permits Consumers to grant options to purchase common
shares of Consumers to directors and employees of Consumers and any subsidiary
or affiliate, including Anchor. Options may be granted to purchase an aggregate
of 3,300,000 Common Shares of Consumers. Options to purchase 1,216,500 shares of
Consumers Common Stock, at exercise prices that range from $9.65 to $13.50
(Canadian dollars), were granted to all of the salaried employees of Anchor in
1997. Granted options have a term of ten years and vest one third each year over
a three year period.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company are entitled to receive an annual
director's fee of $7,000. In connection with the Proposed Settlement, it is
expected that the amount of the annual director's fee will be increased to
$15,000. In addition, fees of $750 are paid for each non-employee director for
director's meeting and committee meetings attended unless more than one meeting
is held on the same day, in which case the fee for attending each subsequent
meeting is $500.
EMPLOYMENT CONTRACTS
The Company does not, as a general rule, enter into employment
agreements with its executive officers and/or other key employees.
EMPLOYEE PLAN
As part of the Anchor Acquisition, the Company assumed Old Anchor's
obligations under the Anchor Glass Container Corporation Executive/Key Employee
Retention Plan which covers approximately 35 employees including Messrs. Pool,
Day and Sinatro. Under this plan, if a participating employee is terminated by
the Company without cause or terminates his or her employment with the Company
for good reason (such as a reduction in base salary, a material change in
position, duties or responsibilities, or a material change in job location), the
Company is obligated to pay a severance benefit to such employee. If all
participating employees were to be terminated by the Company without cause
and/or were to terminate their employment with the Company for good reason, the
aggregate amount of severance benefits payable by the Company under this plan
would be $1.1 million. This plan expires August 5, 1998.
COMPENSATION COMMITTEE INTERLOCK
The compensation committee is comprised of the entire board of
directors, which includes the Chief Executive Officer and President, the Chief
Financial Officer, the Senior Vice President-Administration and the Senior Vice
President-General Counsel.
24
<PAGE> 25
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL STOCKHOLDERS OF COMPANY
The following table sets forth information with respect to the
beneficial ownership of the Company's Class A Common Stock and Class B Common
Stock (the "Voting Common Stock") as of December 31, 1997 by (i) each person who
is known by the Company to beneficially own 5% or more of such Voting Common
Stock, (ii) each Director of the Company, (iii) the Company's Chief Executive
Officer and (iv) all current Directors and executive officers of the Company as
a group.
<TABLE>
<CAPTION>
CLASS AND AMOUNT OF
BENEFICIAL PERCENTAGE PERCENTAGE
OWNERSHIP(1) (BY CLASS) (1) (BOTH CLASSES) (1)
- -----------------------------------------------------------------------------------------------------------------
Primary
and Fully Fully Fully
NAME(1) Actual Diluted Primary Diluted Primary Diluted
- ------- ------ ---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS:
- -----------------------------------------------------------------------------------------------------------------
John J. Ghaznavi(2) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
M. William Lightner(3) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
David T. Gutowski(4) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
Paul H. Farrar(5) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
C. Kent May(6) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
All Directors and executive officers
as a group(14 persons) - - - - - -
- -----------------------------------------------------------------------------------------------------------------
FIVE PERCENT STOCKHOLDERS
- -----------------------------------------------------------------------------------------------------------------
Smith Barney, as escrow agent for 490,898 8,321,398 100.0 84.7 90.2 30.7
certain creditors of Old Anchor(7) Class A Class A
- -----------------------------------------------------------------------------------------------------------------
Anchor Glass Container Corporation - 1,260,787 72.0 12.9 47.5 4.6
Service Retirement Plan(8)(9) Class A
- -----------------------------------------------------------------------------------------------------------------
Anchor Glass Container Corporation - 158,921 24.5 1.6 10.2 0.6
Retirement Plan for Salaried Class A
Employees(8)(10)
- -----------------------------------------------------------------------------------------------------------------
Pension Plan for Hourly Employees of - 80,292 14.1 0.8 5.5 0.3
Latchford Glass Company and Class A
Associated Companies(8)(11)
- -----------------------------------------------------------------------------------------------------------------
902,615 17,309,942 100.0 100.0 97.2 63.8
Consumers U.S., Inc.(12) Class B Class B
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to shares beneficially owned and
all addresses are in care of the Company. All primary share amounts and
percentages reflect beneficial ownership determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
All fully diluted share amounts and percentages reflect beneficial
ownership of Voting Common Stock determined on a fully diluted basis. All
information with respect to beneficial ownership has been furnished by the
respective Director, executive officer or stockholder, as the case may be,
as of December 31, 1997.
(2) Through G&G, Ghaznavi Canada, Inc. and other affiliates, Mr. Ghaznavi
beneficially owns 21,619,584 shares of the voting common stock of
Consumers, including 1,588,126 shares issuable upon the exercise of
currently exercisable options.
(3) Mr. Lightner beneficially owns 63,800 shares of the voting common stock of
Consumers, including 60,000 shares issuable upon the exercise of currently
exercisable options, but not including 500 shares owned by Mr. Lightner's
spouse with respect to which Mr. Lightner disclaims beneficial ownership.
(4) Mr. Gutowski beneficially owns 45,600 shares of the voting common stock of
Consumers, including 40,000 shares issuable upon the exercise of currently
exercisable options, but not
25
<PAGE> 26
including 5,700 shares owned by Mr. Gutowski's children with respect to
which Mr. Gutowski disclaims beneficial ownership.
(5) Mr. Farrar beneficially owns 15,000 shares of the voting common stock of
Consumers, including 10,000 shares issuable upon the exercise of currently
exercisable options.
(6) Mr. May beneficially owns 17,600 options to purchase shares of the voting
common stock of Consumers, all of which are issuable upon the exercise of
currently exercisable options.
(7) Includes 7,830,500 shares issuable upon conversion of 1,879,320 shares of
Series A Preferred Stock. The 490,898 shares of Class A Common Stock and
1,879,320 shares of Series A Preferred Stock are held by Smith Barney, as
escrow agent, pursuant to an escrow agreement between Old Anchor and Smith
Barney. Such shares are to be distributed to the creditors of Old Anchor or
to a court appointed disbursing agent upon the effective date of a plan of
reorganization of Old Anchor approved by the United States Bankruptcy Court
of the District of Delaware. Under the terms of such escrow agreement,
Smith Barney may not exercise any voting rights with respect to the Class A
Common Stock held in escrow except as expressly instructed in an order of
such Bankruptcy Court. The address of Smith Barney is 388 Greenwich Street,
19th Floor, New York, New York 10013.
(8) This stockholder's shares of Series A Preferred Stock are held in trust by
the Chase Manhattan Bank, as trustee of such benefit plan and the current
address for this stockholder is c/o The Chase Manhattan Bank, 777 Broadway,
New York, New York 10003. However, an "investment manager", as that term is
defined in Section 3(38) of ERISA, will be appointed to control the shares
contributed to the plans. When appointed, such investment manager will have
exclusive control over this stockholder's shares of Series A Preferred
Stock and any shares of Class A Common Stock into which such shares of
Series A Preferred Stock may be converted. Pursuant to an agreement among
the Company, Consumers and the PBGC, a valuation of the shares of Series A
Preferred Stock contributed to the Plans has been performed by an
independent appraiser, which was completed in November 1997. The Company is
required to make an additional contribution to the Plans of $0.7 million to
bring the value of the contribution to $9.0 million.
(9) All 1,260,787 shares of this stockholder's beneficially owned shares of
Class A Common Stock are issuable upon conversion of 302,589 shares of
Series A Preferred Stock.
(10) All 158,921 shares of this stockholder's beneficially owned
shares are issuable upon conversion of 38,141 shares of Series A Preferred
Stock.
(11) All 80,292 shares of this stockholder's beneficially owned
shares are issuable upon conversion of 19,270 shares of Series A Preferred
Stock.
(12) Includes 16,407,325 shares issuable upon conversion 3,609,611 shares of
Series B Preferred Stock (including 249,611 shares of Series B Preferred
Stock, accrued as of December 31, 1997 as a payment in kind dividend). On a
fully diluted basis, Consumers U.S. owns approximately 59% of the three
classes of common stock of the Company. Not including the Class C Common
Stock (which is nonvoting), Consumers U.S. owns approximately 63.8% of the
voting common stock of the Company on a fully diluted basis. All of the
shares of Class B Common Stock and Series B Preferred Stock currently owned
or subsequently acquired by Consumers U.S. will be pledged to secure the
Consumers U.S. guarantee of the Company's obligations under the First
Mortgage Notes and the Indenture. Pursuant to the Warrant Agreement, upon
the closing of the Note Offering, the Company issued to Consumers U.S.
702,615 shares of Class B Common Stock (or 2.5% of the Common Stock
outstanding on such date on a fully diluted basis outstanding or issuable
as of such date). The address for Consumers U.S. is 3140 William Flinn
Highway, Allison Park, Pennsylvania 15101.
26
<PAGE> 27
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company is part of a group of glass manufacturing companies (the
"Affiliated Glass Manufacturers") with Consumers and Glenshaw, each of which is
controlled by Mr. Ghaznavi through G&G. The Company currently engages (and
intends to expand) in a variety of transactions with Consumers and Glenshaw as a
part of its strategy to achieve synergies among the companies. These expected
transactions may include bulk purchasing of raw and packaging materials,
provision of technical and engineering services, joint utilization of Anchor's
mold and repair shops and the possible consolidation of certain functions such
as sales, engineering and management information services.
The Company has entered into an Intercompany Agreement (the
"Intercompany Agreement") with G&G, Consumers, Consumers U.S., Consumers
International Inc., Glenshaw, Hillsboro Glass Company ("Hillsboro"), I.M.T.E.C.
Enterprises, Inc., a machinery manufacturer majority-owned by G&G, and certain
related companies which establishes standards for certain intercompany
transactions. Pursuant to the Intercompany Agreement, the Company may, from time
to time, fill orders for customers of Affiliated Glass Manufacturers and
Affiliated Glass Manufacturers may, from time to time fill orders for customers
of the Company. In such case, where the customer is not a common customer, the
company that does the manufacturing will pay a market commission, set a 5% of
the invoiced amount, to the company that referred the customer. In the event of
a transfer of a customer to the Company by an Affiliated Glass Manufacturers or
to an Affiliated Glass Manufacturers by the Company, the transfer is treated as
though the transferee had filled the orders for the transferred customer.
In connection with any bulk purchasing of raw materials, packaging
materials, machinery, insurance, maintenance services, environmental services
and other items and services used in this business, each of the Affiliated Glass
Manufacturers will share out-of-pocket costs of the purchasing activities
without payment of commissions. Similarly, in connection with the provision of
technical, engineering or model design services, the company providing the
services will receive reasonable per diem fees and costs for the employees
provided. For services such as the provision of molds, the company providing the
service will receive cost plus a reasonable market mark-up.
Transactions carried out in accordance with the Intercompany Agreement
do not require approval of the board of directors or fairness opinions. Any
amendment to the Intercompany Agreement is subject to the Indenture requirement
that it be in writing, on terms no less favorable to the Company than could have
been obtained in a comparable arms' length transaction between the Company and
third parties and is subject to the approval of the Board of Directors
("Affiliate Transaction Provisions"). The Revolving Credit Agreement and the
Indenture require that transactions between the Company and an affiliate be in
writing on no less favorable terms to the Company than would be obtainable in a
comparable arms' length transaction between the Company and a person that is not
an affiliate. In addition, transactions exceeding certain threshold values
require the approval of the Company's board of directors, the approval of the
Company's independent directors or an independent fairness opinion.
Certain affiliates of the Company are engaged in businesses other than
the manufacture of glass containers, such as manufacturing or rehabilitating
manufacturing equipment, automobile and truck leasing, shipping and real estate
management. These transactions are subject to the Affiliate Transaction
Provisions of the Indenture.
The Company is party to the Management Agreement with G&G. Pursuant to
the Management Agreement, G&G is to provide specified managerial services for
the Company. For these services, G&G is entitled to receive an annual management
fee of $3.0 million and to reimbursement of its out-of-pocket costs plus an
administrative charge not to exceed 10% of those
27
<PAGE> 28
costs. The Revolving Credit Agreement and the Indenture limit management fee
payments by the Company under the Management Agreement to $1.5 million per year
unless the Company meets certain financial tests, in which case such fees will
accrue. In 1997, such tests were met and the fees due under the Management
Agreement were $3.0 million.
In September 1997, Hillsboro, a glass container manufacturing plant
owned by G&G, discontinued manufacturing. All of Hillsboro's rights and
obligations to fill orders under a supply contract between Consumers and one of
its major customers have been purchased by Consumers and Anchor. In addition, in
connection with a plan to simplify the corporate ownership structure of
Consumers, Anchor and their affiliates, Glenshaw may become a subsidiary of
Anchor.
The Company from time to time has engaged the law firm of Eckert
Seamans Cherin and Mellott, LLC, to represent it on a variety of matters. C.
Kent May, an executive officer and director of the Company, is a member of such
law firm.
28
<PAGE> 29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements, Schedules and Exhibits
1. Financial Statements. The Financial Statements of New Anchor and
Old Anchor and the Reports of Independent Public Accountants are
included beginning at page F-1 and beginning at page H-1 of this
Form 10-K. See the index included on page 18.
2. Financial Statement Schedules. The following Financial Statement
Schedules are filed as part of this Form 10-K and should be read
in conjunction with the Consolidated Financial Statements of Old
Anchor and the Financial Statements of Anchor.
SCHEDULE II
ANCHOR RESOLUTION CORP.
VALUATION AND QUALIFYING ACCOUNTS
PERIOD FROM JANUARY 1, 1997 TO FEBRUARY 4, 1997
AND YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Additions
----------------------------
Balance at Charged to Charged to
beginning of costs and other Balance at end
Description period expenses accounts Deductions of period
- ----------- ------------ ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Interim Period 1997
Allowance for doubtful accounts $1,503 $127 $1,630
Year ended December 31, 1996
Allowance for doubtful accounts $1,826 $1,126 - $1,449(A) $1,503
Year ended December 31, 1995
Allowance for doubtful accounts $3,447 $656 - $2,277(A) $1,826
</TABLE>
- ----------------------
(A) Accounts written off
SCHEDULE II
ANCHOR GLASS CONTAINER CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Additions
----------------------------
Balance at Charged to Charged Balance at
beginning of costs and to other end
Description period expenses accounts Deductions of period
- ----------- ------------ ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Period from February 5, 1997 to
December 31, 1997
Allowance for doubtful accounts $1,630 $ 375 $ 360(B) $340(A) $2,025
</TABLE>
- ----------------------------------
(A) Accounts written off
(B) Amount recognized as part of Anchor Acquisition
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the financial statements or notes thereto.
29
<PAGE> 30
3. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
--------- ----
<S> <C>
2.1* Asset Purchase Agreement dated as of December 18, 1996 among Anchor Glass Container Corporation, now known as
Anchor Resolution Corp. ("Old Anchor"), Consumers Packaging, Inc. and Owens-Brockway Glass Container, Inc.
2.2* Amendment to Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of February 5, 1997 by and among
Old Anchor, Consumers Packaging, Inc. and Owens-Brockway Glass Container, Inc.
2.3* Order of United States Bankruptcy Court for the District of Delaware approving (i) the Asset Purchase Agreement
and (ii) the assumption and assignment of certain related executory contracts
2.4* Order of United States Bankruptcy Court for the District of Delaware approving the Amendment to the Asset
Purchase Agreement
2.5* Memorandum of Understanding dated February 5, 1997 among Old Anchor, Consumers Packaging, Inc. and the Company
3.1* Amended and Restated Certificate of Incorporation of the Company
3.2* Bylaws of the Company
3.5* Certificate of Designation of Series A 10% Cumulative Convertible Preferred Stock
3.6* Certificate of Designation of Series B 8% Cumulative Convertible Preferred Stock
4.1* Indenture dated as of April 17, 1997 among the Company, Consumers U.S. and The Bank of New York, as trustee
4.2* Form of Initial Notes (included in Exhibit 4.1)
4.3* Form of Exchange Notes (included in Exhibit 4.1)
4.4* Security Agreement dated as of April 17, 1997 among the Company, Bankers Trust Company, as agent under the
Revolving Credit Agreement
4.5* Assignment of Security Agreement dated as of April 17, 1997 among the Company, Bankers Trust Company, as assignor,
and The Bank of New York, as assignee and as trustee under the Indenture
4.6* Pledge Agreement dated as of April 17, 1997 among Consumers U.S. and The Bank of New York, as trustee under the
Indenture
4.7* Intercreditor Agreement dated as of February 5, 1997 among The Bank of New York, as Note Agent, and BT Commercial
Corporation, as Credit and Shared Collateral Agent
4.8* Amendment No. 1 to the Intercreditor Agreement, dated as of April 17, 1997 among The Bank of New York as Note
Agent, and BT Commercial Corporation, as Credit and Shared Collateral Agent
4.9* Registration Rights Agreement dated as of April 17, 1997 among the Company, Consumers U.S., BT Securities
Corporation and TD Securities (USA) Inc.
4.10** Indenture dated as of March 16, 1998 among the Company, Consumers U.S. and The Bank of New York, as trustee
4.11** Form of Initial Notes (included in Exhibit 4.10)
4.12** Form of Exchange Notes (included in Exhibit 4.10)
4.13** Registration Rights Agreement dated as of March 16, 1998 among the Company, TD Securities and BT Alex. Brown
10.1* Credit Agreement (the "Credit Agreement") dated as of February 5, 1997 among the Company, Bankers Trust Company,
as Issuing Bank, BT Commercial Corporation, as Agent and Co-Syndication Agent, PNC Bank, National Association, as
Co-Syndication Agent and Issuing Bank, and the various financial institutions party thereto
10.2* First Amendment to the Credit Agreement dated as of March 11, 1997 among the Company, Bankers Trust Company, BT
Commercial Corporation, and PNC Bank, National Association
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
--------- ----
<S> <C>
10.3* Second Amendment to the Credit Agreement dated as of April 9, 1997 among the Company,
Bankers Trust Company, BT Commercial Corporation, and PNC Bank, National Association
10.4* Third Amendment and Waiver to the Credit Agreement dated as of May 23, 1997 among the
Association, and the various financial institutions party to the Credit Agreement
10.5* Fourth Amendment to the Credit Agreement dated as of September 15, 1997 among the
Association and the various financial institutions part to the Credit Agreement
10.6* Assignment of Security Interest in U.S. Trademarks and Patents dated February 5, 1997
by the Company to BT Commercial Corporation, as Collateral Agent under the Credit
Agreement
10.7* Assignment of Security Interest in U.S. Copyrights dated February 5, 1997 by the Company
to BT Commercial Corporation, as Collateral Agent under the Credit Agreement
10.8* Guaranty dated February 5, 1997, by Consumers U.S. in favor of BT Commercial Corporation
and the other financial institutions party to the Credit Agreement Plan
10.9* Termination Agreement dated February 3, 1997 by and between Consumers Packaging Inc.,
the Company and the Pension Benefit Guaranty Corporation
10.10* Release Agreement among Old Anchor, the Company, the Official Committee of Unsecured
Creditors of Anchor Glass Container Corporation ("Old Anchor") and Vitro, Sociedad Anonima
10.11* Agreement (the "Vitro Agreement") dated as of December 18, 1996 between Old Anchor and
Consumers Packaging, Inc.
10.12* First Amendment to the Vitro Agreement dated as of February 4, 1997 among Vitro, Sociedad
Anonima, Consumers Packaging, Inc., on behalf of itself, and Consumers Packaging, Inc.
on behalf of the Company
10.13* Waiver Agreement dated as of February 5, 1997 by and between Old Anchor and Consumers
Packaging, Inc.
10.14* Assignment and Assumption Agreement dated as of February 5, 1997 by and between Consumers
Packaging, Inc.
10.15* Assignment and Assumption Agreement dated as of February 5, 1997 by and between Consumers
Packaging, Inc. and the Company relating to certain employee Benefit plans
10.16* Assignment and Assumption Agreement dated as of February 5, 1997 between Consumers
Packaging, Inc. and the Company relating to certain commitment letters
10.17* Bill of Sale, Assignment and Assumption Agreement dated as of February 5, 1997 by and
between Old Anchor and the Company
10.18* Assignment of Patent Property and Design Property from Old Anchor to the Company
10.19* Trademark Assignment from Old Anchor to the Company
10.20* Foreign Trademark Assignment from Old Anchor to the Company
10.21* Copyright Assignment from Old Anchor to the Company
10.22* Agreement dated as of February 5, 1997 between the Travelers Indemnity Company and its
Affiliates, including The Aetna Casualty and Surety Company and their Predecessors,
and the Company
10.23* Allocation Agreement dated as of February 5, 1997 between Consumers Packaging, Inc. and
Owens-Brockway Glass Container, Inc.
10.24* Supply Agreement dated as of February 5, 1997 by and between the Company and Owens-Brockway
Glass Container, Inc.
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
--------- ----
<S> <C>
10.25* Transition Agreement dated as of February 5, 1997 between Consumers Packaging, Inc., the Company and
Owens-Brockway Glass Container, Inc.
10.26+* Technical Assistance and License Agreement executed December 18, 1996 by Owens-Brockway Glass Container, Inc. and
Consumers Packaging, Inc.
10.27* Assurance Agreement (the "Assurance Agreement") dated as of February 5, 1997 among Owens-Brockway Glass Container,
Inc., Consumers Packaging, Inc., the Company, BT Commercial Corporation, Bankers Trust Company and The Bank of New
York
10.28* Letter agreement relating to Assurance Agreement dated April 17, 1997 addressed to Owens-Brockway Glass Container,
Inc. and signed by Bankers Trust Company and The Bank of New York
10.29* Intercompany Agreement dated as of April 17, 1997 among G&G Investments, Inc., Glenshaw Glass Company, Inc.,
Hillsboro Glass Company, I.M.T.E.C. Enterprises, Inc., Consumers Packaging, Inc., Consumers International, Inc.,
Consumers U.S., the Company, BT Securities Corporation and The Bank of New York, as trustee under the Indenture
10.30* Management Agreement dated as of February 5, 1997 by and between the Company and G&G Investments, Inc.
10.31* Anchor Glass Container Corporation/Key Executive Employee Retention Plan
10.32* Lease Agreement - Anchor Place at Fountain Square (the "Lease Agreement") dated March 31, 1988, by and between Old
Anchor and Fountain Associates I Ltd. Relating to the Company's headquarters in Tampa, Florida
10.33* First Amendment to Lease Agreement effective as of June 16, 1992, by and between Fountain Associates I Ltd. and
Old Anchor
10.34* Second Amendment to Lease Agreement effective as of September 30, 1993, by and between Fountain Associates I Ltd.
and Old Anchor
10.35* Third Amendment to Lease Agreement effective as of February 22, 1995, by and between Fountain Associates I Ltd.
and Old Anchor
10.36* Agreement dated as of March 31, 1996 by and between Fountain Associates I Ltd. Citicorp Leasing, Inc. and Old Anchor
10.37* Amended and Restated Agreement effective as of September 12, 1996, by and between Fountain Associates I Ltd.,
Citicorp Leasing Inc. and Old Anchor
10.38* Sixth Amendment to Lease and Second Amendment to Option Agreement dated as of February 5, 1997, by and between
Fountain Associates I Ltd., Citicorp Leasing, Inc. and Old Anchor
10.39* Building Option Agreement dated March 31, 1988, by and between Fountain Associates I, Ltd. and Old Anchor
10.40* First Amendment to Building Option Agreement effective as of June 16, 1992, by and between Fountain Associates I.
Ltd. and Old Anchor
10.41+* Supply Agreement effective as of June 17, 1996 between The Stroh Brewery Company and the Company
10.42 Supply Agreement between Bacardi International Limited and the Company (Withdrawn upon the request of the
registrant, the
Commission consenting thereto)
10.43* Warrant Agreement dated as of February 5, 1997 between the Company and Bankers Trust Company
10.44* Form of Warrant issued pursuant to the Warrant Agreement
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
--------- ----
<S> <C>
10.45 Rebate Agreement dated as of January 1, 1996 between Bacardi
International Limited and the Company (Withdrawn upon the
request of the registrant, the Commission consenting thereto)
10.46** Fifth Amendment to the Credit Agreement dated as of January 16,
1998 among the Association and the various financial
institutions part to the Credit Agreement
10.47** Sixth Amendment to the Credit Agreement dated as of March 11,
1998 among the Association and the various financial
institutions part to the Credit Agreement
11.1** Statement re: computation of per share earnings
12.1** Statement re: computation of ratio of earnings to fixed charges
for the period from February 5, 1997 to December 31, 1997
12.2** Statement re: computation of ratio of earning to fixed charges
for the years ended December 31, 1993, 1994, 1995 and 1996 and
the period from January 1, 1997 to February 4, 1997
21.1* List of subsidiaries of the Company
23.1** Consent of Independent Public Accountants
27.1** Financial Data Schedule of the Company (for SEC use only)
</TABLE>
- ------------------
+ Portions hereof have been omitted and filed separately with the Commission
pursuant to a request for confidential treatment in accordance with Rule 406 of
Regulation C.
* - Filed as an exhibit to the Company's Registration Statement on Form S-4
(Reg. No. 333-31363) originally filed with the Securities and Exchange
Commission on July 16, 1997 and incorporated herein by reference.
** - Filed herewith.
(b) Reports on Form 8-K
None
33
<PAGE> 34
INDEX TO FINANCIAL INFORMATION FOR ANCHOR
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Financial Statements of New Anchor:
Report of Independent Public Accountants F-2
Statement of Operations -
Period from February 5, 1997 to December 31, 1997 F-3
Balance Sheet-
December 31, 1997 F-4
Statement of Cash Flows -
Period from February 5, 1997 to December 31, 1997 F-6
Statement of Stockholders' Equity -
Period from February 5, 1997 to December 31, 1997 F-8
Notes to Financial Statements F-9
</TABLE>
F-1
<PAGE> 35
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Anchor Glass Container Corporation:
We have audited the accompanying balance sheet of Anchor Glass Container
Corporation (a Delaware corporation) as of December 31, 1997, and the related
statements of operations, stockholders' equity and cash flows for the period
from February 5, 1997 through December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Anchor Glass Container
Corporation as of December 31, 1997, and the results of its operations and its
cash flows for the period from February 5, 1997 to December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
February 25, 1998 (Except with respect to the
financing matter as discussed in
Note 14, as to which the date is
March 11, 1998)
F-2
<PAGE> 36
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF OPERATIONS
PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<S> <C>
Net sales ................................................................... $ 569,441
Costs and expenses:
Costs of products sold ................................................. 523,709
Selling and administrative expenses ................................... 25,120
-----------
Income from operations ...................................................... 20,612
Other expense, net .......................................................... (2,602)
Interest expense ............................................................ (18,281)
-----------
Loss before extraordinary item .............................................. (271)
Extraordinary item-
Write-off of deferred financing costs .................................. (11,200)
-----------
Net loss .................................................................... (11,471)
Preferred stock dividends ................................................... (11,302)
-----------
Loss applicable to common stock ............................................. $ (22,773)
===========
Basic net loss per share applicable to common stock before extraordinary item $ (3.62)
===========
Basic net loss per share applicable to common stock ......................... $ (7.11)
===========
Basic weighted average number of common shares outstanding .................. 3,201,148
===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 37
ANCHOR GLASS CONTAINER CORPORATION
BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
Assets
<TABLE>
<CAPTION>
<S> <C>
Current assets:
Cash and cash equivalents...................................................... $ 1,060
Accounts receivable, less allowance for doubtful accounts of $2,025............ 56,940
Inventories -
Raw materials and manufacturing supplies.................................. 23,303
Finished products......................................................... 96,820
Other current assets .......................................................... 8,082
--------
Total current assets................................................. 186,205
- ----------------------------------------------------------------------------------------
Property, plant and equipment:
Land ..................................................................... 7,769
Buildings................................................................. 63,438
Machinery, equipment and molds............................................ 297,317
Less accumulated depreciation............................................. (43,653)
--------
324,871
- ----------------------------------------------------------------------------------------
Other assets................................................................... 25,975
Strategic alliance with customers, net of accumulated amortization of $811..... 34,714
Goodwill, net of accumulated amortization of $2,857............................ 55,803
---------
$ 627,568
=========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 38
ANCHOR GLASS CONTAINER CORPORATION
BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- ---------------------------------------------------------------------------------------------
<S> <C>
Current liabilities:
Revolving credit facility ................................................... $ 10,468
Current maturities of long term-debt ........................................ 567
Accounts payable ............................................................ 63,796
Accrued expenses ............................................................ 64,075
Accrued interest ............................................................ 4,576
Accrued compensation and employee benefits .................................. 25,185
-----------
Total current liabilities .............................................. 168,667
- ---------------------------------------------------------------------------------------------
Long-term debt .............................................................. 152,758
Long-term pension liabilities ............................................... 48,826
Long-term post retirement liabilities ....................................... 57,900
Other long-term liabilities ................................................. 57,522
-----------
317,006
Commitments and contingencies
- ---------------------------------------------------------------------------------------------
Redeemable preferred stock, Series A, $.01 par value; authorized
2,239,320 shares; issued and outstanding 2,239,320 shares;
$25 liquidation and redemption value ..................................... 55,983
-----------
Stockholders' equity:
Preferred stock, Series B, $.01 par value; authorized 5,000,000 shares;
issued and outstanding 3,360,000 shares; $25 liquidation and
redemption value ......................................................... 34
Issuable preferred stock, 249,600 shares at $25 per share ................ 6,240
Common stock, $.10 par value; authorized 50,000,000 shares;
Class A, issued and outstanding 490,898 shares ........................ 49
Class B, issued and outstanding 902,615 shares ........................ 90
Class C, none issued and outstanding .................................. --
Warrants, Class C Common stock, issued and outstanding 2,107,843 shares ..... 10,518
Capital in excess of par value .............................................. 92,294
Accumulated deficit ......................................................... (22,773)
Additional minimum pension liability ........................................ (540)
-----------
85,912
-----------
$ 627,568
===========
</TABLE>
F-5
<PAGE> 39
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss ............................................................... $ (11,471)
Extraordinary item ..................................................... 11,200
Adjustments to reconcile loss before extraordinary item
to net cash provided by operating activities:
Depreciation and amortization ................................ 51,132
Other ........................................................ 3,101
Decrease in cash resulting from changes
in assets and liabilities .......................................... (28,479)
-----------
25,483
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of assets and assumption of liabilities of Old Anchor ......... (200,470)
Expenditures for property, plant and equipment ......................... (40,519)
Payment of stategic alliance with customers ............................ (6,000)
Acquisition related contribution to defined benefit pension plans ...... (9,056)
Other .................................................................. (1,210)
-----------
(257,255)
- ---------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ............................... 280,000
Principal payments of long-term debt ................................... (130,278)
Proceeds from issuance of preferred stock .............................. 84,000
Proceeds from issuance of common stock ................................. 1,000
Net draws on revolving credit facility ................................. 10,468
Other, primarily financing fees ........................................ (12,358)
-----------
232,832
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents:
Increase in cash and cash equivalents .................................. 1,060
Balance, beginning of period ........................................... -
-----------
Balance, end of period ................................................. $ 1,060
===========
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 40
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF CASH FLOWS
PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(continued)
<TABLE>
<S> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ............................................................... $ 11,702
=========
Income tax payments (refunds), net ..................................... $ -
=========
Equipment financing ......................................................... $ 1,115
=========
Increase (decrease) in cash resulting from changes in assets and liabilities:
Accounts receivable .................................................... $ (9,635)
Inventories ............................................................ (1,241)
Other current assets ................................................... (620)
Accounts payable, accrued expenses and other current liabilities ....... (17,495)
Other, net ............................................................. 512
---------
$ (28,479)
=========
</TABLE>
Supplemental noncash activities:
In connection with the Anchor Acquisition, the Company issued $46,983 face
amount of Series A Preferred Stock and $2,454 of Class A Common Stock and
incurred $1,500 of fees. In connection with the Anchor Loan Facility, the
Company issued 1,405,229 warrants to the lenders valued at $7,012.
<TABLE>
<CAPTION>
Anchor Acquisition:
<S> <C>
Fair value of assets acquired .......................................... $ 525,500
Acquisition costs accrued .............................................. (62,500)
Goodwill ............................................................... 59,000
Purchase price ......................................................... (250,000)
---------
Liabilities assumed .................................................... $ 272,000
=========
</TABLE>
In February 1997, the Company contributed $9,000 face amount of Series
A Preferred Stock to the Company's defined benefit pensions plans.
In connection with the issuance of the First Mortgage Notes, the
Company issued 702,615 shares of Class B Common Stock to Consumers and 702,614
warrants valued at $3,506 to the initial purchasers of the First Mortgage Notes.
Also, with the issuance of the First Mortgage Notes, the Company recorded an
extraordinary loss for the write-off of deferred financing fees of the Anchor
Loan Facility.
The Company considers short-term investments with original maturities
of ninety days or less at the date of purchase to be classified as cash
equivalents.
F-7
<PAGE> 41
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(dollars in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Series B Class A Class B Issuable Capital Accumu-
Preferred Common Common Preferred In-Excess lated
Stock Stock Stock Stock Warrants of Par Deficit
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 5, 1997 $ - $ - $ - $ - $ - $ - $ -
Issuance of 3,360,000 shares of
Series B Preferred Stock to
Consumers U.S. ................ 34 - - - - 83,966 -
Issuance of 200,000 shares of
Class B Common Stock to
Consumers U.S. ................ - - 20 - - 2,480 -
Issuance of 490,898 shares of
Class A Common Stock to
creditors of Old Anchor ....... - 49 - - - 2,405 -
Issuance of 1,405,229 warrants
to purchase Class C Common
Stock in conjunction with the
financing of Anchor Loan
Facility ...................... - - - - 7,012 - -
Issuance of 702,615 shares of
Class B Common Stock to
Consumers U.S. in conjuction
with the financing of the Notes - - 70 - - 3,443 -
Issuance of 702,614 warrants to
purchase Class C Common
Stock in conjunction with the
financing of the Notes ........ - - - - 3,506 - -
Pay-in-kind dividends payable
to Consumers U.S. on Series B
Preferred Stock ............... - - - 6,240 - - (6,240)
Dividends accrued on Series A
Preferred Stock ............... - - - - - - (5,062)
Net loss ...................... - - - - - - (11,471)
Amount related to minimum
pension liability ............. - - - - - - -
-------------------------------------------------------------------
Balance, December 31, 1997 ......... $34 $49 $90 $6,240 $10,518 $92,294 $(22,773)
===================================================================
<CAPTION>
---------------------------------
Minimum Total
Pension Stockholders'
Liability Equity
---------------------------------
<S> <C> <C>
Balance, February 5, 1997 $ - $ -
Issuance of 3,360,000 shares of
Series B Preferred Stock to
Consumers U.S. ................ - 84,000
Issuance of 200,000 shares of
Class B Common Stock to
Consumers U.S. ................ - 2,500
Issuance of 490,898 shares of
Class A Common Stock to
creditors of Old Anchor ....... - 2,454
Issuance of 1,405,229 warrants
to purchase Class C Common
Stock in conjunction with the
financing of Anchor Loan
Facility ...................... - 7,012
Issuance of 702,615 shares of
Class B Common Stock to
Consumers U.S. in conjuction
with the financing of the Notes - 3,513
Issuance of 702,614 warrants to
purchase Class C Common
Stock in conjunction with the
financing of the Notes ........ - 3,506
Pay-in-kind dividends payable
to Consumers U.S. on Series B
Preferred Stock ............... - -
Dividends accrued on Series A
Preferred Stock ............... - (5,062)
Net loss ...................... - (11,471)
Amount related to minimum
pension liability ............. (540) (540)
-------------------
Balance, December 31, 1997 ......... $(540) $ 85,912
===================
</TABLE>
F-8
<PAGE> 42
ANCHOR GLASS CONTAINER CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM FEBRUARY 5, 1997 TO DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
NOTE 1 - PURCHASE OF ASSETS
Anchor Glass Acquisition Corporation (the "Company"), a Delaware corporation and
a majority-owned subsidiary of Consumers Packaging Inc. ("Consumers"), was
formed in January 1997 to acquire certain assets and assume certain liabilities
of Anchor Glass Container Corporation ("Old Anchor"), now Anchor Resolution
Corp.
On February 5, 1997, pursuant to an Asset Purchase Agreement dated December 18,
1996, as amended (the "Asset Purchase Agreement"), among Consumers,
Owens-Brockway Glass Container Inc. ("Owens") and Old Anchor, the Company (the
rights and obligations of Consumers having been assigned to the Company) and
Owens acquired substantially all of the assets of, and assumed certain
liabilities, of Old Anchor.
The Company purchased eleven operating glass container manufacturing facilities
and other related assets (the "Anchor Acquisition"). Owens purchased assets and
assumed liabilities of Old Anchor's Antioch and Hayward, California facilities
and purchased certain other existing inventories. Owens also purchased Old
Anchor's investment in Rocky Mountain Bottle Company, a joint venture with Coors
Brewing Company ("Coors"), and assumed Old Anchor's agreement to manufacture
Coors' glass packaging products in the United States.
The total purchase price approximated $378,000, excluding fees of approximately
$1,500 which were paid by Consumers and recorded as capital in excess of par by
the Company. The portion of the purchase price paid in cash by Owens amounted to
approximately $128,000. The remaining purchase price of approximately $250,000
from the Company was comprised of: approximately $200,500 in cash, $47,000 face
amount (1,879,320 shares) of mandatorily redeemable 10% cumulative convertible
preferred stock ("Series A Preferred Stock") and $2,500 of common stock (490,898
shares with an estimated value of $5.00 per share) (the "Class A Common Stock")
of the Company.
The purchase price paid by the Company is subject to adjustment. On June 13,
1997, Old Anchor delivered to the Company the closing balance sheet which
indicated that Old Anchor believed that is was entitled to additional payments
from the Company and Owens totaling approximately $76,300. On July 28, 1997, the
Company delivered its notice of disagreement to Old Anchor, which requested a
reduction of the purchase price of approximately $96,800. Since that time, the
parties have been negotiating the amount of the adjustment, and have reached a
proposed settlement (the "Proposed Settlement"). The Proposed Settlement
requires the payment by the Company to Old Anchor of an additional $1,000 in
cash and the issuance of 1,225,000 warrants for the purchase of additional
shares of common stock, together valued at approximately $7,100, recorded as an
adjustment to goodwill. In addition, the Company will issue 525,000 warrants to
purchase additional shares of common stock to an affiliate of Consumers U.S.,
valued at approximately $2,600 which has been recorded as an expense. None of
the warrants to be issued will require any payment upon exercise. The effect of
the Proposed Settlement has been reflected in the financial statements for the
period ended December 31, 1997. The Proposed Settlement is subject to final
approval by the Company, Old Anchor and the bankruptcy court.
The Company obtained the cash portion of the purchase price principally from an
$85,000 cash investment by Consumers in $84,000 face amount (3,360,000 shares)
of redeemable 8% cumulative
F-9
<PAGE> 43
convertible preferred stock (the "Series B Preferred Stock") and $1,000 of
common stock (200,000 shares) (the "Class B Common Stock") and a $130,000 bank
loan.
Upon consummation of the purchase and effective February 6, 1997, the Company
changed its name to Anchor Glass Container Corporation.
The Anchor Acquisition is accounted for by using the purchase method, with the
purchase price being allocated to the assets acquired and preacquisition
liabilities assumed based on their estimated fair value at the date of
acquisition. These allocations are based on appraisals, evaluations, estimations
and other studies. Certain acquisition costs and fees, including the costs of
closing and consolidating certain facilities have also been recorded by the
Company at the date of acquisition.. The excess of the purchase price over the
fair value of net asset purchased of approximately $58,660 is classified as
Goodwill on the accompanying balance sheet.
The estimated values of assets acquired and liabilities assumed as of February
5, 1997 after giving effect to the to the Anchor Acquisition and consideration
paid is as follows:
<TABLE>
<S> <C>
Accounts receivable...................................................... $ 46,000
Inventories.............................................................. 119,000
Property, plant and equipment............................................ 327,000
Goodwill................................................................. 59,000
Other assets............................................................. 32,000
Current liabilities...................................................... (149,000)
Long-term debt........................................................... (2,000)
Other long-term liabilities ............................................. (182,000)
---------
$ 250,000
=========
</TABLE>
The following unaudited pro forma results of operations for the Company for the
year ended December 31, 1997 assumes the Anchor Acquisition occurred on January
1, 1997 (dollars in thousands except per share data):
<TABLE>
<S> <C>
Net sales................................................................$623,518
Loss before extraordinary item........................................... (12,502)
Net loss................................................................. (23,702)
Loss before extraordinary item applicable to common stock................ (24,985)
Loss applicable to common stock.......................................... (36,185)
Basic net loss per share before extraordinary item applicable to
common stock......................................................... (7.13)
Basic net loss per share applicable to common stock..................... (10.33)
</TABLE>
These pro forma amounts represent historical operating results with appropriate
adjustments of the Anchor Acquisition which would give effect to interest
expense and the impact of purchase price adjustments to depreciation and
amortization expense. These pro forma amounts do not purport to be indicative of
the results that would have actually been obtained had the Anchor Acquisition
been completed as of January 1, 1997, or that may be obtained in the future.
On January 9, 1997, the Pension Benefit Guaranty Corporation ("PBGC") notified
Old Anchor that it intended to institute involuntary termination proceedings
with respect to the three defined benefit pension plans then maintained by Old
Anchor, and currently maintained by the Company. However, the PBGC reached an
agreement with Vitro, S.A., the parent of Old Anchor, in which Vitro, S.A.
agreed to provide a limited guaranty to the PBGC with respect to the unfunded
benefit liabilities of the Company's defined benefit plans, if the plans, or any
one of them, are terminated before August 1, 2006. Consequently, the PBGC agreed
not to terminate the plans as a result of the Asset Purchase Agreement and the
assumption of the plans by the Company. In conjunction with the purchase, the
Company assumed all liabilities of the plans and funded $9,056 of plan
contributions,
F-10
<PAGE> 44
previously unfunded following Old Anchor's filing of Chapter 11. Additionally,
the Company issued to the plans $9,000 face amount (360,000 shares) of Series A
Preferred Stock.
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of clear,
amber, green and other color glass containers of various types, designs and
sizes to customers principally in the beer, food, iced tea, distilled spirits
and soft drink industries. The Company markets its products throughout the
United States. The Company's international and export sales are insignificant.
Sales to The Stroh Brewery Company represented approximately 15.6% of total net
sales for the period ended December 31, 1997. Revenues are recognized as product
is shipped to customers. The loss of a significant customer, unless replaced,
could have a material adverse effect on the Company's business.
Inventories
Inventories are stated at the lower of cost or market. The cost of substantially
all inventories of raw materials and semi-finished and finished products is
determined on the first-in, first-out method. Manufacturing supplies and certain
other inventories are valued at weighted average costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments and
furnace rebuilds which extend useful lives, and expenditures for glass forming
machine molds are capitalized and depreciated using the straight-line method
over the estimated useful lives of the assets for financial statement purposes
while accelerated depreciation methods are principally used for tax purposes.
Generally, annual depreciation rates range from 2.5% for buildings, 6.3% to 20%
for machinery and equipment and 40% for molds. Furnace and machine rebuilds,
which are recurring in nature and which extend the lives of the related assets,
are capitalized and depreciated over the period of extension, generally at rates
of 20% to 25%, based on the type and extent of these rebuilds. Depreciation of
leased property recorded as capital assets is computed on a straight-line basis
over the estimated useful lives of the assets. Maintenance and repairs are
charged directly to expense as incurred.
Strategic Alliance with Customers
The Company has entered into long-term agreements with several customers.
Payments made or to be made to these customers are being amortized as a
component of net sales on the statement of operations over the term of the
related supply contract, which range between 11 and 15 years, based upon
shipments.
In September 1997, Hillsboro Glass Company ("Hillsboro"), a glass-manufacturing
plant owned by G&G Investments, Inc. ("G&G") (the majority owner of Consumers),
discontinued manufacturing. All of Hillsboro's rights and obligations to fill
orders under a supply contract between Consumers and one of its major customers
was purchased by Consumers and the Company effective December 31, 1997. The
purchase price of the Company's portion of this contract approximates $12,500,
the majority of which will be paid in 1998.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair
value of net assets acquired and is amortized on a straight line basis over a
twenty year period. Amortization expense for the period ended December 31, 1997
was $2,857.
F-11
<PAGE> 45
Income Taxes
The Company applied Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes ("SFAS 109") which establishes financial accounting
and reporting standards for the effects of income taxes which result from a
company's activities during the current and preceding years.
Retirement Plans
The Company has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974 and the Retirement Protection Act of 1994, which requires
the Company to make significant additional contributions into its underfunded
defined benefit plans.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 - Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106") requires accrual of
postretirement benefits (such as healthcare benefits) during the period that an
employee provides service. This accounting method has no effect on the Company's
cash outlays for these postretirement benefits.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 - Disclosures about Fair
Value of Financial Instruments requires disclosure of the estimated fair values
of certain financial instruments. The estimated fair value amounts have been
determined using available market information or other appropriate valuation
methodologies that require considerable judgment in interpreting market data and
developing estimates. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. As the long-term debt has not been registered or traded in an
established trading market, and the debt was issued during the current period,
the Company has estimated the fair value of the debt to be the carrying value.
The carrying amount of other financial instruments approximate their estimated
fair values.
The fair value information presented herein is based on information available to
management as of December 31, 1997. Although management is not aware of any
factors that would significantly affect the estimated value amounts, such
amounts have not been comprehensively revalued for purposes of these financial
statements since that date and, therefore, the current estimates of fair value
may differ significantly from the amounts presented herein.
From time to time, the Company may enter into interest rate swap agreements that
effectively hedge interest rate exposure. The net cash amount paid or received
on these agreements are accrued and recognized as an adjustment to interest
expense.
Earnings per share
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" ("SFAS 128") which is effective for all periods ending
after December 15, 1997. SFAS 128 sets forth requirements for computing basic
and diluted earnings per share. Basic income (loss) per common share is computed
by dividing net income (loss) applicable to common stock by the weighted-average
number of common shares and contingently issuable shares outstanding during the
period. Warrants outstanding are contingently issuable shares as they are
issuable for no additional consideration and the conditions necessary for share
exercise have been met. There is no
F-12
<PAGE> 46
diluted earnings per share presented as the assumed conversion of preferred
stock would be anti-dilutive.
The computation of basic loss per share is as follows (dollars in thousands,
except per share):
<TABLE>
<S> <C>
Basic net loss per share
Net loss applicable to common stock........................ $ (22,773)
Divided by
Weighted average shares outstanding, plus.............. 1,242,344
Weighted average warrants outstanding.................. 1,958,804
-----------
3,201,148
----------
Basic net loss per share................................... $ (7.11)
==========
</TABLE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
NOTE 3- REVOLVING CREDIT FACILITY
In conjunction with the Anchor Acquisition, the Company entered into a credit
agreement dated as of February 5, 1997, with Bankers Trust Company ("BTCo") as
issuing bank and BT Commercial Corporation, as agent, to provide a $110,000
senior secured revolving credit facility (the "Revolving Credit Facility"). The
Revolving Credit Facility enables the Company to obtain revolving credit loans
for working capital purposes and the issuance of letters of credit for its
account in an aggregate amount not to exceed $110,000. Advances outstanding at
any one time can not exceed an amount equal to the borrowing base as defined in
the Revolving Credit Facility.
Revolving credit loans bear interest at a rate based upon, at the Company's
option, (i) the higher of the prime rate of BTCo, 0.5% in excess of the
overnight federal funds rate and 0.5% in excess of the adjusted certificate of
deposit rate, as defined, each plus a defined margin, or (ii) the average of the
offering rates of banks in the New York interbank Eurodollar market, plus a
defined margin. Interest is payable monthly. A commitment fee of 0.5% on the
unused portion of the facility and letter of credit fees, as defined, are
payable quarterly. The Revolving Credit Facility expires February 5, 2002.
At December 31, 1997, advances outstanding under the Revolving Credit Facility
were $10,468 and the borrowing availability was $52,497. The total outstanding
letters of credit on this facility were $12,788. At December 31, 1997, the
weighted average interest rate on borrowings outstanding was 8.4%.
The Company's obligations under the Revolving Credit Facility are secured by a
first priority lien on substantially all of the Company's inventories and
accounts receivable and related collateral and a second priority pledge of all
of the Series B Preferred Stock and the Class B Common Stock. In addition, the
Company's obligations under the Revolving Credit Facility are guaranteed by
Consumers U.S., Inc., ("Consumers U.S.") the Company's parent and a wholly-owned
indirect subsidiary of Consumers and the holder of the outstanding Series B
Preferred Stock and Class B Common Stock.
The Revolving Credit Facility contains certain covenants that restrict the
Company from taking various actions, including, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
making of investments, the payment of dividends and other restricted payments,
mergers, acquisitions and other fundamental corporate changes, capital
F-13
<PAGE> 47
expenditures, operating lease payments and transactions with affiliates. The
Revolving Credit Facility also contains certain financial covenants that require
the Company to meet and maintain certain financial tests and minimum ratios,
including a minimum working capital ratio, a minimum consolidated net worth test
and a minimum interest coverage ratio.
NOTE 4 - LONG-TERM DEBT
Long-term debt at December 31, 1997 consists of the following:
<TABLE>
<S> <C>
$ 150,000 First Mortgage Notes, interest at 11.25% due 2005........ $ 150,000
Other.............................................................. 3,325
---------
153,325
Less current maturities............................................ 567
---------
$ 152,758
=========
</TABLE>
In connection with the Anchor Acquisition, the Company entered into a Senior
Credit Agreement, dated as of February 5, 1997, with BTCo, as agent, to provide
a $130,000 bank loan (the "Anchor Loan Facility"). The Anchor Loan Facility was
repaid in full from the net proceeds of the issuance of the $150,000 11.25%
First Mortgage Notes, due 2005, (the " First Mortgage Notes"). The Anchor Loan
Facility bore interest at a rate of 12.50%.
As additional consideration in providing the Anchor Loan Facility, the Company
issued to BT Securities Corporation and TD Securities, 1,405,229 warrants
convertible to Class C Common Stock. The warrants are valued at approximately
$7,000. As a result of the refinancing of the Anchor Loan Facility, deferred
financing fees of $11,200 were written off as an extraordinary loss in the
second quarter of 1997.
Effective April 17, 1997, the Company completed an offering of the First
Mortgage Notes, issued under an indenture dated as of April 17, 1997 (the
"Indenture"), among the Company, Consumers U.S. and The Bank of New York, as
Trustee. The First Mortgage Notes are senior secured obligations of the Company,
ranking senior in right of payment to all existing and future subordinate
indebtedness of the Company and pari passu with all existing and future senior
indebtedness of the Company. The First Mortgage Notes are guaranteed by
Consumers U.S. Proceeds from the issuance of the First Mortgage Notes, net of
fees, were approximately $144,000 and were used to repay $130,000 outstanding
under the Anchor Loan Facility and $8,800 of advances outstanding under the
Revolving Credit Facility, with the balance used for general corporate purposes.
Interest on the First Mortgage Notes accrues at 11.25% per annum and is payable
semiannually on each April 1 and October 1 to registered holders of the First
Mortgage Notes at the close of business on the March 15 and September 15
immediately preceding the applicable interest payment date. The Company entered
into a Registration Rights Agreement on April 17, 1997. Pursuant to this
agreement, additional interest in an amount of up to 1.5% per annum accrues on
the First Mortgage Notes under certain conditions. As a result of the Company's
failure to have an exchange offer registration statement declared effective on
or prior to October 14, 1997, additional interest in the amount of 0.5% accrued
from October 14, 1997. Due to the Company's failure to have exchanged all First
Mortgage Notes tendered in accordance with the terms of the exchange offer on or
prior to November 28, 1997, additional interest increased to 1.0%. Additional
interest increased to 1.5% on January 13, 1998 and accrued to February 11, 1998
when it was reduced to 0.5%.
The First Mortgage Notes are redeemable, in whole or in part, at the Company's
option on or after April 1, 2001, at redemption prices defined in the Indenture.
The Indenture provides that upon the occurrence of a change in control, the
Company will be required to offer to repurchase all of the First Mortgage Notes
at a purchase price in cash equal to 101% of the principal amount plus interest
accrued to the date of purchase. Prior to the sale of the First Mortgage Notes,
the Company entered into an interest rate swap agreement to partially protect
the Company from interest rate fluctuations
F-14
<PAGE> 48
until such time as the fixed interest rate on the First Mortgage Notes was
established. The agreement was terminated concurrent with interest rate of the
First Mortgage Notes being set. The realized gain on the agreement,
approximately $1,900, has been deferred and is being amortized over the term of
the First Mortgage Notes.
All of the obligations of the Company under the First Mortgage Notes and the
Indenture are secured by a first priority perfected security interest in
substantially all of the existing and future real property, personal property
and other assets of the Company and a first priority perfected security interest
in collateral ranking pari passu with the security interest in favor of the
Revolving Credit Facility.
The Indenture, subject to certain exceptions, restricts the Company from taking
various actions, including, but not limited to, subject to specified exceptions,
the incurrence of additional indebtedness, the granting of additional liens, the
payment of dividends and other restricted payments, mergers, acquisitions and
transactions with affiliates.
All of the Company's debt agreements contain cross-default provisions.
Principal payments required on long-term debt are $567 in 1998, $291 in 1999,
$297 in 2000, $303 in 2001 and $300 in 2002. Payments to be made in 2003 and
thereafter are $151,567.
In connection with the issuance of the First Mortgage Notes on April 17, 1997,
the Company issued 702,615 shares of Class B Common Stock to Consumers and
702,614 warrants, valued at $5.00 for each share and warrant, to the initial
purchasers.
NOTE 5 - REDEEMABLE PREFERRED STOCK
The Company has designated 2,239,320 shares as Series A Preferred Stock and
5,000,000 shares as Series B Preferred Stock. The Series A Preferred Stock
ranks, as to dividends and redemption and upon liquidation, prior to all other
classes and series of capital stock of the Company. The holders of Series A
Preferred Stock are entitled to receive, when and as declared by the Board of
Directors of the Company, cumulative dividends, payable quarterly in cash, at an
annual rate of 10%. Holders of Series A Preferred Stock are not entitled to
vote, except as defined in its Certificate of Designation.
No dividends have been declared or paid as of December 31, 1997.
The Company is required to redeem all outstanding shares of the Series A
Preferred Stock on January 31, 2009, and, on or after February 5, 2000, may, at
its option, redeem outstanding shares of Series A Preferred Stock at a price of
$25.00 per share, if the trading price of the common stock equals or exceeds
$6.00 per share. Shares of Series A Preferred Stock are convertible into shares
of Class A Common Stock, at the option of the holder, at a ratio determined by
dividing the liquidation value of the Series A Preferred Stock by $6.00 and such
ratio is subject to adjustment from time to time.
Pursuant to the Asset Purchase Agreement, the Company is obligated to register
all of the shares of the Class A Common Stock and Series A Preferred Stock under
the Securities Exchange Act and to qualify the shares for listing on a
nationally recognized United States securities exchange or on The NASDAQ Stock
Market's National Market.
The Series B Preferred Stock ranks, as to dividends and redemption and upon
liquidation, junior to the Series A Preferred Stock but senior to all other
classes and series of capital stock of the Company. The holders of Series B
Preferred Stock are entitled to receive cumulative dividends, payable quarterly
at an annual rate of 8%. During the period from February 5, 1997 through and
including December 31, 1999, the dividend is payable in additional shares of
Series B Preferred Stock. Thereafter, the dividends will be payable in cash when
and as declared by the Board of Directors. Holders of Series B Preferred Stock
are not entitled to vote, except as defined in its Certificate of Designation.
F-15
<PAGE> 49
Shares of Series B Preferred Stock are not subject to mandatory redemption. On
or after February 5, 2000, the Company may, at its option, redeem outstanding
shares of Series B Preferred Stock at a price of $25.00 per share, if the
trading price of the common stock equals or exceeds $5.50 per share. Shares of
Series B Preferred Stock are convertible into shares of Class B Common Stock, at
the option of the holder, at a ratio determined by dividing the liquidation
value of the Series A Preferred Stock by $5.50 and such ratio is subject to
adjustment from time to time.
NOTE 6 - COMMON STOCK
For the period from February 5, 1997 to February 5, 2000, the common stock is
divided into three classes, Class A and Class B, which are voting, and Class C,
which is non-voting. During this period, the number of Directors of the Company
is fixed at nine, with the holders of the Class A shares having the right to
elect four Directors and the holders of the Class B shares having the right to
elect five Directors. In connection with the settlement of the issues
surrounding the adjustment to the purchase price paid by the Company, it is
expected that the certificate of incorporation of the Company will be amended to
increase the number of directors to be elected by the holders of Class B Common
Stock. Holders of the Class C shares do not participate in the election of
Directors. On February 5, 2000, the three classes of common stock will
automatically be consolidated into one single class of common stock with
identical rights. The Company currently has outstanding warrants exercisable for
2,107,843 shares of Class C Common Stock at an exercise price of $.10 per share,
which has already been deemed paid.
NOTE 7 - RELATED PARTY INFORMATION
G&G Investments, Inc.
The Company is party to a management agreement with G&G, in which G&G is to
provide specified managerial services for the Company. For these services, G&G
is entitled to receive an annual management fee of $3,000 and reimbursement of
its out-of-pocket costs. The terms of Revolving Credit Facility and the
Indenture limit the management fee annual payment to $1,500 unless certain
financial maintenance tests are met. The Company has recorded an expense of
$2,750 for this agreement for the period ended December 31, 1997 of which $975
has been paid.
Other affiliates
Related party transactions with Consumers and its affiliates for the period from
February 5, 1997 to December 31, 1997 are summarized as follows:
<TABLE>
<S> <C>
Purchases of inventory and other................................ $ 5,201
Payable for inventory and other................................. 1,283
Sales of inventory and other.................................... 20,314
Receivable from sales of inventory and other.................... 5,791
</TABLE>
All transaction with Consumers and its affiliates are conducted on terms which,
in the opinion of management, are no less favorable than with third parties.
The Company participates in the Director and Employee Incentive Stock Option
Plan, 1996 of Consumers. Options to purchase 1,216,500 shares of Consumer's
common stock, at exercise prices that range from $9.65 to $13.50 (Canadian
dollars), were granted to all salaried employees of the Company in 1997. The
Company has not adopted Statement of Financial Accounting Standards No. 123 -
Accounting for Stock-Based Compensation ("SFAS 123"). Had the Company adopted
SFAS 123, the 1997 effect on compensation would be immaterial.
F-16
<PAGE> 50
NOTE 8 - PENSION PLANS
As part of the Anchor Acquisition, the Company assumed the pension plans
previously maintained by Old Anchor. The Company has defined benefit retirement
plans for salaried and hourly-paid employees. Benefits are calculated on a
salary-based formula for salaried plans and on a service-based formula for
hourly plans. Pension costs for the period from February 5, 1997 to December 31,
1997 are summarized below.
<TABLE>
<S> <C>
Service cost-benefits earned during the year.................... $ 3,934
Interest cost on projected benefit obligation................... 28,219
Return on plan assets........................................... (29,087)
--------
Total pension cost............................................ $ 3,066
========
</TABLE>
The Company has substantial unfunded obligations related to its employee pension
plans. The Retirement Protection Act of 1994 requires the Company to make
significant additional funding contributions into its underfunded defined
benefit retirement plans and will increase the premiums paid to the PBGC.
Excluding payments made as part of the Anchor Acquisition, the Company funded
required contributions of approximately, $20,000 in 1997.
As an objection to the sale, the PBGC entered a determination to terminate Old
Anchor's qualified defined benefit pension plans. However, in conjunction with
the sale, the Company assumed all liabilities of the plans and funded $9,056 of
plan contributions, previously unfunded following Old Anchor's filing of Chapter
11. Additionally, the Company issued $9,000 face amount of Series A Preferred
Stock and Vitro, the parent of Old Anchor, has guaranteed to fund certain
qualified defined benefit plan obligations, should the Company default on its
obligations. Consequently, the PBGC agreed not to terminate the plans as a
result of the Agreement and the assumption of the plans by the Company.
The Company also sponsors two defined contribution plans covering substantially
all salaried and hourly employees. In 1994, the salaried retirement and savings
programs were changed, resulting in the freezing of benefits under the defined
benefit pension plans for salaried employees and amending the defined
contribution savings plan for salaried employees. Under the amended savings
plan, the Company matches employees' basic contributions to the plan in an
amount equal to 150% of the first 4% of an employee's compensation. Expenses
under the savings programs for the period from February 5, 1997 to December 31,
1997 were approximately $2,000.
The funded status of the Company's pension plans at December 31, 1997 is as
follows:
<TABLE>
<CAPTION>
Accumulated Assets Exceed
Benefits Accumulated
Exceed Assets Benefits
------------- --------
<S> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested benefit obligation........................... $ 314,427 $ 114,381
========= =========
Accumulated benefit obligation...................... $ 325,349 $ 114,381
========= =========
Projected benefit obligation........................ 325,349 114,381
Plan assets at fair value................................ 270,157 131,631
--------- ---------
Projected benefit obligation in excess of (less than)
plan assets........................................ 55,192 (17,250)
Amounts not recognized -
Subsequent gains.................................... 4,651 5,693
Additional minimum liability............................. 540 --
--------- ---------
Accrued (prepaid) pension cost........................... $ 60,383 $ (11,557)
========= =========
</TABLE>
Plan assets are held by an independent trustee and consist primarily of
investments in equities, fixed income and government securities. There is
currently no public market for the Series A Preferred Stock and no dividends
have been paid during the current year. The Company has received a
F-17
<PAGE> 51
valuation of the contributed Series A Preferred Stock in the fourth quarter of
1997. Based upon this valuation, the Company will be required to contribute
approximately $745 to bring the total value of the Series A Preferred Stock
contribution up to the $9,000 contributed value.
Significant assumptions used in determining net pension cost and related pension
obligations for the benefit plans for 1997 are as follows:
<TABLE>
<S> <C>
Discount rate........................................... 7.25 %
Expected long-term rate of return
on plan assets...................................... 9.0
</TABLE>
NOTE 9 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides benefits to substantially all salaried, and certain hourly
employees under several plans. SFAS 106 requires accrual of postretirement
benefits (such as healthcare benefits) during the years an employee provides
services. Currently, the Company funds these healthcare benefits on a
pay-as-you-go basis. The Company also contributes to a multi-employer trust, and
under the requirements of SFAS 106, recognizes as postretirement benefit cost
the required annual contribution. The Company's cash flows are not affected by
implementation of SFAS 106.
The accumulated postretirement benefit obligation at December 31, 1997 is as
follows:
<TABLE>
<S> <C>
Retirees..................................................... $ 39,882
Eligible plan participants................................... 9,186
Other active plan participants............................... 12,054
--------
61,122
Unrecognized gain............................................ 568
--------
Accrued postretirement benefit costs (including $3,790 in
current liabilities)...................................... $ 61,690
========
</TABLE>
Net postretirement benefit costs for the period from February 5, 1997 to
December 31, 1997 consist of the following components:
<TABLE>
<S> <C>
Service cost - benefits earned during the year..................$ 755
Interest cost on accumulated postretirement
benefit obligation.......................................... 3,855
--------
$ 4,610
========
</TABLE>
The assumed healthcare cost trend used in measuring the accumulated
postretirement benefit obligation as of December 31, 1997 was 8.5% declining
gradually to 5.5% by the year 2003, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated post-retirement benefit obligation as of
December 31, 1997 by approximately 11% and the net postretirement healthcare
cost for the period ended December 31, 1997 by approximately 12%. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for 1997.
The Company also contributes to a multi-employer trust which provides certain
other postretirement benefits to retired hourly employees. Expenses under this
program for the period from February 5, 1997 to December 31, 1997 were $3,781.
NOTE 10 - PLANT CLOSING COSTS
In an effort t reduce the Company's cost structure and improve productivity, the
Company closed its Houston, Texas plant effective February 1997 and its
Dayville, Connecticut plant effective April 1997 and included the liabilities
assumed as part of the Anchor Acquisition cost. Closure of these facilities
F-18
<PAGE> 52
will result in the consolidation of underutilized manufacturing operations.
Substantially all of the hourly and salaried employees at these plants,
approximately 600 in total, have been terminated. Exit charges and the amounts
charged against the liability as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
Amount Charged
Exit Charges Against Liability
------------ -----------------
<S> <C> <C>
Severance and employee benefit costs $13,000 $11,700
Plant shutdown costs related to consolidation
and discontinuation of manufacturing facilities 20,000 9,100
</TABLE>
NOTE 11 - INCOME TAXES
The Company applies SFAS 109 under which the liability method is used in
accounting for income taxes. Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Under SFAS 109, if on the basis of
available evidence, it is more likely than not that all or a portion of the
deferred tax asset will not be realized, the asset must be reduced by a
valuation allowance. Since realization is not assured at of December 31, 1997,
management has deemed it appropriate to establish a realization reserve against
the tax asset created during the period.
The following significant components of the deferred tax assets and liabilities
are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Pension and postretirement liabilities........................ $ 1,200
Accumulated depreciation...................................... 600
Other......................................................... 300
Tax loss carryforwards........................................ 2,400
----------
5,000
----------
Valuation allowance............................................. (1,600)
----------
3,400
Deferred tax liabilities:
Accrued liabilities and reserves.............................. 3,200
Other assets.................................................. 200
----------
Net deferred tax assets 3,400
----------
$ -
==========
</TABLE>
The effective tax rate reconciliation at December 31, 1997 is as follows:
<TABLE>
<S> <C>
Federal rate................................................. (34)%
State rate................................................... ( 5)
---
Permanent differences........................................ 25
---
(14)
Valuation allowance......................................... 14
---
Effective rate.............................................. -- %
===
</TABLE>
NOTE 12 - LEASES
The Company leases distribution and office facilities, machinery,
transportation, data processing and office equipment under non-cancelable leases
which expire at various dates through 2004. These leases generally provide for
fixed rental payments and include renewal and purchase options at amounts which
are generally based on fair market value at expiration of the lease. The Company
has no material capital leases.
F-19
<PAGE> 53
Future minimum lease payments under non-cancelable operating leases are as
follows:
<TABLE>
<S> <C>
1998....................................................... $ 17,300
1999....................................................... 13,600
2000....................................................... 10,400
2001....................................................... 9,200
2002....................................................... 9,200
After 2002................................................. 20,300
---------
$ 80,000
=========
</TABLE>
Rental expense for all operating leases for the period from February 5, 1997 to
December 31, 1997 were $17,547.
In connection with the Anchor Acquisition, the Company assumed and amended Old
Anchor's lease of the headquarters facility located in Tampa, Florida and a
related option to purchase. The term of the amended lease expires January 2,
1998, unless the Company has exercised its purchase right, and the term then
expires February 1, 1998. In January 1998, the Company exercised the option to
purchase the headquarters facility and assigned such option to a third party
purchaser of the facility. The Company has to entered into a ten year lease
pursuant to which the Company will lease a portion of the headquarters facility.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
The Company is a respondent in various environment-related cases. The
measurement of liabilities in these cases and other environmental concerns is
based on available facts of each situation and considers factors such as prior
experience in remediation efforts and presently enacted environmental laws and
regulations. In the opinion of management, based upon information presently
known, the Company has adequately provided for environmental liabilities. The
Company is not otherwise party to, and none of its assets are subject to any
other pending legal proceedings, other than ordinary routine litigation
incidental to its business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes that the ultimate
outcome of these cases will not materially affect future operations.
NOTE 14 - SUBSEQUENT EVENTS
Following the issuance of the First Mortgage Notes, the Company filed, with the
Securities and Exchange Commission, a Registration Statement on July 16, 1997,
(File No.333-31363) on Form S-4 under the Securities Act of 1933, with respect
to an issue of 11.25% First Mortgage First Mortgage Notes, due 2005, identical
in all material respects to the First Mortgage Notes, except that the new First
Mortgage Notes would not bear legends restricting the transfer thereof. Upon the
effectiveness of the Registration Statement, February 12, 1998, the Company
commenced an offer to the holders of the First Mortgage Notes to exchange their
First Mortgage Notes for a like principal amount of new First Mortgage Notes.
The exchange offer is expected to be completed by March 30, 1998.
In connection with a plan to simplify the corporate ownership structure of
Consumers, the Company and their affiliates, Glenshaw Glass Company, Inc., a
wholly-owned subsidiary of G&G, may become a subsidiary of the Company or
Consumers U.S.
Subsequent to year end, the Company has made definitive arrangements to issue 9
7/8% senior unsecured notes, due 2008 in the amount of $50,000, the proceeds of
which are to be used to pay down the existing indebtedness under the Company's
Revolving Credit Facility and to provide for future expansion to meet customer
needs.
F-20
<PAGE> 54
INDEX TO FINANCIAL INFORMATION FOR OLD ANCHOR
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants H-2
Consolidated Statements of Operations -
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-3
Consolidated Balance Sheets-
February 4, 1997 and December 31, 1996 H-4
Consolidated Statements of Cash Flows -
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-6
Consolidated Statements of Stockholders'
Equity (Deficiency in Assets)-
Period from January 1, 1997 to February 4, 1997 and
Years Ended December 31, 1996 and 1995 H-8
Notes to Consolidated Financial Statements H-9
SELECTED CONSOLIDATED FINANCIAL DATA H-25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS H-28
</TABLE>
H-1
<PAGE> 55
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Anchor Glass Container Corporation:
We have audited the accompanying consolidated balance sheets of Anchor
Resolution Corp. (Debtor-in-Possession) (the Company) as of February 4, 1997,
and December 31, 1996, and the related consolidated statements of operations,
stockholder's equity (deficiency in assets) and cash flows for the period from
January 1, 1997 to February 4, 1997, and the two years ended December 31, 1996
and 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to report on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our report.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Anchor
Resolution Corp. as of February 4, 1997, and December 31, 1996, and the results
of its operations and its cash flows for the period from January 1, 1997, to
February 4, 1997, and the two years ended December 31, 1996 and 1995 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has
experienced significant losses in the last three fiscal years, and has a net
deficiency in assets of $284,959,000 at February 4, 1997. As described in Notes
2 and 3 to the accompanying consolidated financial statements, in September
1996, the Company filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code. Furthermore, as discussed in Note 2, on February
5, 1997, the Company sold substantially all of its assets and certain
liabilities. The Company's bankruptcy petition and remaining deficiency in
assets after this sale raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 27, 1998
H-2
<PAGE> 56
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Period from January 1,
to February 4, Years Ended December 31,
-------------- -----------------------------
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales ............................................... $ 62,560 $ 814,370 $ 956,639
Costs and expenses:
Cost of products sold .............................. 70,608 831,612 906,393
Selling and administrative expenses ................ 3,745 39,570 48,998
Restructuring and other charges .................... -- 49,973 10,267
Impairment of long-lived assets .................... -- 490,232 --
Write-up of assets held for sale ................... -- (8,967) --
-------- --------- ---------
Loss from operations .................................... (11,793) (588,050) (9,019)
Other income (expense), net ............................. (595) (10,020) 171
Interest expense (1997 and 1996 contractual interest
of $5,353 and$57,768, respectively) ................ (2,437) (48,601) (56,871)
-------- --------- ---------
Loss before reorganization items, income taxes
and extraordinary item ............................. (14,825) (646,671) (65,719)
Reorganization items .................................... (827) (5,008) --
-------- --------- ---------
Loss before income taxes and extraordinary item ......... (15,652) (651,679) (65,719)
Income taxes ............................................ -- 1,825 250
-------- --------- ---------
Loss before extraordinary item .......................... (15,652) (653,504) (65,969)
Extraordinary item-
Write-off of deferred financing fees, net of nil tax -- (2,336) --
-------- --------- ---------
Net loss ................................................ $(15,652) $(655,840) $ (65,969)
======== ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
H-3
<PAGE> 57
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
February 4, December 31,
----------- ------------
Assets 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................... $ 3,449 $ 4,898
Accounts receivable, less allowance for doubtful accounts
of $1,630 and $1,503 ............................... 60,978 55,851
Inventories -
Raw materials and manufacturing supplies ........... 29,649 28,528
Semi-finished and finished products ................ 119,082 115,891
Other current assets .................................... 19,184 18,593
--------- ---------
Total current assets .......................... 232,342 223,761
- ---------------------------------------------------------------------------------------------------
Property, plant and equipment:
Land and land improvements ......................... 10,405 10,405
Buildings .......................................... 120,377 120,377
Machinery, equipment and molds ..................... 531,827 524,643
Less accumulated depreciation, net ................. (350,967) (344,655)
--------- ---------
311,642 310,770
- ---------------------------------------------------------------------------------------------------
Other assets ............................................ 50,943 52,072
Intangible pension asset ................................ 17,140 17,140
Investment in joint venture ............................. 39,734 39,725
--------- ---------
$ 651,801 $ 643,468
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
H-4
<PAGE> 58
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
February 4, December 31,
----------- ------------
Liabilities and Stockholder's Equity ( deficiency in assets) 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities not subject to compromise:
Current liabilities:
Debtor-in-Possession Facility .......................... $ 107,939 $ 90,455
Senior Secured Notes .................................... 158,025 158,025
Accounts payable ........................................ 32,558 25,727
Accrued expenses ........................................ 35,192 32,740
Accrued interest ........................................ 914 1,510
Accrued compensation and employee benefits .............. 58,545 60,423
--------- ---------
Total current liabilities .......................... 393,173 368,880
- --------------------------------------------------------------------------------------------------
Pension liabilities ..................................... 44,198 44,179
Other long-term liabilities ............................. 120,206 119,722
--------- ---------
164,404 163,901
Liabilities subject to compromise ....................... 379,183 379,994
--------- ---------
Total liabilities .................................. 936,760 912,775
Commitments and contingencies
- --------------------------------------------------------------------------------------------------
Stockholder's equity (deficiency in assets):
Common stock - $.10 par value; authorized 1,000 shares,
issued and outstanding, 1 share ........................ -- --
Capital in excess of par value .......................... 576,300 576,300
Accumulated deficit ..................................... (838,865) (823,213)
Amount related to minimum pension liability ............. (22,394) (22,394)
--------- ---------
(284,959) (269,307)
--------- ---------
$ 651,801 $ 643,468
========= =========
</TABLE>
H-5
<PAGE> 59
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Period from January 1,
to February 4, Years Ended December 31,
---------------------- ------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Loss before extraordinary item ................................. $(15,652) $(653,504) $ (65,969)
Adjustments to reconcile loss before extraordinary
item to net cash provided by (used in) operating activities:
Impairment of long-lived assets ...................... -- 490,232 --
Write-up of assets held for sale ..................... -- (8,967) --
Restructuring and other charges ...................... -- 49,973 10,267
Depreciation ......................................... 6,312 72,537 76,994
Amoritization ........................................ 1,293 29,119 22,921
Other ................................................ 127 3,131 462
Decrease in cash resulting from changes
in assets and liabilities .................................. (2,696) (19,697) (44,245)
Increase in cash resulting from changes
in prepetition liabilities ................................. (811) 8,765 --
-------- --------- ---------
(11,427) (28,411) 430
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Expenditures for property, plant and equipment ................. (7,186) (46,254) (70,368)
Proceeds from sales of property, plant and
equipment .................................................. -- 14,022 49,490
Investment in joint venture .................................... (10) (18,552) (20,631)
Other .......................................................... (304) (13,108) (6,991)
-------- --------- ---------
(7,500) (63,892) (48,500)
- --------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ....................... -- 80,000 --
Principal payments on long-term debt ........................... (6) (92,191) (365)
Capital contribution from Vitro S.A ............................ -- 92,484 50,000
Sale of accounts receivable .................................... -- -- 30,000
Net draws on Debtor-In-Possession Facility ..................... 17,484 90,455 --
Draws on Prepetition Credit Agreement ......................... -- -- 87,000
Repayments on Prepetition Credit Agreement ..................... -- (83,000) (114,000)
Other, primarily financing fees ................................ -- (8,862) (437)
-------- --------- ---------
17,478 78,886 52,198
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents ............... (1,449) (13,417) 4,128
Balance, beginning of period ................................... 4,898 18,315 14,187
======== ========= =========
Balance, end of period ......................................... $ 3,449 $ 4,898 $ 18,315
======== ========= =========
</TABLE>
H-6
<PAGE> 60
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Period from January 1,
to February 4, Years Ended December 31,
---------------------- ------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash provided by (used in) operating activities reflects net cash
payments for interest and taxes as follows:
Interest ............................................................ $ 3,033 $ 51,412 $ 52,003
======== ======== ========
Income taxes (refunds), net ......................................... $ -- $ (209) $ (328)
======== ======== ========
In addition, the Company had the following non-cash activities:
Extraordinary item- write off of deferred financing
fees ........................................................... $ -- $ 2,336 $ --
======== ======== ========
Increase (decrease) in cash resulting from changes in assets and
liabilities:
Accounts receivable ............................................ $ (5,127) $(15,351) $ (6,881)
Inventories .................................................... (4,312) 36,154 (5,606)
Other current assets ........................................... (591) (1,623) (4,050)
Accounts payable, accrued expenses and
other current liabilities .................................. 7,456 (26,246) (22,462)
Other, net ...................................................... (122) (12,631) (5,246)
-------- -------- --------
$ (2,696) $(19,697) $(44,245)
======== ======== ========
</TABLE>
The Company considers short-term investments with original maturities of ninety
days or less at the date of purchase to be classified as cash equivalents.
See Notes to Consolidated Financial Statements.
H-7
<PAGE> 61
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY IN ASSETS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL
STOCKHOLDER'S
COMMON CAPITAL IN RETAINED MINIMUM EQUITY
STOCK EXCESS OF EARNINGS PENSION (DEFICIENCY
(A) PAR VALUE (DEFICIT) LIABILITY IN ASSETS)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 .................. $ -- $433,816 $(101,404) $ (7,858) $ 324,554
Capital contribution from Vitro, S.A ...... -- 50,000 -- -- 50,000
Amount related to minimum pension liability -- -- -- (18,982) (18,982)
Net loss .................................. -- -- (65,969) -- (65,969)
- ------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 ................ -- 483,816 (167,373) (26,840) 289,603
Capital contribution from Vitro, S.A ...... -- 92,484 -- -- 92,484
Amount related to minimum pension liability -- -- -- 4,446 4,446
Net loss .................................. -- -- (655,840) -- (655,840)
- ------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 ................ -- 576,300 (823,213) (22,394) (269,307)
Net loss .................................. -- -- (15,652) -- (15,652)
- ------------------------------------------------------------------------------------------------------------------------------
Balance, February 4, 1997 ................. $ -- $576,300 $(838,865) $(22,394) $(284,959)
====== ======== ========= ======== =========
</TABLE>
(A) One share, $.10 par value outstanding
See Notes to Consolidated Financial Statements.
H-8
<PAGE> 62
ANCHOR RESOLUTION CORP.
(DEBTOR-IN-POSSESSION)
(FORMERLY KNOWN AS ANCHOR GLASS CONTAINER CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
NOTE 1 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements are prepared on a historical
cost basis of accounting and reflect adjustments for the impairment of goodwill
and other long-lived assets. As discussed in Note 3, Anchor Resolution Corp.
(formerly known as Anchor Glass Container Corporation) (the "Company") is
operating as a debtor-in-possession under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11"). The accompanying consolidated financial
statements do not purport to reflect or provide for the consequences of the
bankruptcy proceedings. In particular, the consolidated financial statements do
not purport to show (a) as to assets, the remaining assets, their realizable
value on a liquidation basis or their availability to satisfy liabilities; (b)
as to prepetition liabilities, the amounts that may be allowed for claims or
contingencies, or the status and priority thereof; or (c) as to stockholder's
accounts, the effect of any changes that may be made in the capitalization of
the Company; or (d) as to operations, the effect of any changes that may be made
in the Company's remaining business.
Organization of the Company
At February 4, 1997, the Company is a wholly-owned subsidiary of Container
Holdings Corp. ("Container") which is a direct wholly-owned subsidiary of Vitro,
Sociedad Anonima ("Vitro"), a limited liability corporation incorporated under
the laws of the United Mexican States. On September 13, 1996, the Company filed
a voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11") (See Note 3). On February 5, 1997, Consumers
Packaging Inc. ("CPI") and Owens-Brockway Glass Container, Inc. ("OI") acquired
substantially all of the assets and business of the Company in accordance with
the terms of the Agreement (See Note 2). The financial statements for the period
from January 1, 1997 to February 4, 1997 (the "1997 Interim Period") represent
the final period of operations of the Company.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany accounts
and transactions have been eliminated in consolidation.
Business Segment
The Company is engaged in the manufacture and sale of a diverse line of clear,
amber, green and other color glass containers of various types, designs and
sizes to customers principally in the beer, food, iced tea, distilled spirits,
wine and soft drink industries. The Company markets its products throughout the
United States. The Company's international operations and export sales are
insignificant. Sales to Anheuser-Busch represented 6%, 11% and 24% of total net
sales for the 1997 Interim Period and the years ended 1996 and 1995,
respectively. As a result of the current highly competitive environment, the
Company had been informed by Anheuser-Busch that the Company's 1996 and future
volume allocations would be reduced. Additionally, sales to The Stroh Brewery
H-9
<PAGE> 63
Company represented 10.0% and 10.8% of total net sales for the 1997 Interim
Period and the year ended 1996.
Inventories
Inventories are stated at the lower of cost or market. The cost of substantially
all inventories of raw materials and semi-finished and finished products is
determined on the last-in, first-out ("LIFO") method. At February 4, 1997 and
December 31, 1996 the estimated current cost of these inventories exceeds their
stated value determined on the LIFO basis by approximately $16,740.
Manufacturing supplies and certain other inventories are valued at weighted
average actual or standard costs that approximate actual costs.
Property, Plant and Equipment
Property, plant and equipment expenditures, including renewals, betterments and
furnace rebuilds, which extend useful lives, and expenditures for glass forming
machine molds are capitalized and depreciated using the straight-line method
over the estimated useful lives of the assets for financial statement purposes
while accelerated depreciation methods are principally used for tax purposes.
Generally, annual depreciation rates range from 2.5% for buildings, 6.3% to 20%
for machinery and equipment and 40% for molds. Furnace and machine rebuilds,
which are recurring in nature and which extend the lives of the related assets,
are recorded as a charge to accumulated depreciation. Annual depreciation rates
for such expenditures range from 20% to 25%, based on the type and extent of
these rebuilds. Depreciation of leased property recorded as capital assets is
computed on a straight-line basis over the estimated useful lives of the assets.
Maintenance and repairs are charged directly to expense as incurred.
Excess of Cost Over Fair Value of Net Assets Acquired (Goodwill)
As a result of the declining profitability, diminishing cash flows and the
Company's bankruptcy as discussed in Note 3, the recoverable value of the
carrying amount of long-lived assets and intangibles was reviewed for
impairment.
Prior to the sale of substantially all of its assets, the Company used projected
undiscounted earnings before interest, income taxes, depreciation and
amortization but after maintenance capital expenditures as compared to the
unamortized balance of goodwill and other long-lived assets, to measure any
impairment, and as of December 31, 1995, no impairment was calculated. As a
result of the sale of the Company's assets, in late 1996, the Company used
projected proceeds from the sale as a measure of impairment of goodwill.
Based upon this review, the amount of remaining excess of purchase price over
fair value of net assets acquired of $457,232 and other long-lived assets of
$33,000 were written off in the year ended December 31, 1996.
The excess of cost over fair value of net assets acquired had been amortized on
a straight line basis over a 40 year period. Amortization expense, included as a
component of cost of products sold, for the years ended December 31, 1996 and
1995 was $13,920 and $13,925 respectively.
Income Taxes
Statement of Financial Accounting Standards No. 109 - Accounting for Income
Taxes ("SFAS 109") establishes financial accounting and reporting standards for
the effects of income taxes which result from a company's activities during the
current and preceding years. In general, SFAS 109 requires that each company
within a consolidated group recognize tax expense based on its own income. The
Company and its subsidiaries file a consolidated tax return with Container and
its subsidiaries. To the extent that current operating loss benefits of the
consolidated group or post acquisition loss
H-10
<PAGE> 64
carryforwards are allocated to the Company as a reduction of current income
taxes payable, such benefits are reflected as a contribution of capital. The
Company's tax benefits arising prior to acquisition (preacquisition losses) are
reflected as a reduction in goodwill when the losses are utilized. Post
acquisition losses of the Company are used to offset current or future income
tax provisions.
Retirement Plans
The Company has retirement plans, principally non-contributory, covering
substantially all salaried and hourly employees. The Company's funding policy is
to pay at least the minimum amount required by the Employee Retirement Income
Security Act of 1974. As a result of the Bankruptcy Proceedings (See Note 3),
certain plan contributions were not made as of February 4, 1997 (See Note 12).
At February 4, 1997 and December 31, 1996, the Company has recorded an
additional minimum pension liability for underfunded plans representing the
excess of the underfunded liability over previously recorded accrued pension
costs.
Postretirement Benefits
Statement of Financial Accounting Standards No. 106 - Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106") requires accrual of
postretirement benefits (such as healthcare benefits) during the period that an
employee provides service. The transition obligation from the adoption of SFAS
106 approximated $3,400 and is being amortized on a straight-line basis over a
period of twenty years. This accounting method has no effect on the Company's
cash outlays for these retirement benefits.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 - Disclosures about Fair
Value of Financial Instruments requires disclosure of the estimated fair values
of certain financial instruments. The estimated fair value amounts have been
determined using available market information or other appropriate valuation
methodologies that require considerable judgment in interpreting market data and
developing estimates. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts. Based on the uncertainty of the ultimate outcome of the Bankruptcy
Proceedings, discussed in Note 3, the Company is unable to estimate the fair
value of long-term debt at February 4, 1997 and December 31, 1996. The carrying
amount of other financial instruments approximate their estimated fair values.
The fair value information presented herein is based on information available to
management as of February 4, 1997. Such amounts have not been comprehensively
revalued for purposes of these financial statements since that date and,
therefore, the current estimates of fair value may differ significantly from the
amounts presented herein. As a result of the Bankruptcy Proceedings discussed in
Note 3, the ultimate value of these financial instruments is dependent upon the
payment under the Company's future plan of reorganization.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
H-11
<PAGE> 65
NOTE 2 - SALE OF ASSETS
On February 5, 1997, OI and Anchor Glass Acquisition Corporation ("New Anchor"),
a majority-owned subsidiary of CPI, acquired substantially all of the assets and
business of the Company, pursuant to the Asset Purchase Agreement dated December
18, 1996, as amended (the "Agreement").
New Anchor purchased eleven operating glass container manufacturing facilities,
five idled glass container manufacturing facilities and other related assets. OI
purchased assets and assumed liabilities of the Company's Antioch, California
and Hayward, California facilities and purchased certain other existing
inventories. OI also purchased the Company's investment in Rocky Mountain Bottle
Company, a joint venture with Coors Brewing Company ("Coors"), and assumed the
Company's agreement to manufacture Coors' glass packaging products in the United
States.
The total purchase price approximated $378,000, excluding fees of approximately
$1,500. The purchase price received from OI amounted to approximately $128,000
and was received in cash. The remaining purchase price of approximately $250,000
from New Anchor was comprised of: approximately $200,500 in cash, $47,000 face
amount (1,879,320 shares) of mandatorily redeemable 10% cumulative convertible
preferred stock and $2,500 of common stock (490,898 shares with an estimated
value of $5.00 per share) of New Anchor.
The purchase price paid by New Anchor in connection with the Anchor Acquisition
is subject to adjustment. On June 13, 1997, the Company delivered to New Anchor
the closing balance sheet which indicated that the Company believed that it was
entitled to additional payments from New Anchor and Owens totaling approximately
$76,300. On July 28, 1997, New Anchor delivered its notice of disagreement to
the Company, which requested a reduction of the purchase price of approximately
$96,800. Since that time, the parties have been negotiating the amount of the
adjustment, and have reached a proposed settlement (the "Proposed Settlement").
The Proposed Settlement requires the payment by New Anchor to the Company of an
additional $1,000 in cash and the issuance of 1,225,000 warrants for the
purchase of additional shares of common stock. None of the warrants to be issued
will require any payment upon exercise. The Proposed Settlement is subject to
final approval by the Company, New Anchor and the bankruptcy court.
Proceeds from the sale were used to repay the outstanding balance of the DIP
Facility and accrued interest thereon, of approximately $109,000 at February 4,
1997. The remainder of the proceeds will be used against prepetition
liabilities, as ultimately determined under the Company's Plan of Reorganization
(see Note 3).
Upon consummation of the purchase and effective February 6, 1997, New Anchor
changed its name to Anchor Glass Container Corporation and the Company changed
its name to Anchor Resolution Corp.
As an objection to the sale, the Pension Benefit Guaranty Corporation ("PBGC")
entered a determination to terminate the Company's qualified defined benefit
pension plans. However, in conjunction with the sale, New Anchor assumed all
liabilities of the plans and funded approximately $9,100 of plan contributions,
previously unfunded following the Company's filing of Chapter 11 (see Note 3).
Additionally, New Anchor issued to the plans $9,000 face amount (360,000 shares)
of mandatorily redeemable 10% cumulative preferred stock and Vitro agreed to
provide a limited guaranty to the PBGC with respect to the unfunded benefit
liabilities of the Company's defined benefit plans. Consequently, the PBGC
agreed not to terminate the plans as a result of the Agreement and the
assumption of the plans by New Anchor.
On October 4, 1996, the Company entered into an asset purchase agreement with
Ball-Foster Glass Container Co. L.L.C., ("Ball-Foster"). Pursuant to that
agreement, Ball-Foster was to acquire
H-12
<PAGE> 66
substantially all of the assets of the Company for $365 million in cash at
closing, subject to adjustment, as set forth in that agreement. In addition,
Ball-Foster was to assume specified liabilities of the Company. Payment of the
purchase price was guaranteed by Saint-Gobain Corporation, parent company of
Ball-Foster.
Also on October 4, 1996, the Company filed a motion with the Bankruptcy Court
seeking an order (i) authorizing the sale to Ball-Foster, subject to higher and
better bids, of substantially all of the Company's assets free and clear of
certain liens, claims and encumbrances and (ii) authorizing assumption and
assignment of certain unexpired leases and executory contracts. The Court had
entered several amended scheduling orders which established a timetable for the
sale process. The amended deadline for submissions of higher and better bids was
December 12, 1996. At that time, the Company received a higher and better offer
from CPI and OI. Ball-Foster received a termination fee of $3,000 from the
proceeds of the transaction.
The following unaudited pro forma condensed balance sheet gives effect to the
sale of assets and business and payoff of the DIP Facility (as defined)
described above as if such transactions occurred on February 4, 1997:
<TABLE>
<S> <C>
Cash.......................................................................... $223,000
Other current assets.......................................................... 7,500
Investment in Common Stock of Anchor Glass Container Corporation.............. 2,500
Investment in Preferred Stock of Anchor Glass Container Corporation........... 47,000
Property, plant and equipment................................................. 7,000
Other assets.................................................................. 10,000
--------
Total assets......................................................... $297,000
--------
Liabilities not subject to compromise:
Current liabilities........................................................... $165,000
Other long-term liabilities............................................... 16,000
Liabilities subject to compromise......................................... 375,000
---------
Total liabilities.................................................... 556,000
---------
Deficiency in assets................................................. $(259,000)
=========
</TABLE>
The Company's remaining deficiency in assets after this sale raises substantial
doubt about its ability to continue as a going concern. The consolidated
financial statements do not include adjustments that might result from the
outcome of this uncertainty.
NOTE 3 - BANKRUPTCY PROCEEDINGS
As a result of the continued decline in the Company's results of operations from
the effect of the highly competitive glass container market and the Company's
high debt level, on September 13, 1996 (the "Petition Date"), the Company filed
a voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court"). On September 30, 1996, Anchor Recycling
Corporation, a wholly-owned subsidiary of the Company, also filed a voluntary
petition to reorganize under Chapter 11 in the same court. The Chapter 11
proceedings are being jointly administered, with the Company managing the
business in the ordinary course as a debtor-in-possession under the supervision
of the Bankruptcy Court. Vitro and the Company concluded that the Chapter 11
filing was necessary in order to preserve the value of its assets and to ensure
that the business has sufficient cash resources to continue operations while it
completed the sale of the business discussed in Note 2.
Under Chapter 11 proceedings, litigation and actions by creditors to collect
certain claims existing at the Petition Date are stayed, without specific
Bankruptcy Court authorization to pay such claims. The Company had received
authorization, pursuant to first day orders, to pay certain claims related
H-13
<PAGE> 67
to wages, salaries, vacation, sick pay and other claims. As a
debtor-in-possession, the Company has the right, subject to Bankruptcy Court
approval, and certain other limitations, to assume or reject certain executory
contracts, including unexpired leases. Any claim for damages resulting from the
rejection of an executory contract or an unexpired lease is treated as a general
unsecured claim in the Chapter 11 proceedings.
On September 26, 1996 the United States Trustee appointed a single unsecured
creditors' committee (the "Creditors Committee"). The Creditors' Committee has
the right to review and object to certain business transactions and has
participated in the negotiation of the Company's plan of reorganization. The
Creditors Committee has retained the firm of Wachtell, Lipton, Rosen & Katz as
its counsel and Smith Barney Inc. as its financial advisors.
The Company obtained debtor-in-possession ("DIP") financing from Foothill
Capital Corporation, as agent and Congress Financial Corporation, as co-agent,
(the "Lender Group") which provided for a $130,000 DIP Credit Facility (the "DIP
Facility"), and was approved by the Bankruptcy Court on November 15, 1996. The
DIP Facility, which expires September 30, 1997, provides up to $130,000 under a
borrowing base formula, less prepetition advances under the Company's then
existing New Senior Credit Facility (the "Prepetition Credit Facility") with the
Lender Group, on terms substantially the same as the Prepetition Credit
Facility. On February 5, 1997, the DIP Facility was repaid in full with proceeds
from the sale as discussed in Note 2.
The DIP Facility and prepetition secured claims are collateralized by
substantially all of the assets of the Company including accounts receivable,
inventories and property, plant and equipment. The Company has continued to
accrue interest on its prepetition secured debt obligations. Because of the
Chapter 11 filing, there has been no accrual of interest on prepetition
unsecured debt subsequent to the Petition Date.
Of the cash proceeds received from the sale of substantially all the assets and
business of the Company (see Note 2), approximately $109,000 was used to repay
in full the DIP Facility and approximately $11,000 was applied to the prepayment
of real estate taxes, certain costs related to the Company's partnership with
Coors (see Note 8) and the termination fee payable to Ball-Foster (see Note 2).
The balance of the net proceeds of the sale remaining after application to the
costs of the winddown and to other administrative and priority claims will be
distributed to the creditors of the Company, including the holders of
approximately $158,000 principal amount of the Company's Senior Secured Notes
and holders of other secured and unsecured claims, pursuant to a Plan of
Reorganization which is being developed by the Company in conjunction with the
Creditors Committee.
The Company has separately reported, as reorganization items on the consolidated
statement of operations, professional fees and similar types of expenditures
relating directly to the Chapter 11 filing. The Company's policy is to expense
all such expenditures as incurred. These expenses are primarily for legal,
claims and accounting services.
H-14
<PAGE> 68
NOTE 4 - PREPETITION LIABILITIES
Prepetition liabilities subject to compromise include the following:
<TABLE>
<CAPTION>
February 4, December 31,
1997 1996
----------- ------------
<S> <C> <C>
$100,000 10.25% Senior Notes $100,000 $100,000
$200,000 9.875% Senior Subordinated Debentures 200,000 200,000
Other debt 4,368 4,368
Trade payables 67,890 68,701
Accrued interest 6,925 6,925
-------- --------
$379,183 $379,994
======== ========
</TABLE>
Because of the Chapter 11 proceedings, there has been no accrual of interest on
the $100,000 10.25% Senior Notes or the $200,000 9.875% Senior Subordinated
Debentures since September 12, 1996. If accrued, interest expense would have
increased $2,916 and $9,167, respectively, during the 1997 Interim Period and
the year ended December 31, 1996. Additionally, the amounts reflected as
prepetition liabilities do not include amounts related to potential claims,
which are substantially in excess of the recorded liabilities at February 4,
1997.
NOTE 5- LONG-TERM DEBT
At February 4, 1997 and December 31, 1996, all debt which, by its terms was
previously classified as long-term at the Petition Date, is classified as
prepetition liabilities in the accompanying balance sheet.
As a result of the Bankruptcy Proceedings (See Note 3), the Company is in
default of various covenants relating to its outstanding prepetition debt.
However, under Chapter 11 proceedings, litigation or actions by creditors
related to these defaults are stayed. In addition, the DIP Facility required
that the Company's collateral value and availability, as defined, could not be
less than a specified amount and the outstanding credit facility balance could
not be more than a specified amount as measured on a rolling four-week period
throughout the term of the DIP Facility. Prior to the repayment of the DIP
Facility, the Company was in full compliance with these covenants.
Long-term debt at December 31, 1995, giving affect to the Noteholder
Restructuring Agreement discussed below, consists of the following:
<TABLE>
1995
---------
<S> <C>
Floating Rate Series A Senior Secured Notes, variable interest rate, payable monthly $ 38,000
Series B Senior Secured Notes, interest at 9.91%, payable monthly 202,000
Floating Rate Series C Senior Secured Notes, variable interest rate, payable monthly 10,000
$100,000 Senior Notes, Series A, interest at 10.25%, payable semi-annually 100,000
$200,000 Senior Subordinated Debentures, interest at 9.875%, payable semi-annually 200,000
Other 4,450
---------
554,450
Less current maturities 1,770
---------
$ 552,680
=========
</TABLE>
Effective January 12, 1996, the Company and the holders of the Senior Secured
Notes entered into a Noteholder Restructuring Agreement which provides for,
among other things, consent by the holders to the replacement of the then
current Credit Agreement with a new $130,000 credit facility (subsequently
replaced by the DIP Facility) and waiver by the holders to identified defaults
or events of default existing on the effective date or which may occur during
the waiver
H-15
<PAGE> 69
period which expired not later than January 31, 1998. The restructuring period
was defined as the period between the effective date and the termination date,
which would have occurred no later than June 30, 1998 (the "Restructuring
Period"). The following events occurred in connection with the effectiveness of
the Noteholder Restructuring Agreement:
- - execution of the $130,000 Prepetition Credit Facility
- - mandatory prepayment on January 12, 1996 of the aggregate principal amount
of the Senior Secured Notes as follows:
- Series A $12,160; Series B $64,640 and Series C $3,200;
- - payment of a restructuring fee of 1.75% of the principal amount of the
consenting noteholders' Senior Secured Notes outstanding prior to giving
effect to the prepayments above, approximately $4,100, and
- - $40,000 capital contribution from Vitro and a commitment from Vitro to
contribute an additional $25,000 on or before January 31, 1997. Capital
contributions in 1996 amounted to $92,484.
Compliance with the financial maintenance tests as defined in the amendments to
the Note Purchase Agreement, including fixed charge coverage, net worth, current
ratio and debt to equity were waived through the period ending January 31, 1998.
However, the Company was required to maintain capital expenditures and net worth
in amounts not less than those defined in the Noteholder Restructuring
Agreement.
During the Restructuring Period, the Series A Notes and Series C Notes bore a
floating rate of interest at the one-month LIBOR rate, as defined, plus 2.0%.
The interest rate was adjusted monthly. Interest on the Series B Notes is fixed
at 9.91% per annum. Interest during the Restructuring Period is payable on the
15th of each month.
Effective January 12, 1996, and concurrent with the Noteholder Restructuring
Agreement, the Company entered into a Loan Agreement with Foothill Capital
Corporation, as agent and Congress Financial Corporation, as co-agent, to
provide for the $130,000 Prepetition Credit Facility. $80,000 of proceeds from
the Prepetition Credit Facility were used to prepay at closing a significant
portion of certain payments of the Senior Secured Notes originally scheduled to
be made in July 1996 and July 1997 and the remaining $50,000 was used to finance
working capital and other general corporate purposes. Advances outstanding at
any one time are not to exceed an amount equal to the Borrowing Base as defined
in the Prepetition Credit Facility. Interest, at prime plus 1.125%, as defined,
is payable monthly. A commitment fee of .5% of the unused portion of the
Prepetition Credit Facility is payable monthly. The Prepetition Credit Facility
(which was subsequently replaced with the DIP Facility) was repaid February 5,
1997 with proceeds from the sale discussed in Note 2.
Through February 5, 1997 the Company had borrowings outstanding under the DIP
Facility. At February 4, 1997 and December 31, 1996, advances outstanding under
the DIP Facility were $107,939 and $90,455, respectively. At December 31, 1996,
the weighted average interest rate on borrowings outstanding was 9.375%.
In March 1994, Vitro provided a one year, $20,000 letter of credit facility on
behalf of the Company, thereby effectively increasing the Company's letter of
credit availability by $20,000. Outstanding letters of credit under this
facility at December 31, 1996 were $15,000. In February 1997, the Company
received an additional capital contribution of $8,400 in satisfaction of
obligations outstanding under the letter of credit facility, which was
terminated at that time.
H-16
<PAGE> 70
The Senior Secured Notes are collateralized by the property, plant and equipment
of the Company with a secondary interest in inventories and accounts receivable.
The DIP Facility is collateralized by inventories and accounts receivable with a
secondary interest in the property, plant and equipment of the Company. Both the
Note Purchase Agreement and the DIP Facility provide for various covenants that
restrict the Company's ability to incur additional indebtedness, sell or
transfer assets, make investments, enter into transactions with or make
distributions to affiliates and pay dividends or make other distributions in
respect of its capital stock, as well as require it to meet various financial
maintenance tests. Effective with the Noteholder Restructuring Agreement, the
holders of the Senior Secured Notes waived compliance with the financial
maintenance covenants through January 31, 1998. However, the Company must
maintain capital expenditures and net worth in amounts not less than those
defined in the Noteholder Restructuring Agreement.
Effective June 18, 1992, the Company issued $100,000 aggregate principal amount
of 10.25% Senior Notes due June 30, 2002 (the "Exchange Notes"). The Company
then completed an exchange offer with the exchange of all Exchange Notes for a
like principal amount of 10.25% Senior Notes due 2002, Series A (the "Senior
Notes"), issued under an Indenture dated as of October 15, 1992 between the
Company and Continental Bank, National Association, as Trustee. The Senior Notes
are unsecured obligations of the Company ranking senior in right of payment to
the Debentures (described below) and pari passu with all other existing and
future senior indebtedness of the Company. Interest is payable semi-annually in
arrears on each June 30 and December 31. Interest has not been paid or accrued
following the Petition Date.
Effective December 2, 1993, the Company completed a public offering of $200,000
aggregate principal amount of 9.875% Senior Subordinated Debentures due December
15, 2008 (the "Debentures") under an Indenture dated December 1, 1993 between
the Company and Chemical Bank, as Trustee. The Debentures are unsecured
obligations, subordinate in right of payment to all existing and future senior
debt, as defined, of the Company. Interest on the Debentures is payable
semi-annually on June 15 and December 15. Interest has not been paid or accrued
following the Petition Date.
All of the Company's debt agreements contain cross-default provisions.
NOTE 6 - RESTRUCTURING AND OTHER CHARGES
In January 1996, formal plans were approved to further restructure certain of
the Company's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
the Company's largest customer. The Company closed its Cliffwood, New Jersey
plant effective January 1996, and substantially all hourly and salaried
employees of that plant, approximately 350, were terminated. A restructuring
charge of approximately $50,000 was recorded in the 1996. Of this amount,
approximately $24,900 related to the writedown to net realizable value of
certain manufacturing assets.
During 1994, formal plans were approved to significantly reduce the Company's
cost structure and to improve productivity. This restructuring program relates
primarily to consolidation of underutilized manufacturing operations and
provided for the closure of three of the Company's 17 manufacturing plants then
operating. The Company closed its Waukegan, Illinois and Los Angeles, California
plants in the second quarter of 1995 and its Keyser, West Virginia plant in the
third quarter of 1995. In the 1994 fourth quarter, the Company recorded a
restructuring charge of $79,599 and in the 1995 first quarter, an additional
$10,300 charge was recorded to reflect the benefit arrangements for employees
affected by this plan. In total, substantially all hourly and salaried employees
of these plants, approximately 725, were terminated. Of the total $89,800
charge, approximately $50,600 related to the writedown to net realizable value
of certain manufacturing assets.
H-17
<PAGE> 71
The Keyser and Cliffwood plants have been recorded at net realizable value and
are held for sale. The Waukegan plant was sold in 1996 and the Los Angeles plant
will be retained by the Company as part of the acquisition discussed in Note 2
to the consolidated financial statements.
The following represents information regarding amounts charged against the
restructuring liability for the Company's restructuring plans.
<TABLE>
<CAPTION>
Amount
Charged
Restructuring Against
Charges Liability
------------- ----------
<S> <C> <C>
1996 RESTRUCTURING PLAN
Severance and employee benefit costs $ 10,800 $ 10,800
Plant shutdown costs related to consolidation
and discontinuation of manufacturing activities $ 14,300 $ 12,600
1994/1995 RESTRUCTURING PLAN
Severance and employee benefit costs $ 18,300 $ 18,300
Plant shutdown costs related to consolidation
and discontinuation of manufacturing activities $ 20,900 $ 18,500
</TABLE>
NOTE 7 - CAPITAL CONTRIBUTION
As a condition of closing to the Noteholder Restructuring Agreement, as
discussed in Note 5, in January 1996, the Company received a $40,000 cash
capital contribution from Vitro and received a commitment from Vitro to
contribute an additional $25,000 on or before January 31, 1997. During 1996,
Vitro provided capital contributions of $92,484.
NOTE 8 - INVESTMENT IN JOINT VENTURE
In March 1995, the Company and Coors entered into a long-term partnership (the
"Partnership") to produce glass bottles at the Coors glass manufacturing
facility in Wheat Ridge, Colorado. The Partnership will employ the Company's
technology, along with capital contributions from both companies, to increase
the efficiency, capacity and volume of the Coors facility. Coors has
contributed, as its capital contribution, the facility's machinery, equipment
and certain personal property. The Company's required capital contribution was
approximately $54,000 in cash for capital spending needs over the first three
years of the partnership, of which approximately $36,015 has been contributed
through capital expenditures through December 31, 1996. The Company's investment
in the joint venture is accounted for on the equity method. Capital
contributions are recorded as the investment is funded. The Partnership has an
initial term of ten years, which can be extended for additional terms of two
years each, and the partners will share the cost benefit of achieved operational
efficiencies. In addition, Coors has entered into a separate long-term preferred
supplier agreement with the Company. The preferred supplier agreement has an
initial term of ten years, which can be extended for additional terms of two
years each. This agreement will allow the Company to supply 100% of Coors' glass
container requirements (exceeding the Partnership's production) beginning
January 1, 1996.
As discussed in Note 2, effective February 5, 1997, OI purchased the Company's
investment in the joint venture (including the assumption of related
obligations) and the preferred supplier agreement.
H-18
<PAGE> 72
NOTE 9 - SALE AND LEASEBACK
In July and August 1995, the Company entered into sale and leaseback
transactions of certain manufacturing equipment located at four of the Company's
manufacturing facilities. Under the sale agreements, the Company sold the
equipment at an aggregate net selling price of approximately $48,300. In
addition, the Company entered into agreements to lease back the equipment for a
nine year term at an average annual rental of approximately $7,600. The deferred
gain of approximately $14,200, representing the excess of the selling price over
the net book value of the equipment, is being amortized at approximately $1,600
annually over the nine year operating lease term.
NOTE 10 - RELATED PARTY INFORMATION
Container
There have been no material transactions between the Company and Container or
its subsidiaries in the 1997 Interim Period and in the years ended 1996 and
1995. During 1996, the Company sold a previously closed manufacturing facility
to Container for proceeds of approximately $750 of cash and a note receivable of
$2,800.
Vitro
Related party transactions with Vitro and its consolidated subsidiaries are
summarized as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Years Ended December 31,
------------------------
1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Purchases of equipment.................. $ 7,183 $ 6,662
Payable for equipment................... 2,078 22
Purchases of inventory.................. 6,978 2,115
Payable for inventory................... 1,582 9
Sales of inventory...................... 23,376 14,534
Receivable from sales of inventory...... 3,100 2,211
Other receivables....................... - 221
Equipment deposits...................... 2,187 2,187
</TABLE>
The nature and amount of related parties transactions during the 1997 Interim
Period were not material.
Sale of Accounts Receivable
In December 1995, approximately $30,700 of eligible trade receivables was sold
to Factoraje Serfin, S.A. de C.V., a wholly-owned subsidiary of Grupo Financiero
Serfin, S.A. de C.V., an associated company in which Vitro owns a minority
interest. This transaction resulted in net proceeds to the Company of $30,000.
These receivables were sold without recourse and the proceeds were used to fund
working capital needs.
NOTE 11 - INCOME TAXES
The consolidated group of companies, of which the Company is a member, applies
SFAS 109 under which the liability method is used in accounting for income
taxes. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and are
measured
H-19
<PAGE> 73
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Under SFAS 109, if on the basis of available evidence,
it is more likely than not that all or a portion of the deferred tax asset will
not be realized, the asset must be reduced by a valuation allowance.
The Company had previously recognized approximately $1,825 as a deferred tax
asset, net of the valuation allowance. As a result of continuing losses,
management has determined it was no longer more likely than not that the value
of the remaining deferred tax asset would be realized. As a result, the Company
recorded an additional valuation allowance of $1,825, which is reflected as a
provision for income taxes in the Consolidated Statement of Operations for the
year ended December 31, 1996. The company recorded a current state income tax
provision of $250 in 1995.
The significant components of the deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
February 4, December 31,
1997 1996
---------- ------------
<S> <C> <C>
Deferred tax assets:
Acquired tax benefits...................................... $ 27,700 $ 27,700
Post acquisition loss carryforwards....................... 112,000 106,000
Pension and postretirement liabilities..................... 55,300 55,300
Accruals and reserves...................................... 50,300 50,300
--------- ----------
245,300 239,300
Valuation allowance........................................ (158,400) (152,400)
---------- ----------
86,900 86,900
--------- ----------
Deferred tax liabilities:
Property, plant and equipment.............................. 55,000 55,000
Inventories................................................ 22,300 22,300
Receivables and other assets............................... 9,600 9,600
--------- ----------
86,900 86,900
--------- ----------
Net deferred tax asset....... .................................... $ - $ -
========== ==========
</TABLE>
At February 4, 1997, the Company had unused net operating losses and investment
tax credit carryforwards of approximately $340,000 and $5,200, respectively,
expiring at various dates through 2011. Of these amounts, $275,000 and $0,
respectively, are not restricted as to use and expire at various dates through
2011. The balance of the carryforwards amounting to $65,000 and $5,200,
respectively, expire at various dates through 2004, and are restricted to
offsetting future taxable income of the respective companies which generated the
carryforwards.
NOTE 12 - PENSION PLANS
The Company has defined benefit retirement plans for salaried and hourly-paid
employees. Benefits are calculated on a salary-based formula for salaried plans
and on a service-based formula for hourly plans. Effective December 31, 1994,
the Company changed its defined benefit plans for
H-20
<PAGE> 74
salaried employees resulting in the freezing of benefits, as discussed below.
Pension costs incurred in the 1997 Interim Period were $848. Pension costs for
the years ended 1996 and 1995 are summarized below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Years Ended December 31,
1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost-benefits earned during the year.................. $ 5,266 $ 6,731
Interest cost on projected benefit obligation................. 28,646 29,429
Return on plan assets......................................... (28,270) (22,500)
Net amortization and deferral................................. 2,442 2,757
Curtailment (gain) loss....................................... 964 -
--------- --------
Total pension cost......................................... $ 9,048 $ 16,367
========= ========
</TABLE>
The Company has substantial unfunded obligations related to its employee pension
plans. The Retirement Protection Act of 1994 requires the Company to make
significant additional funding contributions into its underfunded defined
benefit retirement plans and will increase the premiums paid to the PBGC.
Subsequent to the Petition Date, the Company did not make scheduled contribution
payments to its employee pension plans. Scheduled plan contribution payments not
made in the year ended December 31, 1996, amounted to $16,330. Of the scheduled
January 15, 1997 contribution, $3,599 was not paid.
As an objection to the sale, the PBGC entered a determination to terminate the
Company's qualified defined benefit pension plans. However, in conjunction with
the sale, New Anchor assumed all liabilities of the plans and funded
approximately $9,100 of plan contributions, previously unfunded following the
Company's filing of Chapter 11 (see Note 3). Additionally, New Anchor issued
$9,000 face amount of mandatorily redeemable 10% cumulative convertible
preferred stock and Vitro has guaranteed to fund qualified defined benefit plan
obligations up to $70,000, should New Anchor default on its obligations.
Consequently, the PBGC agreed not to terminate the plans as a result of the
Agreement and the assumption of the plans by New Anchor.
Effective December 31, 1994, the Company changed its salaried retirement and
savings programs, resulting in the freezing of benefits under its three defined
benefit pension plans for salaried employees and amending its defined
contribution savings plan for salaried employees. The freezing of benefits under
the defined benefit pension plans for salaried employees resulted in a
curtailment gain of $3,588. Effective December 31, 1996, the Company merged the
Latchford Glass Company Salaried Employees' Pension Plan into the Anchor Glass
Container Corporation Retirement Plan for Salaried Employees. Also effective
December 31, 1994, the Company merged the Diamond Bathurst Salaried Employees
Retirement Plan into the Anchor Glass Container Corporation Retirement Plan for
Salaried Employees. Under the amended savings plan, the Company will match,
beginning in 1995, employees' basic contributions to the plan in an amount equal
to 150% of the first 4% of an employee's compensation.
H-21
<PAGE> 75
The funded status of the Company's pension plans at December 31, 1996, the
latest valuation date, follows:
<TABLE>
<CAPTION>
1996
-----------------------------------
Accumulated Assets Exceed
Benefits Accumulated
Exceed Assets Benefits
------------- -------------
<S> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested benefit obligation........................... $290,589 $ 107,015
======== =========
Accumulated benefit obligation...................... $301,349 $ 107,015
======== =========
Projected benefit obligation.............................. 301,349 107,015
Plan assets at fair value................................. 218,013 116,139
-------- ---------
Projected benefit obligation in excess of
(less than) plan assets............................. 83,336 (9,124)
Amounts not recognized -
Subsequent losses................................... (22,394) (3,817)
Prior service cost.................................. (17,140) -
Additional minimum liability.............................. 39,534 -
-------- ---------
Accrued (prepaid) pension cost............................ $ 83,336 $ (12,941)
======== =========
</TABLE>
Significant assumptions (weighted average rates) used in determining net pension
cost and related pension obligations for the benefit plans for 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Discount rate.................................... 7.50% 7.50%
Expected long-term rate of return................
on plan assets................................ 9.0 9.0
Rate of increase on compensation
level......................................... 5.0 5.0
</TABLE>
The Company recognized an additional minimum liability that is equal to the
difference between the accumulated benefit obligation over plan assets in excess
of accrued (prepaid) pension cost. A corresponding amount is recognized as
either an intangible asset or a reduction of equity. Pursuant to this
requirement, the Company recorded, as of February 4, 1997 and December 31, 1996,
an additional liability of $39,534, an intangible pension asset of $17,140, and
an equity reduction of $22,394. Plan assets are held by independent trustees and
consist principally of investments in equities, fixed income and government
securities.
The Company also sponsors two defined contribution plans covering substantially
all salaried and hourly employees. Expenses under these programs for the 1997
Interim Period and the years ended December 31, 1996 and 1995 were approximately
$237, $2,817 and $3,045 respectively.
NOTE 13 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides benefits to substantially all salaried, and certain hourly
employees under several plans. SFAS 106 requires accrual of postretirement
benefits (such as healthcare benefits) during the years an employee provides
services. Currently, the Company funds these healthcare benefits on a
pay-as-you-go basis. The Company also contributes to a multi-employer trust, and
under the requirements of SFAS 106, recognizes as postretirement benefit cost
the required annual contribution.
SFAS 106 allows recognition of the cumulative effect of this liability in the
year of adoption or the amortization of the net initial transition obligation
over a period of up to twenty years. The Company elected to recognize the net
initial transition obligation of approximately $3,400 on a
H-22
<PAGE> 76
straight-line basis over a period of twenty years. The Company's cash flows are
not affected by implementation of SFAS 106.
The accumulated postretirement benefit obligation at December 31, 1996, the
latest valuation date, is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
December 31,
1996
- ----------------------------------------------------------------------------------------------
<S> <C>
Retirees......................................................... $38,403
Eligible plan participants....................................... 8,743
Other active plan participants................................... 14,273
-------
61,419
Unrecognized gain ............................................... 4,698
Unrecognized transition obligation .............................. (2,695)
-------
Accrued postretirement benefit costs............................. $63,422
=======
</TABLE>
Net postretirement benefit costs for the 1997 Interim Period were $643. Net
postretirement benefit costs for the years ended December 31, 1996 and 1995
consist of the following components:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Years Ended
December 31,
1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost - benefits earned during the year................... $1,052 $1,191
Interest cost on accumulated postretirement
benefit obligation........................................... 4,200 4,641
Net amortization and deferral.................................... 168 168
------ ------
$5,420 $6,000
====== ======
</TABLE>
The assumed healthcare cost trend used in measuring the accumulated
postretirement benefit obligation as of December 31, 1996 was 9.0% declining
gradually to 5.5% by the year 2003, after which it remains constant. A one
percentage point increase in the assumed healthcare cost trend rate for each
year would increase the accumulated post-retirement benefit obligation as of
December 31, 1996 by approximately 12% and the net postretirement healthcare
cost for the year ended December 31, 1996 by approximately 13%. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for 1996.
The Company also contributes to a multi-employer trust which provides certain
other postretirement benefits to retired hourly employees. Expenses under this
program for the 1997 Interim Period and the years ended December 31, 1996 and
1995, were $360, $4,990 and $5,033 respectively.
NOTE 14 - LEASES
The Company leases distribution and office facilities, machinery,
transportation, data processing and office equipment under non-cancelable leases
which expire at various dates through 2004. These leases generally provide for
fixed rental payments and include renewal and purchase options at amounts which
are generally based on fair market value at expiration of the lease. The Company
has no material capital leases.
H-23
<PAGE> 77
Future minimum lease payments under non-cancelable operating leases are as
follows:
<TABLE>
<S> <C>
1997........................................ $22,100
1998........................................ 17,600
1999........................................ 13,300
2000........................................ 9,700
2001........................................ 8,600
After 2001.................................. 20,300
-------
$91,600
=======
</TABLE>
Rental expense for all operating leases for the 1997 Interim Period and the
years ended December 31, 1996 and 1995 was $3,012, $19,770 and $21,670,
respectively.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
The Company is a respondent in various environment-related cases. The
measurement of liabilities in these cases and other environmental concerns is
based on available facts of each situation and considers factors such as prior
experience in remediation efforts and presently enacted environmental laws and
regulations. In the opinion of management, based upon information presently
known, the Company has adequately provided for environmental liabilities. The
Company is not otherwise party to, and none of its assets are subject to any
other pending legal proceedings, other than ordinary routine litigation
incidental to its business and against which the Company is adequately insured
and indemnified or which is not material. The Company believes that the ultimate
outcome of these cases will not materially affect future operations.
NOTE 16 - SUBSEQUENT EVENT
Effective January 30, 1998, all of the remaining assets of the Company were
transferred to Anchor Liquidating Trust.
H-24
<PAGE> 78
ANCHOR RESOLUTION CORP.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain historical financial information
of Old Anchor. The selected financial data for the period from January 1, 1997
to February 4, 1997 (the "Interim Period 1997") and the four years ended
December 31, 1996 has been derived from Old Anchor's consolidated financial
statements. The following information should be read in conjunction with Old
Anchor's consolidated financial statements, including notes thereto, and the
related Old Anchor Management's Discussion and Analysis of Financial Condition
and Results of Operations, included elsewhere in this report.
<TABLE>
<CAPTION>
INTERIM
YEARS ENDED DECEMBER 31, PERIOD
---------------------------------------------------------- --------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales $ 1,126,037 $ 1,089,317 $ 956,639 $ 814,370 $ 62,560
Cost of products sold 1,028,332 996,780 906,393 831,612 70,608
Selling and administrative expenses 51,137 52,371 48,998 39,570 3,745
Restructuring and other charges(1) ---- 79,481 10,267 49,973 ----
Impairment of long-lived assets(2) ---- ---- ---- 490,232 ----
Write-up of assets held for sale(1) ---- ---- ---- (8,967) ----
----------- ----------- ----------- --------- ---------
Income (loss) from operations 46,568 (39,315) (9,019) (588,050) (11,793)
Other income (expense), net 500 (2,385) 171 (10,020) (595)
Interest expense(3) (62,535) (56,070) (56,871) (48,601) (2,437)
----------- ----------- ----------- --------- ---------
Income (loss) before reorganization items,
income taxes, extraordinary items and
cumulative effect of accounting change (15,467) (97,770) (65,719) (646,671) (14,825)
Reorganization items ---- ---- ---- (5,008) (827)
Income taxes(4) (2,400) (250) (250) (1,825) ----
Extraordinary items(5) (18,152) ---- ---- (2,336) ----
Cumulative effect of accounting change(4) 1,776 ---- ---- ---- ----
----------- ----------- ----------- --------- ---------
Net income (loss) $ (34,243) $ (98,020) $ (65,969) $(655,840) $ (15,652)
=========== =========== =========== ========= =========
OTHER FINANCIAL DATA:
Net cash provided by (used in)
operating activities $ 99,279 $ 27,914 $ 430 $ (28,411) $ (11,427)
Net cash used in investing activities (118,470) (96,655) (48,500) (63,892) (7,500)
Net cash provided by financing
activities 3,259 28,467 52,198 78,886 17,478
Depreciation and amortization 103,549 100,476 99,915 101,656 7,605
Capital expenditures 89,901 93,833 70,368 46,254 7,186
BALANCE SHEET DATA (AT END OF PERIOD):
Accounts receivable $ 58,128 $ 66,618 $ 40,965 $ 55,851 $ 60,978
Inventories 173,204 176,769 180,574 144,419 148,731
Total assets 1,347,201 1,264,488 1,208,348 643,468 651,801
Total debt(6) 555,222 584,671 557,450 552,848 570,335
Total stockholder's equity (deficiency
in assets) 412,752 324,554 289,603 (269,307) (284,959)
</TABLE>
H-25
<PAGE> 79
(1) Restructuring and other charges reflects Old Anchor's implementation of a
series of restructuring plans in an effort to respond to the continued
decline in the industry sales volume combines with, in 1996, the loss of a
significant portion of the business of Old Anchor's largest customer. The
following represents information regarding the amounts charged against the
restructuring liability for old Anchor's restructuring plans:
<TABLE>
<CAPTION>
AMOUNT CHARGED
AGAINST LIABILITY
RESTRUCTURING AS OF DECEMBER 31,
CHARGES 1996
------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
1996 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses $25,100 $20,100
Writedown of certain manufacturing assets to net
realizable value 24,900 --
1994/1995 RESTRUCTURING PLAN
Plant shutdown costs, including severance costs and
pension curtailment losses $39,200 $33,700
Writedown of certain manufacturing assets to net
realizable value 36,600 --
Writedown of previously shutdown manufacturing
facilities to net realizable value 14,000 --
</TABLE>
During the year ended December 31, 1996, Old Anchor recorded an adjustment
to the carrying value of certain idled facilities held for sale. These
assets were previously written down to an estimated net realizable value.
Upon a current evaluation of quotes and offers on these properties in 1996,
Old Anchor increased their net carrying value by approximately $9.0
million. The balance of the restructuring liability is anticipated to be
expended and charged against the liability over the next three years.
(2) Impairment of long-lived assets reflects the adjustment for the write-off
of goodwill and other long-lived assets. As a result of the declining
profitability, diminishing cash flow and the bankruptcy proceedings, the
recoverable value of the carrying amount of long-lived assets and
intangibles was reviewed for impairment. Based upon this review, the amount
of remaining excess of the purchase price over the fair value of net assets
acquired at December 31, 1996, of $457.2 million and other long-lived
assets of $33.0 million were written off in the year ended December 31,
1996. The excess cost over fair value of net assets acquired had been
amortized on a straight-line basis over a 40 year period. Amortization
expense, included as a component of cost of products sold, was
approximately $13.9 million for each of the years ended December 31, 1996,
1995, 1994 and 1993. See Old Anchor's Notes to the Consolidated Financial
Statements.
(3) Because of Chapter 11 proceedings, there has been no accrual of interest on
the $100.0 million 10.25% Senior Notes or the $200.0 million 9.875% Senior
Subordinated Debentures since September 12, 1996. If accrued, interest
expense would have increased $2.9 million and $9.2 million, respectively
during the 1997 Interim Period and the year ended December 31, 1996.
(4) Income tax provision reflects any additional valuation allowances required
to be recorded under SFAS 109. The adoption of SFAS 109 effective January
1, 1993 resulted in an increase in the cumulative net deferred tax asset by
$1.8 million. Under SFAS 109, deferred income taxes reflect the net tax
effects of temporary differences between carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for
income tax purposes, and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. If on
the basis of available evidence, it is more likely than not that all or a
portion of the deferred tax asset will not be realized, the asset must be
reduced by a valuation allowance.
H-26
<PAGE> 80
(5) Extraordinary items in the two years ended December 31, 1993 and 1996,
result from the write-off of financing costs related to debt extinguished
during the relevant periods, net of taxes.
(6) Total debt as of December 31, 1996 includes $462.3 million of prepetition
liabilities and $90.5 million outstanding under Old Anchor's
debtor-in-possession credit facility.
H-27
<PAGE> 81
ANCHOR RESOLUTION CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1996
RESULTS OF OPERATIONS
Introduction
The following table sets forth certain information derived from the
Consolidated Financial Statements of Anchor Resolution Corp., formerly Anchor
Glass Container Corporation and currently a debtor-in-possession under Chapter
11 of the Bankruptcy Code ("Old Anchor"), for the two years ended December 31,
1996. The following discussion should be read in conjunction with the
Consolidated Financial Statements of Old Anchor and notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1996
---- ----
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
(dollars in millions)
<S> <C> <C> <C> <C>
Net sales $956.6 100.0% $814.4 100.0%
Cost of products sold 906.4 94.8 831.6 102.1
Selling and administrative expenses 49.0 5.1 39.6 4.9
Restructuring and other charges 10.3 1.1 50.0 6.1
Impairment of long-lived assets ---- ---- 490.2 60.2
Write-up of assets held for sale ---- ---- (9.0) (1.1)
Loss from operations (9.1) (1.0) (588.0) (72.2)
Interest expense 56.8 5.9 48.6 6.0
Loss before reorganization items,
income taxes and extraordinary items (65.7) (6.9) (646.7) (79.4)
Loss before extraordinary items (66.0) (6.9) (653.5) (80.2)
Net loss (66.0) (6.9) (655.8) (80.5)
</TABLE>
The net loss for the year ended December 31, 1996 was $655.8 million
compared to a net loss of $66.0 million for 1995. Included in the loss for 1996
is the impairment of long-lived assets of $490.2 million. Included in the 1996
and 1995 results were first quarter charges of $50.0 million and $10.5 million,
respectively, for Old Anchor's s 1996 and 1995 restructuring programs. Excluding
the effect of these items, net loss would have been $115.6 million compared to
$55.7 million for 1995.
The decline in Old Anchor's operations is a direct result of Old
Anchor's high debt levels and industry-wide volume declines that have led to
severe competitive pricing pressures, negatively impacting operating results.
Net sales for 1996 decreased 14.9% compared to 1995, on a volume decline of
approximately 14%, primarily in the beer, iced tea and soft drink markets. As an
example, Old Anchor's 1996 volume allocation from its largest customer in 1995,
Anheuser-Busch, has been significantly reduced. The softness in overall industry
volume shipments has led to severe competitive pricing pressures, negatively
impacting operating margins. In accordance with its restructuring plans, Old
Anchor closed its Cliffwood, New Jersey plant in January 1996, and closed its
Waukegan, Illinois, Los Angeles, California and Keyser, West Virginia plants in
1995.
NET SALES
Net sales for 1996 were $814.4 million, a decrease of 14.9% compared to
$956.6 million for 1995. The decrease in net sales principally reflects the
softening in 1996 of the year-to-year
H-28
<PAGE> 82
demand for glass containers which has resulted in increased competition for
market share and lower pricing trends. In addition, as described above,
Anheuser-Busch has significantly reduced its purchases from Old Anchor.
COST OF PRODUCTS SOLD
Cost of products sold as a percentage of net sales were 102.1% for 1996
compared to 94.8% for 1995. This increase principally reflects the impact of
reduced shipping volumes and lower pricing trends, as described above. Partially
offsetting this increase is the impact of Old Anchor's strategic initiatives and
cost savings derived from Old Anchor's restructuring plans and re-engineering
program.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses declined $9.4 million, or 19.2% in
1996 compared to 1995. This decrease principally reflects lower personnel and
fringe benefit costs as a result of headcount reductions associated with Old
Anchor's re-engineering and cost reduction programs.
RESTRUCTURING AND OTHER CHARGES
In the 1995 first quarter, an additional $10.3 million charge was
recorded to reflect the benefit arrangements for employees affected by this
plan. In January 1996, formal plans were approved to further restructure certain
of Old Anchor's operations to respond to the continued decline in the industry
sales volume combined with the loss of a significant portion of the business of
Old Anchor's largest 1995 customer. A restructuring charge of approximately
$50.0 million has been recorded in the 1996 Consolidated Statement of Operations
for the closure of the Cliffwood, New Jersey plant and other restructuring
obligations.
IMPAIRMENT OF LONG-LIVED ASSETS
As a result of declining profitability, diminishing cash flows and the
bankruptcy proceedings, the entire $457.2 million of goodwill and $33.0 million
of other long-lived assets were written off.
WRITE-UP OF ASSETS HELD FOR SALE
In December 1996, Old Anchor wrote up the value of certain assets held
for sale by $9.0 million.
INTEREST EXPENSE
Interest expense was $48.6 million for 1996 compared to $56.8 million
for 1995. Because of the Bankruptcy Proceedings, there has been no accrual of
interest on the $100.0 million 10.25% Senior Notes or the $200.0 million 9.857%
Senior Subordinated Debentures since September 12, 1996. If accrued, interest
expense would have increased by $9.1 million in 1996.
LIQUIDITY AND CAPITAL RESOURCES
As a result of the continued decline in Old Anchor's results of
operations from the effect of the highly competitive glass container market, and
Old Anchor's high debt level, on September 13, 1996 (the "Petition Date"), Old
Anchor filed a voluntary petition for reorganization under Chapter 11 of the
United States Bankruptcy Code ("Chapter 11") in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"). On September 30,
1996, Anchor Recycling Corporation, a wholly-owned subsidiary of Old Anchor,
also filed a voluntary petition to reorganize under Chapter 11 in the same
court. The Chapter 11 proceedings are being jointly
H-29
<PAGE> 83
administered, with Old Anchor managing the business in the ordinary course as a
debtor-in-possession under the supervision of the Bankruptcy Court. Old Anchor
concluded that the Chapter 11 filing was necessary in order to preserve the
value of its assets and to ensure that the business had sufficient cash
resources to continue operations while it completed the sale of the business
discussed in Note 2 to the Notes to the Consolidated Financial Statements,
appearing elsewhere herein.
Old Anchor obtained debtor-in-possession ("DIP") financing from
Foothill Capital Corporation, as agent and Congress Financial Corporation, as
co-agent (the "Lender Group") to proved for a $130.0 million DIP Credit Facility
(the "DIP Facility"), which was approved by the Bankruptcy Court on November 15,
1996. The DIP Facility, which would expire September 30, 1997, provided up to
$130.0 million under a borrowing base formula, less prepetition advances under
Old Anchor's then existing Prepetition Credit Facility with the Lender Group, on
terms substantially the same as the Prepetition Credit Facility.
Advances outstanding at any one time were not to exceed an amount equal
to the Borrowing Base, consisting of accounts receivable and finished product
inventory, as defined in the Prepetition Credit Facility, and amended by the DIP
Facility. At December 31, 1996, Old Anchor's available borrowing base, as
defined under the DIP Facility was approximately $113.7 million against which
$90.5 was outstanding. Interest, at prime plus 1.125%, as defined, was payable
monthly. A commitment fee of 0.5% of the unused portion of the DIP Facility was
payable monthly.
On February 5, 1997, Anchor Glass Container Corporation ("New Anchor"),
a wholly-owned subsidiary of Consumers Packaging, Inc. ("CPI"), and
Owens-Brockway Glass Container, Inc. ("OI") acquired substantially all of the
assets and business of Old Anchor in accordance with the terms of the Asset
Purchase Agreement, dated December 18, 1996 (the "Agreement") as discussed in
Note 2 to the Notes to Consolidated Financial Statements. The total purchase
price approximated $387.9 million, excluding fees of approximately $9.9 million.
The purchase price received from OI amounted to approximately $128.4 million and
was received in cash. The remaining purchase price of approximately $250.0
million from New Anchor was comprised of approximately $200.5 million in cash,
$47.0 million face amount (1,879,320 shares) of mandatorily redeemable 10%
cumulative convertible preferred stock and $2.5 million of common stock (490,898
shares with an estimated value of $5.00 per share) of New Anchor. The purchase
price is subject to adjustment as defined in the Agreement.
Proceeds from the sale were used to repay the outstanding balance of
the DIP Facility and accrued interest thereon, at February 5, 1997, of
approximately $109.0 million. The remainder of the proceeds will be used to
satisfy prepetition liabilities, as to be determined under Old Anchor's Plan of
Reorganization. Old Anchor's principal sources of liquidity through February 5,
1997 were funds derived from operations and borrowings under the DIP Facility.
In 1996, operating activities consumed $28.4 million in cash compared
to $0.4 million of cash provided in 1995. These increases in cash consumed
reflect the increase in losses and the changes in working capital items during
the periods compared.
Capital expenditures in 1996 were $46.3 million compared to $70.4
million in 1995. In addition, in 1996, Old Anchor invested approximately $18.6
million in the joint venture with Coors Brewing Company ("Coors"). Old Anchor
invested $20.0 million in the joint venture in 1995. Also in 1995, Old Anchor
entered into sale and leaseback transactions, with respect to certain of its
glass manufacturing equipment, with an aggregate net selling price of
approximately $48.3 million.
Cash flows from financing activities for the years ended December 31,
1996 and 1995 were $78.9 million and $52.2 million, respectively. The 1996 cash
flows from financing activities
H-30
<PAGE> 84
principally reflects a $92.5 million capital contribution received from Vitro,
Sociedad Anonima and borrowings under the Prepetition Credit Facility, modified
by the DIP Facility. In February 1997, Old Anchor received an additional capital
contribution of $8.4 million in satisfaction of obligations outstanding under
the $20.0 million letter of credit facility, which was terminated at that time.
As a result of the Bankruptcy Proceedings, Old Anchor is in default of
various covenants relating to Old Anchor's outstanding prepetition debt.
However, under Chapter 11 proceedings, litigation or actions by creditors
related to theses defaults are stayed. In addition, the DIP Facility required
that Old Anchor's collateral value and availability, as defined, could not be
less than a specified amount as measured on a rolling four-week period
throughout the term of the DIP Facility. Prior to the repayment of the DIP
Facility, Old Anchor was in full compliance with these covenants.
IMPACT OF INFLATION
The impact of inflation on the costs of Old Anchor, and the ability to
pass on cost increases in the form of increased sales prices, is dependent upon
market conditions. While the general level of inflation in the domestic economy
has been at relatively low levels since Old Anchor's formation in 1983, Old
Anchor has generally been unable, since the end of 1991, to fully pass on
inflationary cost increases as a result of competitive pricing pressures. This
has negatively impacted Old Anchor's operating results.
SEASONALITY
Due principally to the seasonal nature of the brewing, iced tea and
soft drink industries, in which demand is stronger during the summer months, Old
Anchor's shipment volume is typically highest in the second and third quarters.
Consequently, Old Anchor historically builds inventory during the first quarter
in anticipation of seasonal demands during the second and third quarters.
However, industry patterns existing over the last 18 months have somewhat
altered the normal seasonal trends. In addition, Old Anchor generally schedules
shutdowns of its plants for furnace rebuilds and machine repairs in the first
and fourth quarters of the year to coincide with scheduled holiday and vacation
time under its labor union contracts. These shutdowns and seasonal sales
patterns adversely affect profitability during the first and fourth quarters.
H-31
<PAGE> 85
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ANCHOR GLASS CONTAINER CORPORATION
Date: March 31, 1998 By /s/ M. William Lightner, Jr.
---------------------------------
M. William Lightner, Jr.
Senior Vice President, Finance
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Richard M. Deneau
- -------------------------------------
Richard M. Deneau
President and Chief Operating Officer
March 31, 1998
/s/ M. William Lightner, Jr.
- -------------------------------------
M. William Lightner, Jr.
Senior Vice President, Finance
Chief Financial Officer and Treasurer
March 31, 1998
Directors:
/s/ Paul H. Farrar
- -------------------------------------
Paul H. Farrar
March 31, 1998
/s/ John J. Ghaznavi
- -------------------------------------
John J. Ghaznavi
March 31, 1998
/s/ David T. Gutowski
- -------------------------------------
David T. Gutowski
March 31, 1998
/s/ M. William Lightner, Jr.
- -------------------------------------
M. William Lightner, Jr.
March 31, 1998
/s/ C. Kent May
- -------------------------------------
C. Kent May
March 31, 1998
<PAGE> 1
Exhibit 4.10
ANCHOR GLASS CONTAINER CORPORATION,
as Issuer,
and
CONSUMERS U.S., INC.,
as Parent
and
The Bank of New York,
as Trustee
___________________
INDENTURE
Dated as of March 16, 1998
___________________
$50,000,000
9 7/8% Senior Notes due 2008
<PAGE> 2
Cross-Reference Table
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- ----------
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 14.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 14.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06; 4.08; 14.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16; 10.10
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 14.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.05
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.01
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.01
- ---------------------------
</TABLE>
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount . . . . . . . . . . . . . . . . . . 29
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.04. Paying Agent to Hold Assets in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.05. Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.09. Treasury Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.14. Deposit of Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.15. Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.16. Book-Entry Provisions for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.17. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.02. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.03. Maintenance of Corporate Existence and Corporate Separateness . . . . . . . . . . . . . . . . 44
SECTION 4.04. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.05. Maintenance of Properties and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.06. Compliance Certificate; Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.08. SEC Reports; Reports to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.09. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.10. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.11. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.12. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries . . . . . . . . 52
SECTION 4.14. Limitations on Activities of the Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.15. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.16. Limitation on the Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.17. Limitation on Issuance and Sale of Capital Stock of Restricted Subsidiaries . . . . . . . . . 58
SECTION 4.18. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.19. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.20. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.21. Restricted and Unrestricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.07. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.05. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.12. Trustee's Application for Instructions from the Company . . . . . . . . . . . . . . . . . . . 73
ARTICLE EIGHT
[RESERVED]
ARTICLE NINE
[RESERVED]
ARTICLE TEN
[RESERVED]
ARTICLE ELEVEN
</TABLE>
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<TABLE>
<S> <C> <C>
[RESERVED]
ARTICLE TWELVE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 12.01. Termination of the Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.02. Legal Defeasance and Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.03. Conditions to Legal Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . 76
SECTION 12.04. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.05. Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE THIRTEEN
AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE AND THE NOTES
SECTION 13.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 13.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 13.03. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.04. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.05. Reference in Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.06. Compliance with TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.07. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 13.08. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE FOURTEEN
MISCELLANEOUS
SECTION 14.01. TIA Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 14.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 14.03. Communications by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14.05. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 14.06. Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.07. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.08. Governing Law; Consent to Jurisdiction; Service of Process . . . . . . . . . . . . . . . . . 85
SECTION 14.09. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 14.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 14.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 14.12. Duplicate and Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
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<TABLE>
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SECTION 14.13. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 14.14. Table of Contents, Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
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INDENTURE, dated as of March 16, 1998, among Anchor Glass Container Corporation,
a Delaware corporation (the "Company"), Consumers U.S., Inc., a Delaware
corporation (the "Parent")(for purposes of Sections 4.03, 4.14, 6.01, 6.02,
14.08 and 14.11), and The Bank of New York, a New York banking corporation, as
Trustee (the "Trustee").
WHEREAS, the Company has duly authorized the creation of an
issue of 9 7/8% Senior Notes due 2008 (the "Initial Notes") and, if and when
issued in exchange for Initial Notes pursuant to the Indenture and the
Registration Rights Agreement, an issue of the Company's 9 7/8% Senior Notes
due 2008 (the "Exchange Notes", and together with the Initial Notes, the
"Notes") and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture;
WHEREAS, the Parent has duly authorized the execution and
delivery of this Indenture;
WHEREAS, all things necessary to make the Notes, when duly
issued and executed by the Company, and authenticated and delivered hereunder,
the valid obligations of the Company, and to make this Indenture a valid and
binding agreement of the Company and the Parent, have been done;
NOW, THEREFORE, for good and valuable consideration, the
parties hereby agree as follows:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in
Section 6.02(a).
"Acquired Indebtedness" of any Person means Indebtedness of
another Person and any of its Subsidiaries existing at the time such other
Person becomes a Subsidiary (Restricted Subsidiary in the case of the Company)
of the referent Person or at the time it merges or consolidates with the
referent Person or any of the referent Person's Subsidiaries (Restricted
Subsidiaries in the case of the Company) or assumed by the referent Person or
any Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person in connection with the acquisition of assets from such other
Person and in each case not Incurred by such other Person or its Subsidiaries
in connection with, or in anticipation or contemplation of, such other Person
becoming a Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person or such acquisition, merger or consolidation.
"Affiliate" means, when used with reference to any Person,
any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the referent Person. For the purposes
of this definition, "control" when used with
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respect to any specified Person means the power to direct or cause the
direction of management or policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise
(and the terms "controlling" and "controlled" have meanings correlative of the
foregoing) or the ownership of more than 10% of the Voting Stock of such
Person; provided that Bankers Trust Company and The Toronto-Dominion Bank and
each of their Affiliates will not be deemed to be affiliates of the Company and
for purposes of payment to employee compensation, a person shall not be deemed
to be an Affiliate of the Company by virtue of his or her status as an officer
or director of the Company absent other elements of control.
"Affiliate Transaction" has the meaning set forth in Section
4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Anchor Acquisition" means the acquisition on February 5, 1997
by the Company of certain assets and certain liabilities of Old Anchor pursuant
to the Asset Purchase Agreement dated December 18, 1996 among Consumers
Packaging, Old Anchor, Owens-Brockway Glass Container, Inc. (the rights and
obligations of Consumers Packaging thereunder having been assigned to the
Company).
"all or substantially all" shall have the meaning given such
phrase in the Revised Model Business Corporation Act.
"Asset Acquisition" means (i) an Investment by the Company or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged with the Company or any
Restricted Subsidiary or (ii) the acquisition by the Company or any Restricted
Subsidiary of assets of any Person comprising a division or line of business of
such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease, assignment or other disposition or series of
related sales, issuances, conveyances, transfers, leases, assignments or other
dispositions (including, without limitation, by merger or consolidation, and
whether by operation of law or otherwise) for value by the Company or by any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person (other than by a Restricted Subsidiary to the Company or another
Restricted Subsidiary) of (i) any Capital Stock of a Restricted Subsidiary held
or beneficially owned by the Company or any Restricted Subsidiary, (ii) any
other Property (excluding Capital Stock not covered in (i) or (iii)) of the
Company or of any Restricted Subsidiary or (iii) non-cash consideration
received by the Company or any Restricted Subsidiary pursuant to Section 4.16.
Notwithstanding the foregoing, Asset Sales shall not include (a) the creation
of any Permitted Lien, (b) any disposition of Bank Collateral, (c) the sale or
other disposition of inventory in the ordinary course of business, (d) the sale
or other disposition of and any item of machinery, equipment,
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<PAGE> 11
furniture, apparatus, tools, implements or other similar Property, the Fair
Market Value of which does not exceed $500,000 in a single or series of related
transactions or $2.5 million in the aggregate in any fiscal year, or (e) the
sale of receivables pursuant to a receivables securitization or similar
program.
"Asset Sale Offer" has the meaning provided in Section 4.16.
"Attributable Indebtedness" means, in respect of a Sale and
Leaseback Transaction at the time of determination thereof the capitalized
amount of Indebtedness in respect of such transaction that would appear on the
face of a balance sheet of the lessee thereunder in accordance with GAAP.
"Authenticating Agent" has the meaning provided in Section
2.02.
"Authority" means any national, federal, state, municipal or
local government or quasi-governmental agency or authority.
"Bank Collateral" means all of the collateral securing the
Revolving Credit Facility.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy," as now and hereafter in effect or any successor statute.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means each day which is not a Saturday, a
Sunday or any day which banking institutions are not required to open in the
City of New York.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease that are
required to be classified and accounted for as a capital lease obligations
under GAAP and, for purposes of this definition, the amount of such obligations
at any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP. Each Capitalized Lease Obligation shall be
deemed to be secured by a Lien on the property subject to the lease.
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<PAGE> 12
"Capital Stock" means (i) with respect to any person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person, and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (i) marketable direct obligations
issued or unconditionally guaranteed by the United States or Canadian
Government or issued by any agency thereof and backed by the full faith and
credit of the United States or Canada, in each case maturing within one year
from the date of acquisition thereof; (ii) marketable direct obligations issued
by any state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having at
least the second highest rating obtainable from either Standard & Poor's Rating
Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having at least the second highest rating obtainable
from either S&P's or Moody's; (iv) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
issued by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $500,000,000; (v) shares of any money market mutual fund that
(a) has its assets invested continuously in the types of investments referred
to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has at least the second highest rating obtainable from
either S&P or Moody's; and (vi) repurchase agreements with respect to, and
which are fully secured by a perfected security interest in, obligations of a
type described in clause (i) or clause (ii) above and are with any commercial
bank described in clause (iv) above.
"Change of Control" means an event or series of events by
which (a) (i) Permitted Holders shall cease to be the beneficial owner
(including, without limitation, economic interest and voting power), directly
or indirectly, of at least 40% (or after a Qualified Public Offering, 25%) of
the Fully-Diluted Voting Stock of Consumers Packaging, the Parent or the
Company, (ii) the Parent shall cease to be the owner (including, without
limitation, economic interest and voting power) directly of at least 40% (or
after a Qualified Public Offering, 25%) of the Fully-Diluted Voting Stock of
the Company or (iii) any Person or group (as defined under Rule 13d-3 under the
Exchange Act) other than one or more of the Permitted Holders or, in the case
of the Company, Smith Barney in its capacity as Escrow Agent for the creditors
of Old Anchor in connection with its Chapter 11 proceedings under the
United States Bankruptcy Code so long as it does not in fact exercise control
over the Company, becomes the beneficial owner (as defined under Rule 13d-3
under the Exchange Act), directly or indirectly, of more of the Fully-Diluted
Voting Stock of Consumers Packaging, the Parent or the Company, as the case may
be, than is then beneficially owned, directly or indirectly, by one or more of
the Permitted Holders; (b) during any period of two consecutive years or in the
case this event occurs within the first two years after Issue Date,
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<PAGE> 13
such shorter period as shall have begun on the Issue Date, individuals who at
the beginning of such period constituted the Board of Directors of the Company
or Consumer Packaging or the Parent, as the case may be, on the Issue Date
(together with any new or replacement directors whose proposal for election by
the shareholders of the Company, Consumers Packaging or the Parent, as the case
may be, or by the other directors was approved by a vote of 66 2/3% of the
directors of the Company or Consumers Packaging or the Parent, as the case may
be, then still in office who were either directors on the Issue Date or whose
election or nomination for election was previously so approved) shall cease for
any reason to constitute a majority of the members of the Board of Directors of
the Company or Consumers Packaging or the Parent, as the case may be, then
still in office; provided that if any Person or group other than the applicable
Permitted Holders is able to elect a majority of the Board of Directors of
Consumers Packaging or the Company or the Parent, as the case may be, pursuant
to an agreement with one or more Persons, a Change of Control shall be deemed
to have occurred; (c) the Company or Consumers Packaging or the Parent, as the
case may be, consolidates with or merges with or into another Person or any
Person consolidates with, or merges with or into, the Company, Consumers
Packaging or the Parent, as the case may be (in each case, whether or not in
compliance with the terms of the Indenture), in any such event pursuant to a
transaction in which immediately after the consummation thereof Persons owning
a majority of the Voting Stock of the Company or Consumers Packaging or the
Parent, as the case may be, immediately prior to such consummation shall cease
to own a majority of the Voting Stock of the Company or Consumers Packaging or
the Parent, as the case may be, or the surviving entity if other than the
Company or Consumers Packaging or the Parent, as the case may be; or (d) the
Company or Consumers Packaging or the Parent conveys, transfers or leases all
or substantially all of its assets.
"Change of Control Date" has the meaning provided in Section
4.15.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Commodity Agreement" of any Person means any forward
contract, commodity swap, commodity option or other similar financial agreement
or arrangement relating to, or the value of which is dependent upon,
fluctuations in commodity prices.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
such successor.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income plus
(ii) to the extent that any of the
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<PAGE> 14
following shall have been taken into account in determining Consolidated Net
Income, (A) all net income taxes of such Person and its Subsidiaries
(Restricted Subsidiaries in the case of the Company) paid or accrued in
accordance with GAAP for such period (without including or taking into account
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions of assets outside the
ordinary course of business), Consolidated Interest Expense, amortization
expense and depreciation expense (including depreciation or amortization
expense included in cost of goods sold), and (B) other noncash items (other
than noncash interest) reducing Consolidated Net Income, other than any noncash
item which requires the accrual of or a reserve for cash charges for any future
period, less other noncash items increasing Consolidated Net Income, all as
determined on a consolidated basis for such Person and its Subsidiaries
(Restricted Subsidiaries in the case of the Company) in conformity with GAAP.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense and (ii) the product of (x) the amount of all cash dividend payments on
any series of Preferred Stock or Disqualified Capital Stock of such Person and
of its Subsidiaries (Restricted Subsidiaries in the case of the Company) paid,
accrued or scheduled to be paid or accrued during such period times (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local tax rate
of such Person, expressed as a decimal.
"Consolidated Interest Coverage Ratio" means, with respect to
any Person, the ratio of Consolidated EBITDA of such Person during the Four
Quarter Period ending on or prior to the date of the transaction or event
giving rise to the need to calculate the Consolidated Interest Coverage Ratio
(the "Transaction Date") to Consolidated Fixed Charges of such Person for the
Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the Incurrence or repayment of any
Indebtedness of such Person or any of its Subsidiaries (Restricted Subsidiaries
in the case of the Company) (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any Incurrence of other
Indebtedness (and the application of the proceeds thereof), other than the
Incurrence or repayment (not resulting in a permanent reduction of available
borrowings) of Indebtedness in the ordinary course of business pursuant to
working capital facilities (including the Revolving Credit Facility), at any
time subsequent to the first day of the Four Quarter Period and on or prior to
the Transaction Date, as if such Incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (Restricted
Subsidiaries in the case of the Company) (including any Person who becomes a
Subsidiary (Restricted Subsidiary in the case of the Company) as a result of
any such Asset Acquisition) Incurring Acquired Indebtedness at any time
subsequent to the to the first day of the Four Quarter Period and on or prior
to the Transaction Date), as if such Asset
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<PAGE> 15
Sale or Asset Acquisition (including the Incurrence of any such Indebtedness or
Acquired Indebtedness and also including or deducting any Consolidated EBITDA
associated with such Asset Acquisition or Asset Sale, respectively) occurred on
the first day of the Four Quarter Period; provided that the Consolidated EBITDA
of any Person acquired shall be included only to the extent includable pursuant
to the definition of "Consolidated Net Income". For purposes of this
definition, (x) whenever pro forma effect is to be given to any of the
foregoing transactions, the pro forma calculations will be determined in
accordance with Regulation S-X promulgated by the Commission and (y) the
Company's Consolidated EBITDA, Consolidated Fixed Charges, Consolidated
Interest Expense and Consolidated Net Income for the second, third and fourth
quarters of 1996 shall be Pro Forma. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Interest Coverage Ratio", (1) interest on
Indebtedness determined on a fluctuating basis as of the Transaction Date
(including Indebtedness actually Incurred on the Transaction Date) and which
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (2) notwithstanding clause (1) above, interest
on Indebtedness determined on a fluctuating basis, to the extent such interest
is covered by agreements relating to Interest Swap Obligations, shall be deemed
to accrue at the rate per annum resulting after giving effect to the operation
of such agreements; and (3) interest on Indebtedness Incurred in the ordinary
course of business pursuant to working capital facilities (including the
Revolving Credit Facility) shall be determined as if the average amount of
borrowings outstanding thereunder during the Four Quarter Period shall have
been outstanding on every day of such Four Quarter Period and interest had
accrued at the rate determined pursuant to the preceding clause (1) or (2)
(whether or not such Indebtedness shall have been outstanding on the
Transaction Date).
"Consolidated Interest Expense" means, with respect to any
Person for any period, the aggregate of the interest expense (without deduction
of interest income) of such Person and its Subsidiaries (Restricted
Subsidiaries in the case of the Company) for such period, on a consolidated
basis, as determined in accordance with GAAP and including, without
duplication, (a) all amortization of original issue discount; (b) the interest
component of Capitalized Lease Obligations paid or accrued by such Person and
its Subsidiaries (Restricted Subsidiaries in the case of the Company) during
such period; (c) net cash costs under all Interest Swap Obligations (including
amortization of fees); (d) all capitalized interest; (e) to the extent that
such Person or any of its Subsidiaries (Restricted Subsidiaries in the case of
the Company) guarantees interest on any debt of any borrower, interest paid by
such borrower during such period on such debt but only to the extent of the
amount of the interest Guaranteed; (f) all amortization or write off of
deferred financing costs of such Person and its consolidated Subsidiaries
(Restricted Subsidiaries in the case of the Company) during such period (other
than the write-off of financing fees related to the Company's Senior Credit
Agreement dated February 5, 1997) and any premium or penalty paid in connection
with redeeming or retiring Indebtedness of such Person and its consolidated
Subsidiaries (Restricted Subsidiaries in the case of the Company) prior to the
Stated Maturity thereof; and (g) the interest portion of any deferred payment
obligations for such period.
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Subsidiaries (Restricted Subsidiaries in the case of the Company) for such
period on a consolidated basis, determined in accordance with GAAP; provided
that there shall be excluded therefrom (a) after-tax gains from Asset Sales or
abandonments or reserves relating thereto, (b) after-tax items classified as
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<PAGE> 16
extraordinary or nonrecurring gains or losses, (c) the net income of any Person
acquired in a "pooling of interests" transaction accrued prior to the date it
becomes a Subsidiary (Restricted Subsidiary in the case of the Company) of the
referent Person or is merged or consolidated with the referent Person or any
Subsidiary of the referent Person, (d) the net income (but not loss) of any
Subsidiary (Restricted Subsidiary in the case of the Company) of the referent
Person to the extent that the declaration of dividends or similar distributions
by that Subsidiary of that income is restricted by a contract, operation of law
or otherwise, except to the extent of dividends or distributions paid in the
form of cash or Cash Equivalents to the referent Person or to a Subsidiary
(Restricted Subsidiaries in the case of the Company) of the referent Person by
such Person, (e) the net income of any Person, other than a Subsidiary
(Restricted Subsidiary in the case of the Company) of the referent Person,
except to the extent of dividends or distributions paid in the form of cash or
Cash Equivalents to the referent Person or to a Subsidiary (Restricted
Subsidiaries in the case of the Company) of the referent Person by such Person,
(f) any restoration to income of any contingency reserve except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earning of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" of any Person means the total of the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.
"Consumers Packaging" means Consumers Packaging Inc., a
corporation organized under the federal laws of Canada.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date hereof is located at 101 Barclay Street,
Floor 21 West, New York, New York 10286.
"Covenant Defeasance" has the meaning provided in Section
12.02.
"Currency Agreements" means, in respect of a Person, any
foreign exchange currency futures or options, currency swap agreements, forward
exchange rate agreements, exchange rate collar agreements, exchange rate
insurance or other similar agreements or arrangements, or combination thereof,
as to which such Person is a party or a beneficiary.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which
is, or with the
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<PAGE> 17
lapse of time or the giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning provided in Section 2.12.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Discontinued Plant" means plants of the Company closed prior
to the Issue Date including, without limitation, those located in Dayville,
Connecticut and Houston, Texas, and one plant closed by the Company after the
Issue Date which is specified as such in an Officers' Certificate.
"Discontinued Plant Asset Sale" means an Asset Sale of a
Discontinued Plant.
"Discontinued Plant Closing Costs" means cash expenses
incurred by the Company and its Restricted Subsidiaries as a result of the
closing of a Discontinued Plant no later than 270 days after a Discontinued
Plant Asset Sale.
"Disqualified Capital 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) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to ten months prior to the date on which the Notes mature; provided,
however, that any Capital Stock that would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require the
Company to repurchase or redeem such Capital Stock upon the occurrence of a
Change of Control occurring on or prior to the first anniversary date on which
the Notes mature shall not constitute Disqualified Stock if (i) the change of
control provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions applicable to the Notes
contained in Section 4.15 and (ii) such Capital Stock specifically provides
that the Company will not repurchase or redeem any such stock pursuant to such
provisions prior to the Company's repurchase of such Notes as are required to
be repurchased pursuant to Section 4.15.
"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.
"Equity Offering" means an offering of nonredeemable Common
Stock of the Company to any Person other than the Company or any of its
Subsidiaries.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds Amount" has the meaning provided in Section
4.16.
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<PAGE> 18
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto and the rules and
regulations promulgated by the SEC thereunder.
"Exchange Notes" has the meaning provided in the preamble to
this Indenture.
"Exchange Offer" means the registration by the Company under
the Securities Act pursuant to a registration statement of the offer by the
Company to each Holder of the Initial Notes to exchange all the Initial Notes
held by such Holder for the Exchange Notes in an aggregate principal amount
equal to the aggregate principal amount of the Initial Notes held by such
Holder, all in accordance with the terms and conditions of the Registration
Rights Agreement.
"Fair Market Value" or "Fair Value" means, with respect to any
Property, the price which could be negotiated in an arm's-length transaction,
for cash, between an informed, willing and able seller and an informed and
willing and able buyer, neither of whom is under undue pressure or compulsion
to complete the transaction. Fair Market Value shall be determined by the
Company acting reasonably and in good faith; provided, however, that if the
value of the aggregate consideration to be received by the Company or any of
its Subsidiaries from any Asset Sale could reasonably be expected to exceed (i)
$5.0 million, Fair Market Value shall be determined by the Board of Directors
of the Company as evidenced by a Board Resolution delivered to the Trustee or
(ii) $10.0 million, Fair Market Value shall also be determined by an
Independent Financial Advisor in a written opinion addressed to the Trustee.
"Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing in the United States
that is, in the reasonable and good faith judgment of the Board of Directors of
the Company, qualified to perform the task for which such firm has been
engaged.
"First Mortgage Notes" means the Company's 11 1/4% First
Mortgage Notes due 2005.
"Four Quarter Period" means, in respect of any Person at any
time, the most recently completed four consecutive full fiscal quarters
(provided that in the case of the Company, for the first fiscal quarter of
1997, shall be the period from February 5, 1997 through March 31, 1997).
"Fully-Diluted Voting Stock" means, in respect of any Person
at any time, the Voting Stock of such Person assuming that all outstanding
options, warrants or other rights to acquire such Voting Stock have been
exercised and all outstanding securities convertible into or exchangeable for
such Voting Stock have been converted or exchanged at such time, in each case
in accordance with their terms in effect at such time.
"G&G Investments" means G&G Investments Inc., a Delaware
corporation.
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<PAGE> 19
"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 may be approved by a significant segment of
the accounting profession of the United States, which are applicable as of the
date of determination.
"Global Note" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of
any Person, directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay for (or advance
or supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" will not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided that (A) any
Indebtedness of a Person existing at the time such Person becomes (after the
Issue Date) a Restricted Subsidiary (whether by merger, consolidation,
acquisition or otherwise) of the Company shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Restricted Subsidiary and (B) any
amendment, modification or waiver of any document pursuant to which
Indebtedness was previously Incurred shall be deemed (without duplication), as
of the date of and after giving effect to, such amendment, modification or
waiver, to be an Incurrence of additional Indebtedness unless such amendment,
modification or waiver does not (i) increase the principal or premium thereof
or interest rate thereon (including by way of original issue discount) or (ii)
change to an earlier date the Stated Maturity thereof or the date of any
scheduled or required principal payment thereon or the time or circumstances
under which such Indebtedness shall be redeemed; provided, however, that a
change in GAAP that results in an obligation of such Person that exists at such
time becoming Indebtedness will not be deemed an Incurrence of
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<PAGE> 20
such Indebtedness.
"Indebtedness" means with respect to any Person, without
duplication, (i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money, (ii) the principal of and
premium (if any) in respect of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all Capitalized Lease
Obligations of such Person, including, without limitation, Attributable
Indebtedness, (iv) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade accounts
payable in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (v) all reimbursement obligations of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) all Indebtedness of others (including all dividends of other
Persons for the payment of which is) Guaranteed, directly or indirectly, by
such Person or that is otherwise its legal liability or which such Person has
agreed to purchase or repurchase or in respect of which such Person has agreed
contingently to supply or advance funds, (vii) net liabilities of such Person
under Interest Swap Obligations, Commodity Agreements and Currency Agreements,
(viii) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on any Property (including, without limitation, leasehold interests
and any other tangible or intangible property) of such Person, whether or not
such Indebtedness is assumed by such Person or is not otherwise such Person's
legal liability; provided that, if the obligations so secured have not been
assumed by such Person or are otherwise not such Person's legal liability, the
amount of such Indebtedness for the purposes of this definition shall be
limited to the lesser of the amount of such Indebtedness secured by such Lien
or the Fair Market Value of the Property subject to such Lien and (ix) all
Disqualified Capital Stock issued by such Person, with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, provided that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the full amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with GAAP. Notwithstanding the foregoing, (x) Indebtedness shall
not include any endorsements for collection or deposit in the ordinary course
of business or any Indebtedness that has been defeased or satisfied in
accordance with the terms of the documents governing such Indebtedness and is
no longer considered Indebtedness under GAAP and (y) any realization of a
Permitted Lien on Bank Collateral shall not constitute the Incurrence of
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
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<PAGE> 21
"Independent" when used with respect to any specified Person
means a Person who (a) is in fact independent, (b) does not have any direct
financial interest or any material indirect financial interest in the Company
or any of its Subsidiaries, or in any Affiliate of the Company or any of its
Subsidiaries and (c) is not an officer, employee, promoter, trustee, partner,
director or person performing similar functions for the Company or any of its
Subsidiaries. Whenever it is provided in the Indenture that any Independent
Person's opinion or certificate shall be furnished to the Trustee, such Person
shall be appointed by the Company in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read this definition and
that the signer is Independent within the meaning thereof.
"Independent Financial Advisor" means a Financial Advisor
that is Independent.
"Initial Notes" has the meaning provided in the preamble to
this Indenture.
"Initial Purchasers" means TD Securities (U.S.A.) Inc. and BT
Alex. Brown Incorporated.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a) (1), (2),
(3) or (7) under the Securities Act.
"Intercompany Agreement" means the Intercompany Agreement,
dated as of April 17, 1997, as amended from time to time.
"Intercompany Indebtedness" means any Indebtedness of the
Company or any Restricted Subsidiary which, in the case of the Company, is
owing to any Restricted Subsidiary and which, in the case of any such
Restricted Subsidiary, is owing to the Company or any Restricted Subsidiary;
provided that if as of any date any Person other than the Company or a
Restricted Subsidiary owns or holds such Indebtedness, or holds any Lien in
respect thereof, such Indebtedness shall no longer be Intercompany Indebtedness
permitted to be Incurred pursuant to Section 4.12.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of any
Person under any interest rate swap agreement, interest rate cap, collar or
floor agreement or other similar financial agreement or other interest rate
hedge or arrangement designed to protect the Company or any of its Subsidiaries
against or manage exposure to fluctuations in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.
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<PAGE> 22
"Investment" by any Person means any direct or indirect (i)
loan, advance or other extension of credit or capital contribution (by means of
transfers of cash or other Property (valued at the Fair Market Value thereof as
of the date of transfer) to others or payments for Property or services for the
account or use of others, or otherwise); (ii) purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidences of
equity ownership or Indebtedness issued by any other Person (whether by merger,
consolidation, amalgamation or otherwise (but excluding any merger,
consolidation or amalgamation subject to Article 5) and whether or not
purchased directly from the issuer of such securities or evidences of
Indebtedness); (iii) Guarantee or assumption of any Indebtedness or any other
obligation of any other Person; (iv) all other items that would be classified
as investments (including, without limitation, purchases of assets outside the
ordinary course of business) on a balance sheet of such Person prepared in
accordance with GAAP; and (v) any payment made by such Person to any other
Person in order to obtain a commitment from such other Person to purchase
products or services from such Person, but excluding the purchase of assets
(which for this purpose shall not include any equity or debt securities) used
in a Related Business and excluding any trade accounts receivable in the
ordinary course of business and notes receivable from employees received solely
in exchange for the issuance by the Company to such employees of Qualified
Capital Stock. The amount of any Investment shall not be adjusted for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"Issue Date" means the date of original issuance of the Notes.
"Legal Defeasance" has the meaning provided in Section 12.02.
"Legal Holiday" has the meaning set forth in Section 14.07.
"Legal Requirements" means any and all present and future
judicial and administrative rulings and decisions, and any and all present and
future Federal, state and local laws, ordinances, rules, regulations, permits
and certificates, of any Authority, in each case in any way applicable to the
Company or the Collateral (or the ownership or use thereof).
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge easement, restriction, covenant, right of way, adverse claim
affecting title to real or personal property, or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical effect of
any of the foregoing.
"Loan Agreement" has the meaning provided in the recitals
hereto.
"Management Agreement" means the Management Agreement between
G&G Investments and the Company as in effect on the Issue Date.
"Material Adverse Effect" means a material adverse effect upon
(i) the business,
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<PAGE> 23
operations, properties, assets, financial condition or prospects of the Company
and its Restricted Subsidiaries taken as a whole, (ii) the ability of the
Company or the Parent to perform its obligations under the Indenture or the
Notes or (iii) the material rights and remedies of the Trustee and the Holders
under the Indenture or the Notes.
"Maturity Date" means March 15, 2008.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale,
cash proceeds of such Asset Sale (including Cash Equivalents) net of reasonable
transaction costs of sale including, but not limited to, (i) income taxes
reasonably estimated to be payable as a result of such Asset Sale, (ii) payment
of the outstanding principal amount of, premium or penalty, if any, and
interest on, any Indebtedness that is secured by a Permitted Lien on the
property or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale, (iii) any underwriting, brokerage
or other customary selling commissions and reasonable legal, advisory and other
fees and expenses, including title and recording expenses and reasonable
expenses incurred for preparing such assets for sale, associated therewith, and
(iv) payments of unassumed liabilities (not constituting Indebtedness) relating
to the assets sold at the time of, or within 30 days after, the date of such
sale; provided that the Net Cash Proceeds in the case of any Discontinued Plant
Asset Sale will be deemed to have been applied in accordance with Section 4.16
if used to pay Discontinued Plant Closing Costs attributable to such
Discontinued Plant subject to a limit of up to $5 million per Discontinued
Plant and up to $20.0 million in the aggregate for all Discontinued Plant Asset
Sales from the Issue Date.
"Net Equity Proceeds" means (a) in the case of any sale by the
Company of Qualified Capital Stock of the Company, the aggregate net cash
proceeds received by the Company, after payment of expenses, commissions and
the like (including, without limitation, brokerage, legal, accounting and
investment banking fees and commissions) incurred in connection therewith, and
(b) in the case of any exchange, exercise, conversion or surrender of any
outstanding Indebtedness of the Company or any Restricted Subsidiary for or
into shares of Qualified Capital Stock of the Company, the amount of such
Indebtedness (or, if such Indebtedness was issued at an amount less than the
stated principal amount thereof, the accrued amount thereof as determined in
accordance with GAAP) as reflected in the consolidated financial statements of
the Company prepared in accordance with GAAP as of the most recent date next
preceding the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid in cash by the holder of such
Indebtedness to the Company or to any Restricted Subsidiary upon such exchange,
exercise, conversion or surrender and less any and all payments made to the
holders of such Indebtedness, and all other expenses incurred by the Company in
connection therewith), in the case of each of (i) and (ii) to the extent
consummated after the Issue Date; provided that the exchange, exercise,
conversion or surrender of any Subordinated Obligations shall not be or be
deemed to be included in Net Equity Proceeds unless such Subordinated
Obligation was issued after the Issue Date.
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<PAGE> 24
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes treated
as a single class of securities, as amended or supplemented from time to time
in accordance with the terms hereof, that are issued pursuant to this
Indenture.
"OI Assurance Agreement" means the OI Assurance Agreement
attached hereto as Exhibit H.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
amounts payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated
March 11, 1998, pursuant to which the Initial Notes were offered, and any
supplement thereto.
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, any Vice-President, the Chief Financial Officer, the
Controller, the Treasurer, any Assistant Treasurer or the Secretary of the
Company or any Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by an
Officer and delivered to the Trustee that shall comply with Sections 14.04 and
14.05.
"Old Anchor" means Anchor Resolution Corp., a Delaware
corporation (formerly Anchor Glass Container Corporation).
"144A Global Note" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company, and who shall be reasonably
acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Notes; provided that, if the Notes are to be
redeemed, notice of such redemption has
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<PAGE> 25
been duly given pursuant to this Indenture or provision therefor satisfactory
to the Trustee has been made;
(iii) Notes which have been paid pursuant to Section 2.07 or in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof satisfactory to it
that such Notes are held by a bona fide purchaser in whose hands such Notes are
valid obligations of the Company; and
(iv) Notes which have been defeased pursuant to Article 12.
provided, however, that in determining whether the Holders of the requisite
principal amount of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which a Trust Officer of the Trustee actually knows to be so
owned shall be so disregarded. Notes so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Parent" means Consumers U.S., Inc., a Delaware corporation.
"Paying Agent" has the meaning provided in Section 2.03.
"Permits" means all licenses, permits, variances and
certificates used in connection with the ownership, operation, improvement, use
or occupancy of any Collateral Property (including, without limitation,
business licenses, state health department licenses, licenses to conduct
business and all such other permits, licenses and rights, obtained from any
Authority concerning ownership, improvement, operation, use or occupancy of
such Collateral Property).
"Permitted Holders" means (a) in the case of Consumers
Packaging, (i) John J. Ghaznavi; (ii) the spouse, parents, siblings,
descendants (including children or grandchildren by adoption) of John J.
Ghaznavi or of such spouse or siblings; (iii) in the event of the incompetence
or death of any of John J. Ghaznavi or any of the Persons described in clause
(ii), such Person's estate, executor, administrator, committee or other
personal representative in each case who at any particular date shall
beneficially own or have the right to acquire, directly or indirectly, Voting
Stock of Consumers Packaging; (iv) any trusts created for the sole benefit of
John J. Ghaznavi or the Persons described in clauses (ii) or (iii) or any trust
for the benefit of such trust; or (v) any Person of which John J. Ghaznavi or
any of the Persons described in clauses (ii) or (iii) (x) "beneficially owns"
(as defined in Rules 13d-3 and 13d-5
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<PAGE> 26
under the Exchange Act) on a fully-diluted basis all of the Voting Stock of
such Person or (y) is the sole trustee or general partner, or otherwise has the
sole power to manage the business and affairs, of such Person and (b) in the
case of the Company and the Parent, Consumers Packaging and its Wholly-Owned
Subsidiaries.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Notes and this Indenture,
including Indebtedness in respect of obligations of the Company to the Trustee;
(ii) Indebtedness outstanding from time to time pursuant
to the Revolving Credit Facility in an amount not to exceed the greater of (a)
$125.0 million and (b) the sum of 90% of the gross book value of the accounts
receivable of the Company and its Subsidiaries and 70% of the gross book value
of the inventory of the Company and its Subsidiaries, in each case calculated
in accordance with GAAP;
(iii) Indebtedness outstanding on the Issue Date;
(iv) Commodity Agreements; provided, however, that such
Commodity Agreements are entered into for the purpose of reducing risk in the
ordinary course of the financial management of the Company or any Restricted
Subsidiary and designed to protect the Company or such Restricted Subsidiary
against fluctuations in commodity prices;
(v) Indebtedness Incurred in connection with (a) Interest
Swap Obligations and Currency Agreements relating to Indebtedness permitted
pursuant to the "Limitation on Indebtedness" covenant that are entered into for
the purpose of reducing risk in the ordinary course of the financial management
of the Company or any Restricted Subsidiary; provided, however, that the
notional amount of each such Interest Swap Obligation and Currency Agreement
does not exceed the principal amount of the Indebtedness to which the Interest
Swap Obligation or the Currency Agreement, as the case may be, relates, or (b)
Currency Agreements that are entered into in the ordinary course of the
financial management of the Company or any of its Restricted Subsidiaries and
designed to protect the Company or such Restricted Subsidiary against
fluctuations in foreign currency exchange rates;
(vi) Indebtedness of the Company or any Restricted
Subsidiary represented by Capitalized Lease Obligations, mortgage financings or
other purchase money obligations or obligations under other financing
transactions relating to capital expenditures, 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 used in a Related Business not to
exceed (a) in any fiscal year the lesser of (1) $10.0 million and (2) 25% of
the Company's capital expenditures as determined in accordance with GAAP for
the prior fiscal year and (b) $35.0 million in the aggregate outstanding at any
one time;
(vii) additional Indebtedness Incurred by the Company or
any Restricted
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Subsidiaries not to exceed $10.0 million outstanding at any time;
(viii) Intercompany Indebtedness;
(ix) Refinancing Indebtedness;
(x) Indebtedness of any Person that becomes a Restricted
Subsidiary after the Issue Date which Indebtedness existed at the time such
Person becomes a Restricted Subsidiary; provided that (a) such Indebtedness was
not Incurred as a result of or in connection with or anticipation of such
Person becoming a Restricted Subsidiary and (b) to the extent the principal
amount of such Indebtedness and any other Indebtedness previously permitted
pursuant to this clause (x) exceeds $5.0 million in the aggregate at the time
such Restricted Subsidiary is acquired by the Company, immediately before and
immediately after giving effect to such Person becoming a Restricted Subsidiary
(as if such existing Indebtedness were Incurred on the first day of the Four
Quarter Period) the Company could Incur at least $1.00 of
additional Indebtedness in accordance with the Consolidated Interest Coverage
Ratio test of paragraph (a) of Section 4.12; and
(xi) reimbursement obligations relating to undrawn standby
letters of credit and obligations in respect of performance bonds and surety
bonds, in each case issued in the ordinary course of business.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents; (b) loans, Guarantees and reasonable advances to employees of the
Company or any Restricted Subsidiary made in the ordinary course of business of
the Company or such Restricted Subsidiary, as the case may be, in an aggregate
principal amount not exceeding $1.0 million at any time outstanding; (c)
Investments by the Company or by any Restricted Subsidiary in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary; (d) Investments by the Company or
by any Restricted Subsidiary in another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or any
Restricted Subsidiary in compliance with the provisions of Article 5; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (e) non-cash consideration received in accordance with Section 4.16;
(f) advances to suppliers and customers in the ordinary course of business; (g)
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers or in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business; (h) guarantees by the Company and
its Restricted Subsidiaries of the obligations of one another under the
Revolving Credit Facility; (i) sales of goods or services on trade credit terms
consistent with the Company's and its Subsidiaries' past practices or otherwise
consistent with trade credit terms in common use in the industry and recorded
as accounts receivable on the balance sheet of the Person making such sale; and
(j) lease, utility and other similar deposits in the ordinary course of
business.
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"Permitted Liens" means, without duplication, each of the
following:
(i) Liens securing the First Motgage Notes;
(ii) Liens for taxes or governmental assessments, charges,
levies or claims not yet delinquent or for which a bond has been posted in an
amount equal to the contested amount (including potential interest and
penalties thereon);
(iii) statutory Liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in the
ordinary course of business of ownership and operation of the relevant property
relating to obligations either (a) not yet delinquent or (b) being contested in
good faith by appropriate proceedings and as to which appropriate reserves or
other provisions have been made in advance in accordance with GAAP;
(iv) Liens in connection with workers' compensation,
unemployment insurance and other similar legislation, surety or appeal bonds,
performance bonds or other obligations of a like nature (in each case not
constituting Indebtedness) arising in the ordinary course of business;
(v) zoning restrictions, licenses, easements, servitudes,
rights of way, title defects, covenants running with the land and other similar
charges or encumbrances or restrictions;
(vi) assignments, leases, or subleases at Discontinued
Plants not materially and adversely affecting the value thereof;
(vii) Liens granted by the Company or any Restricted
Subsidiary to secure Indebtedness Incurred pursuant to clause (vi) of the
definition of Permitted Indebtedness, in each case representing all or part of
the cost of purchase, lease, construction or improvement of Property acquired,
constructed or improved after the date hereof owed to a Person not an Affiliate
of the Company; provided, however, that (x) in any such case such Lien shall
extend only to the specific Property of the Company or any Restricted
Subsidiary leased, acquired, constructed or improved with the proceeds of such
Indebtedness and (y) prior to granting any such Lien, the Company shall provide
the Trustee with an Officers' Certificate stating that the Property subject to
such Lien and the remaining assets of the Company or such Restricted Subsidiary
could be operated independently and such Property could be disposed of
independently of the remaining assets of the Company or such Restricted
Subsidiary without interfering with the continued operation and maintenance of
the remaining assets of the Company or such Restricted Subsidiary, and without
impairing the value of the remaining assets of the Company or such Restricted
Subsidiary or interfering with the Trustee's ability to realize such value;
provided further that (A) the aggregate amount of Indebtedness secured by any
such Lien shall not exceed the Fair Market Value (or, if less, the cost) of the
Property so acquired or leased and (B) such Liens shall not encumber any other
Property of the Company or of any Restricted Subsidiary and shall attach to
such Property within 60 days of the
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acquisition or lease of, or completion of construction on, such Property;
(viii) Liens on the Bank Collateral;
(ix) Liens existing on the Issue Date; and
(x) Liens on Property of a Person at the time such Person
was merged with the Company or a Restricted Subsidiary, Liens on acquired
Property existing at the time of acquisition thereof and Liens upon any
Property of a Person existing at the time such Person becomes a Restricted
Subsidiary; provided in each case (x) that such Property was not acquired with
the proceeds of any Asset Sale and (y) that such Liens were not created in
contemplation of such merger or acquisition, as the case may be, and such Liens
only extend to such merged or acquired Property.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency
or political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means
the principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Principal Payment Default" has the meaning set forth in
clause (v) of Section 6.01.
"Private Placement Legend" means the legend initially set
forth on the Notes in the form set forth in Section 2.15.
"Pro Forma" shall mean for any period the pro forma
Consolidated EBITDA, Consolidated Fixed Charges, Consolidated Interest Expense
or Consolidated Net Income of the Company after giving effect to the offering
of the Notes on the Issue Date and the application of the net proceeds
therefrom and the Anchor Acquisition as if such transactions had occurred on
January 1, 1996 and to any other transactions or events for which pro forma
effect is to be given pursuant to the definition of Consolidated Interest
Coverage Ratio calculated in accordance with Regulation S-X as promulgated by
the Commission applied to the audited financial statements of Old Anchor for
the 1996 fiscal year and, where necessary, the unaudited financial statements
of such company for the second and third fiscal quarters of 1996; it being
understood that prior to giving effect to any transactions or events for which
pro forma effect is to be given pursuant to the definition of Consolidated
Interest Coverage Ratio that Consolidated EBITDA for the Company for each of
the second, third and fourth fiscal quarters of 1996 shall be $21.6 million,
$8.8 million and negative $9.9 million, respectively.
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"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real or immovable,
personal or moveable or mixed, or tangible or corporeal, or intangible or
incorporeal, including, without limitation, Capital Stock in any other Person.
"Purchase Money Assets" means Property subject to a Lien in
accordance with clause (vii) of the definition of Permitted Liens.
"Qualified Capital Stock" means (i) any Capital Stock that is
not Disqualified Capital Stock and (ii) each warrant, right or option to
acquire Capital Stock that is not Disqualified Capital Stock other than any
such warrant, right or other option to acquire such Capital Stock that is, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to ten months prior to the date on which the Notes mature.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"Qualified Public Offering" means an underwritten public
offering of the Common Stock of the Company pursuant to a Registration
Statement filed with the Commission in accordance with the Securities Act
resulting in Net Equity Proceeds of at least $75.0 million.
"Record Date" means the Record Dates specified in the Notes,
whether or not a Business Day.
"Redemption Date", when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Notes.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Notes.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or a Restricted Subsidiary of Indebtedness of the Company or a
Restricted Subsidiary initially Incurred in accordance with Section 4.12,
including the Notes (other than pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii) or (xi) of the definition of Permitted Indebtedness) that does
not (i) result in an increase in the aggregate principal amount of Indebtedness
of such Person as of
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the date of such proposed Refinancing (plus the amount of any premium required
to be paid under the terms of the instrument governing such Indebtedness and
plus the amount of reasonable expenses incurred by such Person in connection
with such Refinancing) or (ii) create Indebtedness with (a) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (b) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that if such
Indebtedness being Refinanced is subordinate or junior to the Notes or any
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee at least to the same extent and in the same manner as the
Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 16, 1998 among the Company and the Initial Purchasers for
the benefit of themselves and the Holders, as the same may be amended or
modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" has the meaning provided in
Section 2.01.
"Related Business" means the businesses carried out by the
Company or a Restricted Subsidiary on the date hereof and any reasonable
extensions thereof, including, without limitation, the manufacture and sale of
plastic containers and plastic and metal closures.
"Related Business Investment" means any expenditure by the
Company or a Restricted Subsidiary, as the case may be, to acquire assets
(which shall not include any equity or debt security) used in the ordinary
course of a Related Business of the Company or such Restricted Subsidiary.
"Restricted Payment" has the meaning provided in Section 4.10.
"Restricted Security" has the meaning assigned to such term in
Rule 144 (a) (3) under the Securities Act.
"Restricted Subsidiary" means, as of the date of
determination, any Subsidiary of the Company, other than an Unrestricted
Subsidiary.
"Revolving Credit Agreement" has the meaning set forth in the
definition of "Revolving Credit Facility."
"Revolving Credit Facility" means agreements with one or more
Persons or syndicates of Persons providing for financing for the Company and
its Subsidiaries, and all
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related security agreements, guarantees, notes and other agreements relating to
same, as the same may be amended, modified or supplemented from time to time,
and any agreement or agreements evidencing the refinancing, modification,
replacement, renewal, restatement, refunding, deferral, extension, substitution
or supplement thereof including, without limitation, any arrangement involving
a Wholly-Owned Subsidiary, the sole activity of which is the financing of
receivables, and including the revolving credit facility under that certain
Credit Agreement dated as of February 5, 1997 (the "Revolving Credit
Agreement") among the Company, Bankers Trust Company, as issuing bank, BT
Commercial Corporation, as agent, PNC Bank, as issuing bank and the financial
institutions party thereto in their capacities as lenders thereunder, and any
security documents and guarantees delivered in connection therewith.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Corporation and its successors
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Restricted Subsidiary of any Property,
whether owned by the Company or any Restricted Subsidiary at the Issue Date or
later acquired, which has been or is to be sold or transferred by the Company
or such Restricted Subsidiary.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Specified Subsidiary" means any Subsidiary of the Company
other than (x) an Unrestricted Subsidiary which is not organized under the laws
of the United States of America, any state thereof or the District of Columbia
or under the laws of Canada or any province thereof or (y) a Subsidiary of the
Company which would not constitute a "significant subsidiary" of the Company as
defined in Rule 1.02 of Regulation S-X promulgated by the Commission, except
that for purposes of this definition, all reference therein to ten (10) percent
shall be deemed to be references to five (5) percent.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of
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payment to the Notes pursuant to a written agreement or by operation of law.
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"Surviving Entity" means the Person (if other than the
Company) formed by any consolidation of the Company with any Person or into
which the Company is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Company and of the Company's
Subsidiaries as an entirety or virtually as an entirety.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of this Indenture,
except as otherwise provided in Section 13.06.
"Trust Officer" means any officer of the Trustee assigned by
the Trustee to administer this Indenture, or in the case of a successor
trustee, an officer assigned to the department, division or group performing
the corporate trust work of such successor and assigned to administer this
Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means (i) each Subsidiary of the
Company that the Company has designated pursuant to the provisions described in
Section 4.21 as an Unrestricted Subsidiary and that has not been redesignated a
Restricted Subsidiary and (ii) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct obligations of, and
obligations guaranteed by, the United States of America for the payment of
which the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Voting Stock" with respect to any Person, means securities of
any class of Capital Stock of such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors (or equivalent governing body) of such Person.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, in respect of any Person, a
Subsidiary of such Person (Restricted Subsidiary in the case of the Company),
all the Capital Stock of which (other than directors' qualifying shares) is
owned by such Person or another Wholly-Owned Subsidiary (which is a Restricted
Subsidiary in the case of the Company) of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP as in effect on the date hereof;
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(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular; and
(5) "herein", "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
(a) The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or Depository rule
or usage. The Company and the Trustee shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication.
(b) The terms and provisions contained in the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable, the Company and
the Trustee, by their execution and delivery of this Indenture, expressly agree
to such terms and provisions and to be bound thereby.
(c) Notes offered and sold in reliance on Rule 144A shall
be issued initially in the form of a permanent global Note in registered form,
substantially in the form set forth in Exhibit A with the legends specified in
Section 2.15 (the "144A Global Note") and Notes offered and sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of a permanent global note in registered form, substantially in the form set
forth in Exhibit A with the legends specified in Section 2.15 (the "Regulation
S Global Note" and, together with the 144A Global Note, the "Global Notes"), in
each case deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of a Global Note may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.
(d) Notes offered and sold in reliance on any other
exemption from registration under the Securities Act, other than as described
in the preceding paragraph, shall be issued in the form of permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit A with the legend specified in Section 2.15 (the "Physical Notes").
Physical Notes shall initially be registered in the name of the Depository or
the nominee of
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<PAGE> 36
such Depository and be delivered to the Trustee as custodian for such
Depository. Beneficial owners of Physical Notes, however, may request
registration of such Physical Notes in their names or the names of their
nominees.
(e) In the event that one or more Global Notes is
tendered pursuant to the Exchange Offer, it or they shall be exchanged for a
single, permanent Global Note in fully registered form substantially in the
form of Exhibit B hereto with the legend specified in Section 2.15. Physical
Notes tendered pursuant to the Exchange Offer will be exchanged for permanent
certificated Notes in registered form in substantially the form set forth in
Exhibit B unless the Holder thereof elects to exchange such Physical Note for a
beneficial interest for the Global Note issued pursuant to the Exchange Offer.
Each Exchange Note shall constitute an additional obligation of the Company.
(f) The Notes shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any integral multiple
thereof.
SECTION 2.02. Execution and Authentication; Aggregate
Principal Amount.
(a) Two Officers, one of whom shall be the Chairman of
the Board, the Chief Executive Officer, the President or the Chief Financial
Officer of the Company and each of whom shall have been duly authorized by all
requisite corporate actions of the Company, shall sign the Notes for the
Company by manual or facsimile signature. The Company's seal shall also be
reproduced on the Notes manually or by facsimile. If an Officer whose
signature is on a Note was an Officer at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
(b) A Note shall not be valid until an authorized
signatory of the Trustee manually signs the certificate of authentication on
the Note. The signature of the Trustee shall be conclusive evidence that the
Note has been authenticated under this Indenture.
(c) The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed $50,000,000, and
(ii) Exchange Notes from time to time for issue only in exchange for a like
principal amount of Initial Notes, in each case upon written orders of the
Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Notes to be authenticated, the date on which the
Notes are to be authenticated, the aggregate principal amount of Notes
outstanding on the date of authentication, whether the Notes are to be Initial
Notes or Exchange Notes, and shall further specify the amount of such Notes to
be issued as Global Notes, or Physical Notes. The aggregate principal amount
of Notes outstanding at any time may not exceed $50,000,000, except as provided
in Section 2.07.
(d) The Trustee may appoint an authenticating agent (the
"Authenticating Agent") reasonably acceptable to the Company to authenticate
Notes. Unless otherwise provided in the appointment, an Authenticating Agent
may authenticate Notes whenever the
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<PAGE> 37
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such Authenticating Agent. An
Authenticating Agent has the same rights as an Agent to deal with the Company
and Affiliates of the Company.
SECTION 2.03. Registrar and Paying Agent.
(a) The Company shall maintain an office or agency (which
shall be located in the Borough of Manhattan in the City of New York, State of
New York) where (i) Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (ii) Notes may be presented or
surrendered for payment ("Paying Agent") and (iii) notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Registrar shall keep a register of the Notes and of their transfer and
exchange.
(b) The Company, upon prior written notice to the
Trustee, may have one or more co-Registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional Paying Agent. Neither
the Company nor any Affiliate of the Company may act as Paying Agent. The
Company shall enter into an appropriate agency agreement with any Agent not a
party to this Indenture, which agreement shall incorporate the provisions of
the TIA and implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such.
(c) The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of demands and notices in
connection with the Notes, until such time as the Trustee has resigned or a
successor has been appointed. The Paying Agent or Registrar may resign upon 30
days' notice to the Company.
SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by such Paying Agent for
the payment of principal of, premium, if any, and interest on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and the Company and such Paying Agent shall promptly
notify the Trustee of any Default by the Company or the Guarantors (or any
other obligor on the Notes) in making any such payment. The Company at any
time may require a Paying Agent to distribute all assets held by it to the
Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to a Paying
Agent, such Paying Agent shall have no further liability for such assets.
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SECTION 2.05. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders and shall otherwise comply with TIA Section 312 (a).
If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee at least five Business Days
before each Record Date and at such other times as the Trustee may request in
writing a list as of such date and in such form as the Trustee may reasonably
require of the names and addresses of the Holders, including the aggregate
principal amount of the Note held, and shall otherwise comply with TIA Section
312 (a) which list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
(a) Subject to the provisions of Sections 2.16 and 2.17,
when Notes are presented to the Registrar or a co-Registrar with a request to
register the transfer of such Notes or to exchange such Notes for an equal
principal amount of Notes of other authorized denominations, the Registrar or
co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided that any Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's or co-Registrar's request.
No service charge shall be made for any registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon exchanges
or transfers pursuant to Section 2.02, 2.10, 3.06, 4.15, 4.16 or 13.05, in
which event the Company shall be responsible for the payment of such taxes).
(b) The Registrar or co-Registrar shall not be required
to register the transfer of or exchange of any Note (i) during a period
beginning at the opening of business 15 days before the mailing of a notice of
redemption of Notes and ending at the close of business on the day of such
mailing and (ii) selected for redemption in whole or in part pursuant to
Article 3, except the unredeemed portion of any Note being redeemed in part.
(c) Any Holder of the Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interests in such Global
Notes may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note
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claims that the Note has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. Such Holder must provide an affidavit of lost
certificate and an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Note is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Note, including reasonable fees and expenses of
counsel. Every replacement Note shall constitute an additional obligation of
the Company.
SECTION 2.08. Outstanding Notes.
(a) The Notes outstanding at any time are all the Notes
that have been authenticated by the Trustee except those cancelled by it, those
delivered to it for cancellation and those described in this Section as not
outstanding. Subject to the provisions of Section 2.09, a Note does not cease
to be outstanding because the Company or any of its Affiliates holds the Note.
(b) If a Note is replaced pursuant to Section 2.07 (other
than a mutilated Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives an Opinion of Counsel that the replaced Note is
held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
(c) If on a Redemption Date or the Maturity Date the
Paying Agent holds U.S. Legal Tender or U.S. Government Obligations sufficient
to pay all of the principal and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or any of its Affiliates shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which a Trust Officer of the Trustee actually knows are
so owned shall be so considered. The Company shall notify the Trustee, in
writing, when it or any of its Affiliates repurchases or otherwise acquires
Notes, of the aggregate principal amount of such Notes so repurchased or
otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in
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the form of an Officers' Certificate. The Officers' Certificate shall specify
the amount of temporary Notes to be authenticated and the date on which the
temporary Notes are to be authenticated. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02 definitive Notes in
exchange for temporary Notes. Until such exchange, temporary Notes shall be
entitled to the same rights, benefits and privileges as definitive Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel at the written direction of the Company and shall
dispose of all Notes surrendered for transfer, exchange, payment or
cancellation in accordance with its customary procedures. Subject to Section
2.07, the Company may not issue new Notes to replace Notes that it has paid or
delivered to the Trustee for cancellation. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption or satisfaction
of the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest
or the next succeeding Business Day if such date is not a Business Day. At
least 15 days before the subsequent special record date, the Company shall mail
to each Holder, as of a recent date selected by the Company, with a copy to the
Trustee, a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid. Prior to the payment date set forth in
the notice referred to in the preceding sentence, the Issuer shall deposit with
the Trustee funds in an amount sufficient to pay any amounts due to Holders
pursuant to this Section 2.12.
SECTION 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The
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Company shall promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest
Payment Date and on the Maturity Date, the Company shall have deposited with
the Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Paying Agent to remit payment
to the Holders on such Interest Payment Date or Maturity Date, as the case may
be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security shall bear the following legend (the "Private Placement
Legend") on the face thereof until March 16, 2000, unless otherwise agreed by
the Company and the Holder thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, RESOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL
NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT AND ANY SUCCESSOR
PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS
SECURITY (OR OF ANY PREDECESSOR OF THIS SECURITY) AND THE LAST DAY ON WHICH
THE ISSUER OR ANY AFFILIATE OF THIS ISSUER WSA THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS
MAY BE REQUIRED BY APPLICABLE LAW REOFFER, RESELL, ASSIGN, TRANSFER,
PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THIS SECURITY EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
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STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER IS
ATTACHED AS AN EXHIBIT HERETO), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR SALE UNDER THE
SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA. THE SECURITIES ARE
NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR
INDIRECTLY, IN CANADA OR TO ANY RESIDENT THEREOF IN VIOLATION OF THE
SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
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Each Global Note shall also bear the following legend on the face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF
THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE.
Each Global Note that is a Restricted Security shall also bear the
following legend on the face thereof:
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE
INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Securities.
(a) Each Global Note initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian,
or under any Global Note, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the
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absolute owner of the Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Note.
(b) Transfers of any Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in any Global Note may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in any Global Note if (i) the Depository notifies
the Company that it is unwilling or unable to continue as Depository for any
Global Note and a successor depositary is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a written request from the Depository
to issue Physical Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in any Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes
are to be issued) reflect on its books and records the date and a decrease in
the principal amount of such Global Note in an amount equal to the principal
amount of the beneficial interest in such Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate and make
available for delivery, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global
Note to beneficial owners pursuant to paragraph (b), such Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and make available for delivery, to
each beneficial owner identified by the Depository in exchange for its
beneficial interest in such Global Note, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in the Global Note pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.17, bear the legend regarding transfer restrictions applicable to
the Physical Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 2.17. Special Transfer Provisions.
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(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to any Institutional Accredited Investor which is not a QIB
or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the Private
Placement Legend, if (x) the requested transfer is after April 17, 1999 or (y)
(1) in the case of a transfer to an Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons), the proposed transferee has delivered
to the Registrar a certificate substantially in the form of Exhibit C hereto or
(2) in the case of a transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Registrar a certificate substantially in the form of Exhibit D
hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of (x) the
certificate, if any, required by paragraph (i) above and (y) instructions given
in accordance with the Depository's and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in such Global Note to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and make available for delivery one or more Physical Notes of like
tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a Note
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of Rule
144A to a transferee who has signed the certification provided for on the form
of Note stating, or has otherwise advised the Company and the Registrar in
writing, that it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as it has requested pursuant to
Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Notes
to be
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transferred consist of Physical Notes which after transfer are to be evidenced
by an interest in a Global Note, upon receipt by the Registrar of instructions
given in accordance with the Depository's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an increase in
the principal amount of such Global Note in an amount equal to the principal
amount of the Physical Notes to be transferred, and the Trustee shall cancel
the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the circumstance contemplated by paragraph
(a)(i)(x) of this Section 2.17 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of
the Securities Act.
(d) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.16 or this Section
2.17. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of
any interest in any Note (including any transfers between or among Agent
Members or beneficial owners of interests in any Global Note) other than to
require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 6
of the Notes, it
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shall notify the Trustee and the Paying Agent in writing of the (i) paragraph
of the Note pursuant to which such redemption is to be made, (ii) the
Redemption Date, (iii) the principal amount of the Notes to be redeemed and
(iv) the Redemption Price. The Company shall give each notice provided for in
this Section 3.01 at least 60 days (unless a shorter notice period shall be
satisfactory to the Trustee), but not more than 60 days before the Redemption
Date together with an Officers' Certificate stating that such redemption shall
comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes to Be Redeemed.
If fewer than all of the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if such Notes are not then listed on a national securities exchange,
on a pro rata basis, by lot or in such other fair and reasonable manner chosen
at the discretion of the Trustee; provided, however, that if a partial
redemption is made with the proceeds of a Public Equity Offering, selection of
the Notes or portion thereof for redemption shall be made by the Trustee only
on a pro rata basis, unless such method is otherwise prohibited. The Trustee
shall make the selection from the Notes outstanding and not previously called
for redemption and shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for Redemption. Notes in denominations of $1,000 may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Notes that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03. Notice of Redemption.
(a) At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail or cause to be mailed a notice of
redemption by first class mail, postage prepaid, to each Holder whose Notes are
to be redeemed, with a copy to the Trustee and any Paying Agent.
Each notice for redemption shall identify the Notes to be
redeemed (including CUSIP number) and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
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(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus accrued interest,
if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption
Date, and upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed, as
well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption.
(b) At the Company's request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall have delivered to the Trustee at
least 45 days (unless a shorter period is acceptable to the Trustee) prior to
the proposed redemption date an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any.
SECTION 3.05. Deposit of Redemption Price.
(a) By 11:00 a.m. on or before the Redemption Date, the
Company shall deposit with the Paying Agent U.S. Legal Tender in immediately
available funds sufficient to pay the Redemption Price plus accrued interest,
if any, of all Notes to be redeemed on that date. The Paying Agent shall
promptly return to the Company any U.S. Legal Tender so deposited which is not
required for that purpose, except with respect to monies owed as
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obligations to the Trustee pursuant to Article Seven.
(b) If the Company complies with the preceding paragraph,
then, unless the Company defaults in the payment of such Redemption Price plus
accrued interest, if any, interest on the Notes to be redeemed will cease to
accrue on and after the applicable Redemption Date, whether or not such Notes
are presented for payment. If a Note is redeemed on or after an interest
Record Date but on or prior to the related Interest Payment Date, then any
accrued and unpaid interest shall be paid to the Person in whose name such
Security was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid and, to the extent lawful, on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder a new
Note or Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
(a) The Company shall pay the principal of and interest
on the Notes on the dates and in the manner provided in the Notes and in this
Indenture. An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date U.S. Legal Tender in immediately available funds designated for and
sufficient to pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture.
(b) The Company shall pay, to the extent such payments
are lawful, interest (including post-petition interest in any proceeding under
a Bankruptcy Law) on overdue principal and on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate borne by the Notes plus 2% per annum. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
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SECTION 4.02. Maintenance of Office or Agency.
(a) The Company shall maintain the office or agency
required under Section 2.03. The Company shall give prior written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the address of the Trustee set forth in Section 14.02.
(b) The Company may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, in the City of New York for such purposes.
The Company shall give prior written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
(c) The Company hereby designates the Corporate Trust
Office of the Trustee as one such office or agency of the Company in accordance
with Section 2.03.
SECTION 4.03. Maintenance of Corporate Existence and
Corporate Separateness.
(a) Except as otherwise permitted by Article 5, Section
4.14 and Section 4.16, each of the Company and the Parent shall do or cause to
be done, at its own cost and expense, all things necessary to preserve and keep
in full force and effect its corporate existence in accordance with its
respective organizational documents and the material rights (charter and
statutory) and franchise of each of the Company and the Parent, and the Company
shall do or cause to be done, at its own cost and expense, all things necessary
to preserve and keep in full force and effect the corporate existence of each
of the Restricted Subsidiaries in accordance with the respective organizational
documents of each such Restricted Subsidiary and the material rights (charter
and statutory) and franchises of the Company and each such Restricted
Subsidiary; provided, however, that the Company and the Parent shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of the Restricted Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or the
Parent, as the case may be, shall determine in good faith that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and the Restricted Subsidiaries, taken as a whole, or the Parent.
(b) The Company, its Subsidiaries and the Parent will
satisfy customary corporate formalities, including the holding of regular board
of directors' and shareholders' meetings and the maintenance of corporate
offices and records. The Company, its Subsidiaries and the Parent will not
permit financial information regarding the Company or any of its
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Subsidiaries to be provided to creditors of the Parent, Consumers Packaging or
its other Affiliates without indicating that the assets and financial
performance of the Company and its Subsidiaries are separate from the Parent,
Consumers Packaging and its other Affiliates and will not provide financial
support or assurances to such creditors. The Company, its Subsidiaries and the
Parent will not permit financial information regarding the Parent to be
provided to creditors of the Company, the Company's Subsidiaries, Consumers
Packaging or its other Affiliates without indicating that the assets and
financial performance of the Parent is separate from the Company, the Company's
Subsidiaries, Consumers Packaging and its other Affiliates and will not provide
financial support or assurances to such creditors.
SECTION 4.04. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or any of the Restricted Subsidiaries, as the case may be, or any of their
respective properties and (ii) all lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of the
Company or any of the Restricted Subsidiaries, as the case may be; provided,
however, that the Company, the Restricted Subsidiaries, as the case may be,
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate proceedings properly instituted
and diligently conducted for which adequate reserves, to the extent required
under GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of the
Restricted Subsidiaries to, maintain its material properties in good working
order and condition (subject to ordinary wear and tear) and make all reasonably
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto to actively conduct and carry on its business; provided,
however, that nothing in this Section 4.05 shall prevent the Company or any of
the Restricted Subsidiaries from discontinuing the operation and maintenance of
any of its properties, if such discontinuance is, in the good faith judgment of
the Board of Directors of the Company or such Restricted Subsidiary, as the
case may be, desirable in the conduct of their respective businesses and is not
disadvantageous in any material respect to the Holders.
(b) The Company shall provide or cause to be provided,
for itself and each of the Restricted Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
good faith judgment of the Board of Directors of the Company, are adequate and
appropriate for the conduct of the business of the Company and the Restricted
Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such methods as shall
be customary, in the good faith
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judgment of the Board of Directors of the Company, for companies similarly
situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, an Officers' Certificate signed by its
principal executive officer, principal financial officer or principal
accounting officer stating that a review of the activities of the Company and
its Restricted Subsidiaries, as the case may be, during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
Obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto).
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.08 shall be
accompanied by a written statement of (x) the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Article 4, 5 or 6 of this Indenture
insofar as they relate to accounting matters or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation and (y) if
any Restricted Subsidiary's financial statements are not prepared on a
consolidated basis with the Company's, such Restricted Subsidiary's independent
public accountants (who shall be a firm of established national reputation)
that in making the examination necessary for certification of such financial
statements nothing has come to their attention which would lead them to believe
that any of the Restricted Subsidiaries is in Default under this Indenture or,
if any such Default has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default or (ii) any event of default under any
other mortgage, indenture or instrument as that term is used in Section 6.01
hereof, an Officers' Certificate specifying such Default, Event of Default or
event of default and what action the Company is taking or proposes to take with
respect thereto.
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(d) The Company shall also comply with TIA Section
314(a)(4).
SECTION 4.07. Compliance with Laws.
The Company shall, and shall cause each of its Restricted
Subsidiaries to comply with all applicable Legal Requirements of any Authority
except to the extent that noncompliance could not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 4.08. SEC Reports; Reports to Holders.
(a) The Company will deliver to the Trustee and each
Holder within 15 days after the filing of the same with the Commission, copies
of the quarterly and annual reports and of the information, documents and other
reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, the Company will file with the Commission, to the extent
permitted, and provide the Trustee and Holders with such quarterly and annual
reports and such other information that would be required to be contained in a
filing with the Commission if the Company were required to file such reports
under Sections 13 and 15(d) of the Exchange Act within the time periods
provided therein. In addition, the Company has agreed that, for so long as any
Notes remain outstanding, it will furnish to Holders and securities analysts
and prospective investors, upon their request, the information specified in
Rule 144(A)(d)(4) under the Securities Act and any other information reasonably
requested by a Holder concerning the Company (including financial statements)
necessary in order to permit such Holder to sell or transfer Notes in
compliance with Rule 144A under the Securities Act. The Company will also
comply with the other provisions of 314(a) of the TIA.
(b) Delivery of such reports, information and documents
to the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.09. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury law or other law that would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein
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granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.10. Limitation on Restricted Payments.
Neither the Company nor any of its Restricted Subsidiaries
will, directly or indirectly, (a) declare or pay any dividend or make any
distribution (other than dividends or distributions payable solely in Qualified
Capital Stock of the Company) to holders of the Company's Capital Stock other
than dividends or distributions paid to the Company or any Restricted
Subsidiary, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to acquire
shares of any class of such Capital Stock (other than Capital Stock, warrants,
rights or options held by the Company or any Restricted Subsidiary), other than
through the exchange therefor solely of Qualified Capital Stock of the Company,
(c) make any principal payment on, purchase, defease, redeem, prepay, decrease
or otherwise acquire or retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligation, (other than the purchase, repurchase or other
acquisition of any Subordinated Obligation in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of such purchase, repurchase or other
acquisition, provided that any such purchase, repurchase or other acquisition
is done solely with the proceeds from any Refinancing Indebtedness), (d) make
any Investment (other than Permitted Investments) in any Person or (e) make any
payments to any Affiliate of the Company (other than the Company and its
Restricted Subsidiaries) as compensation for management services, except
through the issuance of Common Stock of the Company that is Qualified Capital
Stock) (each of the foregoing prohibited actions set forth in clauses (a), (b),
(c), (d) and (e) being referred to as a "Restricted Payment"), unless such
proposed Restricted Payment is made after the earlier of (x) the date upon
which the independent auditors of the Company have completed and delivered to
the Company a limited review of the Company's financial statement for the third
quarter of 1997 in accordance with the procedures specified by the American
Institute of Certified Public Accountants, SAS No. 71, Interim Financial
Information and (y) the date upon which the Company has filed with the
Commission its audited financial statements for the fiscal year ended December
31, 1997 and at the time of such proposed Restricted Payment or immediately
after giving effect thereto (i) no Default or Event of Default has occurred and
is continuing or would result therefrom, (ii) the Company could incur at least
$1.00 of additional Indebtedness in accordance with the Consolidated Interest
Coverage Ratio test of paragraph (a) of Section 4.12 and (iii) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the Fair Market Value of the relevant Property) does not
exceed or would not exceed the sum of: (A) 50% of the cumulative Consolidated
Net Income (or, if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of the Company during the period (treating such period as a
single accounting period) from April 1, 1997 to the last day of the last full
fiscal quarter preceding the date of the proposed Restricted Payment; (B) 100%
of the aggregate Net Equity Proceeds received by the Company from any Person
(other than from a
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Restricted Subsidiary) from the issuance and sale subsequent to the Issue Date
of Qualified Capital Stock of the Company (excluding any Qualified Capital
Stock of the Company with respect to which the purchase price thereof has been
financed directly or indirectly using funds (i) borrowed from the Company or
from any of its Subsidiaries, unless and until and to the extent such borrowing
is repaid or (ii) contributed, extended, Guaranteed or advanced by the Company
or by any of its Restricted Subsidiaries (including, without limitation, in
respect of any employee stock ownership or benefit plan, unless and until and
to the extent such borrowing is repaid); and (C) an amount equal to the net
reduction in any Investment made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person (including if such reduction occurs
by reason of the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary) resulting from (x) net cash proceeds (or the Fair Market Value of
property other than cash or Cash Equivalents, provided that such property
represents a return of capital in respect of any such Investment that was made
in the form of other property other than cash or Cash Equivalents) received by
the Company or its Restricted Subsidiaries as repayment of any loan or advance
or a return of capital in respect, or as consideration for the sale, of such
Investment (but only to the extent the Company elects to exclude such amounts
from the calculation of Consolidated Net Income for the purposes of clause (A)
above) or (y) the release or cancellation of a Guarantee constituting such
Investment, in each case, with respect to any such Investment, not to exceed
the amount of such Investment previously made by the Company or any Restricted
Subsidiary, that was treated as a Restricted Payment pursuant to this
paragraph.
Notwithstanding the foregoing, these provisions do not
prohibit: (1) the payment of any dividend or making of any distribution within
60 days after the date of its declaration if the dividend or distribution would
have been permitted on the date of declaration; (2) the repurchase, redemption,
retirement or acquisition of Capital Stock of the Company or Subordinated
Obligations of the Company, or warrants, rights or options to acquire Capital
Stock of the Company, solely in exchange for shares of Qualified Capital Stock
of the Company; (3) any purchase or redemption of Subordinated Obligations made
in exchange for, or out of the proceeds of the substantially concurrent sale of
Refinancing Indebtedness or Indebtedness of the Company which is permitted to
be Incurred pursuant to the Consolidated Interest Coverage Ratio test of
paragraph (a) of Section 4.12; (4) the payment of management fees to G&G
Investments under the Management Agreement of up to $1.5 million in any
calendar year; (5) the repurchase of Capital Stock of the Company from current
or former employees or directors of the Company or any of its Subsidiaries
pursuant to the terms of agreements (including employment agreements) or plans
approved by the Board of Directors under which such persons purchase or sell or
are granted the option to purchase or sell such shares of Capital Stock to the
extent such payments do not exceed $500,000 in any fiscal year which to the
extent not used in any fiscal year, may be carried forward to the next
succeeding fiscal year, provided that the aggregate amount of all such payments
that may be made pursuant to this clause (5) may not exceed $2.5 million; (6)
dividends or other Restricted Payments to make payments permitted by clauses
(vii) and (viii) of paragraph (b) of Section 4.11; (7) dividends payable on the
Series A Preferred Stock pursuant to the terms thereof in an aggregate amount
not to exceed $3 million; (8) Investments in Unrestricted Subsidiaries,
partnerships or joint ventures involving the Company or its Restricted
Subsidiaries, in each case primarily engaged in a Related Business if the
aggregate amount of such Investments made pursuant to this clause (8) (less an
amount equal to the net reduction in any such Investment (including if such
reduction occurs by reason of the redesignation of an
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Unrestricted Subsidiary as a Restricted Subsidiary) made subsequent to the
Issue Date resulting from (x) net cash proceeds (or the Fair Market Value of
tangible property, provided that such tangible property represents a return of
capital in respect of an Investment that was made in the form of other tangible
property and not an Investment that was made in the form of cash) received by
the Company or its Restricted Subsidiaries as repayment of any loan or advance
or a return of capital in respect, or as consideration for the sale, of such
Investment or (y) any release or cancellation of a Guarantee constituting such
Investment (but only to the extent the Company elects to exclude such amounts
from the calculation of Consolidated Net Income for the purpose of clause (A)
of the preceding paragraph), in each case, with regard to any Investment, not
to exceed the amount of such Investment previously made by the Company or any
Restricted Subsidiary pursuant to this clause (8) does not exceed $10 million;
(9) the purchase or redemption of any Indebtedness, to the extent required by
the terms of such Indebtedness following a Change of Control after the Company
shall have complied with the provisions under Section 4.15, including payment
of the applicable Change of Control purchase price; and (10) Investments in
Unrestricted Subsidiaries, partnerships or joint ventures organized and
operating principally in the United States involving the Company or its
Restricted Subsidiaries, in each case primarily engaged in a Related Business,
made in the form of contributions to such Unrestricted Subsidiaries,
partnerships or joint ventures of assets of Discontinued Plants; provided,
however, that, in the case of clauses (2), (3), (4), (5), (6), (7), (8), (9)
and (10) of this paragraph, no Default or Event of Default shall have occurred
or be continuing at the time of such payment or as a result thereof. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date, amounts expended pursuant to clauses (1), (5), (7) and (9) shall,
in each case, be included in such calculation. No payment or other transfer to
the Company or a Restricted Subsidiary shall, in any event, constitute a
Restricted Payment.
SECTION 4.11. Limitation on Transactions with Affiliates.
(a) Neither the Company nor any Restricted Subsidiary
will, directly or indirectly, conduct any business or enter into or permit to
exist any transaction or series of related transactions (including, but not
limited to, the purchase, sale, conveyance, transfer, disposition, exchange or
lease of Property, the making of any payment, the making of any Investment, the
giving of any Guarantee, the rendering of services or the paying of any
commission) with, or for the benefit of, any of their Affiliates (each an
"Affiliate Transaction"), except under an agreement set forth in writing which
is on terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could have been obtained in a
comparable transaction on an arm's-length basis from a Person not an Affiliate
of the Company or such Restricted Subsidiary and if it involves a purchase,
such purchase is reasonably necessary in light of the operating requirements of
the Company and its Subsidiaries. If the Company or any Restricted Subsidiary
enters into an Affiliate Transaction (or a series of related Affiliate
Transactions) involving aggregate payments or other Property with a Fair Market
Value in excess of (i) $1.0 million, the Company or such Restricted Subsidiary
shall, prior to the consummation thereof, deliver to the Trustee an Officers'
Certificate certifying that such transaction or series of related transactions
complies with the foregoing provisions, (ii) $2.5 million, the Company or such
Restricted Subsidiary shall, prior to the consummation thereof, deliver to the
Trustee the Officers' Certificate specified in clause (i) above and an approval
by the Board of Directors of the Company (including a majority of the
independent directors thereof), such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction or series of related transactions complies with the foregoing
provisions and (iii) $5.0 million, the Company or such Restricted Subsidiary
shall, prior to the consummation thereof, deliver to the Trustee the Officers'
Certificate specified in clause (i) above, the Board Resolution specified in
clause (ii) above and a favorable opinion as to the fairness of such
transaction or series of related
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transactions to the Company or the relevant Restricted Subsidiary, as the case
may be, from a financial point of view, from an Independent Financial Advisor
addressed to the Trustee.
(b) The foregoing restriction shall not apply to the
following transactions: (i) any transaction exclusively between the Company and
any of its Wholly-Owned Subsidiaries or exclusively between any Wholly-Owned
Subsidiaries, (ii) reasonable and customary fees paid to members of the Board
of Directors of the Company and of its Subsidiaries, (iii) loans and advances
to employees, officers and directors in the ordinary course of business in an
aggregate principal amount not to exceed $1.0 million at any one time
outstanding and advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business, (iv) reasonable and customary fees and compensation paid to, and
indemnity provided on behalf of, officers, directors or employees of the
Company or any of its Subsidiaries, as determined by the Board of Directors of
the Company or any such Restricted Subsidiary or the senior management thereof
in good faith, including, without limitation, issuances of stock, payment of
bonuses and other transactions pursuant to employment or compensation
agreements, stock option agreements, indemnification agreements and other
arrangements in effect on the Issue Date or substantially similar thereto, (v)
the payment of the management fees to G&G Investments under the Management
Agreement of up to $3.0 million in any calendar year, (vi) other Restricted
Payments made pursuant to the first paragraph of Section 4.10, (vii) payments
or other transactions pursuant to any tax sharing arrangement between the
Company and any other Person with which the Company files a consolidated tax
return or with which the Company is part of a consolidated group for tax
purposes but only to the extent that amounts payable from time to time by the
Company under any such agreement do not exceed the corresponding tax payments
that the Company would have been required to make to any relevant taxing
authority had the Company not joined in such consolidated or combined return,
but instead had filed returns including only the Company and (viii)
transactions pursuant to the Intercompany Agreement. The Company will not
amend the Intercompany Agreement unless such amendment is in writing and the
Company determines that it contains terms no less favorable to the Company than
could have been obtained in comparable transactions on an arm's-length basis
from a Person not an Affiliate of the Company, such determination to be
evidenced by an Officers' Certificate and a Board Resolution stating that a
majority of the Board of Directors (including a majority of the independent
directors thereof) have determined that such amendment complies with the
foregoing provisions.
SECTION 4.12. Limitation on Indebtedness.
(a) Neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, Incur any Indebtedness (including,
without limitation, any Acquired Indebtedness) other than Permitted
Indebtedness; provided, however, the Company or any Restricted Subsidiary may
Incur Indebtedness (including, without limitation, Acquired Indebtedness), if
(i) no Default or Event of Default shall have occurred and be continuing on the
date of the proposed Incurrence thereof or would result as a consequence of
such proposed Incurrence and (ii) immediately before and immediately after
giving effect to such proposed Incurrence, the Consolidated Interest Coverage
Ratio of the Company and its Restricted
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Subsidiaries is at least equal to 2.50 to 1.0.
(b) Neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, Incur Capitalized Lease Obligations,
except pursuant to clause (vi) of the definition of Permitted Indebtedness.
(c) Neither the Company nor any Restricted Subsidiary
may, directly or indirectly, in any event Incur any Indebtedness which by its
terms (or by the terms of any agreement governing such Indebtedness) is
expressly subordinated to any other Indebtedness of the Company or such
Restricted Subsidiary, as the case may be, unless such Indebtedness is also by
its terms (or by the terms of any agreement governing such Indebtedness) made
expressly subordinate to the Notes to the same extent and in the same manner,
and so long as, such Indebtedness is subordinated pursuant to subordination
provisions that are no more favorable to the holders of any other Indebtedness
of the Company or such Restricted Subsidiary, as the case may be.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.
Neither the Company nor any of its Subsidiaries will, directly
or indirectly, create or otherwise cause or permit or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions to the Company
or to any Restricted Subsidiary (i) on its Capital Stock or (ii) with respect
to any other interest or participation in, or measured by, its profits; (b)
make loans or advances or pay any Indebtedness or other obligation owed to the
Company or to any Restricted Subsidiary; or (c) sell, lease or transfer any of
its Property to the Company or to any Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of: (1) applicable
law; (2) this Indenture; (3) customary nonassignment provisions of any contract
or any lease governing a leasehold interest of the Company or any Restricted
Subsidiary; (4) any instrument governing Indebtedness Incurred in accordance
with and pursuant to clause (x) of the definition of Permitted Indebtedness;
provided that such encumbrance or restriction is not, and will not be,
applicable to any Person, or the Property of any Person, other than the Person,
or the Property of the Person, becoming a Restricted Subsidiary; (5)
restrictions imposed by Liens granted pursuant to clauses (vi), (vii) and
(viii) of the definition of Permitted Liens solely to the extent such Liens
encumber the transfer or other disposition of the assets subject to such Liens;
(6) any restriction or encumbrance contained in contracts for the sale of
assets to be consummated in accordance with this Indenture solely in respect of
the assets to be sold pursuant to such contract; (7) any encumbrance or
restriction contained in Refinancing Indebtedness Incurred to Refinance the
Indebtedness issued, assumed or Incurred pursuant to an agreement referred to
in clause (2), (4) or (5) above or clause (8) or (9) below; provided that the
provisions relating to such encumbrance or restriction contained in any such
Refinancing Indebtedness are no less favorable to the Company or such Restricted
Subsidiary or to the Holders in any material respect in the reasonable and good
faith judgment of the Board of Directors of the Company than the provisions
relating to such encumbrance or
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restriction contained in agreements referred to in such clause (2), (4), (5),
(8) or (9) as the case may be; (8) any agreement in effect on the Issue Date;
and (9) the Revolving Credit Facility.
SECTION 4.14. Limitations on Activities of the Parent.
If the Parent issues a Guarantee (other than the Parent's
Guarantee of the First Mortgage Notes and its Guarantee of the Company's
Revolving Credit Facility) to any Person other than the Holders of the Notes (a
"Parent Guarantee Event"), at such time as such Parent Guarantee Event occurs,
the Parent shall Guarantee the Notes (the "Senior Note Guarantee") and such
Senior Note Guarantee shall be senior to such other Guarantee issued by the
Parent. In addition, the following limitations shall apply to the Parent after
the occurrence of a Parent Guarantee Event: the Parent will not (a) Incur any
Indebtedness other than a guarantee of the Indebtedness permitted under clause
(ii) of the definition of Permitted Indebtedness, (b) make any Investments
other than in the Company, (c) grant or suffer to exist a Lien in respect of
any Capital Stock of the Company held by it other than the security interest
granted to secure the First Mortgage Notes or sell or transfer any of such
Capital Stock to any Affiliate other than in a transaction pursuant to clause
(e), (d) carry on any business not being carried on prior to the date of the
granting of the Parent Guarantee or (e) merge or consolidate with or into, or
sell substantially all of its assets to, any Person except for a merger or
consolidation in which the Parent is the surviving corporation and following
such merger or consolidation is in compliance with this covenant.
SECTION 4.15. Change of Control.
(a) Upon the occurrence of a Change of Control, the
Company shall make an offer to repurchase all outstanding Notes pursuant to the
offer described in paragraph (b) below (the "Change of Control Offer") at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase.
(b) Within 30 days following the date upon which the
Change of Control occurred (the "Change of Control Date"), unless the Company
already mailed a notice of redemption pursuant to Section 3.03 the Company
shall send, by first class mail, a notice to each Holder, with a copy to the
Trustee, which notice shall govern the terms of the Change of Control Offer.
The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Change of
Control Offer. Such notice shall identify the Notes (including CUSIP number)
and shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered and not withdrawn will be accepted for
payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed, other than as may be required by law)
(the "Change of Control Payment Date");
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(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day prior to the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Change of
Control Payment Date, a facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to have
such Notes purchased;
(7) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided that each Note purchased and each new Note issued
shall be in an original principal amount of $1,000 or integral multiples
thereof;
(8) the circumstances and relevant facts regarding such Change of
Control; and
(9) that the Change of Control Offer must remain open for at least
20 Business Days and until the close of business on the Change of Control
Payment Date.
By 11:00 a.m. on or before the Change of Control Payment Date,
the Company shall (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the purchase price plus accrued interest,
if any, of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail
to the Holders of Notes so accepted payment in an amount equal to the purchase
price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to
any unpurchased portion of the Notes surrendered. Any Notes not so accepted
shall be promptly mailed by the Company to the Holder thereof. For purposes of
this Section 4.15, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of Notes pursuant to
a Change of Control Offer shall be returned by the Trustee to the Company.
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The Company shall comply with the requirements of Section
14(e) of the Exchange Act, if applicable, and any other tender offer rules
under the Exchange Act or other relevant United States federal and state
securities legislation which may then be applicable and will file Schedule
13E-4 or Schedule 13E-4F or any other schedule required thereunder in
connection with any offer by the Company to repurchase Notes pursuant to a
Change of Control Offer. To the extent the provisions of any U.S. federal or
state securities laws or regulations conflict with the provisions under this
Section 4.15, the Company shall comply with the applicable U.S. federal or
state securities laws and regulations and shall not be deemed to have breached
its obligations under this Section 4.15 by virtue thereof. Notes repurchased
pursuant to a Change of Control Offer shall be delivered to the Trustee for
cancellation pursuant to Section 2.11.
SECTION 4.16. Limitation on the Sale of Assets.
(a) Neither the Company nor any of its Restricted
Subsidiaries will consummate or permit, directly or indirectly, any Asset Sale,
unless (i) the Company or such Restricted Subsidiary, as the case may be,
receives consideration at the time of each such Asset Sale at least equal to
the Fair Market Value of the Property subject to such Asset Sale, (ii) (x) at
least 75% of the consideration received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents, (or, in the case of an
Asset Sale of Discontinued Plants, at least 50% of such consideration is in
such form,); provided that this requirement with respect to cash or Cash
Equivalents shall not apply with respect to Investments made pursuant to clause
(10) of the second paragraph of Section 4.10, and provided further that the
aggregate Fair Market Value of the consideration other than in the form of cash
or Cash Equivalents that may be received pursuant to clause (x) shall not
exceed $5.0 million in the aggregate held (including the amount of any such
consideration not collected or written off by the Company or any of its
Restricted Subsidiaries but excluding any such consideration received in
consideration for Discontinued Plants) by the Company and its Restricted
Subsidiaries at any one time and (y) any such consideration shall not consist
of inventory or accounts receivable or other Bank Collateral, (iii) such Asset
Sale is not made by the Company to any of its Restricted Subsidiaries and (iv)
no Default or Event of Default shall have occurred and be continuing on the
date of such proposed Asset Sale or would result as a consequence of such Asset
Sale.
(b) The Company shall apply or cause such Restricted
Subsidiary to apply, the Net Cash Proceeds of such Asset Sale, within 270 days
of consummation of such Asset Sale for the following purposes, individually or
in combination:
(1) (i) to purchase or otherwise invest in Related Business
Investments; provided that (x) any Property constituting a Related Business
Investment shall not consist of inventory or accounts receivable and (y) such
purchase or Investment shall be made by the Company or such Restricted
Subsidiary, or (ii) to purchase First Mortgage Notes in open-market
transactions; provided that the Company shall be deemed to have applied such
Net Cash Proceeds pursuant to this clause (ii) in satisfaction of the
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requirements of this Section 4.16 in an amount equal to the lesser of (x) the
purchase price paid in such open-market transactions and (y) 100% of the
principal amount of the First Mortgage Notes repurchased; provided further that
the aggregate amount of Net Cash Proceeds that may be deemed to be applied
pursuant to this clause (ii) shall not exceed $5.0 million in the aggregate
from the Issue Date; provided further that pending the application of the Net
Cash Proceeds of such Asset Sale in the ordinary course of business in
accordance with this subparagraph, the Company may apply, or cause such
Restricted Subsidiary to apply, such Net Cash Proceeds temporarily to reduce
Indebtedness under its Revolving Credit Facility, if any, or otherwise invest
such Net Cash Proceeds in Cash Equivalents;
(2) with respect to any Net Cash Proceeds remaining after
application pursuant to the preceding subparagraph (b)(1) (the "Excess Proceeds
Amount"), the Company shall make an offer to repurchase Notes (an "Asset Sale
Offer") in an amount (expressed as an integral multiple of $1,000) equal to the
maximum aggregate principal amount of Notes that may be purchased with the
Excess Proceeds Amount (less the "Excess Proceeds Amount", if any, required to
be offered to repurchase First Mortgage Notes under Section 4.16(b)(2) of the
Indenture dated as of April 17, 1997 among the Company, the Parent and The Bank
of New York relating to the First Mortgage Notes (the "First Mortgage Notes
Indenture")) at a purchase price equal to 100% of the principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of purchase in
accordance with the procedures set forth in this Section 4.16. The Company may
defer the Asset Sale Offer until the aggregate unutilized Excess Proceeds
Amount equals or exceeds $10.0 million resulting from one or more Asset Sales
or Loss Events (at which time, the entire unutilized Excess Proceeds Amount,
and not just the amount in excess of $10.0 million, shall be applied as
required pursuant to this paragraph). All amounts remaining after the
consummation of any Asset Sale Offer pursuant to this paragraph may be used by
the Company only to purchase or otherwise invest in Related Business
Investments other than inventory or accounts receivables or other Bank
Collateral, to purchase First Mortgage Notes in open market transactions up to
an aggregate of $5.0 million in the aggregate under this paragraph (b) or to
purchase Notes in open market transactions up to an aggregate of $5.0 million
in the aggregate; provided that for so long as any First Mortgage Notes are
outstanding, the Company shall be required to purchase First Mortgage Notes
before it can purchase Notes in open market transactions pursuant hereto.
(c) Each notice of an Asset Sale Offer shall be mailed by
first class mail to the record Holders as shown on the register of Holders not
less than 30 days nor more than 60 days before the payment date for the Asset
Sale Offer, with a copy to the Trustee, and shall comply with the procedures
set forth in this Indenture. Upon receiving notice of the Asset Sale Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 principal amount in exchange for cash. To the extent
Holders properly tender Notes in an amount exceeding the Excess Proceeds
Amount, Notes of tendering Holders will be purchased on a pro rata basis (based
on amounts tendered). An Asset Sale Offer shall remain
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open for a period of 20 Business Days and until the close of business on the
payment date of the Asset Sale Offer or such longer period as may be required
by law. Each notice of an Asset Sale Offer shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer and shall identify the Notes (including CUSIP number) and
shall state the following terms:
(i) that the Asset Sale Offer is being made pursuant to this Section
4.16 and that all Notes tendered will be accepted for payment; provided,
however, that if the aggregate principal amount of Notes tendered in a Asset
Sale Offer plus accrued interest at the expiration of such offer exceeds the
aggregate amount of the Asset Sale Offer, the Company shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000 or
multiples thereof shall be purchased);
(ii) the purchase price (including the amount of accrued interest)
and the payment date for the Asset Sale Offer;
(iii) that any Note not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in making payment therefor,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the payment date for the Asset Sale Offer;
(v) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the payment date for the Asset Sale
Offer;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the payment
date for the Asset Sale Offer, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Notes the Holder delivered
for purchase and a statement that such Holder is withdrawing his election to
have such Note purchased; and
(vii) that Holders whose Notes are purchased only in part will be
issued new Notes in a principal amount equal to the unpurchased portion of the
Notes surrendered; provided that each Note purchased and each new Note issued
shall be in an original principal amount of $1,000 or integral multiples
thereof;
By 11:00 a.m. on or before the payment date for the Asset Sale
Offer, the Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Asset Sale Offer which are to be purchased in
accordance with item (b)(1) above, (ii) deposit with the Paying Agent U.S.
Legal Tender sufficient to pay the purchase price plus accrued interest, if
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any, of all Notes to be purchased and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail
to the Holders of Notes so accepted payment in an amount equal to the purchase
price plus accrued interest, if any. For purposes of this Section 4.16, the
Trustee shall act as the Paying Agent.
If an offer is made to repurchase the Notes pursuant to an
Asset Sale Offer, the Issuer will comply with the requirements of Section 14(e)
of the Exchange Act, if applicable, and any other tender offer rules under the
Exchange Act or other relevant United States Federal and state securities
legislation which may then be applicable and will file Schedule 13E-4 or
Schedule 13E-4F or any other schedule required thereunder in connection with
any offer by the Company to purchase Notes pursuant to an Asset Sale. Notes
repurchased pursuant to an Asset Sale Offer shall be delivered to the Trustee
for cancellation.
(d) If an offer is made to repurchase the Notes pursuant
to an Asset Sale Offer, the Company will comply with the requirements of
Section 14(e) of the Exchange Act, if applicable, the provisions of Rule 13e-4
and Rule 14e-1, if applicable, and any other tender offer rules under the
Exchange Act or other relevant United States Federal and state securities
legislation which may then be applicable and will file Schedule 13E-4 or
Schedule 13E-4F or any other schedule required thereunder in connection with
any offer by the Company to purchase Notes pursuant to an Asset Sale Offer.
Notes repurchased pursuant to this Section 4.16 shall be delivered to the
Trustee for cancellation pursuant to Section 2.11.
SECTION 4.17. Limitation on Issuance and Sale of Capital
Stock of Restricted Subsidiaries.
The Company will not permit (i) any Restricted Subsidiary to
issue any Capital Stock other than to the Company or a Restricted Subsidiary;
or (ii) any Person (other than the Company or a Restricted Subsidiary) to,
directly or indirectly, own or control any Capital Stock of any Restricted
Subsidiary (other than directors' qualifying shares); provided, however, that
clauses (i) and (ii) will not prohibit any sale of 100% of the shares of the
Capital Stock of any Restricted Subsidiary owned by the Company or any
Restricted Subsidiary effected in accordance with Section 4.16 or 5.01.
SECTION 4.18. Limitation on Liens.
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
permit or suffer to exist or remain in effect any Liens upon any Property of
the Company or of any of its Restricted Subsidiaries, whether owned on the
Issue Date or acquired after the Issue Date, or on any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits
thereon, without making effective provision for all of the Notes and all other
amounts due under the Indenture to be directly secured equally and ratably with
(or, if the obligation or liability to be secured by such Lien is subordinated
in right of payment to the Notes, prior to)
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the obligation or liability secured by such Lien.
The foregoing limitation does not apply to Permitted Liens.
SECTION 4.19. [Reserved].
SECTION 4.20. [Reserved].
SECTION 4.21. Restricted and Unrestricted Subsidiaries.
(a) The Board of Directors of the Company may designate
or redesignate any Subsidiary to be an Unrestricted Subsidiary if (i) the
Subsidiary to be so designated does not, directly or indirectly, own any
Capital Stock or Indebtedness of, or own or hold any Lien on any property or
assets of, the Company or any other Restricted Subsidiary, (ii) the Subsidiary
to be so designated is not obligated by any Indebtedness or Lien that, if in
default, would result (with the passage of time or notice or otherwise) in a
default on any Indebtedness of the Company or any Restricted Subsidiary and
(iii) either (a) the Subsidiary to be so designated has total assets of $1,000
or less or (b) such designation is effective immediately upon such Person
becoming a Subsidiary of the Company or of a Restricted Subsidiary and the
amount of the Investment by the Company or any of its Restricted Subsidiaries
in such Subsidiary would be permitted under Section 4.10. Unless so designated
as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the
Company or any Restricted Subsidiary will be classified as a Restricted
Subsidiary. Except as provided in the first sentence of this paragraph, no
Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary.
Subject to the next paragraph, an Unrestricted Subsidiary may not be
redesignated as a Restricted Subsidiary.
(b) The Company will not, and will not permit any
Restricted Subsidiary to, take any action or enter into any transaction or
series of transactions that would result in a Person becoming a Restricted
Subsidiary (whether through an acquisition, the redesignation of an
Unrestricted Subsidiary or otherwise) unless after giving effect to such
action, transaction or series of transactions, on a pro forma basis, (i) the
Company could Incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test of paragraph (a) of Section 4.12,
(ii) such Restricted Subsidiary could then Incur under Section 4.12 all
Indebtedness as to which it is obligated at such time, (iii) no Default or
Event of Default would occur or be continuing, and (iv) there exist no Liens
with respect to the property or assets of such Restricted Subsidiary other than
Permitted Liens.
(c) Any such designation by the Board of Directors of the
Company will be evidenced to the Trustee by promptly filing with the Trustee a
copy of the resolution of such board giving effect to such designation and an
Officers' Certificate certifying that such designation complies with the
foregoing provisions.
ARTICLE FIVE
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SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation or Sale of Assets.
(a) The Company will not, and will not permit any
Restricted Subsidiary to, in a single transaction or series of related
transactions, consolidate or merge with or into any Person (other than the
consolidation, merger or amalgamation of a Wholly-Owned Subsidiary with another
Wholly-Owned Subsidiary or into the Company), or sell, assign, transfer, lease,
convey or otherwise dispose of (or cause or permit any Subsidiary of the
Company to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of the Company's assets (determined on a consolidated
basis for the Company and the Company's Subsidiaries) unless: (i) either (1)
the Company, in the case of a transaction involving the Company, or such
Restricted Subsidiary, in the case of a transaction involving Restricted
Subsidiary, shall be the surviving or continuing corporation or (2) the Person
(if other than the Company or such Restricted Subsidiary) formed by such
consolidation or into which the Company or such Restricted Subsidiary is merged
or the Person which acquires by sale, assignment, transfer, lease, conveyance
or other disposition the properties and assets of the Company and of the
Company's Subsidiaries (the "Surviving Entity") (x) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, as primary
obligor, by supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and punctual payment
of the principal of, and premium, if any, and interest on all of the Notes and
the performance of every covenant of the Notes and the Indenture on the part of
the Company to be performed or observed, in the case of a transaction involving
the Company or the performance of every covenant of the Indenture on the part
of such Restricted Subsidiary to be performed or observed, in the case of a
transaction involving a Restricted Subsidiary; (ii) in the case of a
transaction involving the Company immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness Incurred or anticipated to be Incurred in connection with or in
respect of such transaction), the Company or such Surviving Entity, as the case
may be, shall be able to Incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Interest Coverage Ratio test of paragraph (a) of
Section 4.12; provided that, in determining the "Consolidated Interest Coverage
Ratio" of the resulting transferee or Surviving Entity, such ratio shall be
calculated as if the transaction (including the Incurrence of any Indebtedness
or Acquired Indebtedness) took place on the first day of the applicable Four
Quarter Period; (iii) immediately before and immediately after giving effect to
such transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness Incurred or anticipated to be Incurred and any Lien granted in
connection with or in respect of the transaction) no Default and no Event of
Default shall have occurred or by continuing; (iv) in the case of a transaction
involving the Company, immediately after giving effect to such transaction and
the assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness
Incurred or
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anticipated to by Incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, shall
have a Consolidated Net Worth which is not less than the Consolidated Net Worth
of the Company immediately prior to such transaction or series of transactions;
(v) in the case of a sale, assignment, transfer, lease, conveyance or other
disposition of all or substantially all of the Company's assets, the Surviving
Entity shall have received the Company's assets as an entirety or virtually as
an entirety; and (vi) the Company or the Surviving Entity shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by sale,
assignment, transfer, lease, conveyance or otherwise, in a single transaction
or series of related transactions) of all or substantially all of the
properties or assets of one or more Subsidiaries of the Company, the Capital
Stock of which constitutes all or substantially all of the properties and
assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
SECTION 5.02. Successor Corporation Substituted.
Upon any such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition in accordance with the
foregoing, the successor Person formed by such consolidation or into which the
Company is merged or to which such sale, assignment, transfer, lease,
conveyance or other disposition is consolidated or made will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor had been named as the
Company therein, and thereafter (except in the case of a sale, assignment,
transfer, lease, conveyance or other disposition) the predecessor corporation
will be relieved of all further obligations and covenants under this Indenture.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
The following constitute an "Event of Default":
(i) the failure to pay interest on any Note for a period of 30 days
or more after such interest becomes due and payable; or
(ii) the failure to (x) pay the principal of or premium, if any, on
any Note, when such principal becomes due and payable, at maturity, upon
repurchase (including, without limitation, pursuant to a Change of Control
Offer or an Asset Sale Offer), upon acceleration, upon redemption or otherwise
or (y) make a Change of Control Offer or an Asset Sale Offer within the
required period; or
(iii) a default in the observance or performance of any of the
agreements or covenants contained in Section 5.01 or clause (e) of Section 4.14
or the granting by the Company or any Restricted Subsidiary of any Lien to
secure Indebtedness in excess of $100,000 (other than a Permitted Lien) and
after the occurrence of a Parent Guarantee Event, the granting by the Parent of
any Lien to secure Indebtedness in excess of $100,000 (other than a Permitted
Lien);
(iv) a default in the observance or performance of any of the other
agreements or
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covenants contained in this Indenture which default continues for a period of
30 days after the Company receives written notice specifying the default from
the Trustee or from Holders of at least 25% in principal amount of the
outstanding Notes; or
(v) a default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or of any Specified Subsidiary of the Company,
whether such Indebtedness now exists, or is created after the date of this
Indenture, which default (a) is caused by a failure to pay at final maturity
the principal of or premium, if any, on such Indebtedness after any applicable
grace period provided in such Indebtedness on the date of such default (a
"Principal 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 Principal Payment Default
or the maturity of which has been so accelerated, is of at least $10.0 million
in the aggregate; or
(vi) one or more judgments in an aggregate amount in excess of $10.0
million (which are not covered by third-party insurance as to which the insurer
is solvent and has not disclaimed coverage) being rendered against the Company
or any Specified Subsidiary of the Company and such judgments remain
undischarged, or unstayed or unsatisfied for a period of 60 days after such
judgment or judgments become final and non-appealable; or
(vii) the Company, any Specified Subsidiary or, after the occurrence
of a Parent Guaranty Event, the Parent (A) commences a voluntary case or
proceeding under any Bankruptcy Law with respect to itself, (B) consents to the
entry of a judgment, decree or order for relief against it in an involuntary
case or proceeding under any Bankruptcy Law, (C) consents to the appointment of
a Custodian of it or for substantially all of its property, (D) consents to or
acquiesces in the institution of a bankruptcy or an insolvency proceeding
against it, (E) makes a general assignment for the benefit of its creditors, or
(F) takes any corporate action to authorize or effect any of the foregoing; or
(viii) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company, any Significant Subsidiary or,
after the occurrence of a Parent Guaranty Event, the Parent in an involuntary
case or proceeding under any Bankruptcy Law, which shall (A) approve as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, any Specified Subsidiary or the Parent,
(B) appoint a Custodian of the Company, any Specified Subsidiary or the Parent
or for substantially all of its property or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days.
SECTION 6.02. Acceleration.
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(a) If an Event of Default (other than an Event of
Default specified in Section 6.01(vii) or (viii) above with respect to the
Company) occurs and is continuing and has not been waived pursuant to Section
6.04, then and in every such case the Trustee or the Holders of not less than
25% in aggregate principal amount of the then outstanding Notes may declare the
unpaid principal of, premium, if any, and accrued and unpaid interest on, all
the Notes then outstanding to be due and payable, by a notice in writing to the
Company (and to the Trustee, if given by Holders) and upon such declaration
such principal amount, premium, if any, and accrued and unpaid interest will
become immediately due and payable. If an Event of Default specified in
Section 6.01(vii) or (viii) above occurs with respect to the Company or, after
the occurrence of a Parent Guarantee Event, the Parent, all unpaid principal
of, and premium, if any, and accrued and unpaid interest on, the Notes then
outstanding will automatically become due and payable without any declaration
or other act on the part of the Trustee or any Holder.
(b) The Trustee shall, within 90 days after the
occurrence of any Default or Event of Default actually known to it, give to the
Holders notice of such Default; provided that, except in the case of a Default
or an Event of Default in the payment of principal of, or interest on, any
Note, the Trustee shall be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interest of the
Holders.
(c) The Holders of a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may rescind an
acceleration and its consequences if all existing Events of Default (other than
the nonpayment of principal of and premium, if any, and interest on the Notes
which has become due solely by virtue of such acceleration) have been cured or
waived and if the rescission would not conflict with any judgment or decree.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 2.09, 6.07 and 13.02, the Holders of a
majority in principal
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amount of the outstanding Notes by notice to the Trustee may waive any existing
Default or Event of Default and its consequences, except a Default in the
payment of the principal of or interest on any Note as specified in clauses (i)
and (ii) of Section 6.01 or a Default in respect of any term or provision of
the Notes or the Indenture that cannot be modified or amended without the
consent of all Noteholders. When a Default or Event of Default is waived, it
is cured and ceases; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in
principal amount of the outstanding Notes may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on it. Subject to Section 7.01,
however, the Trustee may refuse to follow any direction that the Trustee
reasonably believes conflicts with any law or this Indenture, that the Trustee
determines may be unduly prejudicial to the rights of another Noteholder;
provided that the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and provided further
that this provision shall not affect the rights of the Trustee set forth in
Section 7.01(d).
SECTION 6.06. Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this
Indenture or the Notes unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) Holders of at least 25% in principal amount of the outstanding
Notes make a written request to the Trustee to pursue the remedy;
(3) such Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of satisfactory indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the outstanding Notes do not give the Trustee a direction which, in
the opinion of the Trustee, is inconsistent with the request.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over such
other Noteholder.
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SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on a Note,
on or after the respective due dates expressed in such Note, or to bring suit
for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in clause (i) or (ii) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest at the rate set forth in Section
4.01 and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relating to the Company or any
Guarantor (or any other obligor upon the Notes), any of their respective
creditors or any of their respective property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Noteholder to make
such payments to the Trustee and, in the event that the Trustee shall consent
to the making of such payments directly to the Noteholders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. The Company's payment obligations
under this Section 6.09 shall be secured in accordance with the provisions of
Section 7.07 hereunder. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this
Article 6, it shall pay out the money in the following order:
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First: to the Trustee for amounts due under Section 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively; and
Fourth: to the Company or, to the extent the Trustee collects any
amount pursuant to Article 11 hereof from any Guarantor, to such Guarantor, or
to such party as a court of competent jurisdiction shall direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or
Holders of more than 10% in principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill in its
exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an
Event of Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no covenants or obligations shall be implied in
this Indenture against the Trustee.
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(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein).
(c) Notwithstanding anything to the contrary herein
contained, the Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(e) Whether or not herein expressly provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any
money or assets received by it except as the Trustee may agree in writing with
the Company. Assets held in trust by the Trustee need not be segregated from
other assets except to the extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
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(a) The Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note, or other evidences of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated
in the document unless the Trustee has reason to believe that such fact or
matter is not true.
(b) Before the Trustee acts or refrains from acting, it
may consult with counsel of its selection and may require an Officers'
Certificate, an Opinion of Counsel or both, which shall conform to Sections
14.04 and 14.05. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel or upon advice of such counsel.
(c) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or indirectly or by
or through agents or attorneys and the Trustee shall not be responsible for the
misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action that
it takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent, order,
bond, note, other evidences of indebtedness, or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled,
upon reasonable notice to the Company or any Guarantor, to examine the books,
records, and premises of the Company or any Guarantor, personally or by agent
or attorney and to consult with the officers and representatives of the Company
or any Guarantor, including the Company's accountants and attorneys of the
Company or any Guarantor.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee security or
indemnity reasonably satisfactory to the Trustee against the costs, expenses
and liabilities which may be incurred by it in compliance with such request,
order or direction.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties hereunder.
(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate
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Trust Office of the Trustee, and such notice references the Notes and this
Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary of the Company or any Guarantor, or their respective Affiliates with
the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.04. Trustee's Disclaimer.
The recitals contained herein and in the Notes shall be taken
as statements of the Company and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, and it shall not be accountable for
the Company's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Company in this Indenture or the Notes
other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is actually known to the Trustee, the Trustee shall mail to each
Noteholder notice of the uncured Default or Event of Default within 90 days
after such Default or Event of Default occurs. Except in the case of a Default
or an Event of Default in payment of principal of, or interest on, any Note,
including an accelerated payment, and the failure to make payment on the Change
of Control Payment Date pursuant to a Change of Control Offer or on the payment
date for an Asset Sale Offer, and except in the case of a failure to comply
with Article 5 hereof, the Trustee may withhold the notice if and so long as
its Board of Directors, the executive committee of its Board of Directors or a
committee of its directors and/or Trust Officers determines in good faith that
withholding the notice is in the interest of the Noteholders.
SECTION 7.06. Reports by Trustee to Holders.
(a) Within 60 days after each March 15, the Trustee
shall, to the extent that any of the events described in TIA Section 313(a)
occurred within the previous twelve months, but not otherwise, mail to each
Noteholder a brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Sections 313(b), (c)
and (d).
(b) A copy of each report at the time of its mailing to
Noteholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Notes are listed. The Company shall
promptly notify the Trustee if the Notes become listed on any stock exchange,
or of any delisting thereof, and the Trustee shall comply with TIA Section
313(d).
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SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its services. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture. Such expenses shall include
the reasonable fees and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall jointly and severally
indemnify each of the Trustee (or any predecessor Trustee) and its agents,
employees, stockholders and directors and officers for, and hold them harmless
against, any and all loss, liability, damage, claim or expense including taxes
(other than taxes based on the income of the Trustee) incurred by them except
for such actions to the extent caused by any negligence, bad faith or willful
misconduct on their part, arising out of or in connection with the acceptance
or administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
acceptance, exercise or performance of any of their rights, powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. At the Trustee's sole
discretion, the Company shall defend the claim and the Trustee shall cooperate
and may participate in the defense; provided that any settlement of a claim
shall be approved in writing by the Trustee. Alternatively, the Trustee may at
its option have separate counsel of its own choosing and the Company shall pay
the reasonable fees and expenses of such counsel; provided that the Company
will not be required to pay such fees and expenses if it assumes the Trustee's
defense and there is no conflict of interest between the Company and the
Trustee in connection with such defense as reasonably determined by the
Trustee. The Company need not pay for any settlement made without its written
consent. The Company need not reimburse any expense or indemnify against any
loss or liability to the extent incurred by the Trustee through its negligence,
bad faith or willful misconduct.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a lien prior to the Notes on all assets or money
held or collected by the Trustee, in its capacity as Trustee, except assets or
money held in trust to pay principal of or interest on particular Notes. The
Trustee's right to receive payment of any amounts due under this Section 7.07
shall not be subordinate to any other liability or indebtedness of the Company
(even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(vii) or 6.01(viii) occurs, such
expenses and the compensation for such services are intended to constitute
expenses of administration under any Bankruptcy Law; provided, however, that
this shall not affect the Trustee's rights as set forth in the preceding
paragraph or Section 6.10.
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The provisions of this Section shall survive the termination of this Indenture.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing.
The Holders of a majority in principal amount of the outstanding Notes may
remove the Trustee by so notifying the Company and the Trustee in writing and
may appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a majority in
principal amount of the Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Noteholder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the outstanding
Notes may petition , at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
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If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided that such
corporation shall be otherwise qualified and eligible under this Article 7.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1), (2) and (5). The Trustee (or, in the case
of a corporation included in a bank holding company system, the related bank
holding company) shall have a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA Section 310(a)(2). The Trustee shall comply with
TIA Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Company, as obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein. The provisions of TIA Section 311 shall apply to the
Company and each Guarantor, as obligor on the Notes.
SECTION 7.12. Trustee's Application for Instructions from the
Company.
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the
date on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date
shall not be less than three Business Days after the date any Officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such
action (or the effective date in the case of any omission), the Trustee shall
have received written instructions in response to such application specifying
the action to be taken or omitted.
ARTICLE EIGHT
[RESERVED]
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ARTICLE NINE
[RESERVED]
ARTICLE TEN
[RESERVED]
ARTICLE ELEVEN
[RESERVED]
ARTICLE TWELVE
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 12.01. Termination of the Company's Obligations.
The Indenture will be discharged and will cease to be of
further effect (except as to surviving rights, or registration of transfer or
exchange of the Notes, as expressly provided for below) as to all outstanding
Notes when:
(a) either (i) all the Notes theretofore authenticated
and delivered (except lost, stolen or destroyed Notes which have been
replaced or paid and Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or (ii) all Notes
not theretofore delivered to the Trustee for cancellation have become
due and payable and the Company thereafter has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes
not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date
of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof;
(b) no Default or Event of Default with respect to this
Indenture or the Notes shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company
is a party or by which it is bound;
(c) the Company shall have paid all other sums payable by
it hereunder or under the Notes; and
(d) the Company shall have delivered to the Trustee an
Officers' Certificate
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and an Opinion of Counsel, each stating that all conditions precedent
providing for the termination of the Company's obligations under the
Notes and this Indenture have been complied with. Such Opinion of
Counsel shall also state that such satisfaction and discharge does not
result in a default under the Revolving Credit Agreement (if then in
effect) or any other agreement or instrument then known to such
counsel that binds or affects the Company.
Notwithstanding the foregoing paragraph, the Company's
obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 7.07, 12.05 and
12.06 shall survive until the Notes are no longer outstanding pursuant to the
last paragraph of Section 2.08. After the Notes are no longer outstanding, the
Company's obligations in Sections 7.07, 12.05 and 12.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under the Notes and this Indenture except for those surviving obligations
specified above.
SECTION 12.02. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution of
the Board of Directors of the Company, at any time, elect to have either
paragraph (b) or (c) below be applied to all outstanding Notes upon compliance
with the conditions set forth in Section 12.03.
(b) Upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (b), the Company shall,
subject to the satisfaction of the conditions set forth in Section 12.03, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 12.04 hereof and
the other Sections of this Indenture referred to in (i) and (ii) below, and to
have satisfied all its other obligations under such Notes and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following
provisions, which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 12.04 hereof, and as more fully set
forth in such Section 12.04, payments in respect of the principal of, premium,
if any, and interest on such Notes when such payments are due, (ii) the
Company's obligations with respect to such Notes under Article 2 and Section
4.02 hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and
(iv) this Article 12. Subject to compliance with this Article 12, the Company
may exercise its option under this paragraph (b) notwithstanding the prior
exercise of its option under paragraph (c) hereof.
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(c) Upon the Company's exercise under paragraph (a)
hereof of the option applicable to this paragraph (c), the Company shall,
subject to the satisfaction of the conditions set forth in Section 12.03
hereof, be released from its obligations under the covenants contained in
Sections 4.04, 4.05, 4.06, 4.07, 4.08 and 4.10 through 4.21 and Articles 5, 8,
9 and 10 hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event or Default under Section
6.01(iii), 6.01(iv), 6.01(v) and 6.01(ix) hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby.
SECTION 12.03. Conditions to Legal Defeasance or Covenant
Defeasance.
The following shall be the conditions to the application of
either Section 12.02(b) or 12.02(c) hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the holders of the Notes cash in U.S. dollars,
non-callable U.S. Government Obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if any,
and interest on the Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee (a)(1) an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred, or (2) a ruling to such
effect from, or published by, the Internal Revenue Service and (B) an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that the resulting trust will not be an "Investment Company" within the meaning
of the Investment Company Act of 1940 unless such trust is qualified thereunder
or exempt from regulation thereunder;
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(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the holders of the 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, and that the resulting trust will
not be an "Investment Company" within the meaning of the Investment Company Act
of 1940 unless such trust is qualified thereunder or exempt from regulation
thereunder;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default with respect to the Indenture resulting from the Incurrence of
Indebtedness, all or a portion of which will be used to defease the Notes
concurrently with such Incurrence) or with regard to any such events specified
in Sections 6.01(vii) and 6.01(viii), at any time in the period ending on the
91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under the Indenture or any
other material agreement or instrument to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with;
(viii) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that (A) the trust funds will not be subject to any
rights of holders of Indebtedness of the Company other than the Notes and (B)
assuming no intervening bankruptcy of the Company between the date of deposit
and the 91st day following the deposit and that no Holder of the Notes is an
insider of the Company, after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and
(ix) the Trustee shall have, for the benefit of the Holders, a
perfected first priority security interest under applicable law in the U.S.
dollars or U.S. Government Obligations deposited pursuant to Section 12.03(i)
above.
SECTION 12.04. Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S. Legal
Tender or U.S.
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Government Obligations deposited with it pursuant to Article 8, and shall apply
the deposited U.S. Legal Tender and the money from U.S. Government Obligations
in accordance with this Indenture to the payment of principal of and interest
on the Notes. The Trustee shall be under no obligation to invest said U.S.
Legal Tender or U.S. Government Obligations except as it may agree in writing
with the Company.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Legal Tender
or U.S. Government Obligations deposited pursuant to Section 12.03 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 12 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any U.S. Legal Tender or U.S. Government Obligations held by
it as provided in Section 12.03 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 12.05. Repayment to the Company.
Subject to this Article 12, the Trustee and the Paying Agent
shall promptly pay to the Company upon written request any excess U.S. Legal
Tender or U.S. Government Obligations held by them at any time and thereupon
shall be relieved from all liability with respect to such money. The Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years; provided that the Trustee or such Paying Agent, before being required to
make any payment, may at the expense of the Company cause to be published once
in a newspaper of general circulation in the City of New York or mail to each
Holder entitled to such money notice that such money remains unclaimed and that
after a date specified therein which shall be at least 30 days from the date of
such publication or mailing any unclaimed balance of such money then remaining
will be repaid to the Company. After payment to the Company, Noteholders
entitled to such money must look to the Company for payment as general
creditors unless an applicable law designates another Person.
SECTION 12.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S.
Legal Tender or U.S. Government Obligations in accordance with this Article 12
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Article 8 until such time as the Trustee or Paying Agent is permitted to
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apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Article 8; provided that if the Company has made any payment of interest
on or principal of any Notes because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S. Legal Tender or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE THIRTEEN
AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE AND THE NOTES
SECTION 13.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the
Trustee, together, may amend or supplement in form satisfactory to the Trustee
this Indenture or the Notes without notice to or consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency; provided that
such amendment or supplement does not, in the opinion of the Trustee, adversely
affect the rights of any Holder in any material respect;
(2) to comply with Article 5;
(3) to comply with any requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
(4) to make any change that would provide any additional benefit or
rights to the Noteholders or that does not adversely affect the rights of any
Noteholder; or
(5) to provide for issuance of the Exchange Notes, which will have
terms substantially identical in all material respects to the Initial Notes
(except that the transfer restrictions contained in the Initial Notes will be
modified or eliminated, as appropriate), and which will be treated together
with any outstanding Initial Notes, as a single issue of securities;
provided that the Company has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 13.01.
SECTION 13.02. With Consent of Holders.
(a) Subject to Section 6.07, the Company, when authorized
by a Board Resolution, and the Trustee, together, with the written consent of
the Holder or Holders of at least a majority in aggregate principal amount of
the outstanding Notes, may amend or supplement this Indenture or the Notes
without notice to any other Noteholders. Subject to Section 6.07, the Holder
or Holders of a majority in aggregate principal amount of the outstanding Notes
may waive compliance by the Company with any provision of this Indenture
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or the Notes without notice to any other Noteholder. No amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, shall, without the
consent of each Holder of each Note affected thereby, directly or indirectly:
(i) reduce the amount of Notes whose Holders must consent to an
amendment;
(ii) reduce the rate of or change the time for payment of interest,
including defaulted interest, on any Notes;
(iii) reduce the principal of or change the fixed maturity of any
Notes, or change the date on which any Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor;
(iv) make any Notes payable in money other than that stated in the
Notes;
(v) make any change in provisions of the Indenture protecting the
right of each Holder to receive payment of principal of and interest on such
Note on or after the due date thereof or to bring suit to enforce such payment,
or permitting Holders of a majority in principal amount of the Notes to waive
Defaults or Events of Default;
(vi) amend, modify or change the obligation of the Company to make
or consummate a Change of Control Offer (including amending, modifying or
changing the definition of Change of Control), or, after the Company's
obligation to purchase the Notes arises thereunder, an Asset Sale Offer or
waive any default in the provisions thereof or modify any of the provisions or
definitions with respect to any Asset Sale Offer; or
(vii) adversely affect the ranking of Notes.
(b) After an amendment, supplement or waiver under this
Section 13.02 becomes effective, the Company shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 13.03. Execution of Supplemental Indentures.
The Trustee shall sign any supplemental indenture authorized
pursuant to this Article 13, subject to the last sentence of this Section
13.03. In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article 13 or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture or amendment is authorized or
permitted by this Indenture. The Trustee may, but shall not be
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obligated to, enter into any such supplemental indenture or amendment which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 13.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Notes theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 13.05. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 13 may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and made available for delivery by
the Trustee in exchange for Outstanding Notes.
SECTION 13.06. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 13.07. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder's Note, even if notation of the consent is not made on
any Note. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note or portion of such Note
by notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be at least 30 days
prior to the first solicitation of such consent. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such
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consent shall be valid or effective for more than 90 days after such record
date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Noteholder, unless it makes a change described in any of
clauses (i) through (viii) of Section 13.02(a) or 13.02(b), in which case, the
amendment, supplement or waiver shall bind only each Holder of a Note who has
consented to it and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note; provided that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Note, on or after the respective due dates
expressed in such Note, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 13.08. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may require the Holder of the Note to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Note shall issue and
the Trustee shall authenticate a new Note that reflects the changed terms. Any
such notation or exchange shall be made at the sole cost and expense of the
Company.
ARTICLE FOURTEEN
MISCELLANEOUS
SECTION 14.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 14.02. Notices.
(a) Any notice or communication by the Company, any
Guarantor or the Trustee to the other is duly given if in writing and delivered
in person or mailed by first class mail (registered or certified, return
receipt requested), confirmed facsimile transmission or overnight air courier
guaranteeing next day delivery, to the other's address:
If to the Company or any of the Guarantors:
Anchor Glass Container Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634
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Facsimile No.: (813) 882-7859
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No. (212) 815-5915
Attention: Corporate Trust Trustee Administration
(b) The Company, any Guarantor or the Trustee, by notice
to the other, may designate additional or different addresses for subsequent
notices or communications.
(c) All notices and communications (other than those sent
to Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if by facsimile
transmission; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
(d) Any notice or communication mailed to a Holder shall
be mailed by first class mail, postage prepaid, to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
(e) If a notice or communication is mailed to any Person
in the manner provided above within the time prescribed, it is duly given,
whether or not the addressee receives it.
(f) If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 14.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Registrar and any other Person shall have
the protection of TIA Section 312(c).
SECTION 14.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
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(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent to be performed by the Company, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if any,
provided for in this Indenture relating to the proposed action have been
complied with.
SECTION 14.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it has made
such examination or investigation as is reasonably necessary to enable it to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with.
SECTION 14.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Noteholders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 14.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York or at such place of payment are not required to be open. If a
payment date is a Legal Holiday at such place, payment may be made at such
place on the next succeeding day that is a Business Day, and no interest shall
accrue for the intervening period.
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SECTION 14.08. GOVERNING LAW; CONSENT TO JURISDICTION;
SERVICE OF PROCESS.
(a) THIS INDENTURE, THE NOTES AND EACH GUARANTEE SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
THE PARTIES HERETO EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS INDENTURE, THE
NOTES (INCLUDING ANY GUARANTEE) OR TRANSACTION RELATED HERETO OR THERETO.
(b) Any legal action or proceeding with respect to this
Indenture, any Note or any Guarantee may be brought in the courts of the State
of New York or of the United States for the Southern District of New York, and,
by execution and delivery of this Indenture, each of the parties to this
Indenture hereby irrevocably accepts for itself and in respect of its
respective property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of the parties to this Indenture hereby further
irrevocably waives any claim that any such courts lack jurisdiction over such
party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Indenture, the Notes, any Guarantee or the transactions
contemplated thereby brought in any of the aforesaid courts, that any such
court lacks jurisdiction over such party. The Company and Parent hereto
irrevocably (a) appoints itself as its lawful agent and attorney to accept and
acknowledge service of process against such party, and upon whom process may be
served in any action, suit or proceeding arising out of, or in connection with,
this Indenture, the Notes, any Guarantee or the transactions contemplated
thereby with the same effect as if such party was a resident of the State of
New York and had been lawfully served with such process in such jurisdiction,
and (b) consents to the service of any process, pleading, notices or other
papers by the mailing of copies thereof by registered, certified or first class
mail (postage prepaid, return receipt requested) or by reputable courier
service, to such party at such party's address set forth herein, or by any
other method provided or permitted under New York law, with the same effect as
if such party was a resident of the State of New York and had been lawfully
served with such process in such jurisdiction. Each of the parties to this
Indenture irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its respective address for notices pursuant
to Section 14.02, such service to become effective 30 days after such mailing.
To the extent permitted by law, each of the parties to this Indenture hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any Note or any Guarantee that service of process
was in any way invalid or ineffective. Nothing herein shall affect the right
of any party to this Indenture to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed against any party
in any other jurisdiction.
(c) Each of the parties to this Indenture hereby
irrevocably waives any
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objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Indenture, the Notes or any Guarantee brought in the courts referred to in
clause (b) of this Section 14.08 and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
SECTION 14.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 14.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as
such, of the Company or of the Trustee shall not have any liability for any
obligations of the Company or any Guarantor under the Notes or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creations. Each Noteholder by accepting a Note waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 14.11. Successors.
All agreements of the Company and the Parent in this Indenture
and the Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 14.12. Duplicate and Counterpart Originals.
All parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture. This Indenture may be
executed in any number of counterparts, each of which so executed shall be an
original, but all of them together shall represent the same agreement.
SECTION 14.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Notes shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 14.14. Table of Contents, Headings, Etc.
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The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first written above.
ANCHOR GLASS CONTAINER
CORPORATION, as Issuer
By:
-----------------------------------
Name:
Title:
CONSUMERS U.S., INC.
By:
-----------------------------------
Name:
Title:
Trustee:
THE BANK OF NEW YORK,
as Trustee
By:
-----------------------------------
Name:
Title:
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<PAGE> 94
EXHIBIT A
CUSIP No.:______________
ANCHOR GLASS CONTAINER CORPORATION
9 7/8% SENIOR NOTE DUE 2008
No. $
[IF GLOBAL NOTE:
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, RESOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO
YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE
SECURITIES ACT AND ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE OF THIS SECURITY (OR OF ANY PREDECESSOR OF THIS SECURITY)
AND THE LAST DAY ON WHICH THE ISSUER OR ANY AFFILIATE OF THIS ISSUER WSA THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW REOFFER, RESELL, ASSIGN,
TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THIS SECURITY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH ACCREDITED
INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF
$250,000, FOR
<PAGE> 95
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT THAT, PRIOR TO SUCH
TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER IS ATTACHED AS AN EXHIBIT HERETO), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE QUALIFIED FOR
SALE UNDER THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA. THE
SECURITIES ARE NOT BEING OFFERED FOR SALE AND MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, IN CANADA OR TO ANY RESIDENT THEREOF IN VIOLATION OF
THE SECURITIES LAWS OF CANADA OR ANY PROVINCE OR TERRITORY OF CANADA.
[IF GLOBAL NOTE:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
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TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE.
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF
THE INDENTURE.
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GLOBAL NOTE
REPRESENTING
9 7/8% SENIOR NOTES DUE 2008
ANCHOR GLASS CONTAINER CORPORATION , a Delaware corporation
(the "Company", which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal
sum of Dollars, on March 15, 2008.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
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IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ANCHOR GLASS CONTAINER CORPORATION
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Certificate of Authentication
This is one of the 9 7/8% Senior Notes due 2008 referred to in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
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<PAGE> 99
(REVERSE OF NOTE)
9 7/8% SENIOR NOTE DUE 2008
1. Interest. ANCHOR GLASS CONTAINER CORPORATION, a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. The Company will pay
interest semiannually in arrears on each Interest Payment Date, commencing
September 15, 1998. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Interest shall accrue from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid,
from the date of the original issuance of the Notes.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes plus 2% per annum and on overdue installments of interest (without
regard to any applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of
New York, a New York banking corporation (the "Trustee"), will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an
Indenture, dated as of March 17, 1998 (the "Indenture"), among the Company,
Consumers U.S., Inc. (the "Parent") and the Trustee. This Note is one of a
duly authorized issue of Initial Notes of the Company designated as its 9 7/8%
Senior Notes due 2008 (the "Initial Notes"). The Notes are limited in
aggregate principal amount to $50,000,000. The Notes include the Initial Notes
and the Exchange Notes, as defined below, issued in exchange for the Initial
Notes pursuant to the Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) (the "TIA"). Notwithstanding anything to
the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said
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Act for a statement of them.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to Incur
additional Indebtedness, create Liens, make certain dividend payments,
distributions, Investments and other Restricted Payments, pay dividends and
other distributions, enter into or permit certain transactions with Affiliates
and make Asset Sales. The Indenture also imposes limitations on the ability of
the Company and its Restricted Subsidiaries to consolidate or merge with or
into any other Person or permit any other Person to merge with or into the
Company or a Restricted Subsidiary, or sell, convey, assign, transfer, lease or
otherwise dispose of all or substantially all of the Property of the Company or
any Restricted Subsidiary to any other Person and on the ability of the
Company's Restricted Subsidiaries to issue Capital Stock. Such limitations are
subject to a number of important qualifications and exceptions. The Company
must annually report to the Trustee on compliance with such limitations.
5. Guarantees. Upon the occurrence of certain events,
this Note may be guaranteed by the Parent as provided for in, and pursuant to
the terms of, the Indenture.
6. Redemption.
(a) Optional Redemption. The Notes will be redeemable,
at the option of the Company, in whole and not in part, at any time, on not
less than 30 nor more than 60 days' prior written notice to each holder of
Notes to be redeemed, at a redemption price equal to the sum of (i) the then
outstanding principal amount thereof plus (ii) accrued and unpaid interest, if
any, to the redemption date plus (iii) the Applicable Make-Whole. The
following definitions are used to determine the Applicable Make-Whole:
"Applicable Make-Whole" with respect to the Notes shall be
calculated with respect to the date of redemption to maturity and shall equal
the greater of (i) 1.0% of the then outstanding principal amount of such Notes
and (ii) the excess of (A) the present value of the required interest payments
and principal payments to maturity due on such Notes, computed, on a
semi-annual basis, using a discount rate equal to the Treasury Rate plus 50
basis points, over (B) the then outstanding principal amount of such Notes.
"Average Life" means, as of the date of determination, with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment (assuming the exercise by
the obligor of such debt security of all unconditional (other than as to the
giving of notice) extension options of each such scheduled payment date) of
such debt security multiplied by the amount of such principal payment by (ii)
the sum of all such principal payments.
"Treasury Rate," for purposes of the Indenture, is defined as
the yield to maturity at the time of computation of United States Treasury
securities with a constant
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maturity (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519) which has become publicly available at least two
business days prior to the date fixed for prepayment (or, if such Statistical
Release is no longer published, any publicly available source of similar market
data)) most nearly equal to the remaining Average Life of the Notes; provided,
that if the Average Life of the Notes is not equal to the constant maturity of
a United States Treasury security for which a weekly average yield is given,
the Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one- twelfth of a year) for the weekly average yields of United States
Treasury securities for which such yields are given, except that if the Average
Life of the Notes is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
(c) Within 90 days of the consummation of any Change
of Control Offer pursuant to which the Company has repurchased at least 90% of
the Notes outstanding immediately prior to such Change of Control Offer, the
Company may, at its option, redeem all of the remaining Notes at a redemption
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of redemption.
7. Notice of Redemption. Notice of redemption under
paragraphs 6(a), 6(b) and 6(c) of this Note will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address. Notes in denominations larger
than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of such Notes will
be to receive payment of the Redemption Price plus accrued interest, if any.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be
redeemed in part. Notice of redemption shall 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. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall state
the portion of the principal amount thereof to be redeemed. A new Note in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and
after the redemption date, interest will cease to accrue on Notes or portions
thereof called for redemption as long as the Company has deposited with the
paying agent for the Notes funds in satisfaction of the applicable redemption
price pursuant to the
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Indenture.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture),
and subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Registration Rights. Pursuant to the Registration
Rights Agreement among the Company and the Holders of the Initial Notes, the
Company will be obligated to consummate an exchange offer pursuant to which the
Holder of this Note shall have the right to exchange this Note for the
Company's 9 7/8% Senior Notes due 2008 of the Company, which have been
registered under the Securities Act, in like principal amount and having terms
identical in all material respects to the Initial Notes, including the
guarantee thereof by the Parent, if any. The Holders of the Initial Notes
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
10. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Note (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Notes and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article 3 of the
Indenture, except the unredeemed portion of any Note being redeemed in part.
11. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company. After that, all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
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14. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes, or comply with Article
Five of the Indenture or make any other change that does not adversely affect
in any material respect the rights of any Holder of a Note.
15. Successors. When a successor assumes, in accordance
with the Indenture, all the obligations of its predecessor under the Notes and
the Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Notes or the Indenture or
for any claim based on, in respect of or by reason of, such obligations or
their creation. Each Holder of a Note by accepting a Note waives and releases
all such liability. The waiver and release are part of the consideration for
the issuance of the Notes.
19. Authentication. This Note shall not be valid until
the Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.
20. Governing Law. The laws of the State of New York
shall govern this
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Note and the Indenture without regard to principles of conflicts of laws.
21. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a convenience to
the Holders of the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as the same
may be amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Anchor Glass Container
Corporation, One Anchor Plaza, 4343 Anchor Parkway, Tampa, Florida 33634, Attn:
Chief Financial Officer.
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ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: ______________________________ Signed: _____________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ____________________________
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) March 16, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that this Note is being transferred:
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[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act; or
(3) __ to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) that has furnished to the Trustee a
signed letter containing certain representations and
agreements (the form of which letter can be obtained from the
Trustee); or
(4) __ outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act; or
(5) __ pursuant to the exemption from registration provided by Rule
144 under the Securities Act; or
(6) __ pursuant to an effective registration statement under the
Securities Act; or
(7) __ pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than
the registered Holder thereof; provided that if box (3), (4), (5) or (7) is
checked, the Company or the Trustee may require, prior to registering any such
transfer of the Notes, in its sole discretion, such legal opinions,
certifications (including an investment letter in the case of box (3) or (4))
and other information as the Trustee or the Company has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act.
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<PAGE> 107
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Date: ______________________________ Signed: _____________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ____________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Date: ______________________________ ______________________________
NOTICE: To be executed by an
executive officer
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<PAGE> 108
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 []
Section 4.16 []
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$_______________________________
Dated: _______________________________ ______________________________
NOTICE: The signature on
this assignment must
correspond with the name
as it appears upon the face
of the within Note in every
particular without alteration
or enlargement or any change
whatsoever.
Signature Guarantee: ____________________________________
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<PAGE> 109
EXHIBIT B
CUSIP No.:______________
ANCHOR GLASS CONTAINER CORPORATION
9 7/8% SENIOR NOTE DUE 2008
No. $
[IF GLOBAL NOTE:
THIS IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE
OF THE DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY
OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE.
<PAGE> 110
GLOBAL NOTE
REPRESENTING
9 7/8% SENIOR
NOTES DUE 2008]
ANCHOR GLASS CONTAINER CORPORATION , a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal
sum of Dollars, on March 15, 2008.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 1.
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
ANCHOR GLASS CONTAINER CORPORATION
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Certificate of Authentication
This is one of the 9 7/8% Senior Notes due 2008 referred to in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By: _________________________
Authorized Signatory
Dated:
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<PAGE> 111
(REVERSE OF NOTE)
9 7/8% SENIOR NOTE DUE 2008
1. Interest. ANCHOR GLASS CONTAINER CORPORATION, a
Delaware corporation (the "Company"), promises to pay interest on the principal
amount of this Note at the rate per annum shown above. The Company will pay
interest semiannually in arrears on each Interest Payment Date, commencing
September 15, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Interest shall accrue from the most recent Interest
Payment Date to which interest has been paid or, if no interest has been paid,
from the date of the original issuance of the Notes.
The Company shall pay interest on overdue principal and on overdue installments
of interest from time to time on demand at the rate borne by the Notes plus 2%
per annum and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Notes are cancelled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
shall pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by its check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, The Bank of
New York, a New York banking corporation (the "Trustee"), will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders.
4. Indenture. The Company issued the Notes under an
Indenture, dated as of March 17, 1998 (the "Indenture"), among the Company,
Consumers U.S., Inc. (the "Parent") and the Trustee. This Note is one of a
duly authorized issue of Exchange Notes of the Company designated as its 9 7/8%
Senior Notes due 2008 (the "Exchange Notes"). The Notes are limited in
aggregate principal amount to $50,000,000. The Notes include the Initial Notes
and the Exchange Notes, as defined below, issued in exchange for the Initial
Notes pursuant to the Indenture. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) (the "TIA"). Notwithstanding anything to
the contrary
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herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them.
The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries, among other things, to Incur
additional Indebtedness, create Liens, make certain dividend payments,
distributions, Investments and other Restricted Payments, enter into or permit
certain transactions with Affiliates and make Asset Sales. The Indenture also
imposes limitations on the ability of the Company and its Restricted
Subsidiaries to consolidate or merge with or into any other Person or permit
any other Person to merge with or into the Company or a Restricted Subsidiary,
or sell, convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the Property of the Company or any Restricted Subsidiary
to any other Person and on the ability of the Company's Restricted Subsidiaries
to issue Capital Stock. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.
5. Guarantees. Upon the occurrence of certain events,
this Note may be guaranteed by the Parent as provided for in, and pursuant to
the terms of, the Indenture.
6. Redemption.
(a) Optional Redemption.The Notes will be redeemable, at
the option of the Company, in whole and not in part, at any time, on not less
than 30 nor more than 60 days' prior written notice to each holder of Notes to
be redeemed, at a redemption price equal to the sum of (i) the then outstanding
principal amount thereof plus (ii) accrued and unpaid interest, if any, to the
redemption date plus (iii) the Applicable Make-Whole. The following
definitions are used to determine the Applicable Make-Whole:
"Applicable Make-Whole" with respect to the Notes shall be
calculated with respect to the date of redemption to maturity and shall equal
the greater of (i) 1.0% of the then outstanding principal amount of such Notes
and (ii) the excess of (A) the present value of the required interest payments
and principal payments to maturity due on such Notes, computed, on a
semi-annual basis, using a discount rate equal to the Treasury Rate plus 50
basis points, over (B) the then outstanding principal amount of such Notes.
"Average Life" means, as of the date of determination, with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment (assuming the exercise by
the obligor of such debt security of all unconditional (other than as to the
giving of notice) extension options of each such scheduled payment date) of
such debt security multiplied by the amount of such principal payment by (ii)
the sum of all such principal payments.
"Treasury Rate," for purposes of the Indenture, is defined as
the yield to
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<PAGE> 113
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15(519) which has become publicly available at
least two business days prior to the date fixed for prepayment (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the remaining Average Life of the
Notes; provided, that if the Average Life of the Notes is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) for the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Average Life of the Notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
(b) Optional Redemption Upon a Change of Control. Within
90 days of the consummation of any Change of Control Offer pursuant to which
the Company has repurchased at least 90% of the Notes outstanding immediately
prior to such Change of Control Offer, the Company may, at its option, redeem
all of the remaining Notes at a redemption price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, thereon to the date
of redemption.
7. Notice of Redemption. Notice of redemption under
paragraphs 6(a), 6(b) and 6(c) of this Note will be mailed at least 30 days but
not more than 60 days before the Redemption Date to each Holder of Notes to be
redeemed at such Holder's registered address. Notes in denominations larger
than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the
redemption of the Notes called for redemption shall have been deposited with
the Paying Agent for redemption on such Redemption Date, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, the Notes called for redemption will cease to bear interest from and
after such Redemption Date and the only right of the Holders of such Notes will
be to receive payment of the Redemption Price plus accrued interest, if any.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided,
however, that no Notes of a principal amount of $1,000 or less shall be
redeemed in part. Notice of redemption shall 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. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall state
the portion of the principal amount thereof to be redeemed. A new Note in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and
after the redemption date, interest will cease to accrue on Notes
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<PAGE> 114
or portions thereof called for redemption as long as the Company has deposited
with the paying agent for the Notes funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
8. Offers to Purchase. Sections 4.15 and 4.16 of the
Indenture provide that, after certain Asset Sales (as defined in the Indenture)
and upon the occurrence of a Change of Control (as defined in the Indenture),
and subject to further limitations contained therein, the Company will make an
offer to purchase certain amounts of the Notes in accordance with the
procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange of any Notes (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Notes and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article 3 of the
Indenture, except the unredeemed portion of any Note being redeemed in part.
10. Persons Deemed Owners. The registered Holder of a
Note shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent will pay the money back to the Company. After that, all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the
Company at any time deposits with the Trustee U.S. Legal Tender or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of and interest on the Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity,
B-6
<PAGE> 115
defect or inconsistency, provide for uncertificated Notes in addition to or in
place of certificated Notes, or comply with Article Five of the Indenture or
make any other change that does not adversely affect in any material respect
the rights of any Holder of a Note.
14. Successors. When a successor assumes, in accordance
with the Indenture, all the obligations of its predecessor under the Notes and
the Indenture, the predecessor will be released from those obligations.
15. Defaults and Remedies. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except
as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Notes unless it has received indemnity reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
16. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries or
their respective Affiliates as if it were not the Trustee.
17. No Recourse Against Others. No stockholder,
director, officer, employee or incorporator, as such, of the Company shall have
any liability for any obligation of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of a Note by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
18. Authentication. This Note shall not be valid until
the Trustee or Authenticating Agent manually signs the certificate of
authentication on this Note.
19. Governing Law. The laws of the State of New York
shall govern this Note and the Indenture, without regard to principles of
conflicts of laws.
20. Abbreviations and Defined Terms. Customary
abbreviations may be used in the name of a Holder of a Note or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
B-7
<PAGE> 116
21. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a convenience to
the Holders of the Notes. No representation is made as to the accuracy of such
numbers as printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
22. Indenture. Each Holder, by accepting a Note, agrees
to be bound by all of the terms and provisions of the Indenture, as the same
may be amended from time to time.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture, which has the text of this
Note in larger type. Requests may be made to: Anchor Glass Container
Corporation, One Anchor Plaza, 4343 Anchor Parkway, Tampa, Florida 33634, Attn:
Chief Financial Officer.
B-8
<PAGE> 117
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________, agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Dated: ______________________________ Signed: _____________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ____________________________
B-9
<PAGE> 118
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 []
Section 4.16 []
If you want to elect to have only part of this Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount you elect to have purchased:
$_______________________________
Dated: _______________________________ ______________________________
NOTICE: The signature on
this assignment must
correspond with the name
as it appears upon the face
of the within Note in every
particular without alteration
or enlargement or any change
whatsoever.
Signature Guarantee: ____________________________________
B-10
<PAGE> 119
Exhibit C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Institutional Accredited Investors
__________, ____
Anchor Glass Container Corporation
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Anchor Glass Container Corporation 9 7/8% Senior Notes due 2008
Ladies and Gentlemen:
In connection with our proposed purchase of $__________
aggregate principal amount of 9 7/8% Senior Notes due 2008 (the "Notes") of
Anchor Glass Container Corporation (the "Company"), we confirm that:
1. We have received a copy of the Offering Memorandum
(the "Offering Memorandum"), dated March 11, 1998 relating to the Notes and
such other information as we deem necessary in order to make our investment
decision. We acknowledge that we have read and agreed to the matters stated on
pages (i)-(iii) of the Offering Memorandum and in the section entitled
"Transfer Restrictions" of the Offering Memorandum, including the restrictions
on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the
Notes is subject to certain restrictions and conditions set forth in the
Indenture relating to the Notes (as described in the Offering Memorandum) and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the Notes may not
be offered or sold except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell or otherwise transfer any Notes
prior to the date which is three years after the original issuance of the
Notes, we will do so only (i) to the Company or any of its subsidiaries, (ii)
inside the United States in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act), (iii) inside the United States to an
C-1
<PAGE> 120
institutional if accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
the Trustee (as defined in the Indenture relating to the Notes), a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the Notes, (iv) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (v) pursuant
to the exemption from registration provided by Rule 144 under the Securities
Act (if available), or (vi) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Notes from us a notice advising such purchaser that
resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of any
Notes, we will be required to furnish to the Trustee and the Company such
certification, legal opinions and other information as the Trustee and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear
the economic risk of our or their investment, as the case may be.
6. We are acquiring the Notes purchased by us for our
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
By:________________________________
Name:
Title:
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<PAGE> 121
Exhibit D
Form of Certificate to Be
Delivered in Connection with
Transfers Pursuant to Regulation S
____________, ____
Anchor Glass Container Corporation
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, NY 10286
Attention: Corporate Trust Trustee Administration
Re: Anchor Glass Container Corporation (the "Company")
9 7/8% Senior Notes due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_______________
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United States,
or (b) the transaction was executed in, on or through the facilities of a
designated off-shore securities market and neither we nor any person acting on
our behalf knows that the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
<PAGE> 122
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________________
Authorized Signature
D-2
<PAGE> 1
EXHIBIT 4.13
REGISTRATION RIGHTS AGREEMENT
Dated as of March 16, 1998
By and Among
ANCHOR GLASS CONTAINER CORPORATION,
as Issuer,
and
TD SECURITIES (USA) INC.,
and
BT ALEX. BROWN INCORPORATED,
as Initial Purchasers
$50,000,000
9 7/8% SENIOR NOTES DUE 2008
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C> <C>
1. Definitions............................................................................................ 1
2. Exchange Offer......................................................................................... 5
3. Shelf Registration..................................................................................... 9
4. Additional Interest.................................................................................... 10
5. Registration Procedures................................................................................ 11
6. Registration Expenses.................................................................................. 20
7. Indemnification........................................................................................ 21
8. Rules 144 and 144A..................................................................................... 24
9. Underwritten Registrations............................................................................. 25
10. Miscellaneous.......................................................................................... 25
(a) No Inconsistent Agreements.................................................................... 25
(b) Adjustments Affecting Registrable Notes....................................................... 25
(c) Amendments and Waivers........................................................................ 25
(d) Notices....................................................................................... 26
(e) Successors and Assigns........................................................................ 27
(f) Counterparts.................................................................................. 27
(g) Headings...................................................................................... 27
(h) GOVERNING LAW................................................................................. 27
(i) Severability.................................................................................. 27
(j) Notes Held by the Company or its Affiliates................................................... 28
(k) Third Party Beneficiaries..................................................................... 28
</TABLE>
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of March 16, 1998, by and among ANCHOR GLASS CONTAINER CORPORATION, a
corporation organized under the laws of the State of Delaware (the "Company"),
TD SECURITIES (USA) INC. and BT ALEX. BROWN INCORPORATED (the "Initial
Purchasers").
This Agreement is being entered into in connection with the
Purchase Agreement, dated March 11, 1998, between the Company and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchasers of $50,000,000 aggregate principal amount of
the Company's 97/8% Senior Notes due 2008 (the "Notes"). In order to induce the
Initial Purchasers to enter into the Purchase Agreement, the Company has agreed
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchasers and their direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the obligation of the
Initial Purchasers to purchase the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"Additional Interest" has the meaning ascribed to such term in
Section 4(a) hereof.
"Advice" has the meaning ascribed to such term in Section 5
hereof.
"Agreement" has the meaning ascribed to such term in the
introductory paragraph hereto.
"Applicable Period" has the meaning ascribed to such term in
Section 2(b) hereof.
"Closing Date" has the meaning ascribed to such term in the
Purchase Agreement.
"Company" has the meaning ascribed to such term in the first
introductory paragraph hereto.
"Effectiveness Date" means the 210th day after the Issue Date.
"Effectiveness Period" has the meaning ascribed to such term
in Section 3(a)
<PAGE> 4
hereof.
"Event Date" has the meaning ascribed to such term in Section
4(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect from time to time.
"Exchange Notes" has the meaning ascribed to such term in
Section 2(a) hereof.
"Exchange Offer" has the meaning ascribed to such term in
Section 2(a) hereof.
"Exchange Offer Registration Statement" has the meaning
ascribed to such term in Section 2(a) hereof.
"Filing Date" means (A) if no Registration Statement has been
filed by the Company pursuant to this Agreement, the 90th day after the
Issue Date; provided, however, that if a Shelf Notice is given within
10 days of the Filing Date, then the Filing Date with respect to the
Shelf Registration shall be the 15th calendar day after the date of the
giving of such Shelf Notice; or (B) in each other case (which may be
applicable notwithstanding the consummation of the Exchange Offer), the
30th day after the delivery of a Shelf Notice.
"Holder" means any holder of a Registrable Note or Registrable
Notes.
"Indemnified Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Indemnifying Person" has the meaning ascribed to such term in
Section 7(c) hereof.
"Indenture" means the Indenture, dated as of March 16, 1998
between the Company, Consumers U.S., Inc. and The Bank of New York, as
trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
"Initial Purchasers" has the meaning ascribed to such term in
the first introductory paragraph hereto.
"Inspectors" has the meaning ascribed to such term in Section
5(o) hereof.
"Issue Date" means the date of original issuance of the Notes
sold to the Initial Purchasers pursuant to the Purchase Agreement.
<PAGE> 5
"NASD" has the meaning ascribed to such term in Section 5(s)
hereof.
"Notes" has the meaning ascribed to such term in the second
introductory paragraph hereto.
"Participant" has the meaning ascribed to such term in Section
7(a) hereof.
"Participating Broker-Dealer" has the meaning ascribed to such
term in Section 2(b) hereof.
"Person" means any individual, firm, trustee, corporation,
partnership, limited liability company, joint venture, joint stock
company, trust or trustee, incorporated or unincorporated association,
union, business association, government (or any department, agency or
political subdivision thereof), firm or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
"Private Exchange" has the meaning ascribed to such term in
Section 2(b) hereof.
"Private Exchange Notes" has the meaning ascribed to such term
in Section 2(b) hereof.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to
completion and a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, and all
other amendments and supplements to the Prospectus, with respect to the
terms of the offering of any portion of the Registrable Notes covered
by such Registration Statement including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning provided in the second
introductory paragraph hereto.
"Records" has the meaning ascribed to such term in Section
5(o) hereof.
"Registrable Notes" means each Note upon original issuance of
the Notes and at all times subsequent thereto, each Exchange Note as to
which Section 2(c)(iv) hereof is applicable upon original issuance and
at all times subsequent thereto and each Private Exchange Note upon
original issuance thereof and at all times subsequent thereto, until in
the case of any such Note, Exchange Note or Private Exchange Note, as
the case may be, the earliest to occur of (i) a Registration Statement
(other than, with respect to any Exchange Note as to which Section
2(c)(iv) hereof is applicable, the Exchange
<PAGE> 6
Offer Registration Statement) covering such Note, Exchange Note or
Private Exchange Note, as the case may be, has been declared effective
by the SEC and such Note (unless such Note was not tendered for
exchange by the Holder thereof), Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such
effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with
Rule 144, or (iii) such Note, Exchange Note or Private Exchange Note,
as the case may be, ceases to be outstanding for purposes of the
Indenture.
"Registration Statement" means any registration statement of
the Company, including, but not limited to, the Exchange Offer
Registration Statement, that covers any of the Registrable Notes filed
with the SEC under the Securities Act, including the Prospectus
included in such registration statement.
"Rule 144" means Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule
(other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities
Act, all as the same shall be in effect from time to time.
"Rule 144A" means Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule
(other than Rule 144) or regulation hereafter adopted by the SEC, all
as the same shall be in effect from time to time.
"Rule 415" means Rule 415 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Shelf Notice" has the meaning ascribed to such term in
Section 2(c) hereof.
"Shelf Registration" has the meaning ascribed to such term in
Section 3(a) hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company which covers all of the Registrable Notes on an
appropriate form for an offering to be made on a continuous basis under
Rule 415, and all amendments and
<PAGE> 7
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trustee" means the trustee under the Indenture and the
trustee (if any) under any indenture governing the Exchange Notes.
"Underwritten Registration or Underwritten Offering" means a
registration in which securities of the Company are sold to an
underwriter for reoffering to the public.
2. Exchange Offer.
(a) The Company agrees to file with the SEC no later than the
Filing Date an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes (other than the Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company which are identical
in all material respects to the Notes (the "Exchange Notes") (and which are
entitled to the benefits of the Indenture or a trust indenture which is
identical in all material respects to the Indenture (other than such changes to
the Indenture or any such identical trust indenture as are necessary to comply
with any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA),
except that the Exchange Notes (other than Private Exchange Notes, if any) shall
have been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Offer Registration Statement") and shall comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company agrees to
(x) use its best efforts to cause the Exchange Offer Registration Statement to
be declared effective under the Securities Act on or before the Effectiveness
Date; (y) keep the Exchange Offer open for at least 20 business days (or longer
if required by applicable law) after the date that notice of the Exchange Offer
is mailed to Holders; and (z) use its best efforts to consummate the Exchange
Offer on or prior to the 255th day following the Issue Date. If after such
Exchange Offer Registration Statement is declared effective by the SEC, the
Exchange Offer or the issuance of the Exchange Notes thereunder is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court, such Exchange Offer Registration
Statement shall be deemed not to have become effective for purposes of this
Agreement.
Each Holder that participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes in violation of
the provisions of the Securities Act, and that such Holder is not an affiliate
of the Company within the meaning of the Securities Act.
<PAGE> 8
Upon consummation of the Exchange Offer in accordance with
this Section 2, the Company shall have no further obligation to register
Registrable Notes (other than the Private Exchange Notes and other than in
respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 hereof. No securities other than the Exchange Notes shall
be included in the Exchange Offer Registration Statement.
(b) The Company shall include within the Prospectus included
in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the Staff
of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the Staff of the SEC or such positions or
policies, in the judgment of the Initial Purchasers, represent the prevailing
views of the Staff of the SEC. Such "Plan of Distribution" section shall also
expressly permit the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Notes. The Company
shall consent to the use of the Prospectus forming part of the Exchange Offer
Registration Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of the Exchange Notes
covered by the Prospectus or any amendment or supplement thereto in accordance
with the Securities Act. The Company shall include in the transmittal letter or
similar documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer a provision substantially as follows:
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes. If the undersigned is a broker-dealer,
the undersigned represents that it will receive Exchange Notes for its
own account in exchange for Registrable Notes and that the Registrable
Notes to be exchanged for Exchange Notes were acquired by it as a
result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such Exchange
Notes pursuant to the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
The Company shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus contained therein for a period of 180 days after consummation of the
Exchange Offer (or such longer period if extended pursuant to the last paragraph
of Section 5 hereof) (the "Applicable Period"), in order to permit such
Prospectus to be lawfully delivered by any Participating Broker-Dealer subject
to
<PAGE> 9
the prospectus delivery requirements of the Securities Act for such period of
time as is necessary to comply with applicable law in connection with any resale
of the Exchange Notes.
If, prior to the consummation of the Exchange Offer, the
Initial Purchasers hold any Notes acquired by them and having the status of an
unsold allotment in the initial distribution, the Company shall, upon the
request of either of the Initial Purchasers, simultaneously with the delivery of
the Exchange Notes in the Exchange Offer (or if notice of the request for any
Private Exchange Notes is not given to the Company by the Initial Purchasers at
least five business days prior to such delivery, within five days of such
notice) issue and deliver to the Initial Purchasers in exchange (the "Private
Exchange") for such Notes held by the Initial Purchasers a like principal amount
of debt securities of the Company that are identical in all material respects to
the Exchange Notes (the "Private Exchange Notes") (and which are issued pursuant
to the same Indenture as the Exchange Notes) except for the placement of a
restrictive legend on such Private Exchange Notes. Private Exchange Notes shall
bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus included in
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) keep the Exchange Offer open for at least 20 business days
(or longer if required by applicable law) after the date that notice of
the Exchange Offer is mailed to the Holders;
(3) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(4) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company shall:
<PAGE> 10
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all
Registrable Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder that has tendered, and not withdrawn such tender,
Registrable Notes, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that (1) the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture and (2) the Private Exchange Notes shall be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes shall vote and consent together on all matters as one class and that
none of the Exchange Notes, Private Exchange Notes or the Notes will have the
right to vote or consent as a separate class on any matter.
The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer, or the making of any exchange by a Holder,
does not violate applicable law or any applicable interpretation of the Staff of
the SEC. The Company shall instruct the exchange agent for the Exchange Offer to
inform the Initial Purchasers of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable Notes in
the Exchange Offer.
(c) If, (i) because of any change in law or in currently
prevailing interpretations of the Staff of the SEC, the Company is not permitted
to effect an Exchange Offer, (ii) the Exchange Offer is not consummated within
255 days after the Issue Date, (iii) holders of a majority in principal amount
of the Private Exchange Notes so request within 60 days after the consummation
of the Private Exchange or any Initial Purchaser so requests in respect of Notes
or Private Exchange Notes, acquired by it and having the status of an unsold
allotment in the initial distribution, or (iv) in the case of any Holder that
participates in the Exchange Offer, such Holder does not receive Exchange Notes
on the date of the exchange that may be sold without restriction under state and
federal securities laws (other than due solely to the status of the Holder as an
affiliate of the Company within the meaning of the Securities Act and other than
the obligation of a broker-dealer to deliver the Prospectus contained in the
Exchange Offer Registration Statement), then the Company shall promptly deliver
written notice thereof (the "Shelf Notice") to the Trustee and, in the case of
clauses (i) and (ii) above, all Holders, and in the case of clause (iii) above,
the Holders of the Private Exchange Notes, and in the case of clause (iv) above,
the affected Holder and shall file a Shelf Registration pursuant to Section 3
hereof.
<PAGE> 11
3. Shelf Registration.
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Company shall, at its cost, as
promptly as practicable file with the SEC a shelf registration
statement (the "Shelf Registration" and a "Shelf Registration
Statement"). If the Company shall not have yet filed an Exchange Offer
Registration Statement, the Company shall use its best efforts to file
with the SEC the Shelf Registration on or prior to the applicable
Filing Date. The Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them
(including, without limitation, one or more underwritten offerings).
The Company shall not permit any securities other than the Registrable
Notes to be included in the Shelf Registration.
The Company shall use its best efforts to ensure that (1) any
Shelf Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and
regulations thereunder, (2) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (3) any Prospectus forming part of any Shelf
Registration Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements, in light of the circumstances under
which there were made, not misleading.
The Company shall use its best efforts to cause the Shelf
Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date and to keep the Shelf Registration
continuously effective under the Securities Act until the date which is
two years from the Issue Date, subject to extension pursuant to the
last paragraph of Section 5 hereof (the "Effectiveness Period"), or
such shorter period ending when all Registrable Notes covered by the
Shelf Registration have been sold in the manner set forth and as
contemplated in the Shelf Registration.
(b) Withdrawal of Stop Orders. If the Shelf Registration
ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the
securities registered thereunder), the Company shall use its best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions
<PAGE> 12
applicable to the registration form used for such Shelf Registration,
if required by the Securities Act, or if reasonably requested by the
Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement or by any underwriter of
such Registrable Notes.
4. Additional Interest.
(a) The Company and the Initial Purchasers agree that the
Holders of Registrable Notes will suffer damages if the Company fails to fulfill
its obligations under Sections 2 or 3 hereof and that it would not be feasible
to ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay, as liquidated damages, additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below:
(i) if neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement has been filed with the SEC on or
prior to the Filing Date, then, commencing on the 91st day after the
Issue Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.50% per annum for the first 90
days immediately following the Filing Date, such Additional Interest
rate increasing by an additional 0.50% per annum at the beginning of
each subsequent 90-day period;
(ii) if neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement is declared effective by the SEC on or
prior to the Effectiveness Date, then, commencing on the 211th day
following the Issue Date, Additional Interest shall accrue on the Notes
over and above the stated interest at a rate of 0.50% per annum for the
first 90 days immediately following the Effectiveness Date, such
Additional Interest rate increasing by an additional 0.50% per annum at
the beginning of each subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer and not withdrawn on or prior to the 255th day after the Issue
Date or (B) the Exchange Offer Registration Statement ceases to be
effective at any time prior to the time that the Exchange Offer is
consummated or (C) if applicable, the Shelf Registration has been
declared effective and such Shelf Registration ceases to be effective
at any time during the Effectiveness Period, then Additional Interest
shall accrue on the Notes, over and above the stated interest otherwise
payable on such Notes, at a rate of 0.50% per annum for the first 90
days commencing on (x) the 256th day after the Issue Date with respect
to the Notes validly tendered and not exchanged by the Company in the
case of (A) above, (y) the day the Exchange Offer Registration
Statement ceases to be effective in the case of (B) above, or (z) the
day such Shelf Registration ceases to be effective in the case of (C)
above, such Additional Interest rate increasing by an additional 0.50%
per annum at the beginning of each such subsequent 90-day period (it
being understood and agreed that, notwithstanding any provision to the
contrary, so long as any Note which is the subject
<PAGE> 13
of a Shelf Notice is then covered by an effective Shelf Registration
Statement, no Additional Interest shall accrue on such Note);
provided, however, that the Additional Interest rate on any affected Note may
not exceed in the aggregate 1.5% per annum; and provided, further, that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf Registration
(in the case of clause (i) above), (2) upon the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement (in the case of
clause (ii) above), or (3) upon the exchange of Exchange Notes for all Notes
tendered and not validly withdrawn (in the case of clause (iii)(A) above) or
upon the effectiveness of the Exchange Offer Registration Statement which had
ceased to remain effective (in the case of (iii)(B) above), or upon the
effectiveness of the Shelf Registration which had ceased to remain effective (in
the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Company shall notify the Trustee within three business
days after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to clauses (a)(i), (ii) or (iii) above will be
payable to the Holders of affected Notes in cash, on the same Interest Payment
Dates as specified in the Notes. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes of such Holders, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. Registration Procedures.
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company shall effect such registrations
to permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder, the
Company shall:
(a) Prepare and file with the SEC on or prior to the
applicable Filing Date a Registration Statement or Registration
Statements as prescribed by Sections 2 or 3 hereof, and use its best
efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided, however, that, if
(1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus
contained in an Exchange Registration Statement filed pursuant to
Section 2 hereof is required to be delivered under the Securities Act
by any Participating Broker-Dealer that seeks to sell Exchange Notes
during the Applicable Period, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Company
shall, if requested, furnish to and afford the Holders of the
Registrable Notes covered by such
<PAGE> 14
Registration Statement or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (in each case at
least five business days prior to such filing). The Company shall not
file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders have not been
afforded an opportunity to review prior to the filing of such document,
if the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the
managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or
Exchange Offer Registration Statement, as the case may be, as may be
necessary to keep such Registration Statement continuously effective
for the Effectiveness Period or the Applicable Period or until
consummation of the Exchange Offer, as the case may be, cause the
related Prospectus to be supplemented by any Prospectus supplement
required by applicable law, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the
Securities Act, and comply with the provisions of the Securities Act
and the Exchange Act applicable to it with respect to the disposition
of all securities covered by such Registration Statement as so amended
or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Company shall be
deemed not to have used its best efforts to keep a Registration
Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
that seeks to sell Exchange Notes during the Applicable Period, notify
the selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to a Registration Statement or any post-effective
amendment, when the same has become effective under the Securities Act
(including in such notice a written statement that any Holder may, upon
request, obtain, at the sole expense of the Company, one conformed copy
of such Registration
<PAGE> 15
Statement or post-effective amendment including financial statements
and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop
order or any state securities authority suspending the effectiveness of
a Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the initiation of any proceedings
for that purpose, (iii) if at any time when a prospectus is required by
the Securities Act to be delivered in connection with sales of the
Registrable Notes or resales of Exchange Notes by Participating
Broker-Dealers upon written notice by any such Participating
Broker-Dealer of a resale the representations and warranties of the
Company contained in any agreement (including any underwriting
agreement), contemplated by Section 5(n) hereof cease to be true and
correct, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, (v) of the happening
of any event, the existence of any condition or any information
becoming known that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading, and (vi) of the determination by the Company
that a post-effective amendment and supplement to a Registration
Statement or Prospectus would be appropriate, or a request by the SEC
or any state securities authority for such an amendment or for
additional information after the Registration Statement has become
effective.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes for sale in any jurisdiction,
and, if any such order issued, to use its best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter or underwriters (if any), or
the Holders of a majority in aggregate principal amount of the
Registrable Notes being sold in connection with an underwritten
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter
or
<PAGE> 16
underwriters (if any), such Holders, or counsel for any of them
reasonably request to be included therein, (ii) make all required
filings of such prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or
post-effective amendment, and (iii) supplement or make amendments to
such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
that seeks to sell Exchange Notes during the Applicable Period, furnish
to each selling Holder of Registrable Notes and to each such
Participating Broker-Dealer who so requests and to their respective
counsel and each managing underwriter, if any, at the sole expense of
the Company, one conformed copy of the Registration Statement or
Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all
documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
that seeks to sell Exchange Notes during the Applicable Period, deliver
to each selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their respective counsel, and the
underwriters, if any, at the sole expense of the Company, as many
copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and
any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section
5, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, and the underwriters or agents, if any, and dealers (if any),
in connection with the offering and sale of the Registrable Notes
covered by, or the sale by Participating Broker-Dealers of the Exchange
Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, use its best efforts to register or
qualify such Registrable Notes (and to cooperate with selling Holders
of Registrable Notes or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Notes) for offer and sale under the securities or Blue
<PAGE> 17
Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Company agrees to cause its counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and
all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action
that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject themselves
to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
to enable the Holders thereof or the underwriter or underwriters, if
any, to dispose of such Registrable Notes, except as may be required
solely as a consequence of the nature of a selling Holder's business,
in which case the Company will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of such
approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
that seeks to sell Exchange Notes during the Applicable Period, upon
the occurrence of any event contemplated by paragraph 5(c)(v) or
5(c)(vi) hereof, as promptly as practicable prepare and (subject to
Section 5(a) hereof) file with the SEC, at the sole expense of the
Company, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable
<PAGE> 18
Notes being sold thereunder or to the purchasers of the Exchange Notes
to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company shall not be required to
amend or supplement a Registration Statement, any related Prospectus or
any document incorporated therein by reference, in the event that, and
for a period not to exceed an aggregate of 60 days in any calendar year
if (i) an event occurs and is continuing as a result of which the Shelf
Registration would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make statements therein, in light of the
circumstances under which they were made, not misleading and (ii) (A)
the Company determines in its good faith judgment that the disclosure
of such event at such time would have a material adverse effect on the
business, operations or prospects of the Company or (B) the disclosure
otherwise relates to a pending material business transaction that has
not yet been publicly disclosed.
(l) Use its best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case
may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
debt securities similar to the Notes and take all such other actions as
are reasonably requested by the managing underwriter or underwriters in
order to facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such
representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries and
the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested; (ii) obtain the
written opinion of counsel to the Company and written updates thereof
in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in
<PAGE> 19
underwritten offerings of debt similar to the Notes and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) use its reasonable best efforts to obtain "cold
comfort" letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters
from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be
in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings of
debt similar to the Notes and such other matters as reasonably
requested by the managing underwriter or underwriters; (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those
set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement and the
managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section; and (v) deliver
such documents and certificates as may be reasonably requested in
writing and as are customarily delivered in similar offerings. The
above shall be done at each closing under such underwriting agreement,
or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
that seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable
Notes being sold, or each such Participating Broker-Dealer, as the case
may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and instruments of the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement and
Prospectus. Records that the Company determines, in good faith, to be
confidential and any Records that it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) disclosure of such
information is, in the opinion of counsel for any Inspector, necessary
or advisable in connection with any
<PAGE> 20
action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon,
relating to, or involving this Agreement, or any transactions
contemplated hereby or arising hereunder, or (iv) the information in
such Records has been made generally available to the public. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such
information is generally available to the public. Each selling Holder
of such Registrable Notes and each such Participating Broker-Dealer
will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company to
undertake appropriate action to prevent disclosure of the Records
deemed confidential at the Company's sole expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may
be, to be qualified under the TIA not later than the effective date of
the Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all such documents as may be required to effect such changes,
and all other forms and documents required to be filed with the SEC to
enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(r) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company (or to such other Person as directed by the Company) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Company shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; in no event
<PAGE> 21
shall such Registrable Notes be marked as paid or otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(t) To the extent any Participating Broker-Dealer notifies the
Company in writing that it is participating in the Exchange Offer, use
its reasonable best efforts to cause to be delivered at the request of
an entity stating that it represents the Participating Broker-Dealers
(which entity shall be TD Securities (USA) Inc., unless it elects not
to act as such representative) only one, if any, "cold comfort" letter
with respect to the Prospectus in the form existing on the last date
for which exchanges are accepted pursuant to the Exchange Offer and
with respect to each subsequent amendment or supplement, if any,
effected during the Applicable Period.
(u) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Company may require each seller of Registrable Notes as to
which any Registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable Notes
as the Company may, from time to time, reasonably request. The Company may
exclude from such registration the Registrable Notes of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
actual receipt of any notice from the Company of the happening of any event of
the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof,
such Holder will forthwith discontinue disposition of such Registrable Notes
covered by such Registration Statement or Prospectus or Exchange Notes to be
sold by such Holder or Participating Broker-Dealer, as the case may be, until
such Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof, or until
it is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event the Company shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange
<PAGE> 22
Notes to be sold by such Participating Broker-Dealer, as the case may be, shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or (y) the Advice.
6. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing Prospectuses if
the printing of Prospectuses is requested by the managing underwriter or
underwriters, if any, by the Holders of a majority in aggregate principal amount
of the Registrable Notes included in any Registration Statement or sold by any
Participating Broker-Dealer, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company, (v)
fees and disbursements of all independent certified public accountants referred
to in Section 5(n)(iii) hereof (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to such
performance), (vi) rating agency fees, if any, and any fees associated with
making the Registrable Notes or Exchange Notes eligible for trading through The
Depository Trust Company, (vii) Securities Act liability insurance, if the
Company desires such insurance, (viii) fees and expenses of all other Persons
retained by the Company, (ix) internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees of the
Company performing legal or accounting duties), (x) the expense of any annual
audit, (xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange, if applicable, and (xii)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
(b) The Company shall reimburse the Holders of the Notes being
registered in a Shelf Registration for the reasonable fees and disbursements of
one counsel chosen by the Holders of a majority in aggregate principal amount of
the Notes to be included in such Shelf Registration Statement and reimburse
reasonable out-of-pocket expenses (other than legal expenses) of Holders of
Notes incurred in connection with the registration and sale of the
<PAGE> 23
Registrable Notes pursuant to the Shelf Registration.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Holder of Registrable Notes offered pursuant to a Shelf Registration Statement
and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, the affiliates, directors, officers, agents, representatives
and employees of each such Person or its affiliates, and each other Person, if
any, who controls, any such Person or its affiliates within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act (each,
a "Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Notes or Exchange
Notes, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company will
not be required to indemnify a Participant if (i) such losses, claims, damages
or liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by or on behalf
of such Participant expressly for use therein or (ii) if such Participant sold
to the person asserting the claim the Registrable Notes or Exchange Notes that
are the subject of such claim and such untrue statement or omission or alleged
untrue statement or omission was contained or made in any preliminary prospectus
and corrected in the Prospectus or any amendment or supplement thereto and the
Prospectus does not contain any other untrue statement or omission or alleged
untrue statement or omission of a material fact that was the subject matter of
the related proceeding and it is established by the Company in the related
proceeding that such Participant failed to deliver or provide a copy of the
Prospectus (as amended or supplemented) to such Person with or prior to the
confirmation of the sale of such Registrable Notes or Exchange Notes sold to
such Person if required by applicable law, unless such failure to deliver or
provide a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Company, its affiliates, directors and officers,
agents, representatives and employees and each Person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Participant, but only (i) with reference to information relating to such
Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use in any Registration Statement or Prospectus, any
amendment or
<PAGE> 24
supplement thereto, or any preliminary prospectus or (ii) with respect to any
untrue statement or representation made by such Participant in writing to the
Company. The liability of any Participant under this paragraph shall in no event
exceed the proceeds received by such Participant from sales of Registrable Notes
or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that, unless there exists a conflict among Indemnified Persons, the
Indemnifying Person shall not, in connection with any one such proceeding or
separate but substantially similar related proceeding in the same jurisdiction
arising out of the same general allegations, be liable for the fees and expenses
of more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed
promptly as they are incurred. Any such separate firm for the Participants and
such control Persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes and Exchange
Notes sold by all such Participants and any such separate firm for the Company,
its directors, its officers and such control Persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its prior written
consent, but if settled with such consent or if there be a final non-appealable
judgment for the plaintiff for which the Indemnified Person is entitled to
indemnification pursuant to this Agreement, the Indemnifying Person agrees to
indemnify and hold harmless each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Person
<PAGE> 25
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii)
such Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party, and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional written release of
such Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and
second paragraphs of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect (i) the relative benefits received by the Indemnifying
Person or Persons on the one hand and the Indemnified Person or Persons on the
other from the offering of the Notes or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not only such relative
benefits but also the relative fault of the Indemnifying Person or Persons on
the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or such Participant or
such other Indemnified Person, as the case may be, on the other, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
<PAGE> 26
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A.
The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act and, if at any
time the Company is not required to file such reports, it will, upon the request
of any Holder of Registrable Notes, make publicly available annual reports and
such information, documents and other reports of the type specified in Sections
13 and 15(d) of the Exchange Act. The Company further covenants, for so long as
any Registrable Notes remain outstanding, to make available to any Holder or
beneficial owner of Registrable Notes in connection with any sale thereof and
any prospective purchaser of such Registrable Notes from such Holder or
beneficial owner the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.
9. Underwritten Registrations.
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Notes included in such offering and reasonably acceptable to the
Company.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered,
as of the date hereof, and the Company will not, after the date of this
Agreement, enter into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. The Company
has not entered and the Company will not enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back registration
rights with respect to any Registration Statement other than pursuant to the
Warrant Agreement dated
<PAGE> 27
as of February 5, 1997 between the Company and Bankers Trust Company.
(b) Adjustments Affecting Registrable Notes. The Company will
not, directly or indirectly, take any action with respect to the Registrable
Notes as a class that would adversely affect the ability of the Holders of
Registrable Notes to include such Registrable Notes in a registration undertaken
pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of the Holders of not less than a majority in aggregate
principal amount of the then outstanding Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Registrable Notes or any
Participating Broker- Dealer, at the most current address of such
Holder or Participating Broker-Dealer, as the case may be, set forth on
the records of the registrar under the Indenture, with a copy to the
Initial Purchasers as follows:
TD Securities (USA) Inc.
31 West 52nd Street
New York, New York 10019-6101
Facsimile No: (212) 581-5795
Attention: Rod Ashtaryeh
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No: (212) 848-7179
Attention: John D. Morrison, Esq.
<PAGE> 28
(ii) if to the Initial Purchasers, at the address
specified in Section 10(d)(i);
(iii) if to the Company, as follows:
Anchor Glass Container Corporation
One Anchor Plaza
4343 Anchor Plaza Parkway
Tampa, Florida 33634-7513
Facsimile No:(813) 882-7859
Attention: Chief Financial Officer
with a copy to:
Jones Day Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Facsimile No:(212) 755-7306
Attention: Randi L. Strudler, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW
<PAGE> 29
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
<PAGE> 30
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ANCHOR GLASS CONTAINER
CORPORATION
By:
Name:
Title:
TD SECURITIES (USA) INC.
By:
Name:
Title:
BT ALEX. BROWN INCORPORATED
By:
Name:
Title:
<PAGE> 1
EXHIBIT 10.46
FIFTH AMENDMENT, WAIVER AND CONSENT
FIFTH AMENDMENT, WAIVER AND CONSENT (this "Amendment"), dated
as of January 16, 1998, among ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor
Glass Acquisition Corporation, a Delaware Corporation (the "Borrower"), the
financial institutions party to the Credit Agreement referred to below (the
"Lenders"), BANKERS TRUST COMPANY, as an Issuing Bank (an "Issuing Bank"), BT
COMMERCIAL CORPORATION, acting as Co-Syndication Agent and Agent (the "Agent"),
and PNC BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as an Issuing
Bank (an "Issuing Bank"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Credit
Agreement referred to below.
W I T N E S S E T H :
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the
Agent are parties to a Credit Agreement, dated as of February 5, 1997 (as
amended, modified or supplemented through the date hereof, the "Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement
as herein provided, subject to and on the terms and conditions set forth
herein;
NOW, THEREFORE, it is agreed:
1. The Lenders hereby waive any Default or Event of
Default that may exist as a result of the Borrower's failure to comply with the
requirement of Section 7.1(d) of the Credit Agreement that, not later than
thirty days prior to the end of the fiscal year ending on December 31, 1997,
the Borrower shall deliver monthly projections to the Lenders, provided that
the Borrower delivers such monthly projections to the Lenders on or prior to
February 10, 1998.
2. The Lenders hereby waive any Default or Event of
Default that may exist as a result of the Borrower's failure to comply with the
requirements in the second sentence of Section 7.5(d) of the Credit Agreement
(that the Borrower will deliver to each of the Banks (i) a complete copy of the
annual report (on Internal Revenue Service Form 5500-series) of each Plan
required to be filed with the Internal Revenue Service and (ii) copies of any
records, documents or other information that must be furnished to the PGBC with
respect to any Plan pursuant to Section 4010 of ERISA), provided, however, that
such
<PAGE> 2
requirements in the second sentence of Section 7.5(d) are satisfied as
amended in Section 3 below.
3. Section 7.5(d) of the Credit Agreement is hereby
amended by (i) deleting the text following the first sentence thereof in its
entirety and (ii) inserting the following new text in lieu thereof:
"The Borrower will deliver to each of the Lenders copies of any
records, documents or other information that must be furnished to the
PBGC with respect to any Plan pursuant to Section 4010 of ERISA. Upon
request, the Borrower will deliver to the requesting Lender a complete
copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information),
other than a Multiemployer Plan, required to be filed with the
Internal Revenue Service. In addition to any certificates or notices
delivered to the Lenders pursuant to the first sentence hereof, copies
of any records, documents or other information required to be
furnished to the PBGC, and any material notices received by the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with
respect to any Plan or Foreign Pension Plan, or received from any
government agency or plan administrator or sponsor or trustee with
respect to any Multiemployer Plan, shall be delivered to the Lenders
no later than ten (10) days after the date such records, documents
and/or information has been furnished to the PBGC or such notice has
been received by the Borrower, the Subsidiary or the ERISA Affiliate,
as applicable."
4. The Lenders hereby consent to deem the Letter
Agreement, dated December 31, 1997, between the Borrower, Fountain Associates
I, Ltd. and Citicorp Leasing, Inc. (attached as Annex I hereto) to satisfy the
requirements of Section 8.23(b)(ii) of the Credit Agreement, provided that the
transactions described therein are consummated on or prior to January 30, 1998.
5. In order to induce the Lenders to enter into this
Amendment, the Borrower hereby represents and warrants that (i) the
representations, warranties and agreements contained in Article 6 of the Credit
Agreement are true and correct in all material respects on and as of the Fifth
Amendment Effective Date (as defined in Section 9 of this Amendment) (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date) and (ii) there exists no
Default (after giving effect to Sections 1 and 2 of this Amendment) or Event of
Default on the Fifth Amendment Effective Date, in each case both before (except
with respect to Sections 1 and 2 of this Amendment) and after giving effect to
this Amendment.
-2-
<PAGE> 3
6. This Amendment is limited as specified and shall
not constitute a modification, acceptance or waiver of any other provision of
the Credit Agreement or any other Credit Document.
7. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower, the Agent and each Lender.
8. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
9. This Amendment shall become effective on the date
(the "Fifth Amendment Effective Date") when the Borrower and the Required
Lenders shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent at its address for notice provided for in
the Credit Agreement.
10. From and after the Fifth Amendment Effective Date,
all references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
ANCHOR GLASS CONTAINER CORPORATION
By /s/ M. William Lightner
----------------------------------
Name: M. William Lightner
Title: VP & CFO
BT COMMERCIAL CORPORATION,
Individually, as Agent and as
Co-Syndication Agent
By /s/ Basil Palmeri
------------------------------------
Name: Basil Palmeri
Title: VP
PNC BANK, NATIONAL ASSOCIATION,
Individually, as Co-Syndication
Agent and Issuing Bank
By /s/ Enrico Della Corna
-----------------------------------
Name: Enrico Della Corna
Title:
BANKERS TRUST COMPANY,
as Issuing Bank
By /s/ Basil Palmeri
------------------------------------
Name: Basil Palmeri
Title: VP
<PAGE> 5
BTM CAPITAL CORPORATION
By /s/ illegible
------------------------------------
Name: illegible
Title: Sr. VP
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/ Edward A. Jesser
------------------------------------
Name: Edward A. Jesser
Title: VP
CORESTATES BANK, N.A.
By /s/ John T. Haurin
------------------------------------
Name: John T. Haurin
Title: VP
FLEET BANK
By /s/ Edward McKenney
------------------------------------
Name: Edward McKenney
Title: VP
KEY CORPORATE CAPITAL, INC.
By /s/ John R. Kolodey
------------------------------------
Name: John R. Kolodey
Title: Asst. Vice President
<PAGE> 6
MELLON BANK, N.A.
By /s/ Norman R. Smith
------------------------------------
Name: Norman R. Smith
Title: VP
NATIONAL BANK OF CANADA
By /s/ Donald P. Haddad
------------------------------------
Name: Donald P. Haddad
Title: VP
By /s/ Eric L. Moore
------------------------------------
Name: Eric L. Moore
Title:
NATIONAL CITY COMMERCIAL FINANCE, INC.
By /s/ Mark Hanak
------------------------------------
Name: Mark Hanak
Title: Account Officer
SUMMIT COMMERCIAL/
GIBRALTAR CORP.
By /s/ Harvey Friedman
------------------------------------
Name: Harvey Friedman
Title: EVP
<PAGE> 7
[ANCHOR GLASS CONTAINER LETTERHEAD]
December 31, 1997
Fountain Associates I, Ltd.
c/o Wilson Management Company
6200 Courtney Campbell Causeway
Tampa, FL 33607
Citicorp Leasing, Inc.
c/o Citibank, N.A.
5999 Lexington Avenue
New York, NY 10043
RE: Option Agreement
Ladies and Gentlemen:
Reference is made to the Building Option Agreement dated as of March 31, 1988,
between Anchor Glass Container Corporation, formerly known as Anchor Glass
Acquisition Corporation ("Anchor"), as assignee of Anchor Resolution Corp.,
formerly known as Anchor Glass Container Corporation, and Fountain Associated
I, Ltd. ("Fountain I"), as modified and amended by (a) the First Amendment to
Building Option Agreement dated as of June 16, 1992, (b) the Agreement dated as
of June 16, 1992, (c) the Agreement dated as of March 31, 1996, (d) the Amended
and Restated Agreement dated as of September 12, 1996, and (e) the Sixth
Amendment to Lease and Second Amendment to Building Option Agreement dated as
of February 5, 1997 (as so modified and amended, the "Option Agreement").
The purpose of this letter is to confirm our agreements and understandings with
respect to the Option Agreement as follows:
1. Anchor hereby exercises its right under the Option Agreement
to acquire the property described therein (the "Property").
2. The closing on the acquisition on the Property (the "Option
Closing") will be held at the offices of Anchor located on the Property on
January 20, 1998.
3. At the Option Closing, Anchor intends to assign its right
under the Option Agreement to acquire the Property to Highwoods/Florida
Holdings, L.P., a Delaware limited partnership or its designee ("Holdings").
Upon such assignment and payment by Holdings to Citicorp of the purchase price
for the Property (the "Purchase Price") by wire transfer of same day funds, (a)
Citicorp Leasing, Inc. ("Citicorp") will deliver to Holdings documentation to
terminate Citicorp's liens on the Property and security interests in personal
property and fixtures located on the Property, (b) Fountain I will convey the
Property to Holdings and (c) the parties will execute and deliver an Agreement
of Assignment, Assumption and Lease Termination substantially in the
<PAGE> 8
form of Exhibit A attached to this letter. On or before January 19, 1998,
Citicorp will provide Anchor with a payoff letter as of January 20, 1998, which
will include (a) an invoice, in reasonable detail, for estimated attorneys'
fees and disbursements incurred by Citicorp in connection with the transactions
contemplated by this letter and (b) wire transfer instructions.
Holdings is obtaining a survey of the Property. Accordingly, it will not be
necessary for Fountain I to deliver a survey of the Property at the Option
Closing.
4. Anchor agrees to reimburse Fountain I for up to $5,000 of
attorneys' fees and disbursements incurred by Fountain I in connection with the
transactions contemplated by this letter upon presentation of an invoice, in
reasonable detail, for such fees and disbursements.
If you are in agreement with the foregoing, please so indicate by signing and
dating a copy of this letter in the spaces provided below and returning it to
the undersigned. This letter may be executed in any number of counterparts and
by different signatories thereto in separate counterparts, each of which when
so executed will be deemed to be an original and all of which taken together
will constitute one and the same instrument. One or more counterparts of this
letter may be delivered by telecopier with the intent that it or they will have
the effect of an originally executed counterpart hereof.
Very truly yours,
Anchor Glass Container Corporation
By: /s/ David T. Gutowski
-----------------------------
David T. Gutowski
Sr. Vice President
Agreed:
Fountain I Associates, Ltd.
By TWC Sixty, Inc., Its
General Partner
Date: December 31, 1997 By: /s/ Debra R. Kohler
------------------------------------
Title: Sr. Vice President
Citicorp Leasing, Inc.
Date: December 31, 1997 By: /s/ Edward S. Mundy
------------------------------------
Title: Vice President
-2-
<PAGE> 1
EXHIBIT 10.47
SIXTH AMENDMENT AND WAIVER
SIXTH AMENDMENT AND WAIVER (this "Amendment"), dated as of
March 11, 1998, among ANCHOR GLASS CONTAINER CORPORATION, f/k/a Anchor Glass
Acquisition Corporation, a Delaware Corporation (the "Borrower"), the financial
institutions party to the Credit Agreement referred to below (the "Lenders"),
BANKERS TRUST COMPANY, as an Issuing Bank (an "Issuing Bank"), BT COMMERCIAL
CORPORATION, acting as Co-Syndication Agent and Agent (the "Agent"), and PNC
BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as an Issuing Bank (an
"Issuing Bank"). All capitalized terms used herein and not otherwise defined
shall have the respective meanings provided such terms in the Credit Agreement
referred to below.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Borrower, the Lenders, the Issuing Banks and the
Agent are parties to a Credit Agreement, dated as of February 5, 1997 (as
amended, modified or supplemented through the date hereof, the "Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement
as herein provided, subject to and on the terms and conditions set forth
herein;
NOW, THEREFORE, it is agreed:
1. The Lenders hereby waive any Default or Event of Default
that may have resulted from the Borrower's failure to comply with the
requirement of Section 8.4(a) of the Credit Agreement that, the Borrower will
not, and will not permit any of its Subsidiaries to, make any Capital
Expenditures in the fiscal year ending 1997 exceeding $40,000,000 in the
aggregate.
2. Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition in alphabetical order:
"Dollar Equivalent shall mean, on any date of
calculation of the Borrowing Base pursuant to Section 2.2(c)
of the Credit Agreement or any other date requested by the
Agent, with respect to any amount in Canadian dollars, the
equivalent in Dollars of such amount, determined by the
Borrower using the rate at which such Canadian dollars may be
exchanged into Dollars, as published on such date in the Wall
Street Journal."
3. The definition of "Eligible Accounts Receivable" in
Section 1.1 of the Credit Agreement is hereby amended by (i) deleting the first
sentence therein in its entirety, (ii) inserting the following new first
sentence in lieu thereof:
<PAGE> 2
"Eligible Accounts Receivable" shall mean the sum of (i)
Accounts of the Borrower payable in Dollars and (ii) the
Dollar Equivalent of Accounts of the Borrower payable in
Canadian dollars not to exceed U.S. $2,000,000 in the
aggregate, in each case deemed by the Agent in its Permitted
Discretion to be eligible for inclusion in the calculation of
Borrowing Base.";
(iii) delete the reference to "Schedule XVI" in clause (d),
(iv) insert "Schedule XV" in lieu thereof, (v) delete each reference to
"Schedule XV" in clause (f), (vi) insert "Schedule XIV" in lieu thereof,
(vii) delete the reference to "Schedule XV" in clause (i) and (viii) insert
"Schedule XIV" in lieu thereof.
4. Section 2.2 of the Credit Agreement is hereby amended by
inserting the following parenthetical immediately after "Eligible Accounts
Receivable" in the second line of clause (b) thereof:
"(including, but not limited to, reserves against fluctuations
in the foreign exchange rate of Canadian dollars)".
5. Section 8.18 of the Credit Agreement is hereby amended by
(i) deleting the reference to "Schedule XII" therein and (ii) inserting
"Schedule XIII" in lieu thereof.
6. Schedule XIV to the Credit Agreement is hereby amended by
inserting a new line setting forth the account debtor "Altrista Corporation"
and the corresponding permitted percentage "up to 15.0%" immediately following
the line setting forth the account debtor "Bacardi-Martini/Castleton" and the
corresponding permitted percentage "up to 15.0%".
7. Schedule XV to the Credit Agreement is hereby amended by
inserting a new line setting forth the account debtor "Altrista Corporation"
and the corresponding payment terms "Home canning sales between January 1 and
May 31 will have net June 1 payment terms" at the end thereof.
8. In order to induce the Lenders to enter into this
Amendment, the Borrower hereby represents and warrants that (i) the
representations, warranties and agreements contained in Article 6 of the
Credit Agreement are true and correct in all material respects on and as of the
Sixth Amendment Effective Date (as defined in Section 12 of this Amendment) (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct
in all material respects only as of such specified date) and (ii) there exists
no Default (after giving effect to Section 1 of this Amendment) or Event of
Default on the Sixth Amendment Effective Date, in each case both before (except
with respect to Section 1 of this Amendment) and after giving effect to this
Amendment.
9. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
10. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and
-2-
<PAGE> 3
delivered shall be an original, but all of which shall together constitute one
and the same instrument. A complete set of counterparts shall be lodged with
the Borrower, the Agent and each Lender.
11. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
12. This Amendment shall become effective on the date (the
"Sixth Amendment Effective Date") when the Borrower and the Required Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Agent at its address for notice provided for in
the Credit Agreement.
13. From and after the Sixth Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.
* * *
-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
ANCHOR GLASS CONTAINER CORPORATION
By /s/ M. William Lightner
----------------------------------
Name: M. William Lightner
Title: Senior Vice President -Finance
Chief Financial Officer
BT COMMERCIAL CORPORATION,
Individually, as Agent and as
Co-Syndication Agent
By
----------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
Individually, as
Co-Syndication Agent and
Issuing Bank
By
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, as Issuing Bank
By
------------------------------------
Name:
Title:
<PAGE> 5
BTM CAPITAL CORPORATION
By
------------------------------------
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.
By
------------------------------------
Name:
Title:
CORESTATES BANK, N.A.
By
------------------------------------
Name:
Title:
FLEET BANK
By
------------------------------------
Name:
Title:
KEY CORPORATE CAPITAL, INC.
By
------------------------------------
Name:
Title:
<PAGE> 6
MELLON BANK, N.A.
By
------------------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By
------------------------------------
Name:
Title:
NATIONAL CITY COMMERCIAL FINANCE,
INC.
By
------------------------------------
Name:
Title:
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By
------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 11.1
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 5, 1997
TO DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<S> <C>
Net loss applicable to common stock $ (22,773)
Divided by:
Weighted average shares outstanding, plus 1,242,344
Weighted average warrants outstanding 1,958,804
3,201,148
Basic net loss per share $ (7.11)
============
</TABLE>
<PAGE> 1
EXHIBIT 12.1
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT RE COMPUTATION OF RATIOS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 5, 1997
TO DECEMBER 31, 1997
- -------------------------------------------------------------------------------
EARNINGS -
<S> <C>
Loss before extraordinary item $ (271)
Interest and amortization of debt expense 18,281
Rental expense representative of interest factor 5,849
--------
Total earnings $ 23,859
========
FIXED CHARGES -
Interest and amortization of debt expense $ 18,281
Rental expense representative of interest factor 5,849
--------
Total fixed charges $ 24,130
========
RATIO OF EARNINGS TO FIXED
CHARGES -
========
DEFICIENCY OF EARNINGS AVAILABLE
TO COVER FIXED CHARGES $ 271
========
</TABLE>
For the purposes of computing the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, earnings consist of
income (loss) before income taxes, extraordinary items and cumulative effect of
change in accounting, plus fixed charges. Fixed charges consist of interest and
amortization of debt expense plus a portion of operating lease expense.
<PAGE> 1
EXHIBIT 12.1
ANCHOR GLASS CONTAINER CORPORATION
STATEMENT RE COMPUTATION OF RATIOS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 5, 1997
TO DECEMBER 31, 1997
- -------------------------------------------------------------------------------
EARNINGS -
<S> <C>
Loss before extraordinary item $ (271)
Interest and amortization of debt expense 18,281
Rental expense representative of interest factor 5,849
--------
Total earnings $ 23,859
========
FIXED CHARGES -
Interest and amortization of debt expense $ 18,281
Rental expense representative of interest factor 5,849
--------
Total fixed charges $ 24,130
========
RATIO OF EARNINGS TO FIXED
CHARGES -
========
DEFICIENCY OF EARNINGS AVAILABLE
TO COVER FIXED CHARGES $ 271
========
</TABLE>
For the purposes of computing the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, earnings consist of
income (loss) before income taxes, extraordinary items and cumulative effect of
change in accounting, plus fixed charges. Fixed charges consist of interest and
amortization of debt expense plus a portion of operating lease expense.
<PAGE> 2
EXHIBIT 12.2
ANCHOR RESOLUTION CORP.
STATEMENT RE COMPUTATION OF RATIOS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Period from
January 1,
Years ended December 31, 1997 to
------------------------------------------------- February 4,
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loss before income taxes, extraordinary
items and cumulative effect of accounting
change $(15,467) $(97,770) $(65,719) $(651,679) $(15,652)
Interest and amortization of debt expense 64,938 59,166 59,757 55,063 3,067
Rental expense representative of interest
factor 6,049 6,656 8,192 7,851 1,004
-------- -------- -------- --------- --------
Total earnings 55,520 (31,948) 2,230 (588,765) (11,586)
FIXED CHARGES -
Interest and amortization of debt expense 64,938 59,166 59,757 55,063 3,067
Rental expense representative of interest
factor 6,049 6,656 8,192 $ 7,851 1,004
-------- -------- -------- --------- --------
Total fixed charges $ 70,987 $ 65,822 $ 67,949 $ 62,914 $ 4,071
======== ======== ======== ========= ========
RATIO OF EARNINGS TO FIXED
CHARGES -- -- -- -- --
======== ======== ======== ========= ========
DEFICIENCY OF EARNINGS AVAILABLE
TO COVER FIXED CHARGES $ 15,467 $ 97,770 $ 65,719 $ 651,679 $ 15,652
======== ======== ======== ========= ========
</TABLE>
For the purposes of computing the ratio of earnings to fixed charges and the
deficiency of earnings available to cover fixed charges, earnings consist of
income (loss) before income taxes, extraordinary items and cumulative effect of
change in accounting, plus fixed charges. Fixed charges consist of interest and
amortization of debt expense plus a portion of operating lease expense.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
annual report on Form 10-K.
/s/ ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FINANCIAL STATEMENTS OF ANCHOR GLASS CONTAINER CORPORATION INCLUDED IN FORM 10-K
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-05-1997
<PERIOD-END> DEC-31-1997
<CASH> 1
<SECURITIES> 1,060
<RECEIVABLES> 56,940
<ALLOWANCES> 2,025
<INVENTORY> 120,123
<CURRENT-ASSETS> 186,205
<PP&E> 368,524
<DEPRECIATION> 43,653
<TOTAL-ASSETS> 627,568
<CURRENT-LIABILITIES> 168,667
<BONDS> 152,758
55,983
34
<COMMON> 139
<OTHER-SE> 85,739
<TOTAL-LIABILITY-AND-EQUITY> 627,568
<SALES> 569,441
<TOTAL-REVENUES> 569,441
<CGS> 523,709
<TOTAL-COSTS> 523,709
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 375
<INTEREST-EXPENSE> 18,281
<INCOME-PRETAX> (271)
<INCOME-TAX> 0
<INCOME-CONTINUING> (271)
<DISCONTINUED> 0
<EXTRAORDINARY> (11,200)
<CHANGES> 0
<NET-INCOME> (11,471)
<EPS-PRIMARY> (7.11)
<EPS-DILUTED> (7.11)
</TABLE>
