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[ ] Do not blackline any corrections Take out character LOGO
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Bowne International, France, 5 rue Royale, 75008 Paris
Tel (1)44.94.32.80 Fax (1)44.94.32.95
<PAGE> 2
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 1999
REGISTRATION NO. 333-76699
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
Amendment No. 2 to
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
AMERICAN NATIONAL CAN GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3411 36-4287015
(State or Other Jurisdiction (Primary Industrial (I.R.S. Employer
of Classification Code Number) Identification No.)
Incorporation or Organization)
</TABLE>
ALAN H. SCHUMACHER
AMERICAN NATIONAL CAN GROUP, INC.
8770 W. BRYN MAWR AVENUE
CHICAGO, ILLINOIS 60631
TELEPHONE (773) 399-3000
(Address and telephone number of Registrant's principal executive offices)
------------------------------------
COPIES TO:
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<S> <C>
ROBERT C. TREUHOLD, ESQ. JOHN D. BRINITZER, ESQ.
SHEARMAN & STERLING CLEARY, GOTTLIEB, STEEN & HAMILTON
114, AVENUE DES CHAMPS-ELYSEES ONE LIBERTY PLAZA
75008 PARIS, FRANCE NEW YORK, NEW YORK 10006
</TABLE>
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable on or after the effective date of this Registration
Statement.
------------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
- ---------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE
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- -----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
Common stock, nominal value $0.01
per share........................ 34,500,000 $24.00 $828,000,000 $230,184(3)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes (i) shares of common stock to cover the Underwriters'
over-allotment option and (ii) shares of common stock which are to be
offered outside the United States but that may be resold from time to time
in the United States during the distribution. The shares of common stock
registered hereby are not being registered for the purpose of sales outside
of the United States.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.
(3) Of this amount, $27,800 was previously paid.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy them in any
state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 29, 1999
30,000,000 SHARES
[AMERICAN NATIONAL CAN GROUP LOGO]
AMERICAN NATIONAL CAN GROUP, INC.
COMMON STOCK
------------------
This is our initial public offering. The shares of our common stock are
being sold by Pechiney, a French corporation. We will not receive any of the
proceeds from the sale of our shares of common stock by Pechiney.
The underwriters have an option to purchase 4,500,000 additional shares
from Pechiney to cover over-allotments of shares.
Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $21.00 and $24.00 per share. Our shares have been approved for listing
on the New York Stock Exchange under the symbol "CAN", subject to official
notice of issuance.
INVESTING IN THESE SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.
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<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS PECHINEY
--------------- ------------- -----------
<S> <C> <C> <C>
Per Share.................................................. $ $ $
Total...................................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about ,
.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
The date of this prospectus is , .
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY.................... 1
RISK FACTORS.......................... 7
FORWARD-LOOKING STATEMENTS............ 12
REORGANIZATION OF ANC................. 13
RELATIONSHIP WITH PECHINEY............ 19
USE OF PROCEEDS....................... 22
DIVIDEND POLICY....................... 22
CAPITALIZATION........................ 23
UNAUDITED PRO FORMA COMBINED FINANCIAL
INFORMATION......................... 24
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS....................... 29
OVERVIEW OF THE GLOBAL BEVERAGE CAN
INDUSTRY............................ 47
</TABLE>
<TABLE>
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PAGE
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<S> <C>
BUSINESS OF ANC....................... 52
MANAGEMENT AND CERTAIN SECURITY
HOLDERS............................. 66
PRINCIPAL STOCKHOLDERS................ 79
DESCRIPTION OF CAPITAL STOCK.......... 80
SHARES ELIGIBLE FOR FUTURE SALE....... 82
UNITED STATES TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF COMMON STOCK.... 83
UNDERWRITING.......................... 86
NOTICE TO CANADIAN RESIDENTS.......... 89
ADDITIONAL INFORMATION................ 90
LEGAL MATTERS......................... 90
EXPERTS............................... 90
INDEX TO COMBINED FINANCIAL
STATEMENTS.......................... F-1
</TABLE>
------------------------
We have compiled the market share, market size and competitive ranking data
in this prospectus using statistics and other information from several
third-party sources. The main third-party sources of information are independent
research organizations, including the Can Manufacturers' Institute, Beverage Can
Makers Europe, as well as private consulting firms. We have also used our
estimates of our market share relative to other beverage can companies in light
of our experience.
Various amounts and percentages used in this prospectus have been rounded
and, accordingly, they may not total.
Coca-Cola and Pepsi-Cola are trademarks of The Coca-Cola Company and
PepsiCo, Inc., respectively. We are not affiliated with Coca-Cola or Pepsi.
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
------------------------
DEALER PROSPECTUS DELIVERY OBLIGATION
UNTIL (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
i
<PAGE> 5
PROSPECTUS SUMMARY
The following is a summary of this prospectus. Please do not rely on any
part of this summary without referring to the more detailed information
contained in the other sections of this prospectus.
OUR COMPANY
We believe we are the second largest producer of two-piece beverage cans
and ends in the world, based on 1998 unit volume. In 1998, we sold 39 billion
cans worldwide. We are the second largest beverage can manufacturer in the
United States, with a market share of approximately 25%. In Europe, we are the
largest beverage can manufacturer, with approximately 31% of the market.
We have long-term customer relationships with global beverage producers.
The Coca-Cola Company and its affiliated bottlers make up 51% of our global
sales. We also enjoy strong relationships with major brewers in many of the
markets in which we supply cans. With 22 plants in the United States, 13 plants
in Europe, and operations in Mexico, Brazil, China, Japan and South Korea, we
are well-balanced to supply our geographically diverse customers' requirements.
We have an extensive presence in the beverage can markets in the Americas
and Europe/Asia, which accounted for 63% and 37%, respectively, of our net sales
in 1998. In the Americas, our activities are carried out principally through
American National Can Company in the United States and a wholly owned subsidiary
in Brazil. We have also formed joint ventures with Coors Brewing Company in the
United States and with Mexico's largest glass container manufacturer, Vitro S.A.
In Europe, our activities are carried out through wholly owned subsidiaries and
a majority owned subsidiary in Turkey. We also have a majority owned subsidiary
in China and equity participations in Japan and South Korea.
We are focused on reducing our cost base. We have undertaken three specific
cost reduction programs in the past five years. The goal of our first program,
called "Project Challenge," was to reduce costs other than metal costs by 20%
before the end of 1999, a goal which we achieved by the end of 1998. In 1998, we
introduced "Next Level," a continuous improvement process that seeks to increase
productivity and reduce costs while limiting additional capital expenditures.
This ongoing program already has produced concrete results in the United States,
including a 4% improvement in the number of cans produced per man-hour over
1997. Our third improvement program, "ANC Production System," implements the
principles of "Lean Manufacturing" through a comprehensive overhaul of our
production processes. Lean Manufacturing is the elimination of waste or anything
that does not add value to the customer, such as excess production, delays,
movement and transport, poor process design, excess working capital, inefficient
performance, or making defective items.
THE BEVERAGE CAN INDUSTRY
In 1998, worldwide industry shipments of two-piece beverage cans exceeded
200 billion cans. North America was the single largest market with approximately
114 billion cans shipped in 1998, including nearly 103 billion in the United
States alone, followed by Europe with approximately 33 billion cans. In 1998,
the U.S. and European markets, with a population base of around 600 million
people, consumed approximately 135 billion two-piece beverage cans, equivalent
to about 225 cans per person. Compared to the United States and Europe, per
capita consumption of beverage cans remains low in emerging countries. Outside
the United States and Europe per capita consumption is only about 15 cans per
person.
Soft drink cans and beer cans comprise almost all of the global beverage
can markets. In 1998, soft drink cans represented approximately 68% and beer
cans 32% of the total beverage can market in the United States. In Europe, the
proportions were approximately 57% and 43%, respectively. Throughout the world,
the beverage can competes with bottles made from glass or plastic.
1
<PAGE> 6
The global beverage can industry is characterized by a number of factors,
which we believe generally favor the beverage can:
- Per capita consumption of carbonated soft drinks increased steadily each
year in the United States and Europe between 1990 and 1998.
- We anticipate that the market for carbonated soft drinks in Europe and
the emerging markets of Asia and Latin America, where consumption lags
significantly behind the United States, will grow substantially in the
long-term.
- We believe greater concentration among bottlers in the industry,
particularly in the carbonated soft drink markets, will provide the
beverage can with continued opportunities for growth.
- The can is firmly established in mass retail distribution channels in
the United States.
- We believe the beer markets in the United States and Europe show
favorable trends despite recent gradual decreases in consumption.
- Although the can has lost market share at the expense of the plastic
bottle in the carbonated soft drink markets in the United States and
Europe, it has continued to grow steadily in terms of units. In the beer
market, the can has declined relative to glass in the United States but
has grown in Europe.
- The can has several advantages over plastic and glass bottles that we
believe will continue to make it an attractive and competitive package
in both the carbonated soft drink and beer markets.
OUR STRATEGY
Our strategy aims to create shareholder value through superior
profitability and cash generation. To achieve this goal, we have developed the
following key initiatives:
- We intend to capitalize on favorable conditions in the developed
beverage can markets of the United States and Europe, which represent a
strong volume base and steady growth for the beverage can.
- We will pursue profitable growth opportunities in Europe and emerging
markets, where per capita beverage consumption and beverage can
penetration are substantially lower than in the United States.
- We intend to provide superior customer service and satisfaction, and
have forged successful long-term relationships with several global
beverage can customers.
- We continuously strive to improve productivity and reduce costs.
- We intend to attract and develop the best human capital, and are
strengthening our human resources through new leadership and performance
management.
OUR FORMATION AS A PUBLIC COMPANY
We have been making cans for over 100 years. Since 1988, we have been owned
by Pechiney, a global leader in the production of primary aluminum and
industrial aluminum products. Pechiney is selling a majority ownership stake in
us through this offering. In connection with this offering, we and Pechiney are
taking a number of reorganization actions to separate us from Pechiney.
Following this reorganization, we will conduct all of Pechiney's former global
beverage can operations and we will have transferred our prior non-beverage can
activities to Pechiney Plastic Packaging, Inc.
Our principal executive offices are located at 8770 W. Bryn Mawr Avenue,
Chicago, Illinois 60631 and our telephone number is (773) 399-3000.
2
<PAGE> 7
SUMMARY OF THIS OFFERING
Shares offered............. Pechiney is offering a total of 30,000,000 shares.
Additional shares.......... Pechiney has granted the underwriters an option to
purchase 4,500,000 additional shares. The
underwriters have 30 days from the date of the
final prospectus to exercise this option. They may
only use these additional shares to cover sales of
shares that they have over-allotted.
Price to public............ The initial public offering price of the shares is
expected to be between $21.00 and $24.00 per share.
Selling stockholder........ Prior to this offering, Pechiney owned 100% of our
shares. After this offering, we expect that
Pechiney will retain 45.5% of our shares. If the
underwriters exercise their over-allotment option
in full, Pechiney will retain 37.3% of our shares.
Dividends.................. We currently intend to declare and pay a quarterly
cash dividend of $0.14 per share with respect to
the third quarter of 1999. We also currently intend
to declare and pay to shareholders of record at
that time a special dividend payment of $0.14 per
share with respect to the second quarter of 1999.
With respect to dividend payments, please consider
the information under "Risk Factors -- We may not
be able to pay dividends."
Voting rights.............. Each share permits the holder to cast one vote on
all matters brought before stockholders. For
further details, see "Description of Capital
Stock."
Listing of the shares...... There is currently no public market for our shares.
Our shares have been approved for listing on the
New York Stock Exchange under the symbol "CAN,"
subject to official notice of issuance.
Use of proceeds............ The net proceeds from the sale of our shares will
be paid to Pechiney. We will not receive any
proceeds from this offering.
3
<PAGE> 8
SUMMARY SELECTED COMBINED FINANCIAL INFORMATION
The following table presents summary financial data for ANC. In this
prospectus, we present historical combined financial information and pro forma
financial information. You should also refer to the more complete information
contained in our combined financial statements and the sections entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Unaudited Pro Forma Combined Financial Information."
Our historical combined financial information can be divided into three
categories:
- The combined financial information for the years ended December 31,
1996, 1997 and 1998 and as at year-end 1997 and 1998 has been
prepared in accordance with U.S. GAAP and audited by
PricewaterhouseCoopers LLP. Beginning on page F-3 of this prospectus,
we show our combined statements of income, cash flows and changes in
owner's equity for these three years, as well as our balance sheets
as of December 31, 1997 and 1998 and the notes to those combined
financial statements. These financial statements show the financial
condition, results of operations and cash flows of Pechiney's
packaging group, from which our company was created.
In these financial statements, our beverage can activities are
treated as continuing operations. The plastics and other activities
to be retained by Pechiney are treated as discontinued operations.
Net income (loss) from discontinued operations is shown as a separate
line item on the combined statement of income. On our combined
balance sheet, the net current and non-current assets of the
discontinued operations are each presented as single line items. The
combined statement of cash flows sets forth separately the cash flows
of discontinued operations as single line items within each major
category of cash flows.
- We also present combined financial information for the years ended
December 31, 1994 and 1995 and as at year-end 1994, 1995 and 1996.
This information is unaudited but is presented on the same basis of
accounting as the combined financial information for the audited
periods; it has been prepared in accordance with U.S. GAAP and
reflects the activities to be retained by Pechiney as discontinued
operations.
- Finally, we present interim combined financial information for the
first three months of 1998 and 1999 and as at March 31, 1998 and
1999. This information is unaudited but is presented on the same
basis of accounting as the combined financial information for the
audited periods. Our management believes all adjustments necessary
for a fair presentation of results of the interim periods have been
made and such adjustments were of a normal and recurring nature.
Our combined financial information may not reflect what our results of
operations, financial position and cash flows would have been had we been
operating as a separate, stand-alone entity during the periods presented. Also,
it does not show what our results of operations, financial position and cash
flows will be in the future. This is because we did not operate as a single
stand-alone business for the periods shown.
Our pro forma financial information is unaudited. It reflects adjustments
to our corporate structure and debt that are based on assumptions intended to
show the effect of our reorganization. Please see "Unaudited Pro Forma Combined
Financial Information."
4
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<TABLE>
<CAPTION>
COMBINED FINANCIAL INFORMATION PRO FORMA FINANCIAL INFORMATION
------------------------------------------------------------ --------------------------------
THREE MONTHS YEAR ENDED THREE MONTHS
ENDED AND AS OF AND AS OF ENDED AND AS OF
YEAR ENDED AND AS OF DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
------------------------------------------ --------------- ------------- ----------------
1994 1995 1996 1997 1998 1998 1999 1998 1999
------ ------ ------ ------ ------ ------ ------ ------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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COMBINED STATEMENT OF INCOME
DATA:
Net sales..................... $2,446 $2,677 $2,520 $2,465 $2,459 $ 543 $ 531 $2,459 $ 531
Cost of goods sold (excluding
depreciation)............... 2,164 2,281 2,190 2,069 1,985 448 433 1,985 433
Selling, general and
administrative expense...... 140 123 136 134 138 32 31 138 31
Research and development
expense..................... 25 24 21 20 15 4 4 15 4
Depreciation and
amortization................ 68 73 74 78 82 20 21 82 21
Goodwill amortization(1)...... 292 41 41 41 40 10 10 40 10
Restructuring charge (credit)
and writedown of property
and equipment(2)............ 87 11 159 11 (2) -- -- (2) --
Operating income (loss) from
continuing operations....... (330) 124 (101) 112 201 29 32 201 32
Interest expense.............. 68 54 95 90 69 19 15 77 17
Interest income and other
financial income (expense),
net......................... 15 13 4 27 11 2 8 12 8
Income tax expense
(benefit)................... (23) 51 (35) 30 26 5 11 23 10
Equity in net earnings (loss)
of affiliates............... 6 5 1 (4) 4 (1) 2 4 2
Minority interest............. 7 8 7 5 5 1 -- 5 --
Income (loss) from continuing
operations before cumulative
effect of accounting
change...................... $ (361) $ 29 $ (163) $ 10 $ 116 $ 5 $ 16 $ 112 $ 15
Basic and fully diluted
earnings (loss) per share
from continuing operations
before cumulative effect of
accounting change........... $(6.56) $ 0.53 $(2.96) $ 0.18 $ 2.11 $ 0.09 $ 0.29 $ 2.04 $ 0.27
COMBINED CASH FLOW DATA:
Net cash provided by (used in)
operating activities of
continuing operations....... (44) (12) 4 65 161 (74) (34) 152 (43)
Net cash (used in) investing
activities of continuing
operations.................. 23 910 (119) (57) (58) (11) (15) (58) (15)
Net cash provided by (used in)
financing activities of
continuing operations....... 29 (869) 99 (3) 26 69 48 (14) 8
Additions to property, plant
and equipment............... 95 100 142 72 65 14 15 65 15
Depreciation and
amortization................ 360 114 115 119 122 30 31 122 31
EBITDA(3)..................... 30 238 14 231 323 60 64 323 64
EBITDA excluding restructuring
and writedowns(3)........... 117 249 173 242 321 60 64 321 64
COMBINED BALANCE SHEET DATA:
Cash and cash equivalents..... 20 49 66 106 171 70 157 N/A 108
Property, plant and equipment,
net......................... 899 934 909 846 836 826 807 N/A 807
Total assets.................. 4,643 4,121 3,901 3,891 3,927 3,950 3,965 N/A 3,302
Short-term financing and
current portion of long-term
debt........................ 1,883 759 744 770 687 925 781 N/A 457
Long-term debt (less current
portion).................... 485 1,006 1,073 890 551 333 527 N/A 662
Total debt.................... 2,368 1,765 1,817 1,660 1,238 1,258 1,308 N/A 1,119
Total equity.................. 867 932 816 948 1,538 1,410 1,520 N/A 1,046
(footnotes on next page)
</TABLE>
5
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(1) Substantially all of the goodwill reflected on our combined balance sheet
arose from the revaluation of our tangible assets acquired and liabilities
assumed as of the date of our acquisition by Pechiney in 1988. The initial
amount, which totaled approximately $1.6 billion, is being amortized over a
40-year period in an amount of approximately $40 million per year. In 1994,
goodwill amortization also included a non-recurring $257 million writedown
resulting from a review of the carrying value of assets. In 1998, goodwill
was reduced by $35.6 million as a result of the resolution of tax
contingencies originating from our acquisition by Pechiney. At March 31,
1999, $1,214 million of goodwill was recorded as an asset on our balance
sheet.
(2) The $159 million restructuring charge in 1996 was established to cover the
cost of plant closures, employee termination costs and other costs
associated with our restructuring plans. See Note 15 to our combined
financial statements for a more complete description of this charge.
(3) EBITDA is a non-GAAP measurement that we define as operating income (loss)
from continuing operations, excluding depreciation and amortization and
goodwill amortization. EBITDA excluding restructuring and write-downs is a
non-GAAP measurement that we define as EBITDA excluding restructuring charge
(credit) and writedown of property, plant and equipment. These measures do
not represent cash flow for the periods presented and should not be
considered as alternatives to net income (loss), as indicators of our
operating performance or as alternatives to cash flows as a source of
liquidity. Our EBITDA may not be comparable with EBITDA as defined by other
companies. We believe EBITDA is commonly used by financial analysts and
others in the packaging industry.
6
<PAGE> 11
RISK FACTORS
Investing in our shares will provide you with an equity ownership interest
in ANC. As a stockholder of ANC, you may be exposed to risks inherent in our
business. The performance of your shares will reflect the performance of our
business relative to, among other things, competition, industry conditions and
general economic and market conditions. The value of your investment may
increase or decrease and could result in a loss. You should carefully consider
the following factors as well as other information contained in this prospectus
before deciding to invest in our shares.
RISK FACTORS RELATING TO OUR INDUSTRY
OUR PRINCIPAL MARKETS ARE SUBJECT TO OVERCAPACITY AND INTENSE PRICE COMPETITION,
WHICH COULD PUSH PRICES TO LESS PROFITABLE LEVELS AND AFFECT OUR FINANCIAL
RESULTS AND THE VALUE OF OUR SHARES.
Increases in the levels of overcapacity and price competition in our
principal markets could reduce selling prices and result in lower profits, which
could lead to a reduction in any dividends and lower share value. These factors
could also require us to take one-time restructuring charges or make other
expenditures in the future.
The worldwide beverage can market has experienced limited growth in demand
in recent years. This has led to overcapacity among beverage can producers, as
capacity growth, obtained principally through productivity improvements,
outpaced the growth in demand for beverage cans. As a result, the prices of
beverage cans have decreased. In addition, the beverage can is a standardized
product, allowing for relatively little differentiation among competitors.
The North American beverage can market, in particular, is generally
considered to be a mature market, characterized by slow growth and a
sophisticated distribution system, and in which the can has a significant share
of the soft drink and beer package mix. Price-driven competition has increased
as beverage can producers seek to capture more sales volumes in order to keep
their plants operating at optimal levels and reduce unit costs. In this
environment, a number of U.S. producers have merged or consolidated their
operations. With an increasingly smaller number of major can producers in the
market, competition has been aggressive.
WE ARE SUBJECT TO COMPETITION FROM ALTERNATIVE PRODUCTS WHICH COULD RESULT IN
LOWER PROFITS AND REDUCED CASH FLOWS.
Competition from alternative beverage containers could result in lower
profits, which could lead to a reduction in any dividends and lower share value.
The beverage can is subject to significant competition from substitute
products, particularly plastic soft drink bottles made from polyethylene
terephthalate and single serve beer bottles made of glass. In addition, there
have been several recent developments in plastic beer bottle technology that may
compete against the can. Plastic bottle market share in the U.S. and European
soft drink container market, and glass bottle market share in the U.S. beer
container market, have both grown substantially during the 1990s. Competition
from plastic soft drink bottles is particularly intense in the United States and
the United Kingdom. For further information regarding the beverage can and its
competing products, see the section entitled "Overview of the Global Beverage
Can Industry" in this prospectus.
WE HAVE A RELATIVELY SMALL NUMBER OF CUSTOMERS. THE LOSS OF ONE OR MORE OF THEM
COULD RESULT IN LOWER SALES.
If we were to lose significant volume with a customer or if a major
customer were to fail to renew a major contract, and if another customer could
not be found to make up some or all of the lost sales, the resulting decline in
sales could lead to a reduction in any dividends and lower share value.
There are a small number of large independent beverage fillers in our
primary geographic markets, particularly in the soft drink industry, and the
industry may experience further consolidation. For example, the
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three largest soft drink producers in the United States account for
approximately 90% of the U.S. soft drink market, while the three largest
producers in Europe account for approximately 60% of the European soft drink
market. Suppliers of Coca-Cola and related products account for approximately
45% of the overall soft drink market in the United States and approximately 49%
in Europe. Similarly, Anheuser-Busch, Inc., The Miller Brewing Company and Coors
Brewing Company, the three largest beer producers in the United States, account
for approximately 85% of the non-imported beer market in the United States.
Accordingly, we and the other suppliers of beverage cans rely heavily on a
small number of customers. Each customer has significant bargaining power
relative to the packaging supplier, since a small number of contracts may
account for relatively large sales volume. In addition, we compete solely in the
beverage packaging market and currently manufacture one product, the beverage
can. Six of our 10 largest customers in terms of 1998 net sales are bottlers of
Coca-Cola products (listed alphabetically):
- Coca-Cola Bevande Italia
- Coca-Cola Bottlers of Brazil
- Coca-Cola Bottlers of Spain
- Coca-Cola Bottling Co. Consolidated
- Coca-Cola Bottling Company of Chicago
- Coca-Cola Enterprises Inc.
Together, these six customers accounted for 45% of our 1998 net sales.
WE ARE DEPENDENT ON A RELATIVELY SMALL NUMBER OF SUPPLIERS FOR SOME OF OUR
PRINCIPAL RAW MATERIALS.
If any of our principal suppliers were to increase their prices
significantly or were unable to meet our requirements for raw materials, either
or both of our revenues or profits would decline. If we were unable to obtain
some of our principal raw materials from alternative sources, the resulting
decline in sales and profits could lead to a reduction in any dividends and
lower share value. This is particularly true of aluminum, ink and compounds.
Aluminum can and end sheet used in the production of beverage cans is
currently supplied by four principal suppliers in North America. There is one
dominant supplier for beverage can ink in North America and there is one
dominant worldwide supplier of beverage can end compound. For further details of
our raw materials supplies, see the section of this prospectus entitled
"Business of ANC -- Use and procurement of raw materials."
BAD WEATHER IN OUR PEAK SEASON MAY RESULT IN LOWER SALES.
Unseasonably cool weather during the summer months could result in lower
profits, which could lead to a reduction in any dividends and lower share value.
This is because sales of beverage cans are highest during the summer months.
Therefore, our sales for the second and third quarters of the year, which
include the warmer months in North America and Europe, are higher than in the
first and fourth quarters. In the past, significant changes in summer weather
conditions have caused variations in demand for beverage cans.
RISK FACTORS RELATING TO OUR REORGANIZATION AND OUR INITIAL PUBLIC OFFERING
EXPOSURE TO CONTINGENT LIABILITIES FOLLOWING THE REORGANIZATION MAY NEGATIVELY
AFFECT OUR FINANCIAL RESULTS.
The non-beverage cans business transferred to Pechiney Plastic Packaging
carried actual and potential liabilities, including unfunded post-employment
benefit obligations other than pensions, litigation and environmental
liabilities. There is a risk that we may still be held liable for any claims
made in relation to these matters. These claims could cause our financial
results to decline, which could lead to a reduction in any dividends and lower
share value.
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Pechiney Plastic Packaging and Pechiney provided indemnities and guarantees
with respect to a number of these liabilities, as described in the sections of
this prospectus entitled "Reorganization of ANC" and "Relationship with
Pechiney." If Pechiney Plastic Packaging and Pechiney do not fulfill their
obligations under the indemnities and guarantees they have given us, we may be
held liable for any claims. We will also remain exposed to unidentified
environmental liabilities for other non-beverage can operations and facilities
if the amounts involved exceed the partial indemnity that Pechiney has provided
us, or if Pechiney does not fulfill its obligations under that indemnity. Other
contingent liabilities related to the reorganization, such as tax liabilities,
may also arise. Any of these items could negatively affect our financial
results.
WE WILL NEED TO FIND ALTERNATIVE SOURCES OF DEBT FINANCING, WHICH MAY RESULT IN
INCREASED FINANCING COSTS.
We expect that our financing costs will increase following this offering,
since we will enter into new credit facilities to replace our existing
facilities. If we cannot obtain sufficient funding, or if we are unable to
obtain financing in the amounts desired or on acceptable terms, we may not be
able to fund our operations in full, which may lead to a reduction in any
dividends and lower share value.
In connection with this offering, we expect to repay substantially all of
our existing debt financing. This process may require us to pay a make-whole
premium which, based on the current yield of U.S. Treasury bills, would amount
to $370,000. For further details, please refer to the section of this prospectus
entitled "Reorganization of ANC -- Change of Control Matters."
We estimate that following this offering we will require a total of
approximately $1.3 billion of debt financing and available lines of credit,
taking into account seasonality of the business and peak financial needs. We
have accepted $1.3 billion in aggregate financing commitments from The First
National Bank of Chicago, The Chase Manhattan Bank, ABN AMRO N.V., Royal Bank of
Canada and Banque Nationale de Paris. Chase Securities Inc. and Banc One Capital
Markets, Inc. intend to syndicate the commitments among additional lenders. We
summarize the terms of this financing in the section of this prospectus entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
WE EXPECT THAT PECHINEY WILL BE OUR LARGEST SHAREHOLDER AND WILL BE ABLE TO
INFLUENCE THE MANAGEMENT OF OUR BUSINESS. ITS INTERESTS MAY NOT BE THE SAME AS
INVESTORS' INTERESTS.
After this offering, Pechiney will be able to exercise significant
influence over our policies and business as a result of its significant
shareholding and board representation. Pechiney's interests may not be the same
as other shareholders' interests since Pechiney, as a producer of aluminum and
plastic packaging, has business interests that are connected with the beverage
can market and that may conflict with our interests.
We expect that Pechiney will own 45.5% of our common stock after this
offering, assuming the underwriters do not exercise their over-allotment option.
As a result, Pechiney will only require the approval of a further 4.5% plus one
vote in order to achieve a majority shareholders' vote, assuming that all
shareholders participate in the vote. Under an agreement between Pechiney and
us, Pechiney will have the right to propose four of the 13 members of our board
of directors for approval by the shareholders for as long as it owns 20% of our
shares. As a result, Pechiney will only require the approval of a further three
board members in order to achieve a majority vote in board meetings.
PECHINEY MAY SELL MORE SHARES, WHICH COULD DEPRESS THE MARKET PRICE OF OUR
SHARES.
Pechiney may choose to sell more of our shares in the future. If Pechiney
sells additional shares on the public market after this offering, the trading
price of our shares may fall. The perception that Pechiney may sell substantial
amounts of shares may also cause the trading price of our shares to fall. We
have entered into a registration rights agreement with Pechiney which enables
Pechiney to require us to register additional shares of our stock owned by
Pechiney. In the underwriting agreement, however, Pechiney will agree to a
lock-up under which it may not dispose of additional shares for 180 days
following the date of the final prospectus for this offering unless Credit
Suisse First Boston gives written approval.
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THE ABSENCE OF AN ESTABLISHED TRADING MARKET FOR OUR SHARES MAY DEPRESS THE
MARKET PRICE OF OUR SHARES.
Before this offering, there was no public market for our shares. If no
active trading market develops or is maintained, the trading price of the shares
may fail to rise or may decline, and there may be fewer willing purchasers for
the shares. The market price of our shares after this offering may not be as
high as the public offering price.
PROVISIONS OF DELAWARE LAW AND OF OUR CORPORATE DOCUMENTS, AS WELL AS PECHINEY'S
VOTING POWER, COULD DELAY OR PREVENT A CHANGE OF CONTROL OF OUR COMPANY.
We will be subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which could delay or prevent a third party or
significant stockholder from acquiring control of our company. In addition, our
charter and by-laws contain several provisions which may discourage, delay or
prevent a takeover attempt that a stockholder might consider to be in its best
interests. These provisions include the requirements that:
- the board of directors is divided into three classes with staggered
terms
- any vacancy occurring on the board of directors may be filled only by
the remaining directors
- stockholders take all action only at an annual or special meeting, and
not by written consent in lieu of a meeting
- with respect to any stockholders' meeting, stockholders must comply with
advance notice and information disclosure requirements.
Our board of directors also has the authority to authorize the issuance of
preferred stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a merger, tender offer or proxy contest
involving our company. This may cause the market price of our shares to fall,
and may dilute the voting rights of existing shareholders.
After this offering, assuming the underwriters do not exercise their
over-allotment option, Pechiney will hold approximately 45.5% of our common
stock. Since a majority is required to approve a change of control, Pechiney
will only require the approval of a further 4.5% plus one vote in order to delay
or prevent a change in control of our company.
RISK FACTORS RELATING TO ANC
WE MAY NOT BE ABLE TO PAY DIVIDENDS.
We will only be able to pay dividends if our financial performance, general
business conditions and our management's business plans permit it. Because we
have no history of dividend payments as a publicly listed company, we can give
no assurance as to whether dividends will be declared or, if dividends are
declared, what amount per share will be distributed to stockholders. We
currently intend to declare and pay a quarterly cash dividend of $0.14 per share
with respect to the third quarter of 1999. We also currently intend to declare
and pay to shareholders of record at that time a special dividend payment of
$0.14 per share with respect to the second quarter of 1999.
OUR PROFITS WILL DECLINE IF THE COST OF CAN SHEET RISES AND WE CANNOT INCREASE
THE SELLING PRICE OF BEVERAGE CANS.
Aluminum and steel can sheet are the principal raw materials used in
manufacturing beverage cans. If the cost of can sheet rises, it will cause our
operating expenses to increase. If we cannot increase the selling price of
beverage cans to offset the increased expenses, our profits will decline, which
could lead to a reduction in any dividends and lower share value.
Can sheet represents the majority of the manufacturing cost of the product.
Unless otherwise fixed by contract, can sheet prices vary in relation to the
market prices for aluminum and steel. The market price of aluminum has
historically been volatile.
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CURRENCY FLUCTUATIONS MAY LEAD TO DECREASES IN OUR FINANCIAL RESULTS.
Currency fluctuations could result in lower profits and could lead to a
reduction in any dividends and lower share value, which could weaken our
financial condition.
A major component of the worldwide market price for aluminum can sheet is
U.S. dollar-based. Large portions of our sales and expenses are in European
currencies, most significantly the Euro and the British pound, and we also have
revenues in other currencies. To a lesser extent, portions of our sales are also
denominated in currencies that have experienced significant devaluation relative
to the U.S. dollar, including the Brazilian real, the Turkish lira, the Korean
won and the Mexican peso. These currencies have historically been volatile and
may devalue further. If the currency in which we sell cans falls in value
relative to the currency in which we incur expenses, our profits will decline.
Our currency of accounting is the U.S. dollar. Revenues and earnings
denominated in other currencies, particularly Euros and British pounds, are
translated into U.S. dollars in preparing our combined financial statements. If
these currencies fall in value relative to the U.S. dollar, our levels of net
sales reported in future financial results will decline. Similarly, exchange
rate fluctuations will affect dollar values of assets and liabilities
denominated in these currencies.
For further discussion of these matters and the measures we have taken to
seek to protect our business against these exchange rate risks, see the section
of this prospectus entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quantitative and Qualitative Disclosures
about Market Risk -- Foreign Exchange Rates."
WE ARE EXPOSED TO RISKS IN EMERGING MARKETS WHICH COULD AFFECT THE VALUE OF OUR
ASSETS THERE.
We have a number of operations or investments in emerging markets.
Developments in these markets may result in lower profits, which could lead to a
reduction in any dividends and lower share value.
Our operations in Brazil, China and Turkey represented approximately 9% of
our 1998 net sales. We also have equity interests in operations in Mexico and
South Korea. As compared to our North American and European markets, emerging
markets are more likely to suffer from social, political and economic risks,
such as inflation, restrictions on currency movements, difficulties in
operations including importing raw materials, risks of default by partners and
counterparties, and uncertainty stemming from local corporate, tax and labor
laws. In particular, the recent economic crisis in Brazil (including the
significant devaluation of the Brazilian real) has caused a drop in local
demand, resulting in lower net sales and lower profitability for our Brazilian
operations.
WE ARE SUBJECT TO COSTS AND LIABILITIES RELATED TO STRINGENT ENVIRONMENTAL AND
HEALTH AND SAFETY STANDARDS.
Environmental and health and safety laws and regulations expose us to the
risk of substantial costs and liabilities, including liabilities associated with
assets that have been sold and activities that have been discontinued. Our
accounting reserves may not be sufficient to cover future environmental and
health and safety liabilities. The amounts of these liabilities could result in
lower profits, a reduction in any dividends and lower share value.
We are subject to a broad range of environmental and health and safety laws
and regulations in each of the jurisdictions in which we operate, imposing
increasingly stringent standards on us. They relate to, among other things, air
emissions from solvents used in coatings, inks and compounds, waste water
discharges from the can washing process, the use and handling of hazardous
materials, waste disposal practices, and clean-up of existing environmental
contamination.
Currently, we are involved in a number of compliance and remediation
efforts and legal proceedings concerning environmental matters. Based on
information presently available, we have budgeted capital expenditures for
environmental improvement projects and, in accordance with U.S. GAAP, have
established reserves for known environmental remediation liabilities that are
probable and reasonably capable of estimation. However, environmental matters
cannot be predicted with certainty, and these amounts may not be
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adequate for all purposes. In addition, the development or discovery of new
facts, events, circumstances or conditions, and other developments such as
changes in law, could result in increased costs and liabilities. For further
discussion of these matters, please refer to the section of this prospectus
entitled "Business of ANC -- Environmental and health and safety matters."
The European Packaging and Packaging Waste Directive sets targets for the
use of refillable containers in European Union member states, although the
current regulation allows the member states significant flexibility in setting
and applying quotas. The directive has required a significant increase in the
use of refillable containers in certain member states. A continuation of this
trend could limit potential growth opportunities for the beverage can in Europe,
which could result in lower profits, a reduction in any dividends and lower
share value.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. Our actual results could differ materially from those anticipated
in the forward-looking statements. The forward-looking statements are affected
by risks, uncertainties and assumptions about our business, including, among
other things:
- our customers' financial condition
- our customers' can requirements
- the number of cans we will supply and the locations of our customers
- our ability to control costs
- the terms upon which we will acquire aluminum and our ability to reflect
those terms in can sales
- our debt levels and our ability to obtain financing and service debt
- competitive pressures in the beverage can business
- the successful implementation of our strategy to create shareholder
value through superior profitability and cash generation
- prevailing interest rates and currency exchange rates
- legal proceedings and regulatory matters
- general economic conditions, particularly the strength of the economies
in which we have operations
- the other risks described above in "Risk Factors."
We undertake no obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
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REORGANIZATION OF ANC
SUMMARY OF THE REORGANIZATION
Prior to this offering, we have been operated by Pechiney as part of its
U.S. packaging group. This operating group consisted of several direct and
indirect subsidiaries of Pechiney, as shown on Chart 1 below. The operating
group also conducted various other businesses, principally plastic packaging
operations in the United States. Pechiney will retain these other businesses
following this offering. In a reorganization to be carried out prior to this
offering, Pechiney will transfer all of the beverage can operations to us, and
will cause the non-beverage can operations to be transferred to a newly created
separate company called Pechiney Plastic Packaging, Inc.
Before commencing the reorganization and this offering, French labor laws
require Pechiney to consult with workers' committees. These consultations have
begun, and we do not expect them to delay the reorganization or this offering.
The reorganization will be effected through a series of transactions in a
number of countries, all of which will become effective in all material respects
on or before the closing of this offering. Accordingly, for presentation
purposes, this section of the prospectus assumes the reorganization has been
completed. Some of these transactions require governmental authorizations in
foreign jurisdictions. Although we expect that these will have been obtained in
all material respects prior to closing of this offering, we cannot give any
assurance in this regard. We do not expect the lack of any of these
authorizations to be material.
CHART 1: THE OPERATING GROUP PRIOR TO THE REORGANIZATION
[PRE-REORGANIZATION OPERATING GROUP FLOW CHART]
The principal steps comprising the reorganization were as follows:
STEP 1: THE U.S. NON-BEVERAGE CAN ACTIVITIES WERE SEPARATED FROM THE U.S.
BEVERAGE CAN OPERATIONS
(a) The U.S. operating company was originally 10% held by Pechiney
directly and 90% held by Pechiney North America, Inc., itself a
wholly owned subsidiary of Pechiney.
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(b) The U.S. operating company transferred its non-beverage can
activities to Pechiney Plastic Packaging, a newly formed corporation,
in return for all of Pechiney Plastic Packaging's share capital.
(c) The U.S. operating company transferred Pechiney Plastic Packaging to
Pechiney in exchange for Pechiney's 10% direct stake in the U.S.
operating company.
(d) At the end of Step 1, Pechiney directly owned Pechiney Plastic
Packaging, which held all of the non-beverage can activities, and
indirectly owned 100% of the U.S. operating company through Pechiney
North America.
STEP 2: PECHINEY TRANSFERRED ALL OF ITS BEVERAGE CANS OPERATIONS TO ANC
(a) Pechiney formed our new company and transferred the following to it:
- Pechiney North America (and thus indirectly the U.S. operating
company and its beverage can operations)
- Pechiney's interests in the European operating companies and their
beverage cans operations
- The can end operations in France, the Brazilian beverage cans
operating company, and Pechiney's interests in the joint venture
companies in Turkey, Mexico and South Korea.
(b) At the end of Step 2, ANC held all of Pechiney's beverage cans
operations, as indicated in Chart 2.
CHART 2. FOLLOWING THE REORGANIZATION AND PRIOR TO THIS OFFERING
[POST-REORGANIZATION OPERATING GROUP FLOW CHART]
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TAX TREATMENT
We expect that the 1999 reorganization of the beverage can operations and
plastic packaging operations as described above should not cause us to incur
material U.S. tax liabilities. In early 1998, we and Pechiney engaged in a
restructuring in which we transferred a portion of our ownership in various
European beverage can operating companies to French subsidiaries of Pechiney. At
that time, we received an opinion from Price Waterhouse LLP that these
transactions qualified for U.S. tax-free treatment and thus we should not
recognize any gain or income on the transfer of ownership of these companies. We
also received an opinion from the law firm of Kronish, Lieb, Weiner & Hellman
LLP confirming the Price Waterhouse LLP opinion. In connection with this
offering, we have received further opinions from PricewaterhouseCoopers LLP,
each confirmed by Kronish, Lieb, Weiner & Hellman LLP, that the formation of
Pechiney Plastic Packaging and the transfer to it of non-beverage can assets and
various obligations should qualify for U.S. tax-free treatment and that the 1999
reorganization of our European beverage can operating companies should not
affect their opinion as to the 1998 restructuring. However, there is no
guarantee that the Internal Revenue Service will not assert a contrary position.
If the Internal Revenue Service successfully asserts a contrary position with
respect to either or both of the 1998 and 1999 transactions, the resulting U.S.
federal income tax liability imposed on us would negatively affect our financial
results and could lead to a reduction in any dividends and lower share value.
PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS
Prior to the reorganization, the U.S. operating company carried the assets
and liabilities for pension plans covering its employees. These plans can be
divided into three groups:
- plans relating to plastics employees only, which we transferred to
Pechiney Plastic Packaging, which assumed full contractual
responsibility for them as primary obligor.
- plans relating to beverage cans employees only, which we retained.
- co-mingled plans covering employees from both businesses as well as a
number of non-packaging employees. The benefits of plastics employees
for service accrued were frozen, subject to increases for certain future
service and pay. Pechiney Plastic Packaging set up equivalent plans
covering its employees' future benefits. We retain the co-mingled plans
and their related assets, and will be responsible for the payment of
benefits to all non-beverage can employees that accrued prior to the
reorganization.
In connection with the reorganization, on June 25, 1999 we entered into an
agreement with the Pension Benefit Guaranty Corporation relating to our U.S.
pension plans. Under this agreement we are obligated, for each of the years 1999
through 2003, to make contributions to two of our pension plans totaling $4
million per year in the aggregate. We also have agreed to make additional
contributions to these two plans in the amount necessary to amortize over five
years the increased actuarial accrued liability resulting from any plan
amendments adopted after the date of the agreement. In no event, however, are we
required to make contributions to these plans in excess of the maximum amount
deductible for tax purposes or in excess of the unfunded benefit liabilities of
the plans. In addition, we have agreed that in the event we provide security to
our lenders, we also will provide ratable security of equal status to the
Pension Benefit Guaranty Corporation with respect to the then "termination
liability." The agreement defines termination liability as the excess of (1)
115% of the liabilities calculated on a termination basis under all our U.S.
pension plans, other than plans that are over-funded on a termination basis,
over (2) the assets of the same plans. This agreement with the Pension Benefit
Guaranty Corporation, which also contains notice requirements, will terminate on
or following June 25, 2004 if we achieve a designated credit rating or if the
plans have no unfunded benefit liabilities.
A number of our employees are members of three multi-employer pension plans
sponsored by unions. We will continue to contribute to these three plans after
the reorganization. If, in the future, we were to discontinue contributions to
one of these plans, we could incur a withdrawal liability. For example, we may
discontinue contributions if we close a plant whose employees are covered by one
of these plans. The amount
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of this withdrawal liability, if any, would depend upon a variety of factors
including the funding status of the plan at that time.
Prior to the reorganization, the U.S. operating company also carried
unfunded obligations for other post-employment benefits totaling $697 million,
based on actuarial assumptions and as recorded in our combined financial
statements as at December 31, 1998. These obligations related to both beverage
can and non-beverage can employees. The benefits consist mainly of health and
medical coverage. As part of the reorganization, we entered into a Contribution,
Assignment and Assumption Agreement with Pechiney Plastic Packaging. Under that
agreement, among other things, we assigned the benefit obligations relating to
plastic packaging and a portion of the other non-beverage can employees to
Pechiney Plastic Packaging, which assumed liability for those obligations. The
amount of obligations assigned based on actuarial assumptions and as recorded in
our combined financial statements was $361 million. As a result, we retain $336
million of obligations. Because we could be subject to contingent liabilities
with respect to the obligations assigned to Pechiney Plastic Packaging, Pechiney
Plastic Packaging has also agreed to indemnify us on an after-tax basis against
any losses we may incur if it fails to satisfy its obligations under the
Contribution, Assignment and Assumption Agreement. Pechiney has guaranteed the
performance by Pechiney Plastic Packaging of its obligation under this
indemnity.
CHANGE OF CONTROL MATTERS
In connection with this offering, we will terminate and repay our principal
long-term debt facility. We will also make an offer to prepay our $228 million
of privately placed notes which, if accepted, would require us to pay a
make-whole premium to be calculated on the prepayment date. At current yield
rates, the make-whole premium would amount to $370,000. We will also reduce the
size of our receivables sale program to approximately $50 million and negotiate
changes to its terms and conditions. In addition, we expect that our debt
financing from Pechiney will no longer be in place after this offering. The debt
financing from Pechiney aggregated $1,011 million outstanding as at March 31,
1999, of which $260 million will be transferred to Pechiney Plastic Packaging
before the offering. In June 1999, we accepted $1.3 billion in aggregate
financing commitments, as discussed in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
We have substantial net operating losses. This offering will result in a
change in control as defined under section 382 of the Internal Revenue Code. As
a result, the utilization of our net operating losses will be subject to annual
limitations. Please refer to the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Cash Flows" for further discussion of our net operating
losses.
The change of control will also allow our joint venture partners in Mexico
and Korea to exercise rights under the relevant joint venture agreements. The
transfer of Pechiney's shares in the Mexican joint venture to us will enable
Vitro, the other shareholder, to terminate the joint venture arrangements by
purchasing our interest in the joint venture at fair market value. However,
Vitro has granted us a waiver of its rights for this transfer. In the case of
Hanil Can Co., the Korean food and beverage can joint venture, the other
shareholders may exercise a right of preemption on the proposed transfer of
Pechiney's shares to us. They have agreed in principle not to exercise this
right, and we and Pechiney are working with them to formalize the agreement in
principle.
Finally, the change in control will give two of our customers the legal
right to terminate contracts.
- Under our Master Manufacturer's Authorization Agreement with The
Coca-Cola Company relating to the reproduction of the Coca-Cola
trade-mark and label designs, Coca-Cola is entitled to terminate the
agreement upon a change in control after giving 90 days' prior notice.
We have notified Coca-Cola of the expected change in control. Coca-Cola
has notified us in writing that it will not terminate the agreement.
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- Our Master Supply Agreement with Anheuser Busch also allows the customer
to terminate the agreement upon a change in control. We have notified
the customer of the expected change in control and do not expect them to
terminate the agreement.
INDEMNITIES AND GUARANTEES FROM PECHINEY PLASTIC PACKAGING AND PECHINEY
Pechiney Plastic Packaging and Pechiney have agreed to indemnify us in
respect of the following matters:
- Post-employment benefits other than pensions. Pechiney Plastic
Packaging has agreed to assume post-employment benefit obligations other
than pensions for plastic employees and a portion of other non-beverage
can employees. Pechiney Plastic Packaging will indemnify us on an
after-tax basis, subject to adjustments, for any losses we may incur
with respect to post-employment benefit obligations other than pensions.
Pechiney has agreed to guarantee this obligation of Pechiney Plastic
Packaging.
- Viskase litigation. We are the defendant in patent infringement
proceedings brought by Viskase Corporation. The proceedings, which are
described under "Business of ANC -- Legal Proceedings" below, relate to
the plastic packaging business that we transferred to Pechiney Plastic
Packaging in the reorganization. Pechiney Plastic Packaging has agreed
to indemnify us on an after-tax basis, subject to adjustments, for any
payments we may be required to make with respect to the proceedings.
Pechiney has agreed to guarantee this obligation of Pechiney Plastic
Packaging.
- Environmental. Under U.S. environmental laws and regulations, we are
exposed to the risk of substantial costs and liabilities, including the
cost of remediating pollution damage related to our current or past
operations or facilities. These potential costs and liabilities extend
to assets that have been sold and activities that have been
discontinued.
-- Plastics operations. Pechiney Plastic Packaging has agreed to
indemnify us on an after-tax basis, subject to adjustments, against
any losses we may incur with respect to environmental liabilities
relating to past and present plastics operations and facilities.
This indemnity extends to assets that have been sold and activities
that have been discontinued. It covers both identified and
unidentified liabilities. If Pechiney Plastic Packaging fails to
satisfy its indemnity obligation in full, we may be exposed to
contingent liability. Pechiney has not guaranteed and is not legally
required to support this obligation.
-- Other non-beverage can operations. To the extent that we have
identified environmental liabilities for other non-beverage can
operations and facilities that are probable and reasonably capable
of estimation, we have established accounting reserves that we
retained in the reorganization that we believe are consistent with
U.S. GAAP. These identified liabilities will be for our own account.
For any unidentified liabilities, Pechiney has agreed to indemnify
us in part, on an after-tax basis, subject to adjustments, against
any losses we may incur. This partial indemnity will be limited to
80% of any direct loss we suffer and will be valid for ten years
following the date of the offering. Each claim will be subject to a
$0.5 million deductible and the indemnity will be limited to a
maximum overall amount of $75 million. Pechiney's indemnity relates
only to other non-beverage can operations that we have transferred,
sold or shut down in the past. It does not include the plastics
operations, which are covered by Pechiney Plastic Packaging's
indemnity only. We may be exposed to contingent liability to the
extent that the identified liabilities exceed our reserved amounts,
or any unidentified liabilities exceed the partial indemnity from
Pechiney.
-- Beverage can operations. Any environmental liabilities relating to
our past and present beverage can activities will be for our own
account. To the extent that these liabilities have been identified
and are probable and reasonably capable of estimation, we have
established accounting reserves that we believe are in accordance
with U.S. GAAP.
17
<PAGE> 22
Based on the expected financial condition of Pechiney Plastic Packaging
immediately following our reorganization, we are not aware of any circumstances
or events that make it likely that Pechiney Plastic Packaging would default if
it were called upon to make payment under any of these indemnities. After this
offering, Pechiney Plastic Packaging will remain a part of the Pechiney group,
and we cannot give any assurance as to its future operations or financial
condition. However, Pechiney has indicated that plastic packaging is an area of
strategic focus and that it intends to accelerate the growth of its plastic
packaging activities in the future.
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<PAGE> 23
RELATIONSHIP WITH PECHINEY
We have operated as a subsidiary of Pechiney since 1988. In recent years,
Pechiney provided us with treasury services and exchange rate protection
services. We have also shared corporate services, payroll, retiree benefits
services and related information technology services with Pechiney's U.S.
plastics operations. We have also purchased a portion of our aluminum supply
from Pechiney Rhenalu, a subsidiary of Pechiney.
Following this offering, our ongoing relationship with Pechiney will be
governed by a number of agreements whose material provisions are summarized
below. These agreements are included as exhibits to the registration statement
which contains this prospectus. Please refer to those exhibits for additional
details.
RELATIONSHIP WITH PECHINEY AS A PRINCIPAL SHAREHOLDER
Following the offering, we expect that Pechiney will retain 45.5% of our
shares, assuming the underwriters do not exercise their over-allotment option.
Pechiney will have the right to elect four of the 13 members of our board of
directors. As a result, Pechiney will be able to exercise significant influence
over our policies and business.
AGREEMENTS WITH PECHINEY
Aluminum Purchase Agreements. Prior to this offering we purchased a
portion of our aluminum supplies from Pechiney Rhenalu, a subsidiary of
Pechiney, on an arm's-length basis and under normal market terms and conditions.
The aluminum purchased represented approximately 14% of our total aluminum
purchases in 1998. We expect to continue to purchase aluminum from Pechiney
Rhenalu on similar terms following this offering.
We also have an agreement with Pechiney World Trade, a subsidiary of
Pechiney, under which Pechiney World Trade procures used aluminum beverage cans
on the open market to satisfy a portion of our aluminum can sheet supply. This
is an arm's-length agreement.
Master Netting and Amendment Agreement. Prior to this offering, Pechiney
and several of its subsidiaries, all of which have become our subsidiaries
following the reorganization, entered into a number of currency protection
transactions with Pechiney under which Pechiney purchased foreign currencies, or
sold foreign currencies, at specified rates in order to reduce its exposure to
exchange rate fluctuations. The master netting and amendment agreement covers
all foreign exchange transactions, interest rate and currency swaps, options,
caps, collars, and floors, and any similar transactions which have been or may
be entered into in the future between Pechiney and any of our subsidiaries. If
either Pechiney or one of our subsidiaries defaults under a transaction, then
the non-defaulting party is entitled to terminate all then-outstanding
transactions with the defaulting party and net the termination amounts payable
under such terminated transactions. If one of our subsidiaries has to pay a net
termination amount, we have unconditionally guaranteed that payment. If we
default on this guarantee, then transactions with all of our other subsidiaries
will be terminated and Pechiney may set-off all net termination amounts payable
to and from those subsidiaries. Likewise, if Pechiney has to pay a net
termination amount to one of our subsidiaries but fails to do so, then all then-
outstanding transactions between Pechiney and all of our other subsidiaries will
be terminated and our subsidiaries may set-off all net termination amounts
payable between themselves and Pechiney. For further discussion of the measures
we have taken to seek to protect ourselves against exchange rate fluctuations,
see the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quantitative and Qualitative Disclosures
about Market Risk -- Foreign Exchange Rates."
Extension of Netting Agreement. Prior to this offering, Pechiney and a
number of the subsidiaries that were transferred to us in the reorganization
benefited from a set-off facility with a commercial bank. We have entered into
an extension agreement providing that this facility will continue for two months
following the offering. We will be required to give a guarantee of the
obligations of the subsidiaries transferred to us.
Beer Bottle Technology Option Agreement. Both we and Pechiney will remain
free to enter this market either alone or with other partners. In connection
with this offering, we have entered into an agreement with Pechiney that may
give us access to Pechiney's multi-layer plastic beer bottle technology if we
choose to
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<PAGE> 24
enter the market at any time within two years. If, during that period, we give
notice to Pechiney, Pechiney may respond by requesting us to form a joint
venture with them with respect to the development and production of multi-layer
plastic beer bottles. If the parties cannot agree on the terms of the joint
venture, the agreement requires Pechiney to license its multi-layer plastic beer
bottle technology to us on market terms.
ANC Technology Option Agreement. In connection with this offering, we have
entered into an agreement that gives Pechiney the option to obtain access, on
market terms, to certain ANC drawn and wall-ironed aluminum can forming
technology for use in its non-beverage can operations.
Registration Rights. In connection with this offering, we have entered
into a registration rights agreement with Pechiney under which, if Pechiney
wishes to sell more shares of our common stock in the future, we will register
those shares. We have agreed to cooperate fully in connection with any
registration and with any related offering. Under the lock-up provisions of the
underwriting agreement, however, Pechiney may not dispose of any more of our
shares for 180 days following the date of the final prospectus for this offering
unless Credit Suisse First Boston gives prior written approval.
Reorganization Agreements. The reorganization of Pechiney's U.S. packaging
group that led to our formation was effected by a number of agreements. These
agreements provided for the transfer of the non-beverage can activities to
Pechiney Plastic Packaging and the transfer of Pechiney Plastic Packaging to
Pechiney. These agreements also set out the various indemnities from Pechiney
Plastic Packaging and Pechiney that are described in the section entitled
"Reorganization of ANC -- Indemnities from Pechiney and Pechiney Plastic
Packaging" above. The principal agreements are:
- Contribution, Assignment and Assumption Agreement. We entered into a
contribution, assignment and assumption agreement with Pechiney Plastic
Packaging providing for the transfer of our plastic packaging operations
to Pechiney Plastic Packaging in exchange for 100% of Pechiney Plastic
Packaging's common stock. As a result of this agreement, we separated our
plastic packaging operations into a distinct, wholly owned subsidiary,
which was transferred to Pechiney.
Among other things, this agreement provides for the allocation of the
various benefit obligations relating to plastics employees and other
non-beverage can employees between our company and Pechiney Plastic
Packaging. In general, the employment-related terms of the agreement
provide that beginning on a date mutually agreed between us and Pechiney
Plastic Packaging, all the employees of the non-beverage can business will
cease to be our employees and will become employed by Pechiney Plastic
Packaging. Under the agreement, we will retain liability for a portion of
the benefits to former employees of the non-beverage can business who have
retired or otherwise have terminated employment and their designated
beneficiaries. However, other than for the express obligations that remain
ours, the agreement provides that Pechiney Plastic Packaging shall assume
all past and future obligations with respect to the transferred employees
and indemnify us for any losses we may incur with respect to them.
Under the agreement, these transferred employees will be entitled to the
same level of compensation and benefits from Pechiney Plastic Packaging as
they received immediately prior to their transfer. However, the agreement
is not intended to provide any of the transferred employees a right of
continued employment. Accordingly, Pechiney Plastic Packaging is required
to assume the liabilities under benefit plans that pertain to the
transferred employees including the American National Can Company Pension
Plan for Cleveland Hourly Employees, the American National Can Company
Retirement Plan for Bargaining Employees of Illinois, the American
National Can Company Pension Plan for Organized Pressroom Employees of
American National Can, Mt. Vernon, Ohio Plant, the American National Can
Company Pension Plan for U.P.I.U. Local 271 Employees, Mt. Vernon, Ohio,
1987 Performance Plastics Deferred Compensation Plan, and various other
plans that pertain to the transferred employees.
With respect to other compensation and benefit plans maintained by us, the
transferred employees will no longer be eligible to participate after the
date they become employed by Pechiney Plastic Packaging. With respect to
these plans, Pechiney Plastic Packaging is required under the agreement to
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<PAGE> 25
establish "mirror" plans that will provide the same level of benefits for
the transferred employees and their eligible dependents and beneficiaries
as those provided under the original plan. This arrangement will include
offsets to cover benefits accrued in connection with the transferred
employees' past employment with us.
The terms of the employment of some of the transferred employees are
subject to collective bargaining agreements between us and the respective
union. The agreement provides that Pechiney Plastic Packaging will assume
their collective bargaining agreements and recognize all labor
organizations that represent any of the transferred employees.
The agreement also contains Pechiney Plastic Packaging's indemnification
of us on an after-tax basis, subject to adjustments, with respect to the
Viskase proceedings and environmental liabilities described above.
- Stock Purchase Agreement. We entered into a stock purchase agreement
with Pechiney in which we sold all of our shares of Pechiney Plastic
Packaging common stock to Pechiney in exchange for all of the shares of
ANC common stock held by Pechiney prior to the sale. The effect of the
agreement was to complete the transfer of the plastic packaging
operations to Pechiney and to make our U.S. operating company a wholly
owned subsidiary of Pechiney North America.
- Pechiney Guaranty. Pechiney has guaranteed to us the indemnification
obligations undertaken by Pechiney Plastic Packaging with respect to the
post-employment benefit obligations undertaken by Pechiney Plastic
Packaging under the contribution, assignment and assumption agreement and
the Viskase proceedings.
- FEEP Contribution Agreement. We entered into a contribution agreement
with Financiere Europeenne d'Emballages Pechiney, known as FEEP, in which
FEEP agreed to transfer to ANC all of its interests in three of its
beverage can group companies: ANC do Brasil, Nacanco Holding Europe and
Nacanco Holding France. In exchange, we issued to FEEP shares of our
common stock.
- Subsidiary Stock Transfer Agreements. We entered into six stock transfer
agreements with Pechiney in which Pechiney transferred all of its
interests in Pechiney North America and its international beverage can
operations to us in exchange for the sum of $ . Pechiney had
previously contributed this amount to us as a capital contribution.
- Environmental Indemnity Agreement. In this agreement, Pechiney has
provided us with its partial indemnity with respect to unidentified
environmental liabilities, as described above.
Pechiney Nominee Directors. In connection with this offering, we have
entered into a director nomination agreement with Pechiney under which Pechiney
will have the right to propose four of the 13 members of our board of directors
for approval by the shareholders for as long as it holds 20% of our shares.
Services Agreements. Prior to the reorganization, Pechiney provided us
with treasury and exchange rate services. After the offering, we will obtain
these services from third party sources. We also shared a number of other
services with the non-beverage can activities in Pechiney's U.S. packaging
group. In connection with the reorganization, we have entered into two
agreements regarding these services:
- For most of the corporate services that we shared with Pechiney's U.S.
plastic packaging operations, the relevant service departments have been
divided between Pechiney Plastic Packaging and us. The payroll, retiree,
related information technology, employee benefits design and
administration, communications and legal services will be transferred to
Pechiney Plastic Packaging. We will be able to purchase those services
from Pechiney Plastic Packaging under a shared services agreement. The
agreement specifies that the services will be provided on an
arm's-length basis. The shared services agreement has a term of five
years and may be extended by written agreement. We will have the right
to cancel the services under the agreement, in part or in full, upon
one, three or six months' notice, depending on the service.
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<PAGE> 26
- We have also entered into a reciprocal services agreement with Pechiney
Plastic Packaging under which we and Pechiney Plastic Packaging provide
each other with other corporate services. The reciprocal corporate
services agreement has a term of five years and may be extended by
written agreement. Both parties will have the right to cancel the
services under the reciprocal services agreement, in part or in full,
upon 180 days notice.
USE OF PROCEEDS
The net proceeds from the sale of our shares will be paid to Pechiney, the
selling stockholder. We will not receive any proceeds from this offering.
DIVIDEND POLICY
We currently intend to declare and pay a quarterly cash dividend of $0.14
per share with respect to the third quarter of 1999. We also currently intend to
declare and pay to shareholders of record at that time a special dividend
payment of $0.14 per share with respect to the second quarter of 1999. We will
only be able to pay dividends if our financial performance, general business
conditions and our management's business plans permit it. We are a newly formed
company and as such have never declared or paid any cash dividends on our
capital stock.
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<PAGE> 27
CAPITALIZATION
The following table shows our capitalization as at March 31, 1999, stated
(a) on an actual basis and (b) as adjusted to reflect our reorganization. The
adjustments, which are the same as the adjustments effected in preparing our pro
forma combined financial information appearing elsewhere in this prospectus,
consist of the following:
- the reorganization of ANC
- the agreement by Pechiney Plastic Packaging to reimburse us on an
after-tax basis for any payments we make with respect to the Viskase
proceedings, together with Pechiney's guarantee of this obligation
- the payment of dividends totaling $111 million to Pechiney by a number
of its beverage can subsidiaries prior to this offering
- the transfer to Pechiney Plastic Packaging of $260 million of short-term
and long-term debt owed to Pechiney
- a new third-party credit facility providing for borrowings of up to $1.3
billion
- the prepayment of existing privately placed notes in the amount of $228
million
- the repayment of $751 million of short-term and long-term debt owed to
Pechiney and subsequent borrowing of third-party debt.
For further discussion of our financial condition, you should refer to the
more complete information contained in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" as
well as the pro forma combined financial information and the combined financial
statements.
<TABLE>
<CAPTION>
AS AT
MARCH 31, 1999
-------------------
ACTUAL PRO FORMA
------ ---------
($ IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 157 $ 108
====== ======
Short-term financing........................................ $ 775 $ 455
Current portion of long-term debt........................... 6 2
Long-term debt (excluding current portion).................. 527 662
------ ------
Total debt................................................ 1,308 1,119
------ ------
Owner's equity.............................................. 1,610 --
Common stock (1,000,000,000 shares authorized, 55,000,000
shares issued and outstanding)............................ -- 10
Additional paid in capital.................................. -- 1,182
Receivable from Pechiney Plastic Packaging, Inc............. -- (62)
Accumulated other comprehensive loss........................ (90) (84)
------ ------
Total equity.............................................. 1,520 1,046
------ ------
Total capitalization...................................... $2,828 $2,165
====== ======
Total debt to capitalization ratio........................ 46.3% 51.7%
</TABLE>
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<PAGE> 28
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Our pro forma combined financial information as of and for the three months
ended March 31, 1999 and for the year ended December 31, 1998, which is
unaudited, has been prepared from the combined financial statements which we
present elsewhere in this prospectus. This information reflects adjustments for
the following transactions:
- the reorganization of ANC
- the agreement by Pechiney Plastic Packaging to reimburse us on an
after-tax basis for any payments we make with respect to the Viskase
proceedings, together with Pechiney's guarantee of this obligation
- the payment of dividends totaling $111 million to Pechiney by a number
of its beverage can subsidiaries prior to this offering
- the transfer to Pechiney Plastic Packaging of $260 million of short-term
and long-term debt owed to Pechiney
- a new third party credit facility providing for borrowings of up to $1.3
billion
- the prepayment of existing privately placed notes in the amount of $228
million
- the repayment of $751 million of short-term and long-term debt owed to
Pechiney and subsequent borrowing of third-party debt.
These adjustments are more fully described in the notes to the pro forma
combined financial information below.
For purposes of the pro forma combined statement of income, these
transactions are assumed to have occurred on the first day of each period
presented. For purposes of the pro forma combined balance sheet, they are
assumed to have occurred on March 31, 1999.
Our management believes that the assumptions used to prepare the pro forma
combined financial information are reasonable under the circumstances. The pro
forma combined financial information does not necessarily reflect what our
results of operations or financial position would have been if the transactions
had been completed as of the dates indicated, nor does it give effect to any
events other than those discussed in the notes to the pro forma combined
financial information below. The pro forma combined financial information may
not be indicative of our future operating results or financial position.
The pro forma combined financial information should be read in conjunction
with our combined financial statements and the sections entitled "Reorganization
of ANC" and "Management's Discussion and Analysis of Results of Operations and
Financial Condition" included elsewhere in this prospectus.
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<PAGE> 29
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 THREE MONTHS ENDED MARCH 31, 1999
------------------------------------------ -----------------------------------------
REORGANIZATION PRO FORMA REORGANIZATION PRO FORMA
ACTUAL AND FINANCING AS ADJUSTED ACTUAL AND FINANCING AS ADJUSTED
----------- -------------- ----------- ---------- -------------- -----------
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS) ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
PRO FORMA COMBINED STATEMENT OF
INCOME
Net sales........................ $ 2,459 -- $ 2,459 $ 531 -- $ 531
Costs of goods sold (excluding
depreciation).................. 1,985 -- 1,985 433 -- 433
Selling, general and
administrative
expense........................ 138 -- 138 31 -- 31
Research and development
expense........................ 15 -- 15 4 -- 4
Depreciation and amortization.... 82 -- 82 21 -- 21
Goodwill amortization............ 40 -- 40 10 -- 10
Restructuring charge (credit) and
writedown of property and
equipment...................... (2) -- (2) -- -- --
----------- --- ----------- ---------- --- -----------
OPERATING INCOME (LOSS) FROM
CONTINUING OPERATIONS.......... 201 -- 201 32 -- 32
Interest expense................. 69 $ 8(1) 77 15 $ 2(1) 17
Interest income and other
financial income (expense),
net............................ 11 1(2) 12 8 --(2) 8
----------- --- ----------- ---------- --- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES,
EQUITY IN EARNINGS OF
AFFILIATES, MINORITY INTEREST
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE.............. 143 (7) 136 25 (2) 23
Income tax expense (benefit)..... 26 (3)(3) 23 11 (1)(3) 10
----------- --- ----------- ---------- --- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE EQUITY IN
EARNINGS OF AFFILIATES,
MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE......................... 117 (4) 113 14 (1) 13
Equity in net earnings (loss) of
affiliates..................... 4 -- 4 2 -- 2
Minority interest................ (5) -- (5) -- -- --
----------- --- ----------- ---------- --- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE.... $ 116 $(4) $ 112 $ 16 $(1) $ 15
=========== === =========== ========== === ===========
Pro forma basic and diluted
income (loss) from continuing
operations before cumulative
effect of accounting change per
share.......................... $ 2.11 $ 2.04 $ 0.29 $ 0.27
=========== === =========== ========== === ===========
Pro forma weighted average shares
outstanding.................... 55,000,000 55,000,000 55,000,000 55,000,000
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
--------------------------------------------------------------------
PRO FORMA
ACTUAL REORGANIZATION FINANCING OFFERING AS ADJUSTED
------ -------------- --------- -------- -----------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED BALANCE SHEET
ASSETS:
CURRENT ASSETS
Cash and cash equivalents.................. $ 157 $ (40)(4) $ (9)(8) -- $ 108
Accounts receivable........................ 174 -- -- -- 174
Other receivables and prepaid expenses..... 55 -- -- -- 55
Inventories................................ 249 -- -- -- 249
Net assets of discontinued operations...... 73 (73)(5) -- -- --
Deferred income taxes...................... 102 -- -- -- 102
------ ------ ------ ------- ------
TOTAL CURRENT ASSETS.................... 810 (113) (9) -- 688
Property, plant and equipment net............ 807 -- -- -- 807
Goodwill..................................... 1,214 -- -- -- 1,214
Investments in equity affiliates............. 109 -- -- -- 109
Pension asset................................ 214 -- -- -- 214
Net assets of discontinued operations........ 524 (524)(5) -- -- --
Deferred income taxes........................ 209 (26)(6) --(8) -- 183
Other long-term assets....................... 78 -- 9(9) -- 87
------ ------ ------ ------- ------
TOTAL ASSETS............................ $3,965 $ (663) $ -- -- $3,302
====== ====== ====== ======= ======
LIABILITIES AND OWNER'S EQUITY:
CURRENT LIABILITIES
Accounts payable -- trade.................. $ 235 -- -- -- $ 235
Other payables and accrued liabilities..... 341 -- -- -- 341
Current portion of long-term debt.......... 6 -- $ (4)(9) -- 2
Short-term financing:
External................................ 55 -- 400(9) -- 455
Related party........................... 720 $ (260)(5) (460)(9) -- --
------ ------ ------ ------- ------
TOTAL CURRENT LIABILITIES............. 1,357 (260) (64) -- 1,033
Deferred income taxes........................ 56 -- -- -- 56
Postretirement benefit obligations........... 308 -- -- -- 308
Other long-term liabilities.................. 173 -- -- -- 173
Long-term debt:
External................................... 240 71(4) 351(9) -- 662
Related party.............................. 287 -- (287)(9) -- --
------ ------ ------ ------- ------
TOTAL LIABILITIES....................... 2,421 (189) -- -- 2,232
Minority interests........................... 24 -- -- -- 24
Preferred stock.............................. -- -- -- -- --
Common stock................................. -- -- -- $ 1(10) 1
Additional paid-in capital................... -- 62(7) -- 1,129(10) 1,191
------ ------ ------ ------- ------
Less: Receivable from Pechiney Plastic
Packaging, Inc......................... -- (62)(7) -- -- (62)
Owner's equity............................... 1,610 (480) --(9) (1,130)(10)
(4)(5)(6)
(7)(8)
Accumulated other comprehensive loss......... (90) 6(5) -- -- (84)
------ ------ ------ ------- ------
Total equity................................. 1,520 (474) -- -- 1,046
------ ------ ------ ------- ------
TOTAL LIABILITIES AND EQUITY................. $3,965 $ (663) $ -- -- $3,302
====== ====== ====== ======= ======
</TABLE>
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<PAGE> 31
NOTES TO THE PRO FORMA COMBINED FINANCIAL INFORMATION
(1) Reflects the increase in interest expense based on the following:
- the transfer by ANC to Pechiney Plastic Packaging of $260 million of
intercompany debt payable to Pechiney
- the proceeds from a new $1.3 billion five-year revolving credit facility
- prepayment of $228 million of privately placed notes
- repayment of $751 million of related party debt.
The average borrowing for the year ended December 31, 1998 is assumed to be
$1,100 million. The average borrowing for the three months ended March 31,
1999 is assumed to be $1,060 million. The average debt levels are based on
historical daily average borrowing data which we have compiled for U.S.
operations and an estimate of the average borrowing for non-U.S.
operations. Our debt level varies based in part on the seasonality of our
business.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 MARCH 31, 1999
----------------- ------------------
($ IN MILLIONS)
<S> <C> <C>
Assumed interest expense on average
borrowings.................................... $74 $16
Amortization of deferred financing costs........ 3 1
--- ---
77 17
Interest expense on historical debt............. (69) (15)
--- ---
Increase in interest expense.................... $ 8 $ 2
=== ===
</TABLE>
The interest rate used to calculate pro forma interest expense on the new
revolving credit facilities is libor plus 120 basis points, which is 6.70%
for the year ended December 31, 1998 and 6.30% for the first quarter of
1999. The rate on the revolving credit facilities is based on our
estimates, considering market conditions for similar facilities. A 0.5%
change in the interest rate on the revolving credit facilities would result
in a $5.6 million increase (or decrease) in the pro forma interest expense
for the year ended December 31, 1998 and a $1.4 million increase (or
decrease) for the first quarter of 1999.
(2) Reflects the decrease in interest income due to the use of $40 million of
cash at an assumed average interest rate of 3% for the payment of dividends
to Pechiney by a number of Pechiney's European beverage can subsidiaries.
(3) Reflects the estimated tax impact of pro forma adjustments using an
effective tax rate of 39.6%.
(4) Reflects the payment of dividends aggregating $111 million to Pechiney by a
number of Pechiney's European beverage can subsidiaries, consisting of an
assumed $40 million of existing cash and the borrowing of $71 million of
short-term external debt.
(5) Reflects (a) the contribution by ANC of its plastic packaging activities
and other operations to Pechiney Plastic Packaging in return for common
stock constituting 100% of the share capital of Pechiney Plastic Packaging;
(b) the transfer by ANC to Pechiney Plastic Packaging of $260 million of
short-term financing with Pechiney; and (c) the transfer by ANC of its
shares of Pechiney Plastic Packaging to Pechiney in exchange for shares of
ANC held directly by Pechiney.
(6) Reflects the use of net operating loss carryforwards related to the taxable
gain on the sale to another subsidiary of Pechiney of plastic packaging
technology with an estimated value of $65 million, using an effective tax
rate of 40%.
(7) Reflects the agreement by Pechiney Plastic Packaging to reimburse us on an
after-tax basis for any payments we make with respect to the Viskase
proceedings, together with Pechiney's guarantee of this obligation.
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<PAGE> 32
(8) Reflects $9 million of debt issuance costs related to the new revolving
credit facility.
(9) Reflects (a) the repayment of intercompany debt with Pechiney of $751
million, the increase in short-term debt with others of $400 million and
the increase in long-term debt with others of $351 million; and (b) the
make-whole premium relating to the prepayment of our $228 million of
privately placed notes, which is assumed to amount to $0.4 million, or $0.2
million net of tax. This make-whole premium will be recorded as an
extraordinary loss in the period the notes are prepaid.
(10) Reflects the formation of our company and the issuance of 55,000,000 shares
of our common stock, par value $0.01 per share, including 30,000,000 shares
which we expect Pechiney to sell in this offering.
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<PAGE> 33
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
We manufacture beverage cans and beverage can ends and have an extensive
presence in the worldwide beverage can markets. Our activities are conducted in
several geographic areas, principally North America, South America, Europe and
the Far East. In 1998, our businesses in the United States and Brazil accounted
for 63% of our net sales, while Europe and Asia accounted for 37%. In the Far
East, we have a manufacturing subsidiary in China and equity positions in Japan
and South Korea.
Net Sales. Our net sales figures reflect the volume of cans and can ends
that we sell. In certain cases, we sell can ends separately. Net sales also
reflect the relative mix of different can prices. A higher proportion of larger
cans or cans with special features can lead to higher net sales figures even if
overall volumes remain stable.
Sales of beverage cans are highest during the summer months. Therefore, our
sales for the second and third quarters of the year, which include the warmer
months in North America and Europe, are higher than in the first and fourth
quarters. In the past, significant changes in summer weather conditions have
caused variations in demand for beverage cans and therefore in our net sales.
Some of our long-term sales contracts with customers contain formulas that
link the can price to our raw material cost, generally on the basis of
prevailing aluminum prices several months prior to the sale. These formulas can
lead to variations in net sales levels which, because they are generally offset
by corresponding variations in the cost of goods sold, do not necessarily affect
our operating income levels.
Significant portions of our sales are in European currencies, especially
currencies that now comprise the Euro, as well as the British pound. Revenues
denominated in foreign currencies are translated into U.S. dollars in preparing
our financial statements. Therefore, when these currencies fluctuate in value
relative to the U.S. dollar, our net sales figures may fluctuate accordingly.
Cost of Goods Sold (Excluding Depreciation). Our cost of goods sold
consists of raw materials costs, as well as other operating expenses and freight
charges. It does not include depreciation and amortization charges.
- The principal raw material used in manufacturing beverage cans is
aluminum can sheet for aluminum cans and ends, and steel can sheet for
steel cans. Metal generally represents between 60% and 70% of the
manufacturing cost of the beverage can, depending on the can size and
the type of metal used. We purchase most of our aluminum can stock
requirements from major aluminum can sheet producers in North America
and Europe and we purchase steel from major European producers. In
particular, we have long-term aluminum purchase contracts spanning three
to five years with the following companies:
- Alcan Rolled Products Company, which supplied approximately 47% of our
worldwide aluminum tonnage in 1998
- Aluminum Company of America (known as "Alcoa"), which supplied
approximately 24% of our worldwide aluminum tonnage in 1998
- Pechiney, which supplied approximately 14% of our worldwide aluminum
tonnage in 1998.
All of our purchase contracts are entered into on an arms'-length basis
on prevailing market terms. Unless otherwise fixed by contract, can and
end sheet prices vary in relation to the market prices for aluminum and
steel. Aluminum prices have historically fluctuated while steel prices
have been stable.
In addition to metals, we use other raw materials, principally compound,
inks, varnishes and coating materials.
- Other operating expenses include all other fixed and variable expenses
required to run our can and end plants, principally labor costs,
utilities and repair materials.
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<PAGE> 34
- Freight charges represent the cost of transporting cans from our
facilities to our customers' facilities, as well as warehouse rental,
storage and handling charges.
Selling, General and Administrative Expense. This item consists of selling
and administration compensation costs, together with all other administration
costs such as our headquarters costs, management information systems and
consulting fees. It does not include depreciation and amortization charges.
Research and Development Expense. This item includes our product
engineering costs in the United States, including our Beverage Technical Center
located near Chicago, as well as the cost of research services which we have
historically purchased from Pechiney's facility in Voreppe, France.
Depreciation and Amortization. This item consists of depreciation of our
productive and administrative capital assets, and amortization of purchased
software and other intangibles. It does not include goodwill amortization.
Goodwill Amortization. This item relates principally to the revaluation of
our tangible assets and liabilities as of the date of our acquisition by
Pechiney in 1988. The initial amount, which totaled approximately $1.6 billion,
is being amortized over a 40-year period, which results in an annual charge of
approximately $40 million. At March 31, 1999, our balance sheet reflected
approximately $1.2 billion of goodwill remaining to be amortized.
This goodwill amortization causes our effective tax rate to differ from the
statutory rate because our goodwill amortization, which is a relatively stable
amount in each period, is not deductible for tax purposes. This results in a
higher effective tax rate, particularly in periods where profits are lower. The
rate also fluctuates as a function of varying profit levels in foreign
countries, where the tax rates differ.
Restructuring Charge (Credit) and Writedown of Property and
Equipment. This item consists principally of restructuring charges related to
plant closures and other rationalization programs such as the elimination of
executive and administrative functions at headquarters and plant level through
outsourcing and headcount reductions, as well as gains and losses on fixed asset
sales, and asset impairment charges.
Accounting Change. Effective January 1, 1998, we adopted AICPA Statement
of Position 98-5, "Reporting of the Costs of Start-Up Activities," and wrote off
previously capitalized start-up expenses of $3 million, net of taxes of $1
million.
Acquisitions and New Operations.
- In February 1996, we acquired Sitac S.r.l., an Italian beverage can end
manufacturer, for a purchase price of $12 million, excluding cash
acquired. We recorded goodwill of $1.6 million in connection with the
transaction. We subsequently renamed the company Nacanco Italia S.r.l.
- In late 1996, our Brazilian subsidiary commenced operations. Pechiney
contributed $66 million in cash and equipment to finance the
construction of the Brazilian facility, and this contribution is
reflected in cash flows from financing activities in 1996. The facility
had minimal impact on 1996 sales, operated at a portion of maximum
capacity during its start-up year 1997, and came fully on-stream in
1998.
Cost Reduction Programs. In response to slowing growth rates, overcapacity
and price competition in our major markets, we have devoted substantial
attention to ongoing productivity improvement and cost reduction efforts across
our global network of facilities. In 1996 we introduced Project Challenge whose
objective was to reduce the 1995 cost base, excluding metal costs, by 20%, or
$140 million, before the end of 1999. The results of Project Challenge have been
good. By the end of 1998, we had met and exceeded all of our Project Challenge
objectives, with savings of $170 million per year. However, our Project
Challenge actions are not yet complete, and we anticipate achieving further
savings of approximately $16 million per year through the closure of three
further plants by the end of 2000.
In 1998, we introduced Next Level, a continuous improvement process through
which we seek to increase productivity and reduce costs while limiting
additional capital expenditures. This ongoing program
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<PAGE> 35
has already produced concrete results in the United States, including a 3.9%
improvement in cans per man hour in 1998 over 1997, and a 2.4% improvement in
the first quarter of 1999 over the first quarter of 1998. We expect this program
to result in continued productivity improvements and cost reductions.
RESULTS OF OPERATIONS
The following table shows our operating income (loss) from continuing
operations and various expense items as a percentage of our net sales for the
periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- ------------------
1996 1997 1998 1998 1999
----- ----- ----- ------ ------
(PERCENTAGES OF NET SALES)
<S> <C> <C> <C> <C> <C>
Net sales.............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold (excluding
depreciation)..................... 86.9 83.9 80.7 82.5 81.5
Selling, general and administrative
expense........................... 5.4 5.5 5.6 5.8 5.9
Research and development expense..... 0.9 0.9 0.6 0.7 0.7
Depreciation and amortization........ 2.9 3.2 3.3 3.7 3.9
Goodwill amortization................ 1.6 1.7 1.7 1.9 1.9
Restructuring charge (credit) and
writedown of property and
equipment......................... 6.3 0.4 (0.1) -- --
----- ----- ----- ----- -----
Operating income (loss) from continuing
operations........................... (4.0)% 4.6% 8.2% 5.4% 6.1%
===== ===== ===== ===== =====
EBITDA................................. 0.5% 9.3% 13.2% 11.0% 11.9%
EBITDA excluding restructuring and
writedowns........................... 6.8 9.7 13.1 11.0 11.9
</TABLE>
RESULTS OF OPERATIONS IN THE FIRST THREE MONTHS OF 1998 AND 1999
Net Sales
Our net sales totaled $531 million in the first quarter of 1999, compared
with $543 million in the first quarter of 1998. The 2.2% decline was the result
of lower overall selling prices, although these were partially offset by volume
gains, primarily in Europe. Net sales in the Americas declined by $21 million,
or 5.9%, to $336 million compared with $357 million in the first quarter of
1998. This decline was a result of lower selling prices in the United States,
reflecting the low market price of aluminum which was passed on to customers
through contract pricing formulas. Prices in Brazil also declined when compared
with the first quarter of 1998. Volume gains in soft drinks in the United States
were offset by overall volume losses in Brazil and a slight decline in beer
volumes in the United States. Net sales in Europe and Asia increased by 4.8%, to
$195 million in the first quarter of 1999. Volumes increased in Spain and
Northern European countries other than the United Kingdom. This volume increase
was partly offset by a decline in selling prices in Turkey, where prices moved
toward levels generally prevailing in the European Union.
Operating Expenses
- Cost of goods sold amounted to $432 million in the first quarter of
1999, compared with $447 million in the first quarter of 1998. The $15
million decrease was principally due to a 4% reduction in total metal
costs. As a percentage of net sales, cost of goods sold decreased to
81.5% in the first quarter of 1999 from 82.5% in the first quarter of
1998. Cost of goods sold as a percentage of net sales is generally
higher in the first quarter than for the full year, since sales volumes
are lower in the winter months than in summer.
- Selling, general and administrative expenses declined 3.1% to $31
million in the first quarter of 1999, compared with $32 million in the
first quarter of 1998, reflecting our on-going cost reduction efforts.
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<PAGE> 36
- Research and development expense amounted to $4 million in the first
quarter of both 1999 and 1998.
Operating Income (Loss) from Continuing Operations
Our operating income from continuing operations totaled $32 million in the
first quarter of 1999, an increase of 10.3%, compared with $29 million in the
first quarter of 1998. Depreciation and amortization remained relatively stable
at $21 million in the first quarter of 1999 compared with $20 million in the
first quarter of 1988.
Income (Loss) from Continuing Operations before Cumulative Effect of Accounting
Change
- Interest expense totaled $15 million in the first quarter of 1999,
compared with $19 million in the first quarter of 1998. The decrease
reflects the reduction in our average debt levels as between the two
quarters. Our interest expense levels in 1999 and future years may be
significantly different from these historical figures because of the
change in our capital structure after this offering. In particular, we
expect that our financing will be provided entirely by third-party
lenders rather than Pechiney, which has provided a significant
proportion of our financing in recent years. You should also refer to
the discussion of our historical and prospective financing sources and
requirements in the "-- Liquidity and Capital Resources" discussion
below.
- Interest income and other financial income (expense), net amounted to $8
million in the first quarter of 1999, compared with $2 million in the
first quarter of 1998. The increase was due to the sale, effective March
31, 1999, of our 50% interest in the Container Recycling Alliance
partnership, a joint venture with Waste Management, Inc., for the
recycling of glass, at a gain of $5 million. The selling price was $9
million in cash, plus future payments to us based on Container Recycling
Alliance's operating results for the two years ending December 31, 2000.
The agreement specifies that these future payments will not be less than
$0.75 million in the aggregate.
- Income tax expense amounted to $11 million in the first quarter of 1999
compared with $5 million in the first quarter of 1998. Our effective tax
rate was 42.7% in the first quarter of 1999, compared with 41.2% in the
first quarter of 1998.
- Equity in net earnings (loss) of affiliates totaled $2 million in the
first quarter of 1999, compared with a loss of $1 million in the first
quarter of 1998. This item relates to our activities in Korea, Mexico
and Japan, where operations improved during the course of 1998.
- Minority interest remained relatively stable at $0.5 million in the
first quarter of both 1999 and 1998. This item relates to our activities
in Turkey and China.
Income (loss) from continuing operations before the cumulative effect of
the accounting change totaled $16 million in the first quarter of 1999, compared
with $5 million in the first quarter of 1998.
RESULTS OF OPERATIONS IN 1996, 1997 AND 1998
Net Sales
Our net sales totaled $2,459 million in 1998, compared with $2,465 million
in 1997 and $2,520 million in 1996. The 0.2% decline overall in 1998 reflected
mixed results in key market areas. Net sales in the Americas in 1998 were stable
at $1,560 million, compared with $1,554 million in 1997. In the United States,
although our product mix improved, this was offset by lower volumes in both soft
drink cans and beer cans. The lower volumes in soft drink cans resulted from a
loss of market share, while the decrease in beer can volume was due to an
overall decline in the market. Our loss of market share for soft drink cans
resulted from a 2.0 billion can volume loss with a specific customer due to
unfavorable terms in the proposed contract. We do not expect similar losses in
the near- to mid-term. Brazil reported good gains due to increased market demand
and the plant being on-line for the full year. Net sales in Europe and Asia
declined
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<PAGE> 37
slightly by 1.1%, to $901 million in 1998. Strong market growth in Southern
Europe partially offset the negative impact of a less favorable product mix and
poor weather conditions in Northern Europe.
In 1997, the 2.2% decrease in net sales reflected a decline in our overall
selling prices, partly offset by total volume gains. In the Americas, net sales
decreased by 1.7% to $1,554 million in 1997 from $1,581 million in 1996. This
decrease reflected an increase in unit volumes, more than offset by a decrease
in selling prices. The lower selling prices reflected the low market price of
aluminum in late 1996 and early 1997 which was largely passed on to customers
through contract pricing formulas. The increase in unit volumes was driven by
soft drink can sales, which benefited from sustained demand throughout most of
the year. Beer can sales declined, however, continuing the trend toward
specialty and microbrew beers, which are generally sold in glass, and away from
budget priced beer, which is generally sold in cans. Unit volumes were also
spurred by increased can end sales and the commercial start-up of the Brazilian
facility.
In Europe and Asia, net sales decreased by 3.7% to $911 million in 1997
from $946 million in 1996, largely due to the depreciation in selling currencies
against the U.S. dollar -- notably the Spanish peseta, German mark and Italian
lira. This factor was partially offset by a slight increase in unit volumes,
driven by strong demand in Southern Europe.
Operating Expenses
- Cost of goods sold amounted to $1,984 million in 1998, compared with
$2,069 million in 1997 and $2,190 million in 1996. These figures
represent consistent reductions in cost of goods sold as a percentage of
net sales, which equaled 80.7% in 1998, 83.9% in 1997 and 86.9% in 1996.
The $85 million decrease in 1998 from 1997 included a 3% reduction in
total metal costs, a 10% reduction in labor and benefits expenses and an
11% reduction in distribution costs. In addition, pension interest income
increased by $19 million.
The $121 million decrease in 1997 from 1996 included a 4% reduction in
total metal costs, a 2% reduction in labor and benefits expenses and an
18% reduction in distribution costs. In addition, pension interest income
increased by $19 million.
The reductions in labor and benefits expenses and distribution costs are
the result of our ongoing cost reduction programs.
- Selling, general and administrative expenses amounted to $138 million in
1998, compared with $134 million in 1997 and $136 million in 1996. The
slight increase in 1998 primarily reflected an increase in bad debt
expense of $7 million, together with increased consulting expenses
relating to Project Challenge. Excluding these factors, SG&A expenses
decreased by 4.5% in 1998, reflecting reduced labor and benefits
expenses due to our ongoing cost reduction efforts.
- Research and development expense amounted to $15 million in 1998,
compared with $20 million in 1997 and $22 million in 1996. In 1998, we
used fewer services from Pechiney's research center and were allocated a
lower portion of costs relating to this center. The lower charges in
1998 and 1997 also reflected our ongoing effort to share a larger
portion of development expenses with customers and suppliers.
Operating Income (Loss) from Continuing Operations
Our operating income from continuing operations totaled $201 million in
1998, compared with $112 million in 1997 and a loss of $101 million in 1996.
- Depreciation and amortization amounted to $82 million in 1998, compared
with $78 million in 1997 and $74 million in 1996. The $4 million
increases in each of 1998 and 1997 reflected capital expenditure levels,
including the Brazilian expansion and Project Challenge.
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<PAGE> 38
- Restructuring and writedown of property and equipment posted a credit of
$2 million in 1998, compared with charges of $11 million in 1997 and
$159 million in 1996. In 1998, we did the following:
- we recorded restructuring charges of $14 million for severance costs
associated with the Next Level program and an impairment charge of $4
million for lease termination costs and equipment writeoffs;
- we wrote back $17 million and $29 million in restructuring charges
previously taken for Project Challenge
- we recorded a new charge of $25 million to cover the costs of a new
plant closure related to Project Challenge.
The $2 million restructuring credit posted in 1998 represented the
overall effect of these items. The 1997 charge includes a $10 million
impairment writedown for our investment in China in light of economic
conditions there.
In the fourth quarter of 1996, we recorded a charge of $159 million for
restructuring and impairment of property and equipment related to actions
taken under Project Challenge. After years of strong growth, the beverage
can market in the United States and Canada had reached maturity. In 1996,
the market had increased only slightly over the prior year resulting in
an industry supply/demand imbalance, which led to our decision to reduce
annual capacity by in excess of three billion cans.
The restructuring charge related primarily to the planned shutdown of
five can manufacturing facilities to eliminate production overcapacity.
The facility at Jacksonville, Florida was shut down in December 1996. The
remaining reduction of capacity was planned to be accomplished by the
shutdown of three plants in 1997 and one in 1998. In addition to the cost
of the five plant shutdowns, the restructuring charge covered the
reorganization of operations at plants which would continue operations,
and the elimination of executive and administrative functions at our
headquarters and other plants.
In May 1997, the San Juan, Puerto Rico facility was shut down. In the
fourth quarter of 1997, we decided to defer to 2000 the shutdown of the
remaining two plants originally scheduled for shutdown in 1997. These two
plants primarily produce special-sized cans under contracts that are
scheduled to expire in 2000. Our shutdown plan for one of the two plants
originally contemplated capital investments to expand another plant to
allow for the transfer of production of the special-sized cans. A
decision was made in 1997 not to make the necessary capital investment
and to continue to operate the plant. Our plan for the second plant was
to negotiate an early termination of the contract or to make alternative
supply arrangements. In 1997, we made a decision to continue to operate
the plants at approximately 50% of capacity, incurring cash losses, which
are recorded as incurred.
In 1998, based on a large customer's decision to reduce its purchases in
various geographic markets and on studies by outside consultants of
market demographics, our management decided not to close a plant provided
for in 1996 which at that time was expected to be closed in 1998, but
rather to temporarily curtail production at several lines in our
facilities. As a result, the reserve of $17 million previously
established for employee termination and severance programs, lease
termination costs, facility costs and other exit costs related to this
plant was restored to income. A further restoration of $29 million
related to adjustments to the restructuring reserve for changes in
estimates of the number of employees to be terminated at plants shut down
or to be shut down, and higher-than-expected proceeds on the sale of
several plant sites.
In connection with the 1998 decision not to close the previously
identified plant and in response to the continuing oversupply of can
production capacity, in 1998 our management decided to close a different
plant in late 1999. Accordingly, a charge of $25 million was recorded in
1998 to cover the costs of the new plant closure.
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<PAGE> 39
Please refer to note 15 of our combined financial statements for a
description of our cash payments for restructuring costs in 1996, 1997
and 1998. Our expected cash payments for restructuring costs in future
periods, excluding pension liabilities, are as follows:
<TABLE>
<CAPTION>
($ IN THOUSANDS)
<S> <C>
1999.................................................... $29,449
2000.................................................... 15,551
2001.................................................... 10,443
2002.................................................... 3,966
2003.................................................... 1,327
2004 and beyond......................................... 6,608
</TABLE>
The results of our completed restructuring activities have been good.
Shutdown costs for both Jacksonville, Florida and San Juan, Puerto Rico
were less than anticipated, for two principal reasons. First, we were
able to sell the San Juan, Puerto Rico plant and equipment at a higher
than expected price and we increased the estimated proceeds on the
anticipated sale of the Jacksonville, Florida plant. Second, the rate of
voluntary employee attrition was higher than expected, leading to lower
severance costs. As a result of these factors, we were able to reverse
restructuring provisions of $3 million for Jacksonville and $9 million
for San Juan. These amounts were included in the $29 million of
provisions written back in 1998. Environmental cleanup activities for the
Danbury, Connecticut and Jacksonville, Florida plant sites continue in
anticipation of sale in 2000.
For further discussion of these items, please refer to note 15 to our
combined financial statements.
Income (Loss) from Continuing Operations before Cumulative Effect of Accounting
Change
- Interest expense totaled $69 million in 1998, compared with $90 million
in 1997 and $95 million in 1996. These decreases reflect the continued
reductions in our debt levels. The $21 million decline in 1998 also
reflects the repayment of $473 million of intra-group debt as part of a
capital reorganization. You should refer to note 1 to our combined
financial statements for a discussion of this capital reorganization.
- Interest income and other financial income (expense), net amounted to
$11 million in 1998, compared with $27 million in 1997 and $4 million in
1996. Within this item, interest income totaled $14 million in 1998,
compared with $8 million in 1997 and $9 million in 1996. Interest income
in each year was partly offset by expenses related to the sale of
accounts receivable under our receivables sales agreement. The 1997
income amount also included a $21 million nonrecurring gain relating to
foreign currency forward contracts. This non-recurring gain relates to a
series of unauthorized foreign currency transactions entered into by an
employee at intervals during the second half of 1995, and again between
September 1996 and March 1997. The employee diverted these funds to his
personal bank account. After detection of the unauthorized transactions
in April 1997, the employee was immediately terminated and the cash
proceeds related to the unauthorized transactions were fully recovered
later in 1997. We conducted an internal investigation that determined
all amounts related to the unauthorized transactions were recovered and
no other irregular transactions had occurred. We have reviewed
thoroughly our existing procedures and implemented new procedures with
additional authorization and reporting requirements.
We currently cover our foreign exchange exposures through Pechiney.
Following the offering, we plan to open foreign exchange lines and
engage in foreign exchange trading to cover firm purchase and sales
commitments. We have established trading authorizations and limits on
the basis of our specific requirements. We will monitor compliance
strictly. Our foreign exchange activities will also be overseen by our
risk management department.
- Income tax expense amounted to $27 million in 1998, compared with $30
million in 1997 and an income tax benefit of $35 million in 1996. In
1998, we received a favorable tax settlement from the
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<PAGE> 40
Internal Revenue Service pertaining to federal income tax returns for the
years 1985 through 1995. This settlement enabled us to write back $32
million of our reserves for income taxes, which was offset against our
income tax expenses in 1998. Excluding this effect, our 1998 income tax
expense would have been $59 million. The income tax benefit in 1996
reflects the losses we incurred in that year, due principally to our
restructuring charge.
Our effective tax rate was 18.6% in 1998, compared with 61.4% in 1997 and
negative 18.3% in 1996. In 1998, excluding the favorable tax settlement
and the goodwill amortization effect, our effective tax rate would have
been 31.3%. In 1997, excluding the goodwill amortization effect, the rate
would have been 32.1%.
- Equity in net earnings (loss) of affiliates totaled $4 million in 1998,
compared with losses of $3 million in 1997 and earnings of $1 million in
1996. This item relates to our activities in Korea, Mexico and Japan. In
1998, operations improved in Mexico and Korea, compared with weak
performance in 1997 which related particularly to the devaluation of the
Korean won at the end of 1997.
- Minority interest remained relatively stable at $5 million in 1998 and
1997, compared with $7 million in 1996. This item relates to our
activities in Turkey and China.
Income (loss) from continuing operations before the cumulative effect of
the accounting change totaled $116 million in 1998, compared with $10 million in
1997 and a loss of $163 million in 1996. The cumulative effect of the accounting
change resulted in a $3 million charge in 1998, net of tax of $1 million.
EBITDA-RELATED ITEMS
Although EBITDA is a non-GAAP measurement, we believe it is an appropriate
financial measure of our operating performance, given our significant non-cash
depreciation and amortization charges and our significant goodwill amortization
charges. We define "EBITDA" as operating income (loss) from continuing
operations, excluding depreciation and amortization and goodwill amortization.
We define "EBITDA excluding restructuring and write-downs" as EBITDA excluding
restructuring charge (credit) and writedown of property, plant and equipment.
Our discretionary use of funds depicted by EBITDA may be limited by working
capital, debt service, tax payment and capital expenditure requirements, and by
restrictions related to legal requirements, commitments and uncertainties. You
should refer to the section entitled "Prospectus Summary -- Summary Selected
Combined Financial Information" for a further discussion of these EBITDA-
related items.
Our EBITDA totaled $64 million in the first quarter of 1999, an increase of
6.7% compared with $60 million in the first quarter of 1998. For the full year
1998, our EBITDA totaled $323 million, compared with $231 million in 1997 and
$14 million in 1996. The 1998 figure represents an increase of 39.8% compared
with the full year 1997.
Our EBITDA excluding restructuring and writedowns totaled $64 million in
the first quarter of 1999, an increase of 6.7% compared with $60 million in the
first quarter of 1998. For the full year 1998, this item totaled $321 million,
compared with $242 million in 1997 and $173 million in 1996. These figures
reflect increases of 32.6% in 1998 and 39.9% in 1997.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY AND CAPITAL RESOURCES PRIOR TO THIS OFFERING
In recent years, our primary sources of cash have been cash flow from
operations, advances and other intra-group borrowings from Pechiney, and the
following third-party financing transactions:
- We have a $500 million revolving credit facility with a syndicate of
commercial banks led by The First National Bank of Chicago. The
available lines of credit are due to expire on various dates from 2001
through 2003. As at March 31, 1999, we had no amounts outstanding under
this facility.
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<PAGE> 41
Drawings bear interest based on a spread over Libor, plus other fees, as
discussed in note 7 to our combined financial statements.
- We have $228 million of privately placed notes outstanding, which are
due to be repaid on various dates from 2000 through 2008, including $110
million to be repaid in December 2003. Interest rates under the notes
are fixed and vary from 5.69% to 6.64% according to the note series.
- We have a receivables sale facility under which we can sell up to $125
million of trade receivables to Windmill Funding Corporation and ABN
AMRO Bank N.V. As at March 31, 1999, we had $38 million outstanding
under this facility relating to our continuing operations and $33
million relating to the discontinued plastic operations.
- Vitro-American National Can, S.A. de C.V. has credit facilities totaling
$35 million from commercial banks that are partially guaranteed by
Pechiney.
The advances and other intra-group borrowings from Pechiney amounted to
$1,011 million at March 31, 1999.
In 1998, our debt to equity ratio was reduced to 0.80 at year end compared
to 1.75 at year end 1997 and 2.23 at year end 1996. At March 31, 1999, our debt
to equity ratio was 0.86. The improvement in the ratio in 1998 reflects improved
earnings and cash flows as well as the impact of the capital reorganization of
ANC which reduced debt and increased equity by $473 million. You should refer to
note 1 to our combined financial statements for a discussion of the capital
reorganization. In 1997, the reduction in the ratio was the result of
forgiveness of $152 million of debt by Pechiney.
LIQUIDITY AND CAPITAL RESOURCES FOLLOWING THIS OFFERING
As this offering will result in a change of control of our business, it
will affect our existing debt financing in the following ways:
- We will terminate and repay our $500 million revolving credit facility.
- We will reduce the size of our receivables sale program to approximately
$50 million and negotiate changes to its terms and conditions.
- We will be required to make an offer to prepay our $228 million of
privately placed notes, which, if accepted, would also require us to pay
a make-whole premium to be calculated on the basis of the yield of the
most recently issued U.S. Treasury coupon obligation with a maturity
date closest to the date of maturity of the notes. At current rates, the
make-whole premium would amount to $370,000.
- The lenders under Vitro-American National Can's credit facilities will
be entitled to terminate the credit facilities when the offering is
completed.
- Pechiney has indicated that our intra-group advances and borrowings will
no longer be in place when the offering is completed. These items
aggregated $1,011 million outstanding as of March 31, 1999, of which
$260 million will be transferred to Pechiney Plastic Packaging and the
remainder will be repaid.
As a separate entity, we will have a capital structure and financial
policies that are reflective of an independent company, allowing us to make
better capital allocation and investment decisions. We estimate that following
this offering we will require a total of approximately $1.3 billion of debt
financing and available lines of credit. In the future, our debt requirements
may change depending on our liquidity needs, our capital expenditure
requirements, and our cash flow from operations.
In June 1999 we accepted $1.3 billion in aggregate financing commitments
from The First National Bank of Chicago, The Chase Manhattan Bank, ABN AMRO
N.V., Royal Bank of Canada and Banque Nationale de Paris. Chase Securities Inc.
and Banc One Capital Markets, Inc. as lead arrangers and joint book managers
intend to syndicate the commitments among additional lenders. The credit
facility is expected to become effective upon closing of this offering. It will
consist of a $650 million five-year credit facility and a
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<PAGE> 42
$650 million 364-day credit facility. The material terms and conditions
contained in the term sheet are summarized below. We have filed the term sheet
as an exhibit to our registration statement, and you should refer to that
exhibit for further details of the matters summarized below.
Five-year facility: the $650 million five-year facility consists of a $600
million revolving credit facility and a $50 million corporate loan option
facility. Up to $100 million is available for the issuance of standby letters of
credit. Up to $300 million of the facility is available in Euros and up to $100
million in Eurosterling, or Euros if the United Kingdom adopts the Euro.
364-day facility: the $650 million 364-day facility consists of a $600
million revolving credit facility and a $50 million corporate loan option
facility. Up to $25 million is available as swingline loans. The facility is
extendable for an additional 364 days at the discretion of each lender, and is
convertible at our option into a term loan with a maximum maturity of 364 days
from conversion.
Interest rates: U.S. dollar amounts may be based on a "LIBOR" mechanism, an
"alternative base rate" mechanism or a "competitive bid" mechanism, at our
option. Under the LIBOR option, the interest rate is equal to the LIBOR rate,
adjusted for reserves, plus a margin that varies from 0.80% to 1.20% for the
five-year revolving credit facility, and from 0.80% to 1.25% for the 364-day
revolving credit facility, according to a pricing grid based on the ratio of our
average total debt to our capital. Under the alternative base rate option, the
interest rate is equal to the corporate rate published by First Chicago from
time to time, or the federal funds rate plus 0.5%, whichever is higher. Under
the competitive bid option, we may solicit competitive interest rate bids from
each lender for amounts up to the total amount of each lender's commitments.
Euro amounts are based on the Euribor rate, adjusted for reserves, plus a
margin. Eurosterling amounts are based on the Libor rate, adjusted for reserves,
plus a margin. In each case, the margin varies from 0.8% to 1.2% for the
five-year revolving credit facility, and from 0.80% to 1.25% for the 364-day
revolving credit facility, according to a pricing grid based on the ratio of our
average total debt to our capital. The initial margin in each case will be 1.0%
through at least the end of the first quarter of the year 2000.
Facility fee: we will pay a facility fee on each lender's commitment,
irrespective of usage. The facility fee varies from 0.2% to 0.3% for the five
year revolving credit facility and from 0.15% to 0.25% for the 364-day revolving
credit facility, according to a pricing grid based on the ratio of our average
total debt to our capital. The initial fee will be 0.25% through at least the
end of the first quarter of the year 2000.
Outstanding amounts: we may make drawdowns in a minimum of $25 million and
additional increments of $1 million. We may prepay outstanding amounts in whole
or in part. We may terminate unused commitments on three business days' notice,
subject to a minimum amount of $25 million per termination.
Representations and warranties: we will be required to make customary
representations and warranties to the lenders.
Covenants: we will be required to make customary covenants to the lenders,
including the following, among others:
- quarterly and annual financial reporting and a quarterly no default
certificate
- use of the proceeds of the credit facility
- notice of default, notice of material litigation and other material
notices
- conduct of our business
- no consolidation or mergers, other than as specifically permitted by the
credit facility, as well as limitations on acquisitions
- no liens on stock of subsidiaries, and no other liens except as
specifically permitted by the credit facility
- limitations on sale/leaseback transactions
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<PAGE> 43
- limitations on sales or other dispositions of assets
- limitations on subsidiary indebtedness.
Financial covenants: we will be subject to a total net debt to capital
ratio, an interest coverage ratio and a minimum consolidated net worth covenant.
Conditions of borrowing: the obligations of the lenders to make the initial
loan are subject to customary conditions precedent, including satisfactory
completion of due diligence by the lenders, satisfactory completion of this
offering, delivery of satisfactory documentation, and the making of the first
drawdown on or before August 16, 1999.
Defaults: events of default under the credit facility will include
cross-acceleration with our other debt greater than $15 million, cross-default
with our other debt greater than $40 million, unfunded pension liabilities in
excess of $300 million, the acquisition of beneficial ownership of 30% or more
of our voting stock by any person other than Pechiney, and current board members
or board members elected with the approval of a majority of the current board no
longer constituting the majority of the board, as well as other customary events
of default.
Corporate loan facility: the $100 million corporate loan facility will
provide funding through the issuance of commercial paper under a "conduit
facility," which is a $98 million uncommitted facility provided by Windmill
Funding Corporation and Amsterdam Funding Corporation to purchase loans from us.
This facility consists of a $50 million five-year facility and a $50 million
364-day facility. It is backed up by a $90 million "liquidity facility" and a
$10 million "enhancer facility," both provided by ABN AMRO Bank N.V. The
liquidity facility and the enhancer facility may be drawn upon as back-up
facilities to retire the maturing commercial paper if funding is not available
under the conduit facility.
The interest rates we pay on the conduit facility are based on the actual
commercial paper rate achieved by Windmill or Amsterdam on commercial paper sold
to fund loans to us. Fees on the liquidity facility and the enhancer facility
are based on the fees payable on the five-year and 364-day facilities, as
applicable. We will also pay a program fee to ABN AMRO Bank for the use of this
program.
The corporate loan facility is subject to three termination events: default
under the principal credit facility; nonobservance of a net debt to capital
ratio and an interest corporate ratio; or ABN AMRO deems our company to be no
longer an investment grade equivalent.
CAPITAL EXPENDITURES
Our business requires ongoing capital investments to maintain our existing
level of operations and implement productivity improvements. In the first three
months of 1999, these investments totaled $15 million, compared with $14 million
in the first three months of 1998.
These investments totaled $65 million in 1998, $72 million in 1997 and $142
million in 1996. The higher levels of spending in 1996 included investments for
construction and start-up of our Brazilian plant. Excluding the Brazilian
investment, our 1996 capital expenditures would have been $85 million. Our
reductions in capital spending over the three-year period reflects our drive for
further efficiency and productivity through lean manufacturing rather than high
levels of capital spending. Capital expenditures in 1998 focused on achieving
manufacturing improvements by installing equipment to improve quality and reduce
labor cost.
We currently expect capital expenditures for the full year 1999 to be in
the range of $100 million to $125 million. The increase over the 1998 amount
reflects planned expansion of existing facilities outside the United States.
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<PAGE> 44
CASH FLOWS
The following table shows selected cash flow data for our continuing
operations in the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------ ----------------
1996 1997 1998 1998 1999
------ ----- ----- ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities
of continuing operations........................... $ 4 $ 65 $161 $(74) $(34)
Net cash used in investing activities of continuing
operations......................................... (119) (57) (58) (11) (15)
Net cash provided by (used in) financing activities
of continuing operations........................... 99 (3) 26 69 48
</TABLE>
In the first quarter of 1999, net cash used in operating activities of
continuing operations totaled $34 million. Positive contributions of $16 million
of income from continuing operations and $31 million from depreciation and
amortization were offset by an increase in our net trade working capital of $62
million compared with the same period in 1998. We define net trade working
capital as inventories, accounts receivable and accounts payable. The increase
in net trade working capital reflected our normal build-up of inventories in
anticipation of higher summer sales. In the first quarter of 1998, net cash used
in operating activities of continuing operations totaled $74 million, driven by
income from continuing operations of $5 million and depreciation and
amortization of $31 million offset by a $60 million increase in net trade
working capital.
In 1998, net cash provided by operating activities of continuing operations
totaled $161 million, driven by $116 million of income from continuing
operations and depreciation and amortization of $123 million, together with a
$31 million provision for deferred income taxes. In 1998, we reduced our net
trade working capital by an aggregate of $9 million compared with 1997. This was
achieved principally through a decrease in inventory balances in the United
States as a result of the Project Challenge cost reduction program. Offsetting
these cash flows were $41 million of noncash pension income and $32 million
related to our favorable tax settlement from the Internal Revenue Service, which
was recorded as income but did not generate a cash benefit.
In 1997, net cash provided by operating activities of continuing operations
totaled $65 million, driven by income from continuing operations of $10 million
and depreciation and amortization of $119 million. Pension plan contributions of
$55 million reduced the cash provided by operating activities. Although our
trade working capital remained relatively stable on a net basis, both
receivables and payables increased during the year as a result of the start-up
in Brazil. Increased inventories in Brazil were more than offset by inventory
reductions achieved in the United States, which accounted for our overall $6
million reduction in inventories during the year.
In 1996, net cash provided by operating activities of continuing operations
totaled $4 million. The loss from continuing operations of $163 million was
partly offset by the $159 million restructuring provision and depreciation and
amortization of $115 million. We reduced our net trade working capital by $39
million. The cash generated by these items was principally used to fund pension
plan contributions of $119 million and $23 million of restructuring
expenditures. The fluctuations in trade working capital items during the year
were principally due to the decline in metals prices, which affect our inventory
carrying value and selling prices. The $81 million inventory reduction reflected
these lower metals prices as well as a decline in quantities. The $53 million
decrease in accounts receivable was attributable principally to lower selling
prices due to lower metals prices, as well as to reduced payment periods, while
accounts payable declined by $95 million due also to lower metals prices.
Net cash used in investing activities of continuing operations totaled $15
million in the first quarter of 1999, compared with $11 million in the first
quarter of 1998. This item includes our capital expenditures net of the proceeds
of sales of assets.
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<PAGE> 45
Net cash used in investing activities of continuing operations remained
relatively stable at $58 million in 1998 and $57 million in 1997. The increased
levels of capital expenditures in 1996 related to investments for construction
of our Brazilian plant.
Net cash provided by financing activities of continuing operations in the
first quarter of 1999 totaled $48 million compared to $69 million in the first
quarter of 1998. These amounts reflected increases in short term financing
required to finance our seasonal working capital and inventory build-up.
Net cash provided by financing activities of continuing operations in 1998
totaled $26 million, reflecting the reorganization of our capital structure in
Europe. In 1997, net cash used in financing activities of continuing operations
totaled $3 million. This amount included $28 million in payments on long-term
debt and $8 million in dividends paid. In 1996, net cash provided by financing
activities of continuing operations totaled $99 million, which included net new
long-term debt of $88 million offset by a $37 million decrease in short-term
debt, as well as a $66 million capital contribution from Pechiney related to the
new investment in Brazil.
As at December 31, 1998, we had a total of $423.5 million of net operating
losses recorded on our balance sheet as a $148 million deferred income tax
asset. In conjunction with the reorganization of Pechiney's packaging operations
which resulted in our formation, we expect that plastic packaging technology
with a currently estimated value of $65 million will be sold to another
subsidiary of Pechiney. This sale should give rise to a tax charge of $26
million which we will offset against a portion of our net operating losses.
Following the reorganization, on a pro forma basis, we have a total of $358.5
million of available U.S. net operating losses recorded on our balance sheet as
a $122 million deferred income tax asset.
U.S. tax rules impose an annual limit on the amount of net operating loss
and tax credit carryforwards that may be used by a company following a change in
its ownership of more than 50%. These rules apply because Pechiney is selling
more than 50% of our shares. The annual limitation on tax benefits from these
carryforwards is calculated as follows:
federal long-term tax exempt rate
X
fair market value of the company on the date of the change in ownership
X
federal income tax rate
We do not expect this limitation to have a material impact on our ability
to utilize our net operating losses and tax credit carryforwards.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, including fluctuations in metals
prices, foreign exchange rates and interest rates on our debt. Prior to this
offering, these risks were managed principally through Pechiney's risk
management system. We are currently implementing a worldwide ANC risk management
program to assess our exposure to market risk and implement protection policies.
METALS PRICES
The principal raw material used in manufacturing beverage cans is aluminum
can sheet and steel can sheet. Unless otherwise fixed by contract, can sheet
prices vary in relation to the market prices for aluminum and steel. The market
price of aluminum has historically been volatile, while the market price of
steel has been more stable.
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<PAGE> 46
We generally do not use commodity derivative instruments. We generally
limit our exposure to aluminum price fluctuations by matching the terms of our
aluminum purchase contracts with the terms of our customer sales contracts. In
the United States, several major suppliers of aluminum can stock offer pricing
systems which provide a "band" pricing formula. Under these contracts, the price
of aluminum can stock varies with aluminum quotations, but only within a band
(i.e., an upper limit and lower limit) for a period of up to five years. Other
suppliers offer to supply aluminum can stock on the basis of a capped ingot
price, but without a lower limit price. In the United States, we have entered
into long-term sales contracts with many of our customers, in which the selling
price for beverage cans is based on similar pricing formulas. These sales
contracts cover over 90% of our net sales in North America.
In Europe, over 60% of our net sales are made under long-term contracts of
varying lengths. Pricing on most of these contracts is determined on an annual
basis. We manage our exposure to aluminum price volatility in Europe by matching
aluminum purchases to sales agreements for similar periods. Steel prices have
historically been stable and we expect our existing long-term contracts to give
us continued price stability for steel.
FOREIGN EXCHANGE RATES
We are exposed to two types of risks related to currency exchange rates:
transaction risk and translation risk.
Transaction Risk. Transaction risk occurs when one of our operating units
enters into a foreign currency denominated transaction, with the result that its
expenses are denominated in a different currency from its revenues. This risk is
not significant in our United States operations, since we both purchase raw
materials and sell cans in transactions denominated in U.S. dollars. The
introduction of the Euro on January 1, 1999 eliminated transaction risk between
the 11 European countries participating in the European Monetary Union (known as
the "Euro zone"). Therefore, in our business, this risk arises principally in
the United Kingdom.
Within the United Kingdom, where our functional currency is the British
pound, we purchase can sheet in Euros from suppliers in Euro zone countries. If
the Euro exchange rate rises against the British pound, the relative cost in
British pounds of the can sheet rises. To protect against this risk, when we
enter into a long-term agreement to purchase can sheet, we hedge the risk by
entering into a forward purchase of Euros. This effectively fixes the rate at
which we will be able to obtain the Euros we will require to make payments under
the contract, thereby eliminating the transaction risk.
Similarly, we sell a portion of our U.K. can production to customers in
Euro zone countries. These sales are denominated in Euros. If the Euro declines
in value against the British pound, the amount of revenues in British pounds
declines. When we enter into a long-term sales agreement, we hedge this risk
through a forward sale of Euros. This effectively fixes the rate at which we
will be able to sell the Euros we expect to receive in the future.
Our policy is to use currency exchange instruments only to hedge against
firm commitments under foreign currency denominated contracts to purchase raw
materials or sell beverage cans. Our policy is not to engage in speculative
foreign exchange transactions.
Translation Risk. Translation risk occurs when the functional currency of
a foreign business' financial statements is converted into our reporting
currency, the U.S. dollar. For example, the assets, liabilities, revenues and
expenses of our European operations must be translated into U.S. dollars for
inclusion in our combined financial statements. To the extent that the exchange
rates of the British pound and Euro relative to the U.S. dollar vary, the
reported values of European assets and liabilities and the amount of their
recorded earnings will change. We do not hedge against this particular
translation risk.
In Brazil and Turkey, which experience significant currency volatility, and
where our functional currency is the U.S. dollar, we attempt to balance local
currency denominated monetary assets and liabilities to manage translation risk.
When this is not possible, we hedge translation risks that could have a negative
impact on the
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<PAGE> 47
cash flows of the business. For example, in Brazil, can sales and metal prices
are U.S. dollar indexed, but invoiced in Brazilian reis. We enter into forward
sales of Brazilian reis to hedge net cash flows.
Our Currency Instruments. Approximately 90% of our currency hedging
instruments by nominal value have Pechiney as the counterparty. Following this
offering, our forward purchase contracts and forward sale contracts with
Pechiney will remain in place until they mature. At December 31, 1998, we held
forward contracts to purchase $321 million of foreign currency and to sell $90
million of foreign currency. These commitments extend through July 2003. The
carrying value of these instruments in our accounts is approximately equal to
their fair value, as illustrated by the tables below.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
--------------------------------------------
MATURING WITHIN MATURING BETWEEN
TOTAL 1 YEAR 1-5 YEARS
----- --------------- ----------------
($ IN MILLIONS)
<S> <C> <C> <C>
NOMINAL VALUE:
Forward purchases
Euros(1)........................................... $315 $230 $85
British pounds..................................... 1 1 --
Other.............................................. 5 5 --
---- ---- ---
Total........................................... $321 $236 $85
==== ==== ===
Forward sales
Euros(1)........................................... $ 24 $ 24 --
British pounds..................................... 22 22 --
Brazilian reis..................................... 42 42 --
Other.............................................. 2 2 --
---- ---- ---
Total........................................... $ 90 $ 90 --
==== ==== ===
FAIR VALUE:
Forward purchases
Euros(1)........................................... $ (2) $ 5 $(7)
British Pounds..................................... -- -- --
Other.............................................. -- -- --
---- ---- ---
Total........................................... $ (2) $ 5 $(7)
==== ==== ===
Forward sales
Euros(1)........................................... -- -- --
British Pounds..................................... -- -- --
Brazilian reis..................................... -- -- --
Other.............................................. -- -- --
---- ---- ---
Total........................................... -- -- --
==== ==== ===
</TABLE>
- ------------------
(1) This item consists of contracts originally denominated in French francs,
German marks, Dutch guilders, Belgian francs and Spanish pesetas, which are
now denominations of the Euro.
Fair value amounts represent the sum that we would receive (or pay) if the
instrument were to be unwound as at December 31, 1998. Since these instruments
relate to firm commitments, any gain or loss arising from the mark-to-market
would be offset by a gain or loss on the foreign currency exposures they hedge.
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<PAGE> 48
INTEREST RATE RISKS
Currently, approximately 80% of our debt is at variable interest rates,
which results in exposure to increases in interest rates. We hedge a small
portion of our current exposure using an interest rate cap instrument
denominated in French francs, as illustrated by the table below.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
--------------------------------------------
MATURING WITHIN MATURING BETWEEN
TOTAL 1 YEAR 1-5 YEARS
----- --------------- ----------------
($ IN MILLIONS)
<S> <C> <C> <C>
NOMINAL VALUE:
Purchase of caps..................................... $9 -- $9
-- -- --
Total.............................................. $9 -- $9
== == ==
FAIR VALUE:
Purchase of caps..................................... $0 -- $0
-- -- --
Total.............................................. $0 -- $0
== == ==
</TABLE>
Since our intra-group debt provided by Pechiney will be terminated or
transferred to Pechiney Plastic Packaging on completion of the offering, and we
are currently in negotiations with potential new third-party lenders, our
proportion of fixed and variable rate debt, and our exposure to increases in
interest rates, may be significantly different following this offering.
YEAR 2000
Many computerized systems and microprocessors that are embedded in a
variety of products that we use may experience operational problems if they
cannot handle the transition to the year 2000. We are currently completing a
program designed to ensure that our internal software systems and installed
electronics will function properly with respect to dates in the year 2000 and
afterwards, and that our suppliers will be year 2000 compliant. This program has
consisted of identifying potential risks and carrying out appropriate corrective
action.
Risk Analysis. The process of identifying risks covered all of our
information processing and automated industrial control systems, computer-based
management systems, communications networks and security and access control
systems. In 1996, we initiated the identification of all systems at risk and the
planning of appropriate corrective action.
Corrective Action. Our corrective action program has covered internal
systems, installed electronic components and supplier compliance.
- We purchased new computer systems to replace our old mainframe systems
that were not compliant and which could not be upgraded practicably. In
1998, we purchased and installed a new SAP R/3 financial software
package in the United States. Currently, we are installing a new SAP
purchasing package in the United States and new SAP financial software
across Europe, except for England and Spain. We expect to have completed
installation of these packages by the end of the second quarter of 1999.
Our operations in the United Kingdom and Spain are upgrading their
Oracle financial software to a compliant version, and we expect to
complete the upgrade in July 1999. Finally, we are installing Paradigm
ERP software to replace our production, customer services, distribution
and sales invoicing systems worldwide. We expect to complete
installation of this software by the end of October 1999. We have
successfully tested these new systems in Europe for year 2000
compliance. However, we do not intend to conduct independent tests on
the SAP or Paradigm systems in the United States. Our contract with
Paradigm provides that the Paradigm system is year 2000 compliant. SAP
has also given us assurances that the SAP system is year 2000 compliant.
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<PAGE> 49
- We conducted an inventory of all ANC locations worldwide to identify all
items that contained electronic components using embedded date or time
codes. We then contacted the manufacturers of those components and
sought written assurances of year 2000 compliance. We are testing all
major components identified in the course of the inventory for year 2000
compliance, and we expect to complete this testing by the end of August
1999. Where items were identified as non-compliant, or where we received
no response, we are implementing corrective action consisting of
reprogramming, removing or replacing the item. We expect to have
completed this process by the end of July 1999. Non-compliant items
represent less than 10% of the total items identified in the course of
the inventory.
- We have surveyed our major suppliers, including both hardware and
software suppliers, and have sought assurances that their systems will
be compliant. From the answers given, we believe that our major
suppliers will generally be in compliance. We classify a supplier
response as satisfactory only if the response provides a detailed
analysis that supports a claim that such supplier is year 2000 compliant
or will be by December 31, 1999. On the basis of the responses, we have
classified 70% of our major suppliers as compliant or expected to be
compliant by December 31, 1999. In 20% of the cases, we have not had a
response or have not finished evaluating the response. In a further 10%
of cases, we have classified the supplier as not compliant at this stage
with no acceptable assurance of being in compliance by December 31,
1999. The level of compliance in emerging markets such as Brazil, Turkey
and China is not as high as in North America and Europe. We are
continuing our audit and repeating our requests for assurances in all
cases where the response is missing or non-compliant. This process will
continue through the end of 1999.
Contingency Plans. We are currently drawing up contingency plans that
specify back-up procedures in the event that internal or external products,
processes, systems or services fail, particularly in cases where we are not able
to establish timely compliance through our audits and surveys. We expect to
complete these plans by the end of the second quarter of 1999, although we will
continue to refine them through the end of 1999 as our audits and surveys
continue.
Expenditures. On the basis of currently available information, our
budgeted spending on year 2000 issues will amount to approximately $3 million
when all action is completed. Of this amount, we estimate that we had spent
almost $1.5 million as of March 31, 1999. We have financed this expenditure
using cash generated from operations, and intend to finance the remaining year
2000 expenditure in the same way. These figures refer only to external costs
related directly to year 2000 compliance issues, consisting of the cost of
purchasing hardware, software and outside consultant support for installation.
They do not include the cost of upgrading or replacing software and equipment,
which were commissioned independently, such as SAP and Paradigm. We estimate
that these separately commissioned costs will total approximately $18 million,
of which we spent approximately $10 million as of March 31, 1999.
Likely Effect on Our Business. In light of the foregoing, we do not
currently anticipate that we will experience a significant disruption to our
business as a result of the year 2000 issue. Our most likely risk is a temporary
inability of suppliers to provide supplies of raw materials or of customers to
pay on a timely basis, particularly in emerging markets. We believe that we have
dedicated sufficient resources to deal with the year 2000 issue in a timely
manner. However, our efforts are ongoing and will continue to evolve as new
information becomes available. There is still uncertainty about the broader
scope of the year 2000 issue as it may affect us and third parties, including
our suppliers and customers. For example, lack of readiness by electrical and
water utilities and other providers of general infrastructure could, in some
geographic areas, pose significant impediments to our ability to carry on normal
operations in those areas, including temporary plant closures or delays in
receiving supplies or shipping beverage cans. This may particularly be the case
in emerging markets. Accordingly, while we believe our actions should
significantly lessen year 2000 risks, we are unable to eliminate these risks or
to estimate their ultimate effect on our operating results.
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<PAGE> 50
INTRODUCTION OF THE EURO
On January 1, 1999, 11 member states of the European Union adopted a common
currency known as the Euro. Their previous national currencies became
denominations of the Euro for a transitional period expected to end on January
1, 2002, and the exchange rates between these currencies and the Euro were
fixed.
We conduct business in the majority of the countries concerned. We believe
that the introduction of the Euro will simplify the management of cash flows
among the ANC entities operating in the Euro zone. The Euro has become the prime
currency for metal purchasing in the Euro zone, and we have adopted it as the
currency for all our intra-group billing in the Euro zone. The absence of
exchange rate fluctuations between these currencies has eliminated the need for
a large amount of currency hedging in our European operations. However, the
United Kingdom is not a part of the Euro zone and currency fluctuation risk
between the British pound and the Euro remains.
The introduction of the Euro is thought to have increased price
transparency between countries in the Euro zone, particularly for consumer
goods. We do not believe this will have a significant negative impact on our
results, since we sell beverage cans to large international buyers in a market
that is relatively insensitive to this increased price transparency.
SIGNIFICANT RECENTLY-ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that all
derivatives be recognized as assets and liabilities and measured at fair value.
Changes in the fair value of derivatives not qualifying as hedges are required
to be reported in earnings. We will be required to adopt this standard in our
financial statements for the year ending December 31, 2001. Our management is in
the process of evaluating the standard and has not yet determined the future
impact on our financial statements.
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<PAGE> 51
OVERVIEW OF THE GLOBAL BEVERAGE CAN INDUSTRY
OVERVIEW
In 1998, worldwide industry shipments of two-piece beverage cans exceeded
200 billion cans. North America was the single largest market with approximately
114 billion cans shipped in 1998, including nearly 103 billion in the United
States alone, followed by Europe with approximately 33 billion cans. The U.S.
and European markets, with a population base of approximately 600 million
people, or approximately 20% of the world population, accounted for
approximately 68% of worldwide industry shipments in 1998. The remaining market
was split among approximately 40 billion cans in the Asia-Pacific region,
approximately 13 billion cans in South America and approximately 7 billion cans
in Africa and the Middle East.
Soft drinks and beer comprise substantially all of the global beverage can
markets. In 1998, soft drink cans represented approximately 68% and beer cans
32% of the total beverage can market in the United States. In Europe, the
proportions were approximately 57% and 43%, respectively. Throughout the world,
the beverage can competes with bottles made from glass and plastic. For a
discussion of competing products, see "Business of ANC -- Competition" and "Risk
Factors -- We are subject to competition from alternative products which could
result in lower profits and reduced cash flows."
SIGNIFICANT INDUSTRY CONDITIONS
The global beverage can industry is characterized by a number of factors,
which we believe generally favor the beverage can:
- Strong and increasing carbonated soft drink consumption. Carbonated
soft drink consumption volumes and per capita consumption have increased
steadily each year in both the United States and Europe between 1990 and
1998. In addition to retail prices and weather conditions, advertising
and promotion by major soft drink producers have largely contributed to
these increases. These factors have continued to drive volume growth in
can shipments in both of our primary markets.
- Significant carbonated soft drink demand potential. In Europe, per
capita carbonated soft drink consumption is less than one-third that of
the United States. We believe the European market has strong growth
potential. In Eastern Europe and the emerging markets of Asia and Latin
America, consumption lags significantly behind the United States, and
the package mix is dominated by glass. We believe that in the long term
many of these markets will grow substantially, and that the appeal of
the can will offer long-term growth potential as economic and
demographic growth occurs over time.
- Continuing industry concentration and alignment. The carbonated soft
drink market is highly concentrated with Coca-Cola and Pepsi-Cola being
the principal owners of carbonated soft drink brands. The market leader,
Coca-Cola, had a global market share of 51% in 1998. Beverage can
bottlers, our customers, are also highly concentrated and many are
affiliates of Coca-Cola or Pepsi-Cola. We believe increased
concentration among major carbonated soft drink and beer bottlers will
provide the beverage can with continued opportunities for growth. In
addition, the industry has experienced greater concentration and
alignment between major carbonated soft drink bottlers and beverage can
producers, and we believe this trend will continue. The beer market,
which in Europe has traditionally been more fragmented than the
carbonated soft drink market, is experiencing similar trends.
- Established distribution channels. The can is firmly established in
mass retail distribution channels in the United States. In addition, the
can benefits from a large installed base of filling equipment at
beverage producers' plants. There is also a significant number of
existing can vending machines in the United States and, to a lesser
extent, in Europe.
- Favorable trends in beer markets. In Europe, despite a gradual decline
in consumption, the shift to take-home beer consumption has benefited
the can, spurring growth in both can shipment volumes and market share
between 1990 and 1998. In the United States, beer consumption decreased
slightly
47
<PAGE> 52
between 1990 and 1998, but we believe the beer market will increase as
the children of baby boomers reach the legal drinking age of 21 beginning
in the year 2000.
- Changing product mix. In the carbonated soft drink markets of the
United States and Europe, plastic has gained market share in the recent
past. Although the can has continued to experience steady growth in
terms of units, it has lost market share in these markets. Plastic
bottles have attributes that make them competitive against the can, in
particular in the single-serve beverage market, including resealability,
clarity and shapability. In addition, plastic is less expensive than the
can for larger-size containers on a per ounce basis. In the U.S. beer
market, the can has declined at the expense of glass. On the contrary,
the can is stable in the European beer market.
- Enhanced customer value. Although plastic bottles continue to gain
market share, the can maintains several competitive advantages over
plastic and glass. The can is generally less expensive than plastic and
glass bottles on a per package basis, and is generally priced
competitively in retail outlets, particularly for soft drink
multi-packs. The can demonstrates superior economics in shipping,
handling and stacking. Other advantages include: higher filling speeds
compared to narrow-necked glass and plastic bottles; lighter weight;
resistance to breakage; superior shelf life and product freshness
compared to plastic; large promotional space; and a high rate of
recycling. In the United States, the can recycling rate in 1997 was
66.5%, compared with 33% for glass and 36% for plastic bottles. In
Europe, recycling rates vary by country, with the highest aluminum
recycling rates in 1997 in the following countries: 91% in Sweden, 88%
in Switzerland, 86% in Germany and 82% in Finland. Glass recycling was
76% in Sweden, 91% in Switzerland, 79% in Germany and 62% in Finland.
Both carbonated soft drink and beer producers create significant
advertising awareness for the beverage can by using it as a vehicle for
promotional activities. We believe that these attributes continue to
make the can an attractive and competitive package in both the
carbonated soft drink and beer markets.
THE U.S. AND EUROPEAN BEVERAGE CAN MARKETS
The table below shows the volume of two-piece beverage can shipments for
carbonated soft drinks and beer in the United States and in Europe for the
1990-1998 period.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994(1) 1995 1996 1997 1998
---- ---- ---- ---- ------- ---- ---- ----- -----
CANS (BILLIONS OF UNITS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES
Soft drinks.................................... 53.3 55.8 57.5 60.1 66.3 62.6 64.5 66.5 69.5
Beer........................................... 39.2 38.8 38.2 37.5 36.8 35.5 34.6 34.2 33.4
---- ---- ---- ---- ----- ---- ---- ----- -----
Total.......................................... 92.5 94.6 95.7 97.6 103.1 98.1 99.1 100.7 102.9
==== ==== ==== ==== ===== ==== ==== ===== =====
EUROPE
Soft drinks.................................... 12.3 14.2 14.5 14.8 16.9 18.6 17.9 19.0 19.0
Beer and other alcoholic drinks................ 8.6 9.8 10.2 10.6 12.2 13.7 14.1 14.1 14.1
---- ---- ---- ---- ----- ---- ---- ----- -----
Total.......................................... 20.9 24.0 24.7 25.4 29.1 32.3 32.0 33.1 33.1
==== ==== ==== ==== ===== ==== ==== ===== =====
</TABLE>
- ------------------
Source: Can Manufacturers' Institute and Beverage Can Makers Europe
(1) In 1994, 2.8 billion units were purchased in advance in anticipation of a
metal price increase.
In the United States, the market for beverage cans grew from 92.5 billion
cans in 1990 to nearly 103 billion cans in 1998. This growth reflected increased
consumption of carbonated soft drinks and the growth of cans in mass merchandise
channels, particularly in supermarkets and warehouse clubs, where multi-pack
pricing is competitive. Beverage can shipments for soft drinks grew at a 3%
compound annual rate from 1990 to 1998, while beer can shipments experienced
gradual volume loss of approximately 2% annually. In the United States, limited
market growth -- particularly since 1993 -- as well as overcapacity and price
competition have created a more challenging marketplace.
48
<PAGE> 53
In Europe, the market for beverage cans grew from approximately 21 billion
cans in 1990 to more than 33 billion cans in 1998. Total beverage can shipments
increased at a compound annual rate of approximately 6% from 1990 to 1998,
driven by an increase in per capita consumption of carbonated soft drinks
reflecting changes in customer lifestyle, increased use of the can in the beer
market compared to other packaging products, and the opening up of Eastern
European economies. Europe consists of many beverage can markets with varying
characteristics and factors impacting growth. Northern Europe, which consists of
the U.K., France, Germany and Holland, has represented the largest market for
beverage cans in Europe since 1990. Beverage can penetration is lower in
Southern Europe, which consists of Italy, Spain and Portugal, representing a
potential growth opportunity for the industry.
THE CARBONATED SOFT DRINK MARKET
The table below shows, for the 1990-1998 period, total volumes and per
capita consumption of carbonated soft drink in the United States and Europe.
Volume is expressed in U.S. gallons and includes sales at soda fountains.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES
Volume (billions of U.S. gallons)................. 12.0 12.2 12.4 12.7 13.3 13.8 14.2 14.7 15.2
Per capita (U.S. gallons)......................... 48.0 48.4 48.8 49.7 51.5 52.2 53.4 54.6 56.1
EUROPE
Volume (billions of U.S. gallons)................. 6.1 6.2 6.5 6.4 6.8 7.1 7.1 7.5 7.7
Per capita (U.S. gallons)......................... 14.2 14.3 14.8 14.7 15.4 16.0 15.9 16.7 17.0
</TABLE>
- ---------------
Source: Beverage Marketing Corporation and Canadean
Total gallonage of carbonated soft drink has increased at a compound annual
rate of approximately 3% in the United States since 1990. Per capita consumption
of carbonated soft drinks has grown at a compound annual rate of approximately
2% from 1990 through 1998, reaching 56.1 U.S. gallons (212 liters) per person in
1998. Changes in customer lifestyle and the increased number of younger
consumers in the United States fueled total volume growth and per capita
consumption of carbonated soft drinks during that period. On a year-on-year
basis, the principal factors driving changes in carbonated soft drink
consumption in the United States are retail price and weather conditions.
Another contributing factor is advertising and promotion by major soft drink
producers. In Europe, total carbonated soft drink volume has increased at a
compound annual rate of approximately 3% since 1990 and per capita consumption
of carbonated soft drinks has grown at a compound annual rate of approximately
2% during the same period, reaching 17 U.S. gallons (64 liters) per person in
1998. This increase is largely due to changes in customer lifestyle, promotional
activities of major carbonated soft drink producers and weather conditions.
Despite faster growth than in the United States, per capita consumption in
Europe in 1998 was less than one-third that of the United States.
The table below shows, for the 1990-1998 period, the carbonated soft drink
package mix in the United States and Europe.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
(PERCENTAGES OF TOTAL GALLONAGE)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES
Cans.............................................. 54 54 53 53 53 51 50 49 48
Glass (single-serve).............................. 12 10 9 7 5 2 1 1 1
Plastic (non-returnable single serve)............. 3 4 5 6 8 11 13 16 18
Plastic (non-returnable multiple serve)........... 31 32 33 34 34 36 36 34 33
--- --- --- --- --- --- --- --- ---
Total............................................. 100 100 100 100 100 100 100 100 100
=== === === === === === === === ===
EUROPE
Cans.............................................. 18 19 19 19 19 20 19 19 19
Glass (single serve).............................. 21 16 14 14 13 12 11 10 10
Glass (multiple serve)............................ 30 28 25 21 18 14 12 11 10
Plastic (single serve)............................ 0 1 1 1 2 3 3 4 4
Plastic (multiple serve).......................... 31 36 41 45 48 51 55 56 57
--- --- --- --- --- --- --- --- ---
Total............................................. 100 100 100 100 100 100 100 100 100
=== === === === === === === === ===
</TABLE>
- ------------------
Sources: Our estimates based on the following external sources: Beverage
Marketing Corporation, Can Manufacturers' Institute, Container
Consulting, Canadean and customer interviews.
49
<PAGE> 54
In the United States, the can remains the dominant package in the single
serve category, but faces strong competition. While increasing on a unit basis,
the can lost more than 6% in market share between 1990 and 1998 to plastic
containers, particularly in the single-serve 20-oz size. The recloseable feature
of the plastic container has contributed to its growth in refrigerated
distribution channels for immediate consumption, particularly in convenience
stores. The 20-oz plastic container is also being established in the vending
machine distribution channel. In 1990, glass still held more than 10% of the
U.S. carbonated soft drink market, but it has since been virtually replaced by
plastic.
The can is firmly established in mass retail distribution channels, mostly
supermarkets and warehouse clubs, principally due to competitive multi-pack
pricing. More than 40% of the packaged carbonated soft drink volume in the U.S.
is distributed in supermarkets. Within this distribution channel, the can has a
55% share. In 1996, 50cl and 24-oz plastic multipacks were introduced in
supermarket distribution channels and priced directly against the twelve-can
multipack. However, the can has held its position in the mass retail
distribution channel. The market share of two-liter and three-liter multiple
serve plastic packages increased until 1995, but has recently declined.
In Europe, growth in the volume of can shipments since 1990 has reflected
volume growth of carbonated soft drink consumption, as the can has maintained a
steady market share of approximately 19% of the package mix. Refillable and
non-refillable plastic packaging, which accounted for approximately 61% of the
total soft drink package mix in 1998, has captured market share from refillable
glass since 1990. However, as multi-packing of cans is being introduced
gradually to continental Europe, we believe this packaging format, combined with
heightened customer marketing and the potential for increased per capita
consumption, creates potential opportunities for can growth in Europe. In
particular, the distribution and retail systems in Southern Europe require
longer shelf life and therefore favor the beverage can, with its superior shelf
life and product freshness, over plastic bottles.
THE BEER MARKET
The table below shows, for the 1990-1998 period, total volume and per
capita beer consumption in the United States and in Europe.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES
Volume (billions of U.S. gallons)......... 6.0 5.9 5.8 5.8 5.9 5.8 5.9 5.9 6.0
Per capita (U.S. gallons)................. 24.0 23.2 23.0 22.6 22.5 21.9 22.0 22.0 23.0
EUROPE
Volume (billions of U.S. gallons)......... 8.6 8.4 8.5 8.3 8.4 8.4 8.2 8.3 8.2
Per capita (U.S. gallons)................. 19.9 19.4 19.5 18.8 19.0 18.8 18.3 18.4 18.2
</TABLE>
- ------------------
Source: Beverage Marketing Corporation and Canadean
The total U.S. beer market remained relatively flat from 1990 to 1998.
Although consumption of imported beer continued to grow, both premium and budget
domestic beers have suffered in recent years as U.S. consumers have favored more
sophisticated, higher-priced brands over low-cost, mass-produced brews. The
specialty segment, which includes microbrews, has grown significantly. The light
beer segment, with low-calorie versions of many premium brands, has also been
attracting a significant number of consumers.
In Europe, the overall market for beer has experienced a gradual decline in
consumption since 1990. However, the market has been characterized by a shift
from on-premise consumption in bars, cafes, restaurants and hotels to take-home
consumption, which has benefited the can.
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<PAGE> 55
The table below shows, for the 1990-1998 period, the beer package mix in
the United States and in Europe.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
(PERCENTAGES OF TOTAL GALLONAGE)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES
Cans...................................... 70 70 69 67 64 61 62 61 59
Glass (single serve)...................... 30 30 31 33 36 39 38 39 41
--- --- --- --- --- --- --- --- ---
Total..................................... 100 100 100 100 100 100 100 100 100
=== === === === === === === === ===
EUROPE
Cans...................................... 17 18 18 20 22 24 25 25 25
Glass (single serve)...................... 77 76 76 74 72 70 69 69 69
Glass (multiple serve).................... 6 6 6 6 6 6 6 6 6
--- --- --- --- --- --- --- --- ---
Total..................................... 100 100 100 100 100 100 100 100 100
=== === === === === === === === ===
</TABLE>
- ------------------
Sources: Our estimates based on the following external sources: Beverage
Marketing Corporation, Can Manufacturers' Institute, Canadean and
customer interviews.
In the United States, changes in the beer package mix have reflected
consumption trends. In the present strong economy, consumers have traded up to
premium and specialty brands and the introduction of new brands by major brewers
has benefited glass packaging. The can, the major container in the budget
segment, is experiencing volume losses as that category declines. The erosion of
the can's market share and volume slowed, however, between 1995 and 1998.
Packaged beer continues to take market share from draught beer in most
European countries. The take-home consumption trend has benefited the can. The
can has increased its share of the beer package mix from 17% in 1990 to 25% in
1998.
OTHER BEVERAGE CAN MARKETS
In 1998, the U.S. and European markets, with a population base of around
600 million people, consumed approximately 135 billion two-piece beverage cans,
equivalent to about 225 cans per person. Compared to the United States and
Europe, per capita consumption of beverage cans remains low in emerging
countries. Based on a global market of 200 billion two-piece beverage cans,
outside the United States and Europe annual per capita consumption is only about
15 cans per person. In these markets, glass dominates the package mix,
reflecting the traditional preference for less expensive multiple serve
returnable containers over the can, which is still perceived and marketed as a
premium product. However, we believe, over time, as Asian and Latin American
economies recover from their present economic difficulties, demographic growth
and the appeal of the can as a product representing a higher standard of living
offer substantial long-term growth potential for the beverage can.
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<PAGE> 56
BUSINESS OF ANC
OUR KEY BUSINESS STRENGTHS
- ANC is a global leader. We believe we are the second largest producer
of two-piece beverage cans and ends in the world, based on 1998 unit
volume. We are the second largest beverage can manufacturer in the
United States with a market share of approximately 25%. In Europe, we
are the largest beverage can manufacturer, with approximately 31% of the
market.
- ANC has excellent customer alliances. We have long-term customer
relationships with global beverage producers. The Coca-Cola Company and
its affiliated bottlers make up 51% of our global portfolio. We also
enjoy strong relationships with major brewers in many of the markets in
which we supply cans.
- ANC has strategically located facilities. With 22 plants in the United
States, 13 plants in Europe, and operations in Mexico, Brazil, China,
Japan and South Korea, we are well-balanced to supply our geographically
diverse customers' requirements.
- ANC is a leader in product innovation and differentiation. As a part of
our customer-focused approach, we have sought to provide our customers
with the means to differentiate themselves through product innovation.
We were the first can manufacturer to introduce commercial shaped and
embossed cans to the marketplace. We are on the leading edge of
promotional concepts such as tab incising, colored tabs and ends, and
new ink technologies.
- ANC's management is focused on the beverage can. Our exclusive business
is the production and sale of beverage cans and ends. Our management is
dedicated to making the best strategic decisions for the supply of
quality beverage cans and ends to our customers.
OUR STRATEGY
Our strategy aims to create shareholder value through superior
profitability and cash generation. To achieve this goal, we have developed
several key strategic initiatives.
CAPITALIZE ON FAVORABLE CONDITIONS IN DEVELOPED MARKETS
We are a leader in the developed beverage can markets of the United States
and Northern Europe. These markets represent a strong volume base and steady
growth for the beverage can. We intend to continue to focus on maintaining our
strategically located facilities in these markets. We believe our network of
plants is poised to benefit from the steady growth of these stable markets with
limited additional capital expenditure.
PURSUE PROFITABLE GROWTH OPPORTUNITIES IN EUROPE AND EMERGING MARKETS
We believe Southern Europe and emerging markets in Asia and Latin America,
where per capita beverage consumption and beverage can penetration are lower
than in the United States, represent attractive opportunities for profitable
growth. We are the largest player in the growing market of Southern Europe. We
intend to add incremental capacity to our existing facilities to supply these
markets with only limited increases in our capital expenditures. We also
continue to monitor a number of emerging markets looking for attractive
strategic acquisitions or investments. We currently have strategic market
positions in emerging markets such as Mexico, Brazil and China. As our global
customers expand in these markets, we will be well-positioned to serve them and
participate in their growth.
PROVIDE SUPERIOR CUSTOMER SERVICE AND SATISFACTION
We have forged successful long-term relationships with several global
beverage producers. Our long-term customer relationships and outstanding service
capabilities make us a key player in our principal markets. We believe
outstanding customer service has been key to maintaining our close customer
relationships and represents a competitive strength. We have developed
value-added, innovative services for our customers, including a technical team
that leverages our manufacturing experience by providing them on-site production
52
<PAGE> 57
assistance. We intend to enhance this strength by continuing to focus on greater
product quality, customer support, and product innovation to add value to our
customers' operations and enhance customer satisfaction.
CONTINUOUSLY IMPROVE PRODUCTIVITY AND REDUCE COSTS
We have undertaken three specific cost reduction programs in the past five
years: Project Challenge, Next Level, and our total quality production system
program, which we refer to as "ANC Production System." Project Challenge was
introduced in 1996 as a business-wide cost reduction program. The program's
objective was to reduce the 1995 cost base, excluding metal costs, by 20% before
the end of 1999, an outcome we achieved by year-end 1998. Building on the
success of Project Challenge, in 1998 we introduced "Next Level," a continuous
improvement process that seeks to increase productivity and reduce costs while
limiting additional capital expenditures. This ongoing program has already
produced concrete results in the United States, including a 4% improvement in
the number of cans produced per man-hour in 1998 over 1997. Our third
improvement program, ANC Production System, implements the principles of Lean
Manufacturing through a comprehensive overhaul of our production processes. We
believe the cost reductions we anticipate through ANC Production System will be
a significant competitive advantage for us.
ATTRACT AND DEVELOP THE BEST HUMAN CAPITAL
We recognize that achieving our objectives will depend in large part upon
maintaining the highest quality management team. To this end, we are
strengthening our human resources through new leadership and improved
performance management. We are changing our culture by blending the best of our
existing internal resources with externally recruited proven talent with new
ideas from benchmark companies. We are also committed to ongoing training for
our employees to improve their skills and create a results-oriented environment
in an effort to better meet the needs of our customers.
PRODUCTS
The beverage can is a standardized two-piece container produced by a
combination of drawing and ironing aluminum or steel can stock, and an end
closure which is seamed on to the can by the customer after filling. In the
United States, the beverage cans we produce are made exclusively from aluminum.
Our principal product in the United States is the two-piece, 12-oz aluminum
beverage can and end. We also produce an extensive range of other sizes, from
5.5-oz to 24-oz aluminum cans. In Europe, we produce beverage cans in both
aluminum and steel, in a range of seven different sizes but principally in 33cl
and 50cl sizes, as well as aluminum ends. In Europe, aluminum has gained market
share against steel in 1998 and accounted for approximately 51% of the
industry's cans shipped in 1998.
Metal used in the production of beverage cans accounts for between 60% and
70% of the manufacturing cost of the beverage can, depending on can size, end
diameter and type of metal. To reduce our metal costs, we reduced raw material
usage and spoilage in our manufacturing processes as a part of Project
Challenge. These measures included lightweighting, which consists of reducing
the thickness of the can sheet and the diameter of the can top. In the United
States and Europe, we were the first beverage can manufacturer to reduce the
diameter of the can neck to 202 (2 2/16-inches), which has become the industry
standard in the U.S. soft drink market. Conversion to this new can format began
in 1993 and is virtually completed. The U.S. beer market generally utilizes a
204 (2 4/16-inches) can neck. In Europe, we have been converting can and end
production capacity to 202 necks since 1994, although the U.K. and Turkish beer
markets continue to use 206 (2 6/16-inches) ends.
MARKETS
We believe that, on the basis of 1998 unit volume, we are the second
largest producer of two-piece beverage cans and ends in the world, the second
largest producer of beverage cans and ends in North America with a U.S. market
share of approximately 25%, and the largest producer of beverage cans and ends
in Europe with approximately 31% of the European market. The following table
sets forth selected data for our business, overall and by geographic region, for
1996, 1997 and 1998. All net sales numbers in this table
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<PAGE> 58
exclude intracompany sales. Total cans shipped in the Americas includes cans
shipped through Valley Metal Container Partnership, our joint venture with Coors
Brewing Company, and Vitro-American National Can, S.A. de C.V., our joint
venture with Vitro S.A. in Mexico. Joint venture shipments are accounted for
under the equity method and as such are not included in net sales.
<TABLE>
<CAPTION>
YEAR ENDED AT DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
TOTAL:
Net sales ($ in millions)................................. $2,520 $2,465 $2,459
Total cans shipped (billions of cans)..................... 38.5 39.1 38.7
Number of employees....................................... 5,230 4,956 4,735
THE AMERICAS:
Net sales ($ in millions)................................. $1,574 $1,554 $1,558
Total cans shipped (billions of cans)..................... 28.2 28.8 28.0
EUROPE AND ASIA:
Net sales ($ in millions)................................. $ 946 $ 911 $ 901
Total cans shipped (billions of cans)..................... 10.3 10.3 10.7
</TABLE>
We have an extensive presence in the beverage can markets in the Americas
and Europe/Asia, which accounted for 63% and 37%, respectively, of our net sales
in 1998. In the Americas, our activities are carried out principally through
American National Can Company in the United States and a wholly owned subsidiary
in Brazil. We have also formed joint ventures with Coors Brewing Company in the
United States and with Mexico's largest glass container manufacturer, Vitro S.A.
In Europe, our activities are carried out through wholly owned subsidiaries and
a majority owned subsidiary in Turkey. We also have a majority owned subsidiary
in China and equity participations in Japan and South Korea.
In 1998, we held 25% of the U.S. beverage can market. We believe our strong
customer relationships, our optimally located facilities and our technical
support services make us a strong player in this market. Since 1994, we have
operated the Valley Metal Container Partnership, a joint venture producing
beverage cans and ends near the Coors Brewery Company in Golden, Colorado. This
joint venture provides Coors Brewing Company with the benefits of our
technological expertise and a dedicated can and end supply, while allowing both
parties to benefit from the savings that our can and end making technology
generates.
Our market share in Europe was 31% in 1998. We believe three principal
factors position us to serve the European market: a geographically dispersed
network of manufacturing facilities located close to major bottlers; a strong
manufacturing presence in the higher-growth Southern European market; and a
relatively high market share among leading soft drink producers.
We are streamlining our business in mature markets while pursuing
development in markets which we believe have greater potential for growth,
particularly in Eastern Europe, Latin America and Asia. We commenced operations
in Mexico in 1995 through Vitro-American National Can, S.A. de C.V., a joint
venture with Vitro S.A., Mexico's largest glass container manufacturer. At
December 31, 1998, the facility, located in Queretaro, represented gross
investments in property, plant and equipment of $49.7 million and has the
capacity to produce approximately one billion cans per year. Prior to 1998,
operating performance was hampered by the weak Mexican economy and the resulting
overcapacity in the marketplace. In 1998, operations benefited from
organizational changes, productivity improvement programs and aggressive cost
cutting, along with renewed beverage promotional activity and increased demand
in Mexico. As a result, sales and earnings increased significantly over 1997.
Vitro-American National Can's share of the Mexican beverage can market was
approximately 14% in 1998.
Construction of a plant in Brazil commenced in the first quarter of 1996
and initial commercial production started in December 1996. At December 31,
1998, the facility represented gross investments in property, plant and
equipment of $73 million. The facility, located in Extrema, Minas Gerais, 60
miles northeast of Sao Paulo, has the capacity to produce 1.5 billion units per
year. While competitive production capacity increased significantly and created
margin pressure in 1997, high demand levels led to significantly
54
<PAGE> 59
improved results in 1998. This trend is not expected to continue in 1999 due to
the recent economic difficulties in Brazil. Our share of the Brazilian beverage
can market was approximately 17% in 1998.
Our operations in Asia consist of two joint ventures operating in Japan and
South Korea and one subsidiary in China. The Chinese subsidiary, which is 40%
owned by Guangdong City Blue Ribbon Group and 60%-owned by us, operates a plant
that produces 12-oz aluminum beverage cans for beer and carbonated soft drinks.
The Chinese market continues to grow -- it grew by approximately 7% in 1998 --
but overcapacity remains a factor prompting increased pressure on prices. The
Chinese subsidiary's share of the Chinese beverage can market was approximately
5% in 1998.
The 24.5% and 40% interests, respectively, in our Japanese and South Korean
joint ventures, operated with local majority partners, are accounted for under
the equity method. Since 1997, activity in Asia has slowed considerably due to
the economic crisis, poor weather conditions and overcapacity. Each joint
venture has reacted to weak business conditions with restructuring and
cost-cutting programs, initiated in 1997, and expected to continue throughout
1999. Our Japanese joint venture, a majority of which is owned by Asahi Brewers,
continues to expand its facilities to meet anticipated increases in demand from
Asahi.
CUSTOMERS
Our facilities are generally located in proximity to our major customers,
and ship cans directly to beverage fillers and producers under a variety of
multi-year supply contracts. In the carbonated soft drink market, the owners of
beverage brands generally own both the beverage trademark and the secret
formulas to concentrates. Owners of beverage brands either manufacture and sell
products themselves or rely on a network of bottlers, often their affiliates, to
sell, distribute and sometimes manufacture these products under licenses.
Consolidation trends among beverage can fillers have led to a highly
concentrated customer base. Our top ten global customers represented
approximately 67% of our 1998 net sales. Among these customers are six Coca-Cola
affiliated bottlers, which accounted for 45% of our 1998 net sales, with
Coca-Cola Enterprises Inc. alone representing 28%. No other customer represented
more than 10% of our 1998 net sales. Our top ten global customers in 1998 also
included Anheuser-Busch, Incorporated, Beverage Associates Cooperative, Inc.,
The Pepsi Bottling Group, Inc., and The Stroh Brewing Company, who together
represented 22% of our 1998 net sales. In addition, we supply 100% of Coors
Brewing Company's can needs through our joint venture, Valley Metal Container
Partnership.
We have a strong supply relationship with The Coca-Cola Company and its
affiliated bottlers. Coca-Cola has numerous brands, including: Coca-Cola
Classic, Diet Coke, Sprite, Diet Sprite, Barq's, Mr. Pibb and Fanta. We believe
we are a significant supplier to the Coca-Cola system. Sales to Coca-Cola and
its affiliated bottlers represented 51% of our 1998 net sales. In addition, we
have been the largest supplier of cans to Coca-Cola Enterprises Inc. for the
past ten years. We believe this relationship will continue to create long-term
benefit to us on a global basis.
In June 1999, Coca-Cola products from two filling facilities in Europe were
subject to a sales suspension and product recall. An off-taste in bottles was
traced to defective carbon dioxide used at a bottling facility in Antwerp,
Belgium, and an external odor on cans was traced to wooden pallets used to
transport filled cans shipped from a filling facility in Dunkirk, France.
Neither of these matters was due to the quality of our cans. The Belgian and
French authorities have since approved the reintroduction of Coca-Cola products
for sale. These incidents have not disrupted our can production, and we do not
expect them to have a material impact on our results for the year 1999.
The market environments in which we operate are highly competitive. The
ability of can manufacturers to differentiate their products is limited. As a
result, we are focused on the differentiation of our services. We believe our
technical support provided within our customers' plants has aided us in building
solid customer relationships. We are also highly responsive to our customers'
quality, innovation and promotional needs, which helps to make us a preferred
supplier. We believe these strengths have been validated by our long-term
contracts with major customers.
We are currently negotiating a new contract with one of our major
customers. The purpose of the new contract is to further develop our business
with that customer, and to extend the term of our existing contract.
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<PAGE> 60
COST IMPROVEMENT PROGRAMS
In response to slowing growth rates, overcapacity and price competition in
our major markets, we have devoted substantial attention to ongoing productivity
improvement and cost reduction efforts across our global network of facilities.
These initiatives involved three distinct programs.
PROJECT CHALLENGE
The objective of Project Challenge was to reduce the 1995 cost base,
excluding metal costs, by 20% before the end of 1999. The program focused on
reduction of operating costs, working capital requirements and selling, general
and administrative expenditures. To achieve this objective, we implemented a
number of measures, including:
- best practice transfers: the identification and generalization across
all facilities of optimal manufacturing processes
- benchmarking: an internal and external comparative analysis of
manufacturing processes designed to identify cost reduction targets
- headcount reductions, both in our plants and through restructuring at
corporate offices
- worldwide sourcing of materials and parts
- lightweighting, or the reduction of metal per container
- logistics reduction, including warehousing, inventories and freight.
Project Challenge also honed our ability to track our business through
better quality measurements, spoilage reduction, and improved inventory
management. As part of this effort, we eliminated some of our higher-cost
production capacity through the closure of two manufacturing facilities and the
curtailment of several additional can making lines in the past three years.
NEXT LEVEL
In 1998, building on the success of Project Challenge, we introduced "Next
Level," a continuous improvement process through which we seek to increase
productivity and reduce costs while limiting additional capital expenditures.
Next Level represents a more focused, analytical approach than its predecessor
cost reduction effort. An internal task force comprised of engineers,
manufacturing experts and plant staff spends several months in each of our
facilities to study and adopt best practices, optimize performance for each
piece of equipment, improve manufacturing techniques, and introduce superior
maintenance programs to reduce machine downtime. A by-product of these efforts
is the development and enhancement of new analytical and problem solving skills
at the plant level. The Next Level program also encompasses a number of measures
designed to enhance employee productivity through training, organizational
development and employee incentives, including newly adopted systems more
closely linking performance to reward. The objective of the Next Level program
is to institute a cost-focused culture within our organization.
The table below illustrates the productivity gains achieved through Project
Challenge and Next Level, expressed in percentage change in cans produced per
man-hour.
<TABLE>
<CAPTION>
CHANGE 1996/95 1997/96 1998/97
- ------ ------- ------- -------
<S> <C> <C> <C>
U.S. cans per man-hour................................... +0.1% +10.4% +3.9%
European cans per man-hour............................... -2.7% +2.3% +3.3%
</TABLE>
ANC PRODUCTION SYSTEM
In 1999, we introduced ANC Production System, which implements the
principles of Lean Manufacturing, targeting waste not only at the plant level,
but in every part of our organization. The aim of Lean Manufacturing is to
reduce costs by applying the specific tools of the Toyota Production System to
identify and eliminate waste on the factory floor and in the global production
system. The Toyota Production
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<PAGE> 61
System, a manufacturing system pioneered by the Toyota Motor Company, is
centered around a philosophy of continual improvement. Under this philosophy,
every process is continually evaluated and improved in terms of time required,
resources used and product quality. From redundant e-mails to unnecessary
meetings to waiting for parts, we are focused on removing waste from our
practices. In our plants, our efforts focus on reducing spoilage and equipment
downtime, both sources of waste. Every ANC employee will attend a three-day
training seminar over the next 24 months to learn the skills of Lean Management
and its application to various tasks. We are learning from the experience of
other benchmark companies that have successfully implemented Lean Manufacturing
techniques and we have hired experts in lean production from outside the can
industry to bring new perspectives on waste reduction.
RESTRUCTURING CHARGES
For Project Challenge, we recorded a restructuring charge of $159 million
in 1996. In 1998, we restored $21 million of this charge to income. For Next
Level, we recorded a restructuring charge of $14 million in 1998. The measures
we are taking under the ANC Production System program have not required any
restructuring charges. For further details of these charges, please refer to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and note 15 to our combined financial statements. We
do not currently anticipate recording any material additional charges for these
programs.
RESEARCH AND DEVELOPMENT
Consistent with our emphasis on customer satisfaction and in order to
permit customers to increase market differentiation of their products, we
continuously pursue the development of innovations for beverage cans.
Our principal innovations include:
- shaped cans
- fluted cans
- registered embossing development
- large opening ends
- colored ends and tabs
- promotional "under-the-tab" printing
- aluminum beer widgets, a technology which replicates the foaming of
draught beer, which we developed jointly with a major U.K. brewer.
We believe our product performance and cost-effectiveness benefit from our
significant commitment to research and development, often conducted in
collaboration with our customers. At our Beverage Technical Center in Elk Grove
Village, Illinois, we design, develop and test new and improved beverage can and
can end products and processes, and qualify materials for customers around the
world. Our technical center operates a complete, bi-metal pilot can-making line
for comprehensive and efficient trials, as well as an advanced laboratory. We
also contract for the services of various research facilities, including
Pechiney's laboratory in Voreppe, France.
Our research and development expenditure amounted to $15 million in 1998,
compared with $20 million in 1997 and $22 million in 1996. This expenditure was
$4 million in the first quarter of both 1999 and 1998.
In 1997, with the introduction of the Coca-Cola contour can, inspired by
Coca-Cola's contour bottle, we became the first manufacturer to commercially
produce shaped two-piece beverage cans. The shaped can represents a
technological breakthrough in two-piece beverage can making, retaining
structural stability and superior graphics without significantly affecting
production and filling speeds. We developed the can shaping technology with
Oberburg Engineering of Switzerland. Today, we have the exclusive rights to use
the shaping
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<PAGE> 62
technology through the beginning of 2000, and we may extend these rights to the
beginning of 2002. Once we no longer have these exclusive rights, Oberburg can
sell machines which use the technology to other can manufacturers by paying us a
royalty. Coca-Cola has test-marketed the shaped can on a limited basis in the
United States. The shaped can remains a developmental project that continues to
attract customer interest.
Also in 1997, we commenced production of registered embossed beverage cans
for Coca-Cola. Registered embossing aligns indentation with the can's graphics,
providing texture and differentiation to the package and allowing brewers and
soft drink companies to enhance the image of their brand. The process was
developed by Alcoa Packaging Machinery, a licensee under our can sidewall
reshaping technology.
Colored ends, which we introduced in 1997, allow customers to extend brand
image to the total package. Colored and printed tabs provide further promotional
opportunities such as proof of purchase and instant win games. In 1997, we also
introduced a 568ml can (one U.K. pint) as part of a joint development project
with one of our key beer customers. This new size has since been adopted by a
major cider customer.
In 1998, we produced the first commercial embossed two-piece beverage cans
in the United Kingdom for Whitbread Beer Company's Stella Artois premium lager
and were awarded the "Best in Metal" prize by the Metal Packaging Manufacturers
Association. The embossed can continues to attract customer interest worldwide.
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<PAGE> 63
PRODUCTION FACILITIES
The competitiveness of can production depends in large part on the control
of transportation costs. We have built up a network of geographically dispersed
low cost facilities that allows us to minimize transportation costs by producing
can bodies in relative proximity to our customers in our principal markets.
The following maps illustrate our 22 facilities in the United States and 13
facilities in Europe, including location and product details for each facility:
UNITED STATES FACILITIES
[MAP OF USA FACILITIES]
UNITED STATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOCATION TYPE OF PLANT
-------- -------------
<S> <C>
Birmingham, Alabama End
Bishopville, South Carolina Can
Chatsworth, California Can
Chicago, Illinois Can
Fairfield, California Can
Forest Park, Georgia Can
Fremont, Ohio Can
Golden, Colorado (2 plants) Can & End
Houston, Texas Can
Kent, Washington Can
Longview, Texas Can
</TABLE>
<TABLE>
<CAPTION>
LOCATION TYPE OF PLANT
-------- -------------
<S> <C>
Monmouth Junction, New Jersey Can
Oklahoma City, Oklahoma Can
Olive Branch, Mississippi Can
Phoenix, Arizona Can
Piscataway, New Jersey Can
San Leandro, California End
St. Paul, Minnesota Can
Valparaiso, Indiana End
Whitehouse, Ohio Can
Winston-Salem, North Carolina Can
</TABLE>
59
<PAGE> 64
EUROPEAN FACILITIES
[MAP OF EUROPEAN FACILITIES]
EUROPE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOCATION TYPE OF PLANT
-------- -------------
<S> <C>
Dunkirk, France Can
Mont, France End
Gelsenkirchen, Germany Can
Waterford, Ireland End
Nogara, Italy Can
Pianella, Italy End
San Martino, Italy Can
</TABLE>
<TABLE>
<CAPTION>
LOCATION TYPE OF PLANT
-------- -------------
<S> <C>
La Selva, Spain Can
Valdemorillo, Spain Can
Manisa, Turkey Can
Milton Keynes, United Kingdom Can
Runcorn, United Kingdom Can
Wakefield, United Kingdom Can
</TABLE>
We have three additional facilities in which we own a significant share. In
Queretaro, Mexico, we have a joint venture can plant owned on a 50/50 basis by
ourselves and Vitro, S.A. In Brazil, we have a wholly-owned plant in Extrema,
Minas Gerais, 60 miles northeast of Sao Paulo. In China, we have a joint venture
can plant with the Blue Ribbon Group in the city of Zhaoqing. We own 60% of this
venture.
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<PAGE> 65
As part of our quality management system and efforts to continuously
improve products and processes, we have sought quality certification from the
Geneva-based International Organization for Standardization. By the end of 1997,
all European facilities had obtained ISO 9002 certification. Currently, 19 of
our 38 facilities have obtained ISO 9002 certification, confirming that our
quality controls and manufacturing processes meet recognized international
standards.
We own all of our manufacturing facilities and generally own the land on
which those facilities are located, except for four facilities in the United
States that we operate under lease. We lease our corporate headquarters in
Chicago, Illinois. We believe our properties and facilities are in good
condition and have sufficient productive capacity to serve our current needs and
expected near-term growth.
Our ongoing productivity improvement and cost reduction efforts in recent
years have focused on improved raw material cost management, upgrading and
modernizing our facilities to improve costs, efficiency and productivity, and
phasing out non-competitive facilities. As part of Project Challenge and in
light of excess supply in the North American market, we reduced our annual
beverage can production capacity by approximately 3 billion cans in 1996 and
1997 by closing our Jacksonville, Florida and San Juan, Puerto Rico can
manufacturing facilities and by permanently curtailing production on several
lines at selected plant sites.
USE AND PROCUREMENT OF RAW MATERIALS
To reduce costs and optimize resources, we purchase our principal raw
materials on a centralized global basis. We purchase several categories of raw
materials including inks, varnishes, coatings, compounds and, most
significantly, metal.
The principal raw material used in manufacturing beverage cans is aluminum
can sheet for aluminum cans and steel can sheet for steel cans. Our aluminum
beverage can production activities in the United States and Europe consumed
approximately 581,200 metric tons of aluminum can sheet in 1998 and 587,000
metric tons in 1997, while steel beverage can production activities consumed
approximately 138,700 metric tons of steel in 1998 compared with 149,000 metric
tons in 1997. Part of the reduction in metal consumption can be attributed to
the lightweighting of cans. In the United States, we purchase the majority of
our aluminum can stock requirements from the major North American aluminum can
sheet producers. In Europe, we purchase aluminum can stock from European
producers, and we purchase steel can sheet from major European steel producers
pursuant to annual or long-term contracts at prevailing market prices and on
standard market terms. Our aluminum purchasing in Europe includes approximately
58% of our European supply purchased from an affiliate of Pechiney on
arm's-length terms. For further details of our future relationship with
Pechiney, including expected future purchasing of aluminum, see the section
entitled "Relationship with Pechiney."
Unless otherwise fixed by contract, aluminum can sheet prices will vary in
relation to the London Metal Exchange prices for primary aluminum. Steel can
sheet costs have historically been more stable and are not subject to the same
volatility as aluminum. If the cost of can sheet rises, it will cause our
operating expenses to increase. If we cannot increase the selling price of
beverage cans to offset the increased expenses, our profits will decline. For
further details of this risk, see the section entitled "Risk Factors -- Our
profits will decline if the cost of can sheet rises and we cannot increase the
selling price of beverage cans."
COMPETITION
The market for beverage cans is highly competitive. Competition is based
principally on price, product quality and service. The beverage can also
competes with bottles made from glass and plastic. See the sections entitled
"Overview of the global beverage can industry -- Significant industry conditions
- --Customer value" and "-- Changing product mix."
In 1998, the beverage can accounted for a significant majority of the North
American single-serve beer and soft drink market, followed by glass, while
plastic single-serve sizes continued to gain market share for soft drinks.
Plastic bottles constitute the vast majority of larger-size containers, which
compete with cans sold in multi-pack configurations. In Europe, we believe the
can, as part of the packaging mix, maintained its overall market share in the
packaged beer and carbonated soft drink market in 1998. In the European soft
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<PAGE> 66
drink market, plastic bottle growth is estimated to have slightly outperformed
market growth at the expense of glass. However, markets such as the United
Kingdom have experienced a more rapid gain in single-serve plastic bottles.
The production of beverage cans in the United States and Europe is highly
concentrated, with six leading producers of beverage cans, including us,
comprising virtually the entire market. Our principal U.S. competitors are:
- Ball Corporation, which recently purchased the North American beverage
can operations of Reynolds Metals Company
- Crown Cork and Seal Company, Inc.
- Metal Container Corporation, a subsidiary of Anheuser-Busch Companies,
Inc.
In Europe, our principal competitors are:
- Carnaud Metalbox, which was acquired by Crown Cork and Seal in 1996
- Schmalbach-Lubeca Continental Can Europe (VIAG AG)
- PLM AB, which was recently acquired by Rexam Plc.
ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS
Our operations are subject to numerous federal, state, local and foreign
environmental health and safety laws and regulations, including those pertaining
to the handling and disposal of hazardous and toxic materials, practices and
procedures applicable to the construction and operation of our facilities and
standards relating to the discharge of pollutants to the air, soil and water. In
addition, our operations are subject to environmental remediation laws such as
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 (known as "CERCLA"), and similar state laws that can impose liability
upon statutorily defined categories of parties for the entire cost of the
cleanup of a contaminated site without regard to fault or the lawfulness of the
original activity resulting in contamination. Pursuant to CERCLA and similar
state laws, we are currently undertaking or participating in remediation of
contamination at a number of our present and former operations and at several
third party waste disposal sites. We are also subject to liability for
environmental obligations in connection with previously divested businesses.
Based on information currently available, the sites at which we have,
relative to other sites, the largest potential liability for remediation of
contamination are third party disposal sites known as the Operating Industries,
Inc. Landfill Site in California, the Midco I and II/Midwest Solvents Recovery
Site, the Ninth Avenue Dump Landfill Site and the Fisher-Calo Site, each of
which is in Indiana, and the Ellisville Site in Missouri. Based on information
currently available regarding these sites and other sites at which we are
subject to known remediation liability, we do not expect that this liability
will materially damage our business, financial condition or results of
operations. In addition, under U.S. GAAP, we have established reserves for known
environmental remediation liabilities that are probable and reasonably capable
of estimation. Nonetheless, any future development in existing facts, events,
circumstances or conditions, or any new facts, events, circumstances or
conditions, may result in a significant increase in liability that would
materially harm our business, financial condition or results of operations.
As for environmental, health and safety laws and regulations applicable to
our ongoing operations and construction activities, while we believe that our
operations are in substantial compliance with these laws and regulations as
currently in effect, we are currently faced with instances of noncompliance at
our U.S. and non-U.S. facilities for which expenditures will be required, and
violations of these laws or regulations may occur in the future. Violations of
environmental, health and safety laws can lead to substantial fines or
penalties. Other developments, such as the promulgation of more stringent
requirements of environmental, health and safety laws and regulations and
increasingly strict enforcement by governmental authorities, could substantially
impact our operations.
We are currently handling the defense of a claim filed by governmental
authorities alleging improper handling and disposal of asbestos at our former
Englewood plant in Chicago, Illinois. The government initially sought a penalty
of approximately $1.5 million. While we intend to continue to vigorously defend
this claim, the claim is in a preliminary stage and we cannot predict its
outcome with certainty. In addition,
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<PAGE> 67
on May 27, 1999, the New Jersey Department of Environmental Protection issued a
notice of violation alleging that our Piscataway, New Jersey plant is not in
compliance with certain of its air permit requirements and certain New Jersey
air regulations, primarily in connection with emissions of volatile organic
compounds. We are currently in discussions with the Department in an effort to
resolve this issue. While it is possible that the State of New Jersey will
commence an enforcement action seeking fines or penalties, this matter is in a
preliminary stage and we cannot predict its outcome with certainty. We also have
recently received a notification from the Brazilian authorities that the
wastewater effluent chemical oxygen demand at our Extrema plant is above the
limit incorporated in the plant's environmental operating permit. We intend to
implement additional wastewater treatment at an estimated capital cost of
$200,000 in order to correct this reported deficiency. In addition, we are in
the process of addressing noncompliance with occupational safety and health
laws, particularly as related to noise, electrical upgrade and ventilation, at
several of our facilities in Europe. We have budgeted capital expenditures of
approximately $25 million over the next five years for this work.
Current or forthcoming U.S. regulations also may require action to address
air emissions of ethylene glycol monobutyl ether (known as "EGBE") and
formaldehyde from our facilities that manufacture can bodies. Under its current
draft schedule, in November 2001, the U.S. Environmental Protection Agency
(known as "EPA") will adopt new standards under the Federal Clean Air Act to
require 2-piece can makers to implement maximum achievable control technology
(known as "MACT") for designated hazardous air pollutants, particularly EGBE and
formaldehyde. Under EPA's current draft schedule, we would have to comply with
these standards by November 2004. If these regulations are promulgated, we may
have to spend up to an estimated $70 million to purchase and install control
equipment (thermal oxidizers) between November 2001 and November 2004 to
implement MACT for EGBE and formaldehyde at our facilities that manufacture can
bodies. We recently carried out testing and determined that formaldehyde was
being formed during the process of curing the coatings and inks during can
manufacture. As a result of these findings and regardless of the adoption of the
MACT standards, under current state laws establishing formaldehyde emission
limits, we may be subject to fines, penalties or other actions requiring
emission reductions. Pursuant to these laws, we may have to spend up to $40
million to control formaldehyde emissions beginning as early as 1999 if, as more
fully described below, we are unable to change the formulation of coatings and
inks to reduce the emissions below state exposure limits, or if the state
exposure limits are not adjusted in response to new scientific data.
We and others in the industry are engaged in actions seeking to mitigate
these costs and liabilities. On November 12, 1996, a petition was filed with the
EPA requesting that the 2-piece can coating subcategory, or its EGBE emissions,
be removed from the list of regulated pollutants on the basis that, as used in
this process, it is non-hazardous. In March 1999, the EPA began formal
evaluation of the petition. It is required to issue its decision by the end of
February 2000. Regarding formaldehyde, a 45% emissions reduction has already
been accomplished by modifying the inside spray material, and work is underway
to reduce emissions from the use of varnish and ink. Further, EPA currently is
reviewing new scientific data showing formaldehyde to be significantly less
hazardous than would be predicted based on earlier data and is expected to
announce a decision by the end of 1999. If EPA accepts these new data and the
states adjust their regulations accordingly, we do not expect to incur
significant additional costs to reduce formaldehyde emissions. However, there
can be no assurance that the regulatory relief being sought will be granted, and
it is possible that the costs and liabilities associated with EGBE and
formaldehyde emissions will be higher than the current estimates.
New ambient air quality standards for particulate and ground level ozone
were adopted in 1997. In May 1999, a Federal Appeals Court in Washington, D.C.
set aside these standards. These new standards, if they survive the court
challenge, could require our U.S. facilities to install additional pollution
control equipment. Important aspects of the standards, including the deadlines
to conform, have not yet been stated. At this stage, the eventual financial
implications for us cannot be estimated.
While these matters and other developments, such as claims for damages to
property or injury to persons resulting from the environmental, health or safety
impacts of our operations or past contamination, could materially harm our
business, financial condition or results of operations, based on information
presently available, management does not anticipate any material harm.
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One of our principal environmental goals is to progress beyond mere
compliance with applicable regulations and to establish procedures to
continuously improve our impact on the environment. We favor an approach that
would use market mechanisms, such as voluntary commitments and negotiable
permits. Accordingly, we have implemented an environmental management system at
our facilities, which fosters and monitors continuous improvement.
INSURANCE
To date, we have been able to obtain adequate insurance coverage for our
operations worldwide at levels which we consider to be prudent. We maintain
insurance covering various types of risk in respect of our operations. The
insurance coverage we maintain includes public and products liability,
transportation, material damage, business interruption and all-risks insurance,
as well as employer's liability insurance where required. We do not anticipate
any difficulty in obtaining adequate levels of insurance in the future.
INTELLECTUAL PROPERTY
Our intellectual property, including patents, designs, know-how and
trademarks, are important to our business. We have implemented vigorous policies
to protect our patent rights and intellectual property. We have long had
worldwide patent committees to coordinate intellectual property management with
our management, research and development, sales and marketing and legal
functions. In 1997, we began to coordinate the efforts more closely at the
senior management levels. The principal purpose of these committees is to
protect and capitalize on our intellectual property.
At December 31, 1998, we had a portfolio of approximately 250 patents and
100 patent applications in total. We have filed approximately 20 new patent
applications in 1998. The patent coverage on our most important technologies
will not expire within the next 10 years.
We are currently a party to a patent infringement action brought against us
by Viskase Corporation. See the section entitled "-- Legal proceedings" below.
EMPLOYEES
At December 31, 1998, we employed approximately 4,735 people. The table
below shows our number of employees by geographic location at December 31, 1996,
1997 and 1998.
<TABLE>
<CAPTION>
YEAR ENDED AT DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
The Americas................................................ 3,100 2,843 2,614
Europe...................................................... 1,903 1,898 1,915
Asia........................................................ 227 215 206
----- ----- -----
Total..................................................... 5,230 4,956 4,735
===== ===== =====
</TABLE>
In the Americas, 66% of our employees were members of labor unions as of
year-end 1998, primarily the United Steel Workers' Association and the
International Association of Machinists. In Europe, membership of our employees
in labor unions varies from country to country, and a number of countries
prohibit us from keeping records of union membership. However, we estimate that
union membership among our employees in Europe is approximately 40%. We have
entered into various collective bargaining agreements in both the United States
and Europe. In most continental European countries, collective bargaining
agreements are imposed by law on the entire industry. We are not aware of any
material arrangements whose expiry is pending and which are not expected to be
satisfactorily renewed or replaced in a timely manner. Our labor relations
environment has been stable, no significant work stoppage has occurred since
1996, and we believe relations with our employees are good.
LEGAL PROCEEDINGS
In December 1993, Viskase Corporation, a subsidiary of Envirodyne
Industries, Inc., brought a patent infringement action against American National
Can Company in the U.S. District Court for the Northern
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District of Illinois. Viskase alleged that we infringed its patents relating to
the manufacture of heat shrinkable bags for meat and poultry.
In November 1996, following a trial, the jury awarded Viskase $102 million
in damages and found willful infringement on our part. At December 31, 1996, we
recorded a provision in the amount of the jury's award plus estimated costs, in
addition to a $3 million reserve previously recorded. Under applicable law, the
jury's damage award may be reduced if the court finds the amount excessive, or
increased by up to a multiple of three, depending on the court's assessment of
the willful nature of the infringement. The parties filed various post-trial
motions and, among them, Viskase filed motions seeking prejudgment interest and
attorneys' fees.
On September 29, 1997, the judge ordered a new trial as to the alleged
infringement by our Affinity(TM)-containing products and on the amount of
damages. Viskase then filed a motion for summary judgment concerning the
Affinity(TM)-containing products. In August 1998, the court granted summary
judgment to Viskase on the Affinity(TM)-containing products. Viskase then filed
a motion for reinstatement of the $102 million damage award. On May 10, 1999,
the court granted reinstatement of the jury's damage award. The court
subsequently set a ruling date of July 30, 1999 for Viskase's request for treble
damages, pre- and post-judgment interest and expenses.
In addition, we have requested the U.S. Patent and Trademark Office (known
as the "PTO") to re-examine the claims of two of the patents that Viskase
alleged ANC infringed. In March 1999, a PTO Examiner issued an Office Action
that re-examined and rejected claims of one of the two patents, but the Office
Action is not final. Concerning the second patent, the PTO has also issued an
Office Action rejecting the Viskase claims, but the PTO recently granted
Viskase's petition to change the inventorship of the patent. Additional
proceedings are ongoing.
Because these legal proceedings relate to plastic packaging operations that
have been transferred to Pechiney Plastic Packaging as part of the
reorganization, Pechiney Plastic Packaging has agreed to reimburse us on an
after-tax basis, subject to adjustments, for any payments we may make with
respect to this litigation. Pechiney has agreed to guarantee this obligation of
Pechiney Plastic Packaging. In any event, on the basis of the current facts and
circumstances, we do not believe that the provisions we made in 1996 based on
the jury's damages award require amendment.
Pechiney has received a notice of patent infringement for a number of
patents owned by the Lemelson Medical, Education & Research Foundation, Limited
Partnership. The notice of patent infringement may cover Pechiney's
subsidiaries, including our company. Lemelson has offered to grant us a license
to use the patents they claim we infringed. We do not expect this matter to have
a material effect on our business or financial condition.
We are involved on a regular basis in various claims and lawsuits
incidental to the ordinary course of our business. Except for the Viskase
proceedings, we are not involved in any legal or arbitration proceedings,
including environmental proceedings, which we expect could materially harm our
business, financial condition or results of operations, either individually or
in the aggregate.
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MANAGEMENT AND CERTAIN SECURITY HOLDERS
DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the names and ages of the members of our board of
directors and executive officers as of the date of this offering, and their
current positions.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jean-Pierre Rodier....................... 52 Chairman of the Board and Chief Executive
Officer
Edward A. Lapekas........................ 56 President, Chief Operating Officer and
Director
Christel Bories.......................... 35 Director
Frank W. Considine....................... 77 Director
Ronald J. Gidwitz........................ 54 Director
George D. Kennedy........................ 73 Director
Homer J. Livingston, Jr.................. 63 Director
Roland H. Meyer, Jr...................... 71 Director
James J. O'Connor........................ 62 Director
Alain Pasquier........................... 50 Director
Jean-Dominique Senard.................... 45 Director
James R. Thompson........................ 63 Director
Jack H. Turner........................... 64 Director
Curtis J. Clawson........................ 39 Executive Vice President and President --
Beverage Cans Americas
Michael D. Herdman....................... 49 Executive Vice President and President --
Beverage Cans Europe and Asia
Alan H. Schumacher....................... 52 Executive Vice President and Chief
Financial Officer
Dennis R. Bankowski...................... 52 Executive Vice President --
Administration and Chief Human Resources
Officer
</TABLE>
DIRECTORS
The following individuals have agreed to serve as directors of our company.
They were elected on April 14, 1999 and will hold office until the annual
meeting of our stockholders in the year 2000, 2001 or 2002, depending upon the
director class in which they serve following the offering.
JEAN-PIERRE RODIER will serve as Chairman of the Board and Chief Executive
Officer until the completion of the offering, at which time he will resign from
these positions and be replaced by Mr. Edward Lapekas. Since 1994, Mr. Rodier
has served as Chairman and Chief Executive Officer of Pechiney, formerly our
parent company. Prior to this offering, he served as Chairman of the Board and
Chief Executive Officer of American National Can Company. Before joining
Pechiney in 1994, Mr. Rodier served as Chairman and Chief Executive Officer of
Penarroya and Managing Director of Penarroya's parent company, Imetal. He has
also held the positions of Chairman of the Executive Board for Metaleurop France
and head of Union Miniere, the Belgian affiliate of Groupe Suez.
EDWARD A. LAPEKAS is President and Chief Operating Officer and has served
as Senior Executive Vice President and Chief Operating Officer -- Beverage Cans
Worldwide of American National Can Company since November 1996. He joined
American National Can Company in June 1996 as Senior Vice President -- Beverage
Cans Americas. Prior to joining American National Can Company, Mr. Lapekas
served as Vice
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<PAGE> 71
Chairman of Schmalbach-Lubeca A.G. from July 1991 through June 1996. Prior to
that time, he held senior management positions throughout the world with
Continental Can Company from 1968 through 1991.
CHRISTEL BORIES has been Senior Executive Vice President, Chief Operating
Officer, Plastic Packaging of Pechiney since January 1999 and also served in a
similar position at American National Can Company. From April 1995 through
December 1998, she was Senior Executive Vice President, Strategy and Control of
Pechiney. From 1993 until March 1995, she was employed at Union Miniere as
Director Strategy and Control and member of the Direction Committee. Prior to
that time she was a consultant with Corporate Value Associates.
FRANK W. CONSIDINE was Chairman of the Board of American National Can
Company from 1983 to 1990, Honorary Chairman and Chairman of the Executive
Committee from 1990 to present, President from 1969 to 1988, and Chief Executive
Officer from 1973 to 1988. Mr. Considine is also a director of SEI Information
Technology and Scotsman Industries, Inc. and Chairman of the Board of Trustees
of Loyola University, Chicago, Vice President of the Lyric Opera of Chicago, and
a member of the Executive Committee of the Museum of Sciences and Industry,
Chicago, and the Board of Trustees of the Field Museum of Natural History,
Chicago.
RONALD J. GIDWITZ is a partner in GCG Partners, a private investment firm,
a position he has held since 1998. He previously served as President and Chief
Executive Officer of Helene Curtis Industries, Inc. from 1979 to 1998. He is
also a director of Continental Materials Corporation, Prairie Packaging
Corporation and SEI Consulting. Mr. Gidwitz is also a member of the Board of
Governors of Boys and Girls Clubs of America, the board of directors of Lyric
Opera of Chicago, the Field Museum of Natural History, the Museum of Sciences
and Industry, and the Board of Trustees of Rush-Presbyterian Medical Center.
GEORGE D. KENNEDY was Chairman and a director of Mallinckrodt Group Inc., a
producer of medical products and chemicals, from 1991 until his retirement in
October, 1994. He was Chairman and Chief Executive Officer of Mallinckrodt Group
Inc. from 1986 to 1991. Mr. Kennedy is also a director of the Kemper National
Insurance Companies and Scotsman Industries, Inc.
HOMER J. LIVINGSTON, JR. served as President and Chief Executive Officer
of the Chicago Stock Exchange in Chicago, Illinois from November 1992 until his
retirement in May 1995. From 1988 through 1992, Mr. Livingston was Chairman of
the Board and Chief Executive Officer of Livingston Financial Group. He has also
held the positions of Executive Vice President of First National Bank of
Chicago, Partner at Lehman Bros., Partner at William Blair & Co., President and
Chief Executive Officer of LaSalle National Bank and Trustee of Southern Pacific
Railroad. Mr. Livingston is also a director of EVEREN Capital Corporation and
Peoples Energy Corporation.
ROLAND H. MEYER, JR. served as President and Chief Operating Officer of
American National Can Company from 1989, and Chief Operating Officer from 1988,
until his retirement in 1992. Mr. Meyer joined American National Can Company in
1972 and from that time held various management positions in the Metal Container
Division including Manager -- Manufacturing, Vice President -- Operations, and
Vice Chairman -- Operations. Mr. Meyer is also a director of Uniroyal Technology
Corporation and Vice Chairman of First Commercial Bank of Tampa.
JAMES J. O'CONNOR is the retired Chairman and Chief Executive Officer of
Commonwealth Edison Company and Unicom Corporation, a holding company, where he
served from June 1994 until March 1998, and of Edison Company, an electric
utility, where he served from 1980 to March 1998. He is also a Director of
Corning Incorporated, EVEREN Capital Corporation, Scotsman Industries Inc.,
Smurfit-Stone Container Corporation, Tribune Company and UAL Corporation.
ALAIN PASQUIER has held various senior corporate management positions
within Pechiney's finance department since 1993. He currently serves as Senior
Vice President -- Corporate Finance of Pechiney, a position he has held since
1997. He is also a director of Impress Metal Packaging Holdings B.V. and Paribas
Capital Markets Ltd.
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<PAGE> 72
JEAN-DOMINIQUE SENARD has been Senior Executive Vice President and Chief
Financial Officer, and a member of the Executive Committee of Pechiney since
October 1996. Prior to joining Pechiney, Mr. Senard was employed by the French
company Saint-Gobain from January 1987 through October 1996, where he was Group
Treasurer from January 1987 through January 1989, Director of Treasury and
Financing from January 1989 through September 1995, and Financial Director of
Saint-Gobain's General Delegation for Germany and Central Europe and a member of
the Management Committee of Vegla GmbH from October 1995 through October 1996.
He commenced his career at Total where he served as financial controller and
later financial risk manager within the treasury group.
JAMES R. THOMPSON was Governor of Illinois during the period 1977 through
1991. Since January 1991, Mr. Thompson has been a partner in, and Chairman of
the Executive Committee of, Winston & Strawn, a Chicago, Illinois law firm, and
since January 1993, he has been Chairman of the firm. Mr. Thompson is also a
director of FMC Corporation, Prime Retail, Inc., Hollinger International, Inc.,
Jefferson Smurfit Group, Metzler Group, Prime Group Realty Trust and Union
Pacific Resources. He also serves as a Public Governor of the Chicago Board of
Trade and is the Chairman of the Public Review Board of the Hotel and Restaurant
Employees International Union. He is Chairman of the Board of Trustees of the
Illinois Mathematics and Science Academy Foundation, and serves as a trustee of
the Chicago Historical Society, Lyric Opera of Chicago, Museum of Contemporary
Art, the Art Institute of Chicago and the Economic Club of Chicago.
JACK H. TURNER served as President of American National Can Company and
Chief Operating Officer from 1992 until his retirement in 1995. From September
1989 through June 1992, he was Executive Vice President and Chief Operating
Officer of the beverage worldwide business. Mr. Turner joined American National
Can Company in February 1969 and has held numerous financial and operations
positions.
EXECUTIVE OFFICERS
In addition to Mr. Rodier and Mr. Lapekas, who are also Directors, the
following persons are executive officers of ANC. The executive officers were
appointed on April 14, 1999 and will hold office until the first annual meeting
of our stockholders following the offering.
CURTIS J. CLAWSON is Executive Vice President and President -- Beverage
Cans Americas. He joined American National Can Company in June 1998 as Senior
Vice President -- Beverage Cans Americas. From March 1995 through January 1998,
he was an employee of Allied Signal, Incorporated, following which he took a
career break from January to June 1998. From March 1995 through March 1997, his
position was President Filters and Spark Plugs, and from April 1997 through
January 1998, his position was President Laminates. Prior to his employment with
Allied Signal, he was an employee of Arvin Industries, Incorporated. He held the
position of General Manager from January 1994 through February 1995. While at
Arvin he also served in the positions of Vice President Sales during 1993 and
Sales Manager/Plant Manager during 1992.
MICHAEL D. HERDMAN is Executive Vice President and President -- Beverage
Cans Europe and Asia. Since 1991, Mr. Herdman has held the position of Senior
Vice President -- Beverage Cans Europe. In January 1997, he also assumed
responsibility for the beverage can business in Asia. Since joining American
National Can Company in 1972, Mr. Herdman's prior positions have included
Managing Director of Nacanco Ltd, Vice President of Business Development, Vice
President and General Manager -- Plastics, Managing Director -- Iberica, and
other sales and manufacturing management positions.
ALAN H. SCHUMACHER is Executive Vice President and Chief Financial Officer.
He has held this position in American National Can Company since July 1997. From
January 1988 through June 1997, he held the positions of Vice President,
Controller and Chief Accounting Officer. Positions held at American National Can
Company prior to 1988 include Assistant Corporate Controller, and Manager
Corporate Accounting. Prior to joining American National Can Company, Mr.
Schumacher was employed in the audit function of Price Waterhouse and Company.
DENNIS R. BANKOWSKI is Executive Vice President -- Administration and Chief
Human Resources Officer. He joined American National Can Company in 1991 as
Senior Vice President -- Human Resources.
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<PAGE> 73
In January 1997, he was named Senior Vice President -- Corporate Services.
Before joining American National Can Company, Mr. Bankowski was employed by BP
America, a subsidiary of British Petroleum, from 1981 through 1990 where he
served in the positions of Director of Compensation, Director of Organizational
Development and Vice President of Human Resources.
BOARD OF DIRECTORS, DIRECTORS' COMPENSATION AND COMMITTEES OF THE BOARD
The company's board of directors consists of 13 members. Directors are
elected to serve until the expiration date of their terms as determined by their
respective classes, and until their successors are elected and qualified.
Officers of the company are elected or appointed by, and serve at the discretion
of, the board of directors.
As of the date of this offering, the board of directors is divided into
three staggered classes. The initial board will consist of the following:
- four Class I directors: Madame Bories and Messrs. Meyer, Pasquier and
Turner
- four Class II directors: Messrs. Considine, Kennedy, Livingston and
Senard
- five Class III directors: Messrs. Gidwitz, Lapekas, O'Connor, Rodier and
Thompson.
At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. The terms of the Class I directors, Class II directors
and Class III directors will expire upon the election and qualification of
successor directors at the annual meeting of stockholders to be held during
calendar years 2000, 2001 and 2002, respectively.
Each officer serves at the discretion of the board of directors and holds
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal. There are no family relationships among any of
our directors or executive officers.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the company do not receive
compensation other than reimbursement for out-of-pocket expenses incurred by
them in connection with their travel to and attendance at meetings of the board
of directors or its committees.
In addition to the reimbursement of expenses, directors of our company who
are not officers or employees receive an annual cash retainer of $25,000 and an
annual grant of non-transferable stock with a fair market value of $15,000.
These shares cannot be sold or transferred until retirement from the board of
directors. The non-employee directors will also receive an annual stock option
grant with a Black-Scholes value equal to $30,000. The options will be granted
at the fair market value, will become exercisable immediately, and will have a
ten-year term. In addition, non-employee directors who chair any committee of
the board will receive a fee of $3,000 per year for each committee they chair.
Directors can elect to defer the receipt of their annual cash retainers and
chairman fees until retirement from the board of directors. Until distribution
of the deferred amounts following retirement, the deferred amounts will earn
interest based on mutual funds selected by the director from a company listing
of mutual funds approved for the deferral plan. The company provides each
non-employee director with $250,000 of accidental death and dismemberment
insurance coverage on a 24-hour basis for any period a non-employee director is
travelling on company business.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has established an audit committee, a compensation
committee and an executive committee. The functions of each of these committees
are described below.
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<PAGE> 74
The audit committee is responsible for reviewing the propriety and accuracy
of our consolidated financial statements. The audit committee is also
responsible for:
- reviewing the internal accounting controls and annual consolidated
financial statements
- reviewing the scope of the independent certified public accountants'
audit, their report and their recommendations
- considering the possible effect on the independence of the accountants in
approving non-audit services requested of them
- recommending the action to be taken with respect to the appointment of
the independent certified public accountants.
James J. O'Connor is chairman of the audit committee, and the other members
are Homer J. Livingston, Jr. and Jean-Dominique Senard.
The compensation committee is responsible for:
- approving the compensation of all elected officers
- reviewing, advising and making recommendations with respect to elected
officer compensation plans, their benefits and standards and taking all
related actions that are not reserved for the board
- administering our annual incentive plan and the other salary,
compensation or benefit plans that it is designated to administer.
George D. Kennedy is chairman of the compensation committee. The other
members are Frank W. Considine, Ronald J. Gidwitz and Jean-Pierre Rodier.
During intervals between meetings of the board, the executive committee has
and exercises all the powers and authority of the board in the management of our
business and affairs, except as specifically limited in our by-laws. Frank W.
Considine is chairman of the executive committee. The other members are Edward
A. Lapekas and Jean-Pierre Rodier.
EXECUTIVE COMPENSATION
The following table shows information concerning the compensation paid for
services rendered in all capacities to American National Can Company and its
subsidiaries for the fiscal year ended December 31, 1998, for the individual
serving as Chief Executive Officer and the other four most highly compensated
executive officers, based on their employment by American National Can Company
or an affiliate of American National Can Company at December 31, 1998. The
compensation described in this table was paid by American National Can Company,
or an affiliate of American National Can Company.
The positions reflected in the table are the positions to be held by the
named executive officers with the company following the offering and were not
the positions held by the named executive officers during 1998, the period
covered by the table. Compensation reflected in the table for 1998 was paid by
American National Can Company to the named executive officers in the following
capacities:
- Mr. Lapekas, Senior Executive Vice President and Chief Operating Officer
-- Beverage Cans Worldwide
- Mr. Herdman, Senior Vice President -- Beverage Cans Europe and Asia
- Mr. Schumacher, Senior Vice President and Chief Financial Officer
- Mr. Bankowski, Senior Vice President -- Corporate Services.
Mr. Curtis J. Clawson, who is not listed here, joined American National Can
Company in June 1998. The pro-rata salary paid to Mr. Clawson for his seven
months of employment in 1998 was $175,000. A bonus of $158,500 was paid
reflecting 1998 financial and individual performance. If Mr. Clawson had been
employed for the full fiscal year, his level of compensation would qualify him
as a named executive officer.
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<PAGE> 75
References to stock options relate to awards of Pechiney Options under the
Pechiney Stock Option Plan. This plan grants options to purchase Pechiney stock
on the Paris stock exchange. References to stock appreciation rights or SARs
relate to awards of Pechiney Stock Appreciation Rights under the American
National Can Company Long-Term Incentive Plan. SARs reflect the appreciation of
Pechiney American Depositary Shares as traded on the New York Stock Exchange.
The American Depositary Shares trade at a ratio of 2:1 to the Pechiney French
shares.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------
ANNUAL COMPENSATION 1998 LONG-TERM COMPENSATION PAYOUTS
----------------------------------- -------------------------------------------
LONG-TERM
OTHER ANNUAL STOCK INCENTIVE
NAME AND SALARY BONUS COMPENSATION OPTIONS/SARS PLAN PAYOUTS ALL OTHER
PRINCIPAL POSITION ($) ($) ($) (#)(1) ($) COMPENSATION
- ------------------ --------- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rodier......................... $208,156 $111,729 $ 0 0/0 $ 0 $ 0
Chairman and Chief Executive Officer
Edward A. Lapekas.......................... $420,000 $472,226 $ 0 0/109,000 $ 0 $19,361.53(2)
President and Chief Operating Officer
Michael D. Herdman......................... $262,000 $222,307 $251,745(3) 0/ 58,000 $ 0 $ 9,077.53(2)
Executive Vice President and President --
Beverage Cans Europe and Asia
Alan H. Schumacher......................... $231,000 $186,971 $ 0 0/ 58,000 $ 0 $ 9,706.57(2)
Executive Vice President and
Chief Financial Officer
Dennis R. Bankowski........................ $310,000 $227,385 $ 0 0/ 58,000 $ 0 $10,414.57(2)
Executive Vice President -- Administration
and Chief Human Resources Officer
</TABLE>
- ------------------
(1) All these stock appreciation rights will be converted to the Company's
restricted stock at the date of the offering. The method used to convert the
stock appreciation rights is described in the section entitled "Stock
Compensation Conversion Plan" below.
(2) The amounts shown include $8,075.53 contributed to each of the named
executive officers under the American National Can Company Capital
Accumulation Plan for Salaried Employees. Also included are the following
amounts representing imputed income from a company-sponsored group life
insurance plan: Mr. Lapekas $11,286.00, Mr. Herdman $1,002.00, Mr.
Schumacher $1,631.04, and Mr. Bankowski $2,339.04.
(3) Amounts represent allowances paid to, and expenses paid on behalf of, Mr.
Herdman in connection with his foreign assignment, including $116,880 that
Mr. Herdman received as a cost of living and housing allowance and $63,243
that American National Can Company paid on behalf of Mr. Herdman to cover
his foreign income tax expenses.
Effective on the date of this offering, the annual salaries of Messrs.
Rodier, Lapekas, Herdman, Schumacher and Bankowski will be $216,000, $650,000,
$311,000, $300,000 and $322,000, respectively.
GRANTS OF OPTIONS AND STOCK APPRECIATION RIGHTS
The table below shows information concerning grants of stock appreciation
rights made to the named executive officers during the fiscal year ended
December 31, 1998. They received no stock options in our company in 1998.
PECHINEY STOCK APPRECIATION RIGHTS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED
UNDERLYING SARS ANNUAL
SARS GRANTED TO EXERCISE OR RATES OF STOCK PRICE
GRANTED EMPLOYEES IN BASE PRICE MARKET PRICE EXPIRATION APPRECIATION FOR
NAME (#)(1) FISCAL YEAR(2) ($/SHARE) AT GRANT DATE SAR TERM ($)(3)
- ---- ------------ -------------- ----------- ------------ ---------- ---------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rodier............. 0 0 -- -- -- -- --
Edward A. Lapekas.............. 109,000 12.8 $16.16 $16.16 11/25/02 $379,601 $817,484
Michael D. Herdman............. 58,000 6.8 $16.16 $16.16 11/25/02 $201,990 $434,992
Alan H. Schumacher............. 58,000 6.8 $16.16 $16.16 11/25/02 $201,990 $434,992
Dennis R. Bankowski............ 58,000 6.8 $16.16 $16.16 11/25/02 $201,990 $434,992
</TABLE>
- ------------------
(1) All SARs granted to the named executive officers in 1998 were granted on
November 25, 1998 and become exercisable over two years.
(2) 850,000 SARs were granted to American National Can Company employees in
1998.
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<PAGE> 76
(3) The 5% and 10% rates of appreciation were set by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, of
Pechiney capital stock. If Pechiney's capital stock does not increase in
value, then the SAR grants described in this table will be valueless.
As set forth in the Stock Compensation Conversion Plan, any Pechiney Option
granted since June 26, 1996, or SAR granted since September 16, 1997, and held
by an employee of our company at the time of the offering, will be converted
into restricted shares of the company. The terms, vesting schedules, and method
of conversion are described in the section entitled "Stock Compensation
Conversion Plan" below.
1999 EXTRAORDINARY SAR GRANT
On February 10, 1999 a grant of SARs was approved for selected executives
of American National Can Company. The grant, which was not made under the annual
long-term incentive plan, was named the Extraordinary Grant.
This grant was intended to increase the competitiveness of the long-term
incentive plan and was recommended after a review by an independent consulting
firm of the nature and competitiveness of long-term incentives in the United
States. American National Can Company recognized that the long-term incentive
targets for its executives had been set conservatively in recent years, while
competitive U.S. long-term incentive targets had increased rapidly during that
same time period. It also recognized that the opportunity for share price
appreciation with respect to SARs previously granted was limited since the SARs
granted under its plans had a term of three to four years. This term is shorter
than traditional stock options, which often have ten-year terms.
The Extraordinary Grant allowed executives to exchange some or all of their
outstanding SARs from the June 26, 1996 grant for Extraordinary SARs with a new
vesting and exercise schedule, a new grant price and a new four-year term.
As a result of this program, 118,700 of the 164,800 outstanding 1996 SARs
held by our executives have been exchanged. Some executives who have outstanding
1996 SARs were not selected to participate in the Extraordinary Grant. These
executives can retain their 1996 SARs and may exercise them until they expire on
June 26, 1999.
The Extraordinary SARs outstanding on the date of the offering will be
converted to restricted shares in the Company in accordance with the Stock
Compensation Conversion Plan described below.
STOCK COMPENSATION CONVERSION PLAN
Prior to the offering, our executives participated annually in a long-term
incentive plan. The plan granted them either options to purchase Pechiney
capital stock traded on the Paris stock exchange or SARs which provided them
with the opportunity to receive cash awards equal to the appreciation in
Pechiney American Depositary Shares traded on the New York Stock Exchange, or
both. At the time of the offering, we will convert the outstanding Pechiney
options granted since June 26, 1996 and the outstanding SARs granted since
September 16, 1997 to restricted shares in our company.
Additional outstanding SARs granted as part of the long-term incentive plan
on June 26, 1996 that were not exchanged in connection with the Extraordinary
Grant will not be converted under the Stock Compensation Conversion Plan and, if
unexercised, will expire on June 26, 1999.
The options and SARs were valued when originally granted using the
Black-Scholes methodology, a calculation that computes the present value of
stock options and SARs. Each executive with outstanding options or SARs will
receive a grant of restricted shares with an approximate value equal to the
Black-Scholes value of their outstanding options and SARs.
The vesting and exercise schedules of the restricted shares will
approximate those of the original grants.
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<PAGE> 77
Following the grant of restricted shares in our company, it is expected
that all Pechiney stock options granted since June 26, 1996 and all SARs granted
since September 16, 1997 to our employees will be canceled.
Non-employee directors who served on the board of directors for our prior
company earned a retirement benefit as part of their compensation. For those
same directors now serving on our company's board, the present value of their
accrued retirement benefit will be converted to non-transferable shares of our
company stock at the time of the offering.
OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning option and SAR
exercises with respect to Pechiney capital stock by the named executive officers
during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATED PECHINEY OPTION NUMBER OF SECURITIES
STOCK APPRECIATION RIGHT UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
EXERCISES IN LAST FISCAL YEAR OPTION/SARS IN-THE-MONEY OPTION/SARS
-------------------------------- AT FISCAL YEAR END AT FISCAL YEAR-END
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE (#) VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rodier(1)...... 0 FF 0/ 0/0 0/0 FF 0/ FF 0/
$0 $0 $0
Edward A. Lapekas.......... 0 FF 0/ 0/ 8,500/ FF 0/ FF 0/
$0 49,250 133,250 $0 $0
Michael D. Herdman......... 0 FF 0/ 0/ 7,500/ FF 0/ FF 0/
$0 12,450 66,250 $0 $0
Alan H. Schumacher......... 0 FF 0/ 0/ 4,000/ FF 0/ FF 0/
$0 13,900 68,500 $0 $0
Dennis R. Bankowski........ 0 FF 0/ 0/ 5,000/ FF 0/ FF 0/
$0 31,050 71,050 $0 $0
</TABLE>
- ------------------
(1) Mr. Rodier has not been awarded any stock options or stock appreciation
rights in respect of services performed as an executive officer of ANC.
If the offering is completed all of these options and SARs will be canceled
and the holders will be granted restricted shares of the Company in accordance
with the provisions of the Stock Compensation Conversion Plan described above.
The closing price of Pechiney capital stock on December 30, 1998, its last
trading day prior to Pechiney's fiscal year end, was FF 182.50 per share on the
Paris stock exchange. The closing price of American Depositary Shares on
December 31, 1998, their last trading day prior to Pechiney's fiscal year end,
was $16.125 per American Depositary Share on the New York Stock Exchange.
RETIREMENT BENEFITS
Many of our salaried employees have been participants in the tax-qualified
American National Can Company Pension Plan for Salaried Employees. In addition,
those salaried employees whose benefits under this plan would be limited by
Sections 401(a)(17) or 415 of the Internal Revenue Code, or who had deferred
compensation that was not taken into account under the plan, participate in a
non-qualified, unfunded supplemental pension plan. Benefits under the
supplemental plan are paid out of our general funds.
We intend to maintain both the tax-qualified plan and the non-qualified
supplemental plan following completion of the offering.
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<PAGE> 78
When an executive retires at the normal retirement age of 65, the
approximate annual retirement benefits payable under our plans for the following
earnings classifications and years of service are set forth in the table below.
The benefits reflect a reduction to recognize, in part, the cost of Social
Security benefits related to service for the company. The plans also provide for
the payment of benefits to an employee's surviving spouse.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
REMUNERATION 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- ------------ -------- -------- -------- ----------
<S> <C> <C> <C> <C>
$ 250,000 $ 35,029 $ 70,057 $107,495 $ 138,745
500,000 72,529 145,057 219,995 282,495
750,000 110,029 220,057 332,495 426,245
1,000,000 147,529 295,057 444,995 569,995
1,250,000 185,029 370,057 557,495 713,745
1,500,000 222,529 445,057 669,995 857,495
1,750,000 260,029 520,057 782,495 1,001,245
2,000,000 297,529 595,057 894,995 1,144,995
</TABLE>
Covered earnings for retirement benefit purposes include salary and annual
bonus. The calculation of retirement benefits under the pension plans generally
is based upon average covered earnings for the highest five consecutive years of
service. The years of credited service as of January 1, 1999 for the named
executive officers are as follows: 2 years for Mr. Lapekas, 26 years for Mr.
Herdman, 21 years for Mr. Schumacher and 8 years for Mr. Bankowski. By
contractual agreement, Mr. Rodier does not participate in our pension plans.
NEW STOCK-BASED AND INCENTIVE PLANS OF ANC
THE LONG-TERM INCENTIVE PLAN
Generally. Our long-term incentive plan has been approved by the board of
directors. The plan provides for the grant of various types of long-term
incentive awards to key employees. These awards may include non-qualified
options to purchase shares of our common stock, performance units, incentive
stock options, stock appreciation rights, restricted stock grants and cash
awards. The term of the plan is five years. The plan will also be submitted to
our stockholders for approval at the annual meeting of stockholders in 2000.
This stockholder approval is required for purposes of Section 162(m) of the
Internal Revenue Code in order to ensure favorable tax treatment of amounts paid
under the plan after the first regularly scheduled meeting of stockholders that
occurs more than 12 months after the date of the offering. The plan is designed
to align the interests of executives with those of the stockholders through the
use of stock-based compensation. The plan presents executives and key employees
a significant long-term interest in our company's success and is designed to
assist in the retention of these key employees.
Administration. The plan vests broad powers in the compensation committee
of the board of directors to administer and interpret the plan. The committee's
powers include authority to select persons to be granted awards, to determine
terms and conditions of awards, including the type, size and term of awards, to
determine the time when awards will be granted and any conditions for receiving
awards, to establish objectives and conditions for earning awards, and to
determine whether these conditions have been met. The committee also has
authority to determine whether payment of an award will be made at the end of an
award period, or at the time of exercise, or deferred, and to determine whether
payment of an award should be reduced or eliminated. The plan grants powers to
the compensation committee to amend and terminate the plan.
In order to meet the requirements of Section 162(m) of the Internal Revenue
Code and the rules under Section 16 of the Securities Exchange Act of 1934, all
grants under the plan will be made by a grant committee consisting of those
members of the compensation committee who are both "outside directors" as
defined for purposes of Section 162(m) of the Internal Revenue Code and its
regulations and "non employee directors" as defined for purposes of Section 16
of the Securities Exchange Act.
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<PAGE> 79
Participation. The persons to whom grants are made under the plan will be
selected from time to time by the grant committee, based on recommendations by
the President and Chief Executive Officer, from among corporate officers and
other key employees of our company and its subsidiaries and affiliates. The
grant committee may also grant awards to employees of a joint venture or other
business in which we have a substantial investment, and may make awards to
non-executive employees who are in a position to contribute to the Company's
success.
Shares Subject to the Long-Term Incentive Plan. The plan authorizes the
issuance or transfer of an aggregate of 7 million shares of our common stock,
provided that the total number of shares as to which grants may be made under
the plan in any one fiscal year beginning in the year following the date of this
offering may not exceed 2.0% of the total outstanding and treasury shares of the
company.
STOCK OPTION GRANTS AS OF THE OFFERING
As of the offering, the compensation committee of the board of directors
has approved and will make the following stock option grants to the named
executive officers. This initial grant will replace future stock option grants
scheduled to be made under the long-term incentive plan in fiscal years 1999,
2000 and 2001.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME (#)(1) FISCAL YEAR ($/SHARE)(2) DATE(1) 5%(3) 10%(3)
- ---- ---------- ------------ ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Pierre Rodier......... 0 0% $22.50 (1) $ 0 $ 0
Edward A. Lapekas.......... 564,000 13.4% $22.50 (1) $7,980,673 $20,224,592
Michael D. Herdman......... 153,000 3.6% $22.50 (1) $2,164,970 $ 5,486,458
Alan H. Schumacher......... 153,000 3.6% $22.50 (1) $2,164,970 $ 5,486,458
Dennis R. Bankowski........ 153,000 3.6% $22.50 (1) $2,164,970 $ 5,486,458
</TABLE>
- ------------------
(1) These options will be granted as of the date the offering is completed and
consist of non-qualified stock options. These options will become
exercisable over a five-year period at a rate of 20% per year. All of these
options expire ten years after the offering date.
(2) Based on an assumed public offering price of $22.50 per share, the midpoint
of the range shown on the cover page of this prospectus.
(3) The 5% and 10% rates of appreciation were set by the Securities and Exchange
Commission and are not intended to forecast future appreciation, if any, of
our common stock. If our common stock does not increase in value, then the
option grants described in the table will be valueless.
ANC INCENTIVE COMPENSATION PLAN
Generally. The compensation committee intends to approve a new annual
incentive plan scheduled to be implemented in January 2000. The annual incentive
plan will also be submitted to the stockholders for approval at the annual
meeting of stockholders in 2000. This stockholder approval is necessary for
purposes of Section 162(m) of the Internal Revenue Code in order to ensure
favorable tax treatment of amounts paid under the annual incentive plan after
the first regularly scheduled meeting of stockholders that occurs more than 12
months after the date of this offering. The purposes of the annual incentive
plan are to provide a reward and an incentive to employees in managerial, staff
or technical capacities who have contributed in the then-current fiscal year
and, in the future, are likely to contribute to the success of our company. It
also serves to enhance our company's ability to attract and retain outstanding
employees to serve in such capacities.
The annual incentive plan rewards for performance against demanding
individual objectives and specific value management measures. These include
total shareholder return, total business return and cash flow return on
investment. Total shareholder return, equal to capital gains plus dividend
yield, will be measured relative to the Standard & Poor's 500 and/or a peer
group to determine that value has been created at a sufficient rate by our
management. Total business return measures the internal contributions of our
business units to actual
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<PAGE> 80
total shareholder return and reflects the change in estimated market value for
each business unit. Cash flow return on investment is a measure of cash
profitability for our business units. Used by fund managers to evaluate
companies, cash flow return on investment measures the cash produced each year
relative to the cash that has been invested in the business.
The awards paid under our annual incentive plan will exceed competitive
levels when performance in these areas exceeds the targets. When performance
does not reach the expected levels, the awards paid to participants will range
from below competitive levels to zero.
Until January 2000, we will continue to utilize the annual incentive plan
of the prior company which measures the achievement of return on capital
employed and demanding individual objectives in the determination of awards for
participants.
Administration. The annual incentive plan vests broad powers in the
compensation committee to administer and interpret the annual incentive plan.
The compensation committee's powers include authority to select the persons to
be granted awards, to determine the time when awards will be granted, and to
determine and certify whether objectives and conditions for earning awards have
been met. The compensation committee also has authority to determine whether
payment of an award will be made at the end of an award period or deferred, and
to determine whether an award or payment of an award should be reduced or
eliminated. The annual incentive plan grants broad powers to the compensation
committee to amend and terminate the annual incentive plan.
In order to meet the requirements of Section 162(m) of the Internal Revenue
Code and the rules under Section 16 of the Securities Exchange Act, all grants
under the annual incentive plan will be made by a grant committee consisting of
those members of the compensation committee who are both "outside directors" as
defined for purposes of Section 162(m) of the Internal Revenue Code and its
regulations and "non employee directors" as defined for purposes of Section 16
of the Securities Exchange Act.
Eligibility. Any person in the salaried employ of the company during some
part of the fiscal year for which awards are made may be selected for an award
by the compensation committee. Unless also an employee of the company, no member
of the board of directors will be eligible to participate in the annual
incentive plan.
OTHER STOCK OWNERSHIP PROGRAMS
Ownership Guidelines Following the Offering. In order to align closely the
financial interests of our company's key executives with those of our
stockholders, the compensation committee has approved the following minimum
ownership guidelines requiring ownership of shares of our common stock with a
market value equal to the multiple of base salary indicated:
<TABLE>
<CAPTION>
MULTIPLE OF BASE SALARY
-----------------------
<S> <C>
President and Chief Executive Officer....................... 3
Subsidiary Presidents, Executive Vice Presidents and Senior
Vice Presidents........................................... 2
Vice Presidents............................................. 1
</TABLE>
Only shares owned directly, including restricted shares, or through our
savings plan, but not shares subject to unexercised stock options, will be
considered for determining whether an executive meets the ownership guidelines.
The approximately 45 executives who will be subject to the guidelines
immediately following the offering will have a transition period of 5 years
beginning on the offering date within which to meet the guidelines. Other
executives who become subject to the guidelines after the offering date will
also have a transition period of 5 years within which to meet the guidelines.
Executives who fail to meet the minimum ownership requirements will be
ineligible to participate in future long-term incentive stock option or
restricted share grants.
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<PAGE> 81
Founders Grant. The board of directors has approved and we will make a
one-time grant to every full-time employee of options to purchase 100 shares of
our common stock. These options will have an exercise price equal to the
offering price, and will vest 30 percent two years following the grant date, 30
percent three years following the grant date, and 40 percent four years
following the grant date. The options will be exercisable ten years after the
date of the grant.
Employee Stock Purchase Plan. The compensation committee has approved the
implementation of an employee stock purchase plan, which will give all qualified
full and part-time employees worldwide the opportunity to purchase shares of
stock in the company at a discount from the fair market price. The employee
stock purchase plan will be presented for stockholder approval at the first
regularly scheduled meeting of our stockholders following the offering.
Shareholder approval is necessary for employees to receive preferential tax
treatment for awards made under this plan.
EMPLOYMENT CONTRACTS, TERMINATION AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The company entered into individual agreements with Edward Lapekas, Curtis
Clawson, Michael Herdman, Alan Schumacher and Dennis Bankowski. Each agreement
is effective for an indefinite term. If the company terminates an executive for
any reason other than for cause, defined as serious misconduct, gross
negligence, willful disobedience or commission of a crime involving fraud or
moral turpitude, or if the executive voluntarily resigns for any of the reasons
indicated below, the agreements provide for continuation of compensation
(including incentive compensation), vesting of awards made under any company
equity compensation and specific health and welfare benefits for a period of
time following termination, enhanced pension benefits and, in the case of
termination following a change of control, the payment of an amount equal to the
excise tax which may be allocable to any payment or benefit paid as a result of
Section 4999 of the Internal Revenue Code or any similar tax that may be
imposed.
Each executive may voluntarily resign for the following reasons and receive
the pay and benefits provided for in their agreement: material reduction in
status, duties or responsibilities; reduction in the executive's annual targeted
compensation opportunity, defined as the sum of base salary, targeted annual
incentive award and targeted long-term incentive award; relocation to a location
more than 50 miles from their current offices without their prior consent
following a change of control; the failure of the company to pay any amount due
under the agreement; the failure of the company to obtain an agreement from any
successor company to expressly assume the executive agreement; or material
breach of the agreement by the company.
The length of the period during which the executives will continue to
receive their salary, targeted bonuses and accrue pension benefits is equal to
24 months or, in the case of Edward Lapekas following a change of control, 36
months. The length of the continuation period for an executive's inclusion in
medical, dental and life insurance benefit programs is until age 55, at which
time they would become eligible for similar programs under the retiree plans of
the company.
The enhanced pension benefit is calculated as if the executive had reached
the greater of his actual age or age 60, while still employed by the company,
and as if he had service of 30 years or his actual service including the 24- or
36-month period of continuation, whichever is greater.
The agreements also provide that if the executive resigns or retires from
our company for any reason after reaching age 60, for which he does not qualify
to receive pay and benefits during a continuation period, he will be entitled to
an enhanced pension benefit equal to his actual service or 30 years, whichever
is greater, and he and his family will be entitled to be eligible for retiree
medical and life insurance benefits under the applicable plan, on the same terms
and conditions that generally apply to our retirees.
Our prior company has also entered into an individual agreement with
Jean-Pierre Rodier. The agreement provides that the prior company will pay an
annual base salary and bonus to Mr. Rodier in respect of services performed for
the prior company. If Mr. Rodier's employment is terminated by the prior company
for reasons other than cause, he is entitled to payment of any unpaid annual
salary earned or accrued but not
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<PAGE> 82
paid through the termination date, and any unpaid incentive award for the year
prior to termination. He is entitled to a severance payment if he is terminated
from all members of the Pechiney Group companies and provided that the Pechiney
board of directors authorizes the severance payment. The amount of the severance
payment shall be determined by the board of directors at the time of
termination, but can not exceed two times his rate of annual base salary in
effect at the time of termination. Cause is defined as his commission of any act
or omission that would constitute gross misconduct under the labor laws of
France with respect to his employment with the company or any other Pechiney
Group company or his conviction of, guilty plea or indictment for, a felony or a
fraud against the company or any other Pechiney Group company.
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<PAGE> 83
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of our common stock
which we expect the following to own, directly or indirectly, following the
offering, assuming that the underwriters do not exercise their overallotment
option:
- Pechiney
- each director
- each named executive officer
- all of the above, as a group.
This information reflects all of the shares they beneficially own,
including shares which they have the right to acquire within 60 days of this
offering, for example through the exercise of stock options, conversions of
securities or trust arrangements, within the meaning of Rule 13d-3(d)(1) under
the Securities Exchange Act.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------
NAME SHARES PERCENT OF CLASS(1)
- ---- ----------- --------------------
<S> <C> <C>
Pechiney
7, Place du Chancelier Adenauer
75218 Paris Cedex 16, France.............................. 25,000,000 45.455%
Jean-Pierre Rodier.......................................... -- --
Christel Bories............................................. -- --
Frank W. Considine.......................................... -- --
Ronald J. Gidwitz........................................... 7,559(2) 0.014%
George D. Kennedy........................................... 7,559(2) 0.014%
Homer J. Livingston, Jr..................................... 4,535(2) 0.008%
Roland H. Meyer, Jr......................................... -- --
James J. O'Connor........................................... 7,559(2) 0.014%
Alain Pasquier.............................................. -- --
Jean-Dominique Senard....................................... -- --
James R. Thompson........................................... 4,535(2) 0.008%
Jack H. Turner.............................................. -- --
Edward A. Lapekas........................................... 45,381(3) 0.083%
Michael D. Herdman.......................................... 20,982(3) 0.038%
Alan H. Schumacher.......................................... 18,994(3) 0.035%
Dennis R. Bankowski......................................... 24,958(3) 0.045%
All of the above and other executive officers as a group (7
persons).................................................. 25,198,932 45.816%
</TABLE>
- ---------------
(1) The shares owned and the shares included in the number of shares outstanding
have been adjusted in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act. The percentage of shares owned, where it exceeds 0.1%, has
also been computed in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act.
(2) Shares will be granted on the date of the offering in exchange for the
cancellation of accrued pension benefits under the American National Can
Company Non-Employee Directors Pay Plan. The number of shares is determined
by dividing the present value of accrued pension benefits by an assumed
offering price of $22.50 per share, the midpoint of the range shown on the
cover page of this prospectus.
(3) Shares received from the conversion of outstanding SARs and stock options
under the Stock Compensation Conversion Plan.
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<PAGE> 84
DESCRIPTION OF CAPITAL STOCK
As of the date of this offering, the authorized capital stock of the
Company consists of 1,000,000,000 shares of common stock, $0.01 par value per
share, and 25,000,000 shares of preferred stock, $0.01 par value per share. As
of the date of this offering, there were 55,000,000 shares of common stock
outstanding. Following this offering, we intend to grant options to purchase
approximately 4,700,000 shares of common stock
In this section, we summarize the material provisions of our certificate of
incorporation and by-laws, included as exhibits to the registration statement
which contains this prospectus. Please refer to these exhibits for additional
details.
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the common stock entitled to vote
in any election of directors may elect all of the directors standing for
election. Holders of common stock are entitled to receive proportionately any
dividends declared by the board of directors, subject to any preferential
dividend rights of outstanding preferred stock, if any. In the event of
liquidation, dissolution or winding up, the holders of common stock are entitled
to receive ratably our net assets available after the payment of all debts and
other liabilities and subject to the prior rights of any outstanding preferred
stock, if any. Holders of common stock have no preemptive, subscription,
redemption or conversion rights. Our outstanding shares of common stock are, and
the shares offered by us in this offering will be, when issued and paid for,
fully paid and non-assessable. The rights, preferences and privileges of holders
of common stock are subject to the rights of the holders of shares of any series
of preferred stock which we may designate and issue in the future.
PREFERRED STOCK
Under the terms of the certificate of incorporation, the board of directors
is authorized to issue shares of preferred stock in one or more series without
stockholder approval. The board has discretion to determine the number of
shares, rights, preferences, privileges and restrictions, including voting
rights, dividend rights, conversion rights, redemption privileges and
liquidation preferences of each series of shares of preferred stock.
The purpose of authorizing the board of directors to issue stock and
determine its rights and preferences is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could make it more difficult for a third party to
acquire, or could discourage a third party from acquiring, a majority of our
outstanding voting stock. We do not presently have plans to issue any shares of
preferred stock.
DELAWARE LAW AND PROVISIONS OF OUR CHARTER AND BY-LAWS
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the person becomes an interested stockholder, unless
the business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to specified
exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years did own, 15% or more of
the corporation's voting stock.
The by-laws divide the board of directors into three classes with staggered
three-year terms. See "Management and Certain Security Holders." The directors
are removable only for cause upon the affirmative vote of the holders of at
least a majority of the voting power of all outstanding shares then entitled to
vote at an election of directors. Under the by-laws, any vacancy on the board of
directors, including a vacancy
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<PAGE> 85
resulting from an enlargement of the board of directors, may only be filled by
vote of a majority of the directors then in office.
Section 203 of the Delaware General Corporation Law and our staggered board
provisions could make it more difficult for a third party to acquire, or
discourage a third party from making a tender offer for our common stock or
otherwise seeking to acquire, control of our company.
The certificate of incorporation and by-laws also provide that stockholders
may take action only at an annual meeting or special meeting, and not by written
action in lieu of a meeting. The by-laws further provide that only the Chairman
of the Board, the President or the board of directors may call a special meeting
of the stockholders.
A stockholder must comply with advance notice and information disclosure
requirements in order for any matter to be considered "properly brought" before
a meeting. The stockholder must deliver written notice to us between 60 and 90
days prior to the meeting. If we give less than 70 days' notice or prior public
disclosure of the meeting date, the stockholder must deliver written notice to
us within 10 days following the date on which the notice of the meeting was
mailed or the public disclosure was made, whichever occurs first. If the matter
relates to the election of our directors, the notice must set forth specific
information regarding each nominee and the nominating shareholder. For any other
matter, the notice must set forth a brief description of the proposed
stockholder and specified information regarding the proponent stockholder. These
provisions could delay until the next stockholders meeting stockholder actions
which are favored by the holders of a majority of our outstanding voting
securities. These provisions could also discourage a third party from making a
tender offer for our common stock, because even if it acquired a majority of our
outstanding voting securities, the third party would be able to take action as a
stockholder only at a duly called stockholders' meeting and not by written
consent.
The certificate of incorporation contains provisions permitted under the
Delaware General Corporation Law relating to the liability of directors. The
provisions permit us to limit or eliminate a director's liability for monetary
damages for a breach of fiduciary duty as a director, except in circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. Further, the certificate of incorporation and the by-laws contain
provisions to indemnify our directors and officers to the fullest extent
permitted by the Delaware General Corporation Law. We believe these provisions
will assist in attracting and retaining qualified individuals to serve as
directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is First Chicago
Trust Company of New York.
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SHARES ELIGIBLE FOR FUTURE SALE
Before this offering, there has been no public market for our shares. After
completion of this offering we will have 55,000,000 shares of our common stock
outstanding. Of these shares, the 30,000,000 shares sold in this offering,
assuming the underwriters do not exercise their over-allotment option, will be
freely tradable without restriction or further registration under the Securities
Act of 1933, as amended. However, any shares held by our "affiliates," as that
term is defined in Rule 144 under the Securities Act, may generally only be sold
in compliance with the limitations of Rule 144, unless those shares have been
registered for sale under the Securities Act.
SALES OF SHARES
All of our shares offered by this prospectus will be freely tradable in the
open market. The remaining shares of common stock owned by Pechiney that will be
outstanding after this offering will be subject to the resale limitations of
Rule 144 under the Securities Act, since Pechiney is an affiliate. Rule 144
defines an affiliate as a person that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, the issuer. As such, Pechiney's ability to sell its shares is limited
unless we register them for sale under the Securities Act. Under the
registration rights agreement with Pechiney, we have agreed to register
Pechiney's remaining shares for sale under the Securities Act if Pechiney wishes
to sell its shares in the future. See "Relationship with Pechiney -- Agreements
with Pechiney." Pechiney is not under any contractual obligation to retain our
common stock, except during the 180-day "lock-up" period described in the
section entitled "Underwriting" of this prospectus.
If Pechiney does not request us to register shares held by it, as an
affiliate it may only sell shares pursuant to Rule 144, subject to the
limitations described below or pursuant to another exemption from registration.
In general, a stockholder subject to Rule 144 who has owned common stock of
an issuer for at least one year may, within any three-month period, and subject
to requirements regarding the manner of sale and notice, sell up to the greater
of:
- 1% of the total number of shares of common stock then outstanding; and
- the average weekly trading volume of the common stock during the four
weeks preceding the stockholder's required notice of sale.
Rule 144 requires stockholders to aggregate their sales with other
affiliated stockholders for purposes of complying with this volume limitation. A
stockholder who has owned common stock for at least two years, and who has not
been an affiliate of the issuer for at least three months, may sell common stock
free from the volume limitation, manner of sale and notice requirements of Rule
144.
We cannot estimate the number of shares of our common stock that Pechiney
or other third parties may sell in the future because any sales will depend on
market prices, the circumstances of sellers and other factors.
OPTIONS
After this offering, an aggregate of 4,400,000 shares of our common stock
may be issued under our Long-Term Incentive Plan, the Founder's Grant and our
Directors Stock Option Plan. We may choose to file Form S-8 registration
statements, under which the shares issued upon the exercise of stock options or
under the plan will be eligible for resale in the public market without
restriction, subject to Rule 144 limitations for affiliates if applicable.
EFFECT OF SALES OF SHARES
Before this offering, there was no public market for our shares. We cannot
predict the effect, if any, that future sales of our shares or the availability
of our shares for sale would have on the prevailing market price of our shares.
Nevertheless, if we or Pechiney sell substantial amounts of our common stock,
the trading price of our shares may fall. The possibility that we or Pechiney
may sell substantial amounts of shares may also cause the trading price of our
share to fall.
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UNITED STATES TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF COMMON STOCK
GENERAL
The following is a general discussion of the principal U.S. Federal income
and estate tax consequences of the ownership and disposition of our common stock
that may be relevant to you if you are a non-U.S. Holder. For purposes of this
discussion, a non-U.S. holder is a beneficial owner of common stock that is any
of the following for U.S. Federal income tax purposes:
- a nonresident alien individual
- a foreign corporation
- a nonresident alien fiduciary of a foreign estate or trust
- a foreign partnership one or more of the members of which is, for U.S.
Federal income tax purposes, a nonresident alien individual, a foreign
corporation or a nonresident alien fiduciary of a foreign estate or
trust.
This discussion does not address all aspects of U.S. federal income and
estate taxation that may be relevant to you in light of your particular
circumstances, and does not address any foreign, state or local tax
consequences. Furthermore, this discussion is based on provisions of the
Internal Revenue Code, Treasury regulations and administrative and judicial
interpretations as of the date of this prospectus. All of these are subject to
change, possibly with retroactive effect, or different interpretations. If you
are considering buying common stock you should consult your own tax advisor
about current and possible future tax consequences of holding and disposing of
common stock in your particular situation.
DISTRIBUTIONS
If distributions are paid on the shares of our common stock, these
distributions generally will constitute dividends for U.S. federal income tax
purposes to the extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles, and then will
constitute a return of capital that is applied against your basis in the common
stock to the extent these distributions exceed those earnings and profits.
Dividends paid to a non-U.S. holder that are not effectively connected with a
U.S. trade or business of the non-U.S. holder will be subject to United States
withholding tax at a 30% rate or, if a tax treaty applies, a lower rate
specified by the treaty. To receive a reduced treaty rate, a non-U.S. holder
must furnish to us or our paying agent a duly completed Form 1001 or Form W-8BEN
or substitute form certifying to its qualification for the reduced rate.
Currently, withholding is generally imposed on the gross amount of a
distribution, regardless of whether we have sufficient earnings and profits to
cause the distribution to be a dividend for U.S. federal income tax purposes.
However, withholding on distributions made after December 31, 2000 may be on a
less than the gross amount of the distribution if the distribution exceeds a
reasonable estimate made by us of our accumulated and current earnings and
profits.
Dividends that are effectively connected with the conduct of a trade or
business within the U.S. and, if a tax treaty applies, are attributable to a
U.S. permanent establishment of the non-U.S. holder, are exempt from U.S.
federal withholding tax, provided that the non-U.S. holder furnishes to us or
our paying agent a duly completed Form 4224 or Form W-8ECI or substitute form
certifying the exemption. However, dividends exempt from U.S. withholding
because they are effectively connected or they are attributable to a U.S.
permanent establishment are subject to U.S. federal income tax on a net income
basis at the regular graduated U.S. federal income tax rates. Any such
effectively connected dividends received by a foreign corporation may, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or a lower rate specified by an applicable income tax treaty.
Under current U.S. Treasury regulations, dividends paid before January 1,
2001 to an address outside the United States are presumed to be paid to a
resident of the country of address for purposes of the withholding
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discussed above and for purposes of determining and applicability of a tax
treaty rate. However, U.S. Treasury regulations applicable to dividends paid
after December 31, 2000 eliminate this presumption, subject to transition rules
and a non-U.S. holder who wishes to claim the benefit of an applicable treaty
rate, and avoid back-up withholding, as discussed below, would be required to
satisfy applicable certification and other requirements.
For dividends paid after December 31, 2000, a non-U.S. holder generally
will be subject to U.S. backup withholding tax at a 31% rate under the backup
withholding rules described below, rather than at a 30% rate or a reduced rate
under an income tax treaty, as described above, unless the non-U.S. holder
complies with Internal Revenue Service certification procedures or, in the case
of payments made outside the U.S. with respect to an offshore account,
documentary evidence procedures. Further, to claim the benefit of a reduced rate
of withholding under a tax treaty for dividends paid after December 31, 2000, a
non-U.S. holder must comply with modified IRS certification requirements.
Special rules also apply to dividend payments made after December 31, 2000 to
foreign intermediaries, U.S. or foreign wholly owned entities that are
disregarded for U.S. federal income tax purposes and entities that are treated
as fiscally transparent in the U.S., the applicable income tax treaty
jurisdiction, or both. You should consult your own tax advisor concerning the
effect, if any, of the rules affecting post-December 31, 2000 dividends on your
possible investment in common stock.
A non-U.S. holder eligible for a reduced rate of U.S. withholding tax under
an income tax treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund along with the required information with
the IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A non-U.S. holder generally will not be subject to U.S. federal income tax
with respect to gain recognized on a sale or other disposition of our common
stock unless one of the following applies:
- If the gain is effectively connected with a trade or business of the
non-U.S. holder in the United States and, if a tax treaty applies, the
gain is attributable to a U.S. permanent establishment maintained by the
non-U.S. holder. The non-U.S. holder will, unless an applicable treaty
provides otherwise, be taxed on its net gain derived from the sale under
regular graduated U.S. federal income tax rates. If the non-U.S. holder
is a foreign corporation, it may be subject to an additional branch
profits tax equal to 30% of its effectively connected earnings and
profits within the meaning of the Internal Revenue Code for the taxable
year, as adjusted for specified items, unless it qualifies for a lower
rate under an applicable income tax treaty and duly demonstrates that it
qualifies.
- If a non-U.S. holder who is an individual and holds our common stock as
a capital asset is present in the United States for 183 or more days in
the taxable year of the sale or other disposition, and specified other
conditions are met, the non-U.S. holder will be subject to a flat 30%
tax on the gain derived from the sale, which may be offset by certain
U.S. capital losses, despite the fact that the individual is not
considered a resident of the United States.
- If we are or have been a "U.S. real property holding corporation" for
U.S. federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the disposition or the period
during which the non-U.S. holder held the common stock. We believe that
we never have been and are not currently a U.S. real property holding
corporation for U.S. federal income tax purposes. Although we consider
it unlikely based on our current business plans and operations, we may
become a U.S. real property holding corporation in the future. Even if
we were to become a U.S. real property holding corporation, any gain
recognized by a non-U.S. holder still would not be subject to U.S. tax
if the shares were considered to be "regularly traded on an established
securities market" and the non-U.S. holder did not own, actually or
constructively, at any time during the shorter of the periods described
above, more than five percent of our common stock.
84
<PAGE> 89
FEDERAL ESTATE TAX
Common stock owned by an individual who is not a citizen or resident, as
defined for U.S. estate tax purposes, of the United States at the time of death
will be included in that individual's gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Under U.S. Treasury regulations, we must report annually to the IRS and to
each non-U.S. holder the amount of dividends paid to that holder and the tax
withheld with respect to those dividends. These information reporting
requirements apply even if withholding was not required because the dividends
were effectively connected dividends or withholding was reduced or eliminated by
an applicable income tax treaty. Pursuant to an applicable tax treaty, that
information may also be made available to the tax authorities in the country in
which the non-U.S. holder resides.
United States federal backup withholding generally is a withholding tax
imposed at the rate of 31% on specified payments to persons that fail to furnish
required information under the U.S. information reporting requirements. See the
discussion under "Distributions" above for rules regarding backup withholding on
dividends paid to non-U.S. holders, after December 31, 2000.
As a general matter, information reporting and backup withholding will not
apply to a payment by or through a foreign office of a foreign broker of the
proceeds of a sale of our common stock effected outside the U.S. However,
information reporting requirements, but not backup withholding, will apply to a
payment by or through a foreign office of a broker of the proceeds of a sale of
our common stock effected outside the U.S. if that broker:
- is a U.S. person
- is a foreign person that derives 50% or more of its gross income for
specified periods from the conduct of a trade or business in the U.S.
- is a "controlled foreign corporation" as defined in the Internal Revenue
Code; or
- is a foreign partnership with specified U.S. connections, for payments
made after December 31, 2000.
Information reporting requirements will not apply in the above cases if the
broker has documentary evidence in its records that the beneficial owner is a
non-U.S. holder and specified conditions are met or the beneficial owner
otherwise establishes an exemption.
Payment by or through a U.S. office of a broker of the proceeds of a sale
of our common stock is subject to both backup withholding and information
reporting unless the holder certifies to the payor in the manner required as to
its non-U.S. status under penalties of perjury or otherwise establishes an
exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, any amounts withheld under the backup
withholding rules will be refunded or allowed as a credit against the holder's
U.S. federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the IRS.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL TAX CONSEQUENCES OF
THE OWNERSHIP, SALE OR OTHER DISPOSITION OF OUR COMMON STOCK BY NON-U.S. HOLDERS
FOR U.S. FEDERAL INCOME AND ESTATE TAX PURPOSES. YOU ARE URGED TO CONSULT YOUR
OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF
OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, INCLUDING THE EFFECT OF ANY
STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
85
<PAGE> 90
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 1999, the selling stockholder has agreed to sell to
the underwriters named below, for whom Credit Suisse First Boston Corporation,
Deutsche Bank Securities Inc., Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc.
are acting as representatives, the following respective numbers of ANC's shares:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
- ------------ ----------
<S> <C>
Credit Suisse First Boston Corporation.....................
Deutsche Bank Securities Inc...............................
Goldman, Sachs & Co. ......................................
Lehman Brothers Inc. ......................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Salomon Smith Barney Inc...................................
----------
Total.................................................... 30,000,000
==========
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
The selling stockholder has granted to the underwriters a 30-day option to
purchase on a pro rata basis up to 4,500,000 additional outstanding shares from
the selling stockholder at the initial public offering price, less the
underwriting discounts and commissions. The option may be exercised only to
cover any over-allotments of common stock.
The underwriters propose to offer our shares initially at the public
offering price on the cover page of this prospectus and to selling group members
at that price less a concession of $ per share. The underwriters and selling
group members may allow a discount of $ per share on sales to other broker/
dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the representatives.
The following table summarizes the compensation and estimated expenses we
and the selling stockholder will pay.
<TABLE>
<CAPTION>
WITHOUT WITH
OVER-ALLOTMENT OVER-ALLOTMENT
-------------- --------------
<S> <C> <C>
Expenses payable by us...................................... $ $
Underwriting discounts and commissions paid by selling
stockholder............................................... $ $
Expenses payable by the selling stockholder................. $ $
</TABLE>
Each of the underwriters severally represents and agrees that:
- it has not offered or sold and prior to the date six months after the
date of issue of the common stock will not offer or sell any common stock
to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as
86
<PAGE> 91
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers
of Securities Regulations 1995
- it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the common stock in, from or otherwise involving the United
Kingdom
- it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the common stock to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We and Pechiney have agreed, subject to specified exceptions, that we and
it will not offer, sell, contract to sell, announce an intention to sell, pledge
or otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any additional shares of our common stock or securities convertible into or
exchangeable or exercisable for any of our common stock without the prior
written consent of Credit Suisse First Boston Corporation for a period of 180
days after the date of this prospectus. Pechiney has not indicated any intention
to seek written consent for any of these items during the lock-up period.
We and Pechiney have agreed to indemnify the underwriters against
liabilities under the Securities Act, or contribute to payments which the
underwriters may be required to make in that respect.
We have made an application to list our shares of common stock on the New
York Stock Exchange under the symbol "CAN."
In connection with the listing of the common stock on the New York Stock
Exchange, the underwriters will undertake to sell round lots of 100 shares or
more to a minimum of 2,000 beneficial owners.
A number of the U.S. and international underwriters have from time to time
performed, and continue to perform, financial advisory, investment banking and
commercial banking services for us, Pechiney and our respective subsidiaries,
for which customary compensation has been received. A member of the Board of
Directors of Credit Suisse, an affiliate of Credit Suisse First Boston
Corporation, is also a member of the Board of Directors of Pechiney.
The price to the public will be determined by Pechiney and ANC in
consultation with the representatives. The principal factors expected to be
considered in determining the price to the public are:
- prevailing market conditions, particularly market conditions for initial
public offerings and for securities of companies in the metal packaging
industry
- the history of and prospects for ANC's business and for the metal
packaging industry in general
- the past and present operations of ANC
- the past and present earnings and current financial position of ANC
- an assessment of ANC's management.
Credit Suisse First Boston Corporation, on behalf of the underwriters, may
engage in over-allotment, stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Regulation M under the
Securities Exchange Act. Over-allotment involves syndicate sales in excess of
the offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum price. Syndicate covering
transactions involve purchases of the common stock in the open market after the
distribution has been
87
<PAGE> 92
completed in order to cover syndicate short positions. Penalty bids permit the
representatives to reclaim a selling concession from a syndicate member when the
common stock originally sold by that syndicate member is purchased in a
syndicate covering transaction to cover syndicate short positions. These
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the common stock to be higher than it would otherwise be in
the absence of these transactions. These transactions may be effected on the New
York Stock Exchange or otherwise and, if commenced, may be discontinued at any
time.
88
<PAGE> 93
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the shares in Canada is being made only on a private
placement basis exempt from the requirement that ANC and Pechiney prepare and
file a prospectus with the securities regulatory authorities in each province
where trades of shares are effected. Accordingly, any resale of the shares in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
shares.
REPRESENTATIONS OF PURCHASERS
Each purchaser of shares in Canada who receives a purchase confirmation
will be deemed to represent to ANC and Pechiney and the dealer from whom such
purchase confirmation is received that (a) such purchaser is entitled under
applicable provincial securities laws to purchase such shares without the
benefit of a prospectus qualified under such securities laws, (b) where required
by law, such purchaser is purchasing as principal and not as an agent, and (c)
such purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by the
Ontario Securities Laws. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of ANC's directors and officers as well as the experts named herein and
Pechiney may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of ANC,
Pechiney and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against ANC, Pechiney or such persons
in Canada or to enforce a judgment obtained in Canadian courts against ANC,
Pechiney or such persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of shares to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any shares
acquired by such purchaser pursuant to this offering. Such report must be in the
form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from ANC. Only one such report must be
filed in respect of shares acquired on the same date and under the same
prospectus exemption.
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of shares should consult their own legal and tax
advisers with respect to the tax consequences of an investment in the shares in
their particular circumstances and with respect to the eligibility of the shares
for investment by the purchaser under relevant Canadian legislation.
89
<PAGE> 94
ADDITIONAL INFORMATION
We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission. This prospectus, which is a part of the registration
statement, does not contain all of the information included in the registration
statement. For all of the information, you should refer to the registration
statement and its exhibits. You may review a copy of the registration statement,
including exhibits, at the SEC's public reference room at Judiciary Plaza, 450
Fifth Street, N.W., Washington D.C. 20549 or Seven World Trade Center, 13th
Floor, New York, New York 10048 or Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference rooms.
As a result of the offering of shares in the United States, we will become
subject to the reporting requirement of the Securities Exchange Act, and
therefore, we will also file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information on file at the public reference rooms.
You can also request copies of these documents, for a copying fee, by writing to
the SEC.
Our SEC filings and the registration statement can also be reviewed by
accessing the SEC's Internet site at http:/www.sec.gov, which contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC.
Our shares will be traded on the New York Stock Exchange and reports and
other information concerning our company will be available for inspection at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
LEGAL MATTERS
The validity of our shares offered hereby will be passed upon for us and
the selling stockholder by Shearman & Sterling, Paris, France and for the
underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
EXPERTS
The Combined Financial Statements as of December 31, 1997 and 1998 and for
each of the three years in the period ended December 31, 1998 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
90
<PAGE> 95
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
Report of Independent Accountants........................... F-2
Combined Statements of Income for the years ended December
31, 1998, 1997 and 1996 and the three-month periods ended
March 31, 1999 and 1998................................... F-3
Combined Balance Sheets at December 31, 1998 and 1997 and
March 31, 1999; Pro Forma Balance Sheet at March 31,
1999...................................................... F-4
Combined Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 and the three-month
periods ended March 31, 1999 and 1998..................... F-5
Combined Statements of Changes in Owner's Equity for the
years ended December 31, 1998, 1997 and 1996 and the
three-month period ended March 31, 1999................... F-7
Notes to the Combined Financial Statements.................. F-8
</TABLE>
F-1
<PAGE> 96
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of American National Can Group, Inc.
In our opinion, the combined financial statements listed in the Index to
Combined Financial Statements appearing on Page F-1 of this prospectus present
fairly, in all material respects, the financial position of American National
Can Group, Inc. and combined companies ("ANC") at December 31, 1997 and 1998,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of ANC's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing standards which
require that we plan and perform the audits 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 1, effective January 1, 1998, ANC adopted AICPA
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities."
PricewaterhouseCoopers LLP
Chicago, Illinois
April 19, 1999
F-2
<PAGE> 97
AMERICAN NATIONAL CAN GROUP, INC.
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------------ -------------------
NOTES 1996 1997 1998 1998 1999
------ ---------- ---------- ---------- -------- --------
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net sales........................................ $2,520,290 $2,465,018 $2,458,849 $542,558 $530,642
Cost of goods sold (excluding depreciation)...... 2,189,605 2,069,206 1,984,369 447,459 432,268
Selling, general and administrative expense...... 136,427 134,221 138,257 31,580 31,207
Research and development expense................. 21,652 19,514 15,224 3,652 3,563
Depreciation and amortization.................... 73,958 77,656 82,057 20,327 20,986
Goodwill amortization............................ 41,033 41,035 40,474 10,258 10,201
Restructuring charge (credit) and writedown of
property and equipment......................... 5,15 158,706 10,924 (2,437) 154 --
---------- ---------- ---------- -------- --------
OPERATING INCOME (LOSS) FROM CONTINUING
OPERATIONS..................................... (101,091) 112,462 200,905 29,128 32,417
Interest expense................................. 10 95,324 90,433 68,773 19,326 15,318
Interest income and other financial income
(expense), net................................. 11 4,321 26,880 10,634 1,770 8,156
---------- ---------- ---------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES, EQUITY EARNINGS, MINORITY
INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE......................................... (192,094) 48,909 142,766 11,572 25,255
Income tax expense (benefit)..................... 9 (35,191) 30,027 26,546 4,762 10,774
---------- ---------- ---------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EQUITY EARNINGS, MINORITY INTEREST AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE......... (156,903) 18,882 116,220 6,810 14,481
Equity in net earnings (loss) of affiliates...... 6 993 (3,475) 4,465 (1,265) 1,976
Minority interest................................ (7,209) (5,352) (4,997) (580) (470)
---------- ---------- ---------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF ACCOUNTING CHANGE......... (163,119) 10,055 115,688 4,965 15,987
Income (loss) from discontinued operations, net
of tax expense (benefit) of ($32,454), $8,715,
$13,599, $3,232 and $1,309..................... 2 (60,803) 2,392 527 (901) 1,098
Cumulative effect of accounting change, net of
tax of $1,381.................................. 1 (2,566) (2,566) --
---------- ---------- ---------- -------- --------
NET INCOME (LOSS)................................ $ (223,922) $ 12,447 $ 113,649 $ 1,498 $ 17,085
========== ========== ========== ======== ========
EARNINGS (LOSS) PER SHARE
Income (loss) from continuing operations before
cumulative effect of accounting change......... $ (2.97) $ 0.18 $ 2.10 $ 0.09 $ 0.29
Income (loss) from discontinued operations....... (1.10) 0.05 0.01 (0.02) 0.02
Cumulative effect of accounting change........... -- -- (0.04) (0.04) --
---------- ---------- ---------- -------- --------
NET INCOME (LOSS)................................ $ (4.07) $ 0.23 $ 2.07 $ 0.03 $ 0.31
========== ========== ========== ======== ========
</TABLE>
See notes to the Combined Financial Statements.
F-3
<PAGE> 98
AMERICAN NATIONAL CAN GROUP, INC.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------- MARCH 31, 1999
NOTES 1997 1998 1999 PRO FORMA
----- ---------- ---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and cash equivalents................. $ 105,835 $ 170,549 $ 156,912 $ 107,542
Accounts receivable....................... 3 135,549 138,312 173,585 173,585
Other receivables and prepaid expenses.... 36,537 42,232 55,795 55,795
Inventories............................... 4 256,354 236,340 249,281 249,281
Net current assets of discontinued
operations.............................. 2 13,670 46,454 72,685 --
Deferred income taxes..................... 9 119,116 109,713 102,073 102,073
---------- ---------- ---------- ----------
TOTAL CURRENT ASSETS...................... 667,061 743,600 810,331 688,276
Property, plant and equipment, net........ 5,15 845,849 836,064 806,926 806,926
Goodwill, net............................. 1 1,300,471 1,224,348 1,214,041 1,214,041
Investments in equity affiliates.......... 6 98,153 112,541 109,372 109,372
Pension asset............................. 12 194,356 212,531 214,343 214,343
Net noncurrent assets of discontinued
operations.............................. 2 511,787 536,397 524,236 --
Deferred income taxes..................... 9 202,057 193,168 208,577 182,984
Other long-term assets.................... 71,685 68,568 77,539 86,539
---------- ---------- ---------- ----------
TOTAL ASSETS.............................. $3,891,419 $3,927,217 $3,965,365 $3,302,481
========== ========== ========== ==========
LIABILITIES AND OWNER'S EQUITY:
CURRENT LIABILITIES
Accounts payable -- trade................. $ 250,733 $ 241,215 $ 235,332 $ 235,332
Other payables and accrued liabilities.... 13 416,830 342,509 340,963 340,963
Current portion of long-term debt......... 7,8 7,403 6,704 6,200 1,616
Short-term financing:..................... 7
External................................ 24,435 20,258 54,657 454,657
Related party........................... 738,563 659,783 719,816 --
---------- ---------- ---------- ----------
TOTAL CURRENT LIABILITIES................. 1,437,964 1,270,469 1,356,968 1,032,568
Deferred income taxes..................... 9 53,089 59,900 55,959 55,959
Postretirement benefit obligations........ 12 308,847 309,004 307,646 307,646
Other long-term liabilities............... 14 225,020 169,828 173,505 173,505
Long-term debt:........................... 7,8
External................................ 318,198 259,921 239,856 662,591
Related party........................... 571,591 291,277 287,204 --
---------- ---------- ---------- ----------
TOTAL LIABILITIES......................... 2,914,709 2,360,399 2,421,138 2,232,269
---------- ---------- ---------- ----------
Minority interests........................ 29,042 28,530 24,221 24,221
Commitments and contingencies............. 18
Owner's equity............................ 1,031,646 1,603,367 1,610,260 1,129,640
Accumulated other comprehensive loss...... (83,978) (65,079) (90,254) (83,649)
---------- ---------- ---------- ----------
Total equity.............................. 947,668 1,538,288 1,520,006 1,045,991
---------- ---------- ---------- ----------
Total liabilities and equity.............. $3,891,419 $3,927,217 $3,965,365 $3,302,481
========== ========== ========== ==========
</TABLE>
See notes to the Combined Financial Statements.
F-4
<PAGE> 99
AMERICAN NATIONAL CAN GROUP, INC.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------- -------------------
1996 1997 1998 1998 1999
--------- --------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing
operations before cumulative
effect of accounting change....... $(163,119) $ 10,055 $115,688 $ 4,965 $ 15,987
Minority interests................... 7,209 5,352 4,997 580 470
Equity in net (earnings) loss of
affiliates........................ (993) 3,475 (4,465) 1,265 (1,976)
Depreciation and amortization........ 114,991 118,691 122,531 30,585 31,187
Restructuring charge (credit) and
write down of property, plant and
equipment......................... 158,706 10,924 (2,437) 154 --
Pension expense (income)............. (3,234) (21,768) (40,847) (7,022) (4,131)
Provision (benefit) for deferred
income taxes...................... (38,076) (7,310) 30,691 2,664 1,492
Reduction in income tax reserve...... -- -- (32,206) -- --
Other non-cash (income) expense,
net............................... 17,063 13,060 17,824 (2,125) (1,901)
Changes in assets and liabilities
exclusive of effects from
acquisitions, divestitures and
translation adjustments:
Decrease (increase) in inventories... 81,443 6,434 23,243 (32,539) (21,023)
Decrease (increase) in accounts
receivable........................ 52,756 (45,696) (3,140) (43,223) (42,585)
(Decrease) increase in accounts
payable........................... (95,104) 39,386 (10,958) 15,923 1,775
Other changes in assets and
liabilities....................... 8,767 (3,446) (41,741) (36,424) (3,766)
Restructuring expenditures........... (23,303) (22,553) (12,059) (4,862) (5,149)
Pension funding...................... (119,408) (54,865) (14,610) (3,586) (3,968)
Dividends received from
unconsolidated affiliates......... 6,203 13,493 8,243 -- --
--------- --------- -------- -------- --------
Net cash provided by (used in)
operating activities of continuing
operations........................... 3,901 65,232 160,754 (73,645) (33,588)
Net cash provided by (used in)
operating activities of discontinued
operations........................... 8,451 96,704 24,725 9,486 (1,635)
--------- --------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................. 12,352 161,936 185,479 (64,159) (35,223)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment......................... (142,387) (71,861) (65,196) (14,331) (14,540)
Proceeds from sales of property,
plant and equipment............... 27,842 8,538 6,998 3,398 --
Acquisition of businesses............ (12,012) -- -- -- --
Other................................ 7,218 6,320 -- -- 29
--------- --------- -------- -------- --------
Net cash used in investing activities
of continuing operations............. (119,339) (57,003) (58,198) (10,933) (14,511)
Net cash provided by (used in)
investing activities of discontinued
operations........................... 40,812 (55,062) (84,758) (25,717) (10,878)
--------- --------- -------- -------- --------
NET CASH USED IN INVESTING
ACTIVITIES........................... (78,527) (112,065) (142,956) (36,650) (25,389)
</TABLE>
See notes to the Combined Financial Statements.
F-5
<PAGE> 100
AMERICAN NATIONAL CAN GROUP, INC.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Additions to long-term debt....... 120,000 1,037 265,295 31,442 --
Payments on long-term debt........ (32,052) (27,732) (595,951) (585,599) (25,115)
Net increase (decrease) in
short-term financing........... (36,941) 34,284 (95,644) 161,132 87,589
Proceeds from issuance of common
and preferred stock by
subsidiary companies to
Pechiney....................... -- -- 883,100 883,100 --
Capital contributions from
Pechiney....................... 66,000 602 -- --
Dividends paid:
To parent company.............. (12,442) (7,658) (425,028) (417,637) (10,192)
To minority interests in
subsidiaries................. (5,680) (4,016) (5,503) (3,513) (4,776)
--------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities of continuing
operations........................ 98,885 (3,483) 26,269 68,925 47,506
Net cash provided by (used in)
financing activities of
discontinued operations........... (15,172) (3,282) (5,079) (2,002) (2,061)
--------- --------- --------- --------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES.............. 83,713 (6,765) 21,190 66,923 45,445
Net effect of foreign currency
translation on cash............... (63) (4,133) 1,161 9 1,495
--------- --------- --------- --------- ---------
Net increase in cash and cash
equivalents....................... 17,475 38,973 64,874 (33,877) (13,672)
Change in cash and cash equivalents
of discontinued operations........ (88) 454 (160) (2,344) (896)
--------- --------- --------- --------- ---------
Net increase in cash and cash
equivalents of continuing
operations........................ 17,387 39,427 64,714 (36,221) (14,568)
Cash and cash equivalents at
beginning of year................. 49,021 66,408 105,835 105,835 170,549
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF
YEAR.............................. $ 66,408 $ 105,835 $ 170,549 $ 69,614 $ 155,981
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES
Cash payments during the year for:
Interest.......................... $ 95,380 $ 89,646 $ 67,545
Income taxes...................... 31,883 22,502 41,141
Non-cash transactions:
Forgiveness of debt by Pechiney... 152,000
Contribution by Pechiney of its
minority interest in European
subsidiaries................... 883,100
</TABLE>
See notes to the Combined Financial Statements.
F-6
<PAGE> 101
AMERICAN NATIONAL CAN GROUP, INC.
COMBINED STATEMENT OF CHANGES IN OWNER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
OWNER'S COMPREHENSIVE COMPREHENSIVE
EQUITY INCOME INCOME TOTAL
---------- ------------- ------------- ----------
(IN THOUSANDS OF U.S. DOLLARS)
<S> <C> <C> <C> <C>
Balance at January 1, 1996................................ $1,044,619 $(112,247) $ 932,372
Net loss.................................................. (223,922) $(223,922) (223,922)
Changes in accumulated other comprehensive income:
Foreign currency translation adjustment, net of tax of
$1,686................................................ (4,006) (4,006) (4,006)
Minimum pension liability adjustments, net of tax of
$36,706............................................... 57,655 57,655 57,655
---------
Comprehensive income (loss)............................... $(170,273)
=========
Capital contribution from Pechiney relating to Brazilian
subsidiary.............................................. 66,000 66,000
Dividends paid to Pechiney................................ (12,442) (12,442)
---------- --------- ----------
Balance at December 31, 1996.............................. 874,255 (58,598) 815,657
Net income................................................ 12,447 12,447 12,447
Changes in accumulated other comprehensive income:
Foreign currency translation adjustment, net of tax of
($7,496).............................................. (56,353) (56,353) (56,353)
Minimum pension liability adjustment, net of tax of
$18,690............................................... 29,552 29,552 29,552
---------
Comprehensive income (loss)............................... $ (14,354)
=========
Capital contribution from Pechiney relating to forgiveness
of debt ($152,000) and Brazilian subsidiary ($602)...... 152,602 152,602
Dividends paid to Pechiney................................ (7,658) (7,658)
Impact of divestiture..................................... 1,421 1,421
---------- --------- ----------
Balance at December 31, 1997.............................. 1,031,646 (83,978) 947,668
Net income................................................ 113,649 $ 113,649 113,649
Changes in accumulated other comprehensive income:
Foreign currency translation adjustment, net of tax of
$4,263................................................ 29,892 29,892 29,892
Minimum pension liability adjustment, net of tax of
($7,207).............................................. (10,993) (10,993) (10,993)
---------
Comprehensive income...................................... $ 132,548
=========
Contribution by Pechiney of minority interest in European
subsidiaries............................................ 883,100 883,100
Dividends paid to Pechiney................................ (425,028) (425,028)
---------- --------- ----------
Balance at December 31, 1998.............................. 1,603,367 (65,079) 1,538,288
Net income................................................ 17,085 $ 17,085 17,085
Changes in accumulated other comprehensive income:
Foreign currency translation adjustment, net of tax of
$(8,743).............................................. (25,175) (25,175) (25,175)
Minimum pension liability adjustment.................... -- -- --
---------
Comprehensive income...................................... $ (8,090)
=========
Dividends paid to Pechiney................................ (10,192) (10,192)
---------- --------- ----------
Balance at March 31, 1999 (unaudited)..................... $1,610,260 $ (90,254) $1,520,006
========== ========= ==========
</TABLE>
Accumulated other comprehensive income items comprise cumulative
translation adjustments of $18,409, $22,415, $77,347, $47,455 and $72,630 and
minimum pension liability adjustments of $93,838, $36,183, $6,631, $17,624 and
$17,624 at January 1, 1996 and December 31, 1996, 1997, and 1998, and March 31,
1999, respectively. Such amounts are net of tax aggregating $71,029, $32,637,
$21,443, $24,387 and $33,130 at those dates, respectively. The net amounts for
minimum pension liability adjustments referred to above include $2,935, $2,673,
$3,469, $4,265 and $4,265 applicable to the discontinued Plastics business.
See notes to the Combined Financial Statements.
F-7
<PAGE> 102
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 1 -- BASIS OF PRESENTATION
REPORTING STRUCTURE AND NATURE OF BUSINESS
American National Can Group, Inc. (the "Company"), a newly formed Delaware
company, will become the holding company for the worldwide beverage can business
of Pechiney, a French company, through a series of transactions in a number of
countries (the "Reorganization") to be completed immediately prior to the
initial public offering (the "Offering") by Pechiney of a majority ownership in
the Company. The beverage can business consists of the manufacture and sale of
aluminum and steel beverage cans for the soft drink, beer, fruit drink and tea
markets. Operations of this business have been conducted by (a) Pechiney North
America, Inc. ("PNA") (a wholly owned subsidiary of Pechiney) through its 90%
owned subsidiary (Pechiney owns directly the remaining 10%), American National
Can Company ("ANCC") and ANCC's various European (in which Pechiney has a
minority interest) and Asian subsidiaries and (b) Pechiney through its
subsidiaries in Turkey (65% owned), France (100% owned) and Brazil (100% owned)
and its joint ventures in Mexico (50% interest) and Korea (40% interest).
ANCC also operates a plastics packaging business which consists of the
manufacture and sale of flexible plastics (flexible packaging for the food,
meat, dairy and healthcare markets), plastic bottles (plastic barrier bottles
for food companies) and tubes (plastic and laminated tubes for the
pharmaceutical, cosmetics and toiletries markets).
The Reorganization consists of:
-- The payment of dividends aggregating $111,000 to Pechiney by certain of
Pechiney's European beverage can subsidiaries prior to completion of the
Offering, which will result in a reduction of owner's equity of
$111,000. This is in addition to $10,192 that was paid during the first
quarter of 1999.
-- Transfer by Pechiney of (a) PNA, (b) its minority interests in the ANCC
European subsidiaries and (c) its aforementioned subsidiaries and
investments in joint ventures to ANC, Inc.
-- Transfer by ANCC of the Plastics business along with approximately
$260,000 of related party debt to a newly created wholly owned
subsidiary of ANCC (Pechiney Plastic Packaging, Inc.) and transfer of
the stock in the newly created subsidiary to Pechiney in exchange for
Pechiney's 10% ownership interest in ANCC. No gain/loss related to the
transfer of the Plastics operations will be recognized for financial
reporting purposes. The transfer of the Plastics operations would result
in a reduction of owner's equity of approximately $322,000 as at
December 31, 1998. No gain for income tax purposes is expected to result
from the transfer. However, in conjunction with the Reorganization,
Pechiney Plastic Packaging, Inc. intends to sell technology to another
subsidiary of Pechiney, resulting in a taxable gain currently estimated
to be $65,000. Such gain would result in no cash outlay, but would
reduce the deferred tax asset for net operating loss carryforwards by
$26,000.
Accordingly, the accompanying combined financial statements include the
accounts of PNA, ANCC and the entities to be transferred by Pechiney for the
periods presented. The combined entity is referred to hereinafter as "ANC." The
Plastics operations have been presented as discontinued operations in the
accompanying combined financial statements as they represent a separate segment.
As a consequence, in the combined balance sheets at December 31, 1997 and 1998,
the amounts of the net current and net non-current assets and liabilities of the
Plastics operations have been aggregated and presented as single-line items. In
the combined statement of income for all periods presented, the operating
results of the Plastics business have been presented separately as single-line
items. The combined statement of cash flows sets forth separately the cash flows
of the continuing and discontinued operations for all periods presented.
F-8
<PAGE> 103
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
In February 1998, Pechiney reorganized the ownership of its beverage can
European subsidiaries. As a result of that reorganization, newly created foreign
subsidiaries of ANC, which own all the stock of the European subsidiaries,
issued common and preferred stock to Pechiney for $883,100, representing a 44%
ownership interest in the subsidiaries. The proceeds were lent by ANC to PNA.
PNA utilized the proceeds to repay debt owing to Pechiney ($473,100) and for
payment of a dividend to Pechiney ($410,000). As referred to above, Pechiney
will transfer its minority interest in the European subsidiaries to the Company
and, accordingly, $883,100 was recorded in the combined financial statements as
a contribution to capital. The combined financial statements reflect ANC's 100%
ownership of the European subsidiaries after considering the contribution to
capital.
In February 1996, an Italian subsidiary of ANC acquired the capital stock
of SITAC, an Italian company engaged in the manufacture of beverage can ends.
The purchase price, exclusive of cash acquired, was $12,012. Goodwill of $1,600
was recorded in connection with the transaction.
ACCOUNTING PRINCIPLES
The combined financial statements of ANC are prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
NEWLY ISSUED ACCOUNTING PRINCIPLES
- - In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued its Statement of Position 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The statement
requires capitalization of external direct costs of materials and services
consumed in the development or obtainment of internal use computer software,
payroll and payroll-related costs for employees who are directly associated
with and who devote time to the internal-use computer software project and
interest costs incurred during the development of the computer software for
internal use. Adoption of this statement will be required in ANC's financial
statements for the year ending December 31, 1999 and is not expected to have
a significant effect.
- - In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement requires that all
derivatives be recognized as assets and liabilities and measured at fair
value. Changes in the fair value of derivatives not qualifying as hedges are
required to be reported in earnings. Adoption of the standard will be
required in ANC's financial statements for the year ending December 31,
2001. Management is in the process of evaluating this standard and has not
yet determined the future impact on ANC's combined financial statements.
- - In April 1998, the AICPA issued its Statement of Position 98-5, "Reporting
on the Costs of Start-up Activities". This statement requires the cost of
start-up activities and organization costs to be expensed as incurred. ANC
adopted this statement effective January 1, 1998 and unamortized costs that
were previously capitalized through that date were written off as a
cumulative effect of an accounting change. This resulted in a charge of
$2,566 (net of taxes of $1,381) to continuing operations and $1,481 (net of
taxes of $971) to discontinued operations.
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The combined financial statements include the accounts of the entities
referred to above under Reporting Structure and Nature of Business. The equity
method of accounting is used for unconsolidated companies in which ANC exercises
significant influence. All significant intercompany transactions and profits
have been eliminated.
F-9
<PAGE> 104
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
REVENUE RECOGNITION
Revenues are recognized when goods are shipped.
TRANSLATION
Asset and liability accounts denominated in non-U.S. currencies are
translated into U.S. dollars at year-end exchange rates, while revenues and
costs are translated at average rates of exchange in effect during the period.
The net effect of translating non-U.S. currencies is recorded as a cumulative
adjustment within accumulated other comprehensive income, net of applicable
income taxes.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost including interest incurred
on funds borrowed during the period that major items are constructed for their
intended use. No interest costs were capitalized during 1996, 1997 and 1998.
Capitalized leases are stated at the present value of future minimum lease
payments. Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets (buildings -- 40 years and
machinery and equipment -- 4 to 25 years).
Whenever events or changes in circumstances indicate that the carrying
amount of long-lived assets may not be recoverable, this carrying amount is
compared with management's best estimates of the future cash flows (undiscounted
and without interest charges) expected to result from the use of the assets and
their eventual disposition. If the sum of expected future cash flows is less
than the carrying amount of the assets, an impairment loss is recognized based
on the fair value of the assets; when a market value is not available, the fair
value is generally estimated as the present value of expected future cash flows.
INVENTORIES
Inventories are stated at the lower of cost or market. The cost of
substantially all U.S. inventories, other than spare parts, is determined by the
last-in, first-out (LIFO) method. The cost of substantially all other
inventories is determined by the first-in, first-out (FIFO) method. At December
31, 1997 and 1998, inventories stated at LIFO comprised approximately 30% and
36%, respectively, of combined inventories.
GOODWILL
The difference between the purchase price and the book value of net assets
acquired is allocated to tangible and intangible assets and to assumed
liabilities for which a fair value can be specifically determined. The excess of
the purchase price over the fair value of net assets acquired is allocated to
goodwill. Goodwill is amortized on a straight-line basis over a period not
exceeding 40 years.
Substantially all of the goodwill reflected on the combined balance sheet
arose from the revaluation of the tangible assets and assumed liabilities of ANC
as of the date of its acquisition by Pechiney in 1988. Goodwill related to the
acquisition by Pechiney was allocated to the beverage can business and the
Plastics business based on their estimated fair market values. At December 31,
1997 and 1998, accumulated amortization of goodwill aggregated $430,290 and
$470,764, respectively.
The carrying value of goodwill is reviewed regularly to reflect changes
which may have permanently impaired the profitability and the value of the
related assets:
-- the carrying value of goodwill is compared with the fair value of the
corresponding entities, estimated on the basis of management's best
estimates of the market value of these entities or comparable entities,
when available, or using other techniques such as the discounted cash
flow method which is based on management's best estimates of future cash
flows;
F-10
<PAGE> 105
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
-- in addition, goodwill associated with property, plant and equipment is
reviewed for impairment jointly with the property, plant and equipment
with which it is associated.
No writedowns were required in the periods presented as a result of the
evaluations performed under these two methodologies.
During 1998, certain income tax uncertainties related to the 1988
acquisition of ANC by Pechiney were resolved and the related liabilities
established at the acquisition date were reversed resulting in a net $46,122
reduction in goodwill, of which $35,649 was allocated to continuing operations
based on the relationship of goodwill for continuing operations to total
goodwill for continuing and discontinued operations (Note 9).
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred.
DEFERRED INCOME TAXES
Deferred income taxes are accounted for using the liability method on
temporary differences between the financial statement and tax bases. These
deferred taxes are measured by applying currently enacted tax laws. Valuation
allowances are established on deferred tax assets when management estimates that
it is more likely than not that the related benefit will not be realized.
FINANCIAL INSTRUMENTS
ANC's financial instruments include cash, current accounts and notes
receivable, noncurrent receivables, accounts payable, short-term and long-term
debt, and foreign currency exchange contracts. The market value of cash and
current receivables and payables are considered to be identical to the book
value due to the short-term nature of those instruments. The market value for
noncurrent receivables and short-term and long-term debt, based on current
interest rates available to ANC for similar instruments, approximated their
carrying value at December 31, 1998.
ANC enters into foreign currency exchange contracts, primarily with
Pechiney, as a hedge against firm currency commitments which are primarily for
the purchase of raw materials and the sale of finished goods. ANC's foreign
currency exchange contracts do not subject ANC to significant risk due to
exchange rate movements because gains and losses on these contracts are deferred
and offset against gains and losses on the transactions being hedged. At
December 31, 1997, ANC had forward exchange contracts with maturity dates
through March 1999 to purchase $233,000 and to sell $152,000 of various foreign
currencies. At December 31, 1998, ANC had forward exchange contracts, with
maturity dates through July 2003, to purchase $321,000 and to sell $90,000 of
various foreign currencies. The carrying value of ANC foreign currency exchange
contracts approximate their fair value at December 31, 1997 and 1998.
PREPAID CUSTOMER INCENTIVES
Included in prepaid expenses and other long-term assets are prepaid
customer incentives, representing payments to certain customers in exchange for
entering into long-term sales contracts requiring purchases of guaranteed
minimum quantities. These incentive payments are capitalized upon payment and
amortized over the length of the underlying contract on a straight-line basis.
UNCERTAINTIES RESULTING FROM THE 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
F-11
<PAGE> 106
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates and assumptions.
Estimates and assumptions are particularly significant with respect to
estimating liabilities such as provisions and accruals for litigation or
environmental reserves. They are also significant with respect to assessing the
recoverability of the carrying value of property, plant and equipment,
intangible assets and deferred tax assets, which, to a large extent, is based on
estimates of expected future net income or cash flows. Actual future net income
and cash flows could vary significantly from the estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, cash and cash equivalents
include all financial instruments with an initial maturity of 90 days or less.
EARNINGS PER SHARE
Earnings per share have been calculated by dividing net income (loss) by
average shares outstanding after the Offering of 55,000,000. Diluted earnings
per share have not been presented in the combined financial statements as ANC
does not have dilutive potential common shares outstanding.
INTERIM FINANCIAL DATA (UNAUDITED)
The interim financial data as of March 31, 1999 and for each of the three
months ended March 31, 1999 and 1998 is unaudited. The accompanying unaudited
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments necessary
for a fair presentation of results of the interim periods have been made and
such adjustments were of a normal and recurring nature. The results of
operations and cash flows for the three months ended March 31, 1999 are not
necessarily indicative of the results that can be expected for the entire fiscal
year ending December 31, 1999.
F-12
<PAGE> 107
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 2 -- DISCONTINUED OPERATIONS
The Plastics business of ANC will be transferred to Pechiney (Note 1).
These operations have been reflected as discontinued operations for all periods
presented in the combined financial statements. The net assets of the
discontinued business at December 31, 1997 and 1998 comprise:
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Net current assets
Cash........................................................ $ 1,349 $ 1,509
Accounts receivable, net.................................... 14,273 12,623
Inventories:
Raw materials............................................. 26,203 38,054
Spare parts............................................... 6,410 7,326
Work-in-process........................................... 27,612 25,950
Finished goods............................................ 65,132 64,801
-------- --------
Total inventories........................................... 125,357 136,131
Other receivables and prepaid expenses...................... 12,383 20,261
Deferred income taxes....................................... 10,005 7,682
Accounts payable-trade...................................... (60,651) (48,692)
Postretirement benefit obligations.......................... (29,000) (29,000)
Other payables and accrued liabilities...................... (51,614) (46,320)
Current portion of long-term debt........................... (4,096) (4,388)
Short-term financing -- External............................ (4,336) (3,352)
-------- --------
Net current assets.......................................... $ 13,670 $ 46,454
======== ========
Net noncurrent assets
Property, plant and equipment............................... $408,481 $449,264
Goodwill.................................................... 349,542 327,060
Deferred income taxes....................................... 114,028 118,952
Pension asset............................................... 631 177
Other long-term assets...................................... 55,180 43,781
Post retirement benefit obligations......................... (335,031) (331,797)
Other long-term liabilities................................. (13,182) (7,565)
Long-term debt -- Related party............................. (67,862) (63,475)
-------- --------
Net noncurrent assets....................................... $511,787 $536,397
======== ========
</TABLE>
In December 1995, ANC entered into an agreement with PMC Lease Co., a
related party, for the sale and leaseback of certain Plastics business machinery
and equipment. Based on an independent valuation, the final selling price of
these assets was $79,260, which approximated their book value. PMC Lease Co.
paid ANC $14,631 in 1995 and issued a note receivable for the balance. The note
is repayable in annual installments over 10 years, with the final installment
due in December 2005, and bears interest at 6.1%. The lease has been recorded as
a capital lease. The recorded assets and liabilities related to this agreement
have been included in the net assets of discontinued operations in the combined
balance sheet at December 31, 1997 and 1998.
In December 1996, PNA sold the capital stock of Intsel Southwest, a 100%
owned subsidiary engaged in the metal distributions business, for $61,396 of
cash. The gain on sale of this business, together with its net income from 1996
operations, has been presented as a discontinued operation in the combined
statement of income for 1996. Net sales of Intsel Southwest for 1996 were
$99,015.
F-13
<PAGE> 108
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Cash flows from investing activities of discontinued operations for 1996
include proceeds from sales of businesses of $97,462, comprising $61,396
pertaining to the sale of Intsel Southwest by PNA and $35,526 in final
settlement of ANC's selling price of its Food Metal & Specialty business unit
and its Glass business unit. These ANC business units have been accounted for as
discontinued operations since June 30, 1995.
In December 1996, Pechiney authorized the sale of ANC's 51% interest in an
Italian subsidiary engaged in the manufacture of food cans and a provision for
loss of $6,300 related to income taxes was recorded. The sale was completed in
1997 and proceeds were $3,239, net of $13,000 of subsidiary cash. An additional
loss of $100 was recorded in 1997.
In December 1996, the plastics business recorded a restructuring charge of
$32,412. The 1996 charge resulted from Project Challenge initiatives and
comprised the cost to close the Mt. Vernon, OH plant, sever an additional 89
employees primarily in plants other than Mt. Vernon, and to writedown equipment
in other plants to fair value. Costs to close the Mt. Vernon plant include fixed
asset impairments to reduce fixed assets to estimated fair values, severance
costs for 222 employees, and other plant closing costs such as asset dismantling
costs. The plant was closed during the fourth quarter of 1998. The number of
employees terminated under the 1996 program through December 31, 1998 was 288.
Remaining restructuring reserves included in the liabilities of the discontinued
business were $12,163 and $6,751 at December 31, 1997 and 1998, respectively.
Management believes that the remaining reserve at December 31, 1998 will be
substantially utilized in 1999.
The activity in the restructuring reserve for the plastics business was as
follows:
<TABLE>
<CAPTION>
EMPLOYEE EQUIPMENT
TERMINATION DISMANTLE
AND AND NON-CASH
SEVERANCE FACILITY DISPOSAL ASSET
PROGRAMS COSTS COSTS WRITEDOWNS TOTAL
----------- -------- --------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995......... $ 875 $ 284 $2,202 $ -- $ 3,361
Charge to income..................... 6,199 2,000 3,370 20,843 32,412
Cash payments........................ (1,269) (141) (379) -- (1,789)
Non-cash utilized.................... -- -- -- (20,843) (20,843)
------- ------- ------ -------- --------
Balance at December 31, 1996......... 5,805 2,143 5,193 -- 13,141
Cash payments........................ (244) (168) (425) -- (837)
Non-cash utilized.................... (141) -- -- -- (141)
------- ------- ------ -------- --------
Balance at December 31, 1997......... 5,420 1,975 4,768 -- 12,163
Credit to income..................... (720) (1,765) 420 1,365 (700)
Cash payments........................ (2,748) -- (599) -- (3,347)
Non-cash utilized.................... -- -- -- (1,365) (1,365)
------- ------- ------ -------- --------
Balance at December 31, 1998......... 1,952 210 4,589 -- 6,751
Cash payments........................ (537) (37) (760) -- (1,334)
------- ------- ------ -------- --------
Balance at March 31, 1999............ $ 1,415 $ 173 $3,829 $ -- $ 5,417
======= ======= ====== ======== ========
</TABLE>
At December 31, 1995, the reserves for termination and severance programs
and for facility costs related to plant rationalization programs. These reserves
were utilized prior to December 31, 1997.
F-14
<PAGE> 109
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
In 1998, as a result of the closing of the Mount Vernon plant and the
reduction of targeted positions through natural attrition, the plastics business
finalized certain estimates and reduced the accruals for employee termination
and severance benefits by $720 and facility costs by $1,765. The estimate for
equipment dismantle and disposal costs was increased by $420 and obsolete
inventory of $1,365 was charged to income. The closing of the Mount Vernon
facility during 1998 resulted in the loss of business with certain customers. As
a result, the remaining inventory on hand at the closing date became
excess/obsolete because it was no longer saleable.
Income (loss) from discontinued operations as presented in the combined
statement of income comprises:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Plastics business
Income (loss) before income taxes.................... $(130,003) $ 11,107 $ 16,578
(Provision) benefit for income taxes................. 45,315 (8,715) (14,570)
--------- --------- ---------
Income (loss) before cumulative effect of accounting
change............................................ (84,688) 2,392 2,008
Cumulative effect of accounting change, net of tax of
$971 (Note 1)..................................... (1,481)
--------- --------- ---------
Income (loss)........................................ (84,688) 2,392 527
Intsel Southwest
Income before income taxes........................... 13,480
Provision for income taxes........................... 4,718
---------
Income............................................... 8,762
---------
Gain on sale......................................... 23,266
Provision for income taxes........................... 8,143
---------
Net gain............................................. 15,123
---------
23,885
--------- --------- ---------
Income (loss) from discontinued operations............. $ (60,803) $ 2,392 $ 527
========= ========= =========
</TABLE>
Net sales for the Plastics business were $878,080, $846,409 and $827,233
for the years ended December 31, 1996, 1997 and 1998 respectively.
The Plastics business of ANC and the beverage can business of ANC have
historically been operated and managed on an independent basis. The assets and
liabilities directly related to the Plastics business are included in net assets
of the discontinued business in the combined balance sheet. Revenues and
expenses directly related to the Plastics business have been reflected in income
(loss) from discontinued operations in the combined income statement. No amounts
have been allocated to the Plastics business except for certain centralized data
processing, human resources, payroll, accounting and tax service functions. The
direct cost of these services is charged to the Plastics business using varying
bases, primarily the number of transactions processed. The costs for these
services are negotiated and agreed to by the business and the service provider.
Selling, general and administrative expenses included $8,499, $9,683 and $9,698
in 1996, 1997 and 1998, respectively, for these charges. No amounts have been
allocated to the Plastics business for general corporate overhead.
The loss before income taxes of the Plastics business for 1996 includes a
provision for loss of $103,768 pertaining to the Viskase litigation (Note 18).
F-15
<PAGE> 110
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 3 -- ACCOUNTS RECEIVABLE
In June 1997, ANC began selling all of its U.S. receivables (including
those related to its Plastics business) to American National Can Receivables
Corporation ("ANCRC"), a wholly owned nonconsolidated subsidiary of ANC. ANCRC
entered into a Receivables Sale Agreement with a financial institution under
which it is able to sell through October 1999, with limited recourse, an
undivided interest of up to $125,000 in the receivables that it purchases from
ANC. At December 31, 1997 and 1998, ANCRC had sold to the financial institution,
undivided interests of $45,096 and $37,768, respectively, in the receivables
that it purchased from ANC. At December 31, 1997 and 1998, accounts receivable
as shown in the combined balance sheet included $50,266 and $67,704,
respectively, due from ANCRC. ANC has retained the collection responsibility
with respect to the receivables sold to ANCRC.
Before June 1997, ANC had an agreement with a financial institution to sell
U.S. trade accounts receivable, with limited recourse, on a revolving basis.
Under the agreement, the maximum amount of receivables that could be sold at any
point in time was $175,000.
An analysis of the allowances for doubtful current and noncurrent
receivables follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year................................ $ 9,059 $22,486 $24,840
Provision charged to income................................. 12,418 2,774 10,049
Writeoff of uncollectible receivables, net of recoveries.... 507 (249) (2,032)
Other....................................................... 502 (171) 52
------- ------- -------
Balance at end of year...................................... $22,486 $24,840 $32,909
======= ======= =======
</TABLE>
The allowance for doubtful receivables has been determined recognizing that
ANC has retained substantially the same risk of credit loss as if the U.S.
receivables had not been sold.
NOTE 4 -- INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------- -----------
1997 1998 1999
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials............................................ $ 52,408 $ 36,244 $ 43,636
Spare parts.............................................. 51,208 40,065 41,082
Work-in-process.......................................... 4,729 1,974 863
Finished goods........................................... 148,009 158,057 163,700
-------- -------- --------
$256,354 $236,340 $249,281
======== ======== ========
</TABLE>
The LIFO inventory carrying value exceeded its FIFO basis by approximately
$3,506, $6,366 and $7,582 (unaudited) at December 31, 1997 and 1998 and March
31, 1999, respectively.
F-16
<PAGE> 111
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
Land........................................................ $ 41,161 $ 40,473
Buildings................................................... 242,510 249,396
Machinery and equipment..................................... 1,031,878 1,110,795
Construction in progress.................................... 55,347 42,965
Less accumulated depreciation............................... (533,361) (614,058)
---------- ----------
837,535 829,571
---------- ----------
Assets under capital leases................................. 22,053 20,471
Less accumulated amortization............................... (13,739) (13,978)
---------- ----------
8,314 6,493
---------- ----------
$ 845,849 $ 836,064
========== ==========
</TABLE>
Assets under capital leases primarily represent buildings, machinery and
equipment.
NOTE 6 -- INVESTMENTS IN EQUITY AFFILIATES
Investments in equity affiliates and ANC's percentage of ownership were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
% OWNED 1997 1998
------- ------- --------
<S> <C> <C> <C>
Hanil Can Company, Ltd. (Korea)............................ 40.0 $22,128 $ 33,712
Valley Metal Container Partnership (Coors)................. 50.0 24,296 24,867
Nippon National Seikan Co., Ltd. (Japan)................... 24.5 25,222 26,957
ANC Receivables Corporation (Note 3)....................... 100.0 14,096 14,289
Vitro-American National Can (Mexico)....................... 50.0 8,953 8,394
Container Recycling Alliance L.P........................... 50.0 3,458 4,322
------- --------
$98,153 $112,541
======= ========
</TABLE>
As a result of applying the purchase method of accounting, the carrying
value of these investments exceeded ANC's proportionate share of underlying
equity at December 31, 1998 by an aggregate of $17,656, which is being amortized
over a forty-year period.
Equity in net earnings of affiliates included in the combined statement of
income aggregated $12,774, $9,569 and $10,950 in the years ended December 31,
1996, 1997 and 1998, respectively. These amounts included earnings from
partnerships which produce and sell packaging products of $11,781, $13,044 and
$6,485 in the years ended December 31, 1996, 1997 and 1998, respectively, which
were recorded as a reduction of cost of goods sold.
Dividends received from equity affiliates aggregated $6,203, $13,493 and
$8,243 for the years ended December 31, 1996, 1997 and 1998, respectively.
Effective March 31, 1999, ANC sold its 50% interest in the Container
Recycling Alliance partnership at a gain of approximately $4,800. The selling
price was $9,000 in cash, plus future payments to ANC based on
F-17
<PAGE> 112
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
the partnership's operating results for the two years ended December 31, 2000.
The agreement specifies that such future payments will not be less than $750 in
the aggregate.
The following table includes financial information relating to ANC's
unconsolidated equity affiliates as of December 31, 1997 and 1998 and for each
of the three years in the period ended December 31, 1998.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Balance Sheet:
Current assets......................................... $288,860 $303,294
Noncurrent assets...................................... 216,964 264,958
Current liabilities.................................... 257,581 259,419
Noncurrent liabilities................................. 76,225 80,309
Statement of Income:
Net revenues........................................... $689,489 $674,090 $602,708
Net income............................................. 32,847 23,915 34,313
</TABLE>
F-18
<PAGE> 113
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 7 -- LONG-TERM DEBT
A summary of long-term debt outstanding was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
EXTERNAL:
Note Purchase Agreements of ANC with various insurance
companies:
5.69% Senior Notes due December 2000...................... $ 38,000 $ 38,000
6.33% Senior Notes due December 2003...................... 110,200 110,200
6.46% Senior Notes due December 2005...................... 41,800 41,800
6.64% Senior Notes due December 2008...................... 38,000 38,000
Revolving bank borrowings of ANC, bearing interest based on
spreads over LIBOR, under a credit agreement expiring in
June 2003................................................. 85,000 20,000
Bank borrowings of Brazilian subsidiary due January 2001 at
0.75% over Libor.......................................... -- 9,996
Capital leases.............................................. 2,984 2,294
Other....................................................... 5,034 1,752
-------- --------
321,018 262,042
Less: amounts due within one year........................... (2,820) (2,121)
-------- --------
$318,198 $259,921
======== ========
RELATED PARTY:
Revolving borrowings from Pechiney, bearing interest based
on .675 over Libor under a credit agreement expiring
December 2000............................................. $500,000 $ --
Revolving borrowings from Pechiney, bearing interest based
on .125 over Libor under a credit agreement expiring
January 2001.............................................. -- 200,000
Subordinated notes with Pechiney, bearing interest based on
.625 over Libor, due in annual payments through October
2002...................................................... 50,663 46,079
Other borrowings from Pechiney, bearing interest at a rate
of 10.5% expiring December 2004........................... 20,000 20,000
Deutschmark denominated note with Pechiney bearing interest
based on Fibor plus 0.3%, expiring February 2003.......... -- 23,911
Other....................................................... 5,511 5,870
-------- --------
576,174 295,860
Less: amounts due within one year......................... (4,583) (4,583)
-------- --------
$571,591 $291,277
======== ========
</TABLE>
At December 31, 1998 the maturities of long-term debt during the next five
years, excluding obligations under capital leases, were as follows:
<TABLE>
<S> <C>
1999........................................................ $ 6,078
2000........................................................ 42,829
2001........................................................ 215,225
2002........................................................ 52,570
2003........................................................ 134,315
</TABLE>
During the year ended December 31, 1997, long-term debt owing to Pechiney
of $152,000 was forgiven and recorded as a capital contribution.
F-19
<PAGE> 114
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
The Note Purchase Agreements with various insurance companies, the credit
agreement with banks and the Receivables Sales Agreement (Note 3) contain
various restrictions, among others, on the (a) sale of ANC assets, including
specific restrictions on the amount of receivables to be sold in relation to net
sales, (b) issuance of guarantees and (c) the maintenance of ANC consolidated
net worth.
External lines of credit available to ANC under borrowing arrangements and
the usage thereof at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
TOTAL
AVAILABLE USED UNUSED
--------- ------- --------
<S> <C> <C> <C>
U.S. -- long-term......................................... $500,000 $20,000 $480,000
U.S. -- short-term........................................ 89,000 15,525 73,475
International -- short-term............................... 160,112 4,733 155,379
</TABLE>
The U.S. long-term line is available under the credit agreement expiring in
June 2003. At December 31, 1998, borrowings under this agreement are at an
interest rate of Libor plus .17%. The agreement requires payment of a facility
fee of .08% per annum of the commitment amount (whether used or unused) and a
utilization fee of .05% per annum of average borrowings if such borrowings
exceed 60% of the commitment. ANC maintains lines of credit in the United States
and in a number of foreign countries. Foreign borrowings are generally overdraft
facilities at rates competitive in the countries in which ANC operates.
Generally, each foreign line is available only for borrowings related to
operations of a specific country. U.S. lines are overnight facilities at market
rate. The weighted average interest rate on short-term borrowings outstanding as
of December 31, 1997 and 1998 was approximately 5.9% and 5.6%, respectively.
As the Offering will result in a change in control of ANC, it will give
rise to new financial covenants under the $500 million revolving credit
facility. These covenants will require ANC to maintain a specified EBITDA
interest coverage ratio and a specified debt to equity ratio. The change of
control will also require ANC to make an offer to prepay the $228 million of
notes with insurance companies. ANC is currently negotiating with its existing
lenders with respect to these matters. In addition, Pechiney has indicated that
all the debt financing it provides on an intra-group basis will terminate when
the Offering is complete.
Unaudited.
The Company has accepted $1.3 billion in aggregate financing commitments
from The First National Bank of Chicago, The Chase Manhattan Bank, ABN AMRO,
N.V., Royal Bank of Canada and Banque Nationale de Paris, which are intended to
be syndicated among additional lenders.
F-20
<PAGE> 115
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 8 -- LEASES
ANC leases manufacturing, warehouse and office facilities, and equipment.
Future minimum lease payments required under capital leases and operating leases
having initial or remaining noncancelable lease terms in excess of one year are
set forth below. Such future minimum lease payments have not been reduced by
sublease rentals to be received subsequent to December 31, 1998 of $26,275 for
operating leases.
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1999........................................................ $ 826 $ 32,031
2000........................................................ 253 29,772
2001........................................................ 243 27,283
2002........................................................ 242 29,367
2003........................................................ 203 28,428
2004 and beyond............................................. 2,637 114,310
------- --------
Total minimum rentals....................................... 4,404 $261,191
========
Less: amount representing interest.......................... (2,110)
-------
Present value of future minimum payments (Note 7)........... 2,294
Less: current portion....................................... (626)
-------
Long-term obligations under capital leases.................. $ 1,668
=======
</TABLE>
Rental expense under operating leases was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Gross rental expense........................................ $39,443 $40,240 $34,676
Less: sublease rental income................................ (3,031) (3,138) (3,443)
------- ------- -------
$36,412 $37,102 $31,233
======= ======= =======
</TABLE>
Rental expense under operating leases included in the results of
discontinued operations was $8,027, $6,899 and $7,363 for the years ended
December 31, 1996, 1997 and 1998, respectively.
F-21
<PAGE> 116
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
NOTE 9 -- INCOME TAXES
The provision (benefit) for taxes on income (loss) from continuing
operations was as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Current income taxes:
United States:
Federal.............................................. $(19,573) $ 2,674 $(40,650)
State................................................ (408) 358 (144)
Other................................................... 22,866 34,305 36,649
-------- -------- --------
2,885 37,337 (4,145)
-------- -------- --------
Deferred income taxes:
United States........................................... (41,025) (11,027) 23,401
Other................................................... 2,949 3,717 7,290
-------- -------- --------
(38,076) (7,310) 30,691
-------- -------- --------
$(35,191) $ 30,027 $ 26,546
======== ======== ========
</TABLE>
The provision (benefit) for taxes on income (loss) from continuing
operations differs from the U.S. statutory rate for the following reasons:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Statutory tax rate.......................................... (35.0%) 35.0% 35.0%
State taxes, net of federal tax effect...................... (3.0) 6.0 1.8
Goodwill amortization....................................... 7.5 29.3 9.9
Foreign tax rate differential............................... 3.6 (15.4) (4.2)
Adjustment of prior year taxes.............................. -- -- (22.6)
Other....................................................... 8.6 6.5 (1.3)
----- ----- -----
Effective tax rate.......................................... (18.3%) 61.4% 18.6%
===== ===== =====
</TABLE>
U.S. federal income taxes which may be incurred upon remittance of
approximately $137,500 of accumulated earnings of ANC's foreign subsidiaries
have not been provided at December 31, 1998 because such earnings are considered
to be permanently invested.
F-22
<PAGE> 117
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Deferred tax assets (liabilities) consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
DEFERRED TAX ASSETS
Deductible temporary differences:
Employee benefits......................................... $152,454 $149,503
Restructuring reserves.................................... 36,405 29,383
Other..................................................... 139,612 134,657
Tax loss and credit carryforwards:
U.S. federal net operating losses......................... 135,262 148,227
U.S. federal alternative minimum tax credits.............. 6,838 7,587
U.S. federal general business credits..................... 5,738 5,738
U.S. state net operating losses........................... 7,901 7,901
Valuation allowances........................................ (18,455) (18,455)
-------- --------
Total....................................................... 465,755 464,541
-------- --------
DEFERRED TAX LIABILITIES
Taxable temporary differences:
Fixed assets.............................................. (86,829) (100,674)
Inventories............................................... (15,632) (14,065)
Employee benefits......................................... (61,327) (76,682)
Other..................................................... (33,883) (30,139)
-------- --------
Total....................................................... (197,671) (221,560)
-------- --------
Net deferred tax asset...................................... $268,084 $242,981
======== ========
</TABLE>
The U.S. federal net operating loss carryforwards expire as follows:
<TABLE>
<S> <C>
2003........................................................ $ 28,871
2009........................................................ 109,909
2011........................................................ 201,626
2012........................................................ 47,311
2018........................................................ 35,789
</TABLE>
The U. S. federal alternative minimum tax credit carryforwards of $7,587
have an unlimited carryover period.
The general business credits of $5,738 expire 1999 through 2007, including
$2,970 and $1,789 in 2000 and 2001, respectively.
As a result of the Offering, U.S. tax regulations will limit the amount of
net operating loss and tax credit carryforwards available to ANC going forward
on an annual basis.
At December 31, 1998, valuation allowances have been provided for the tax
assets attributed to (a) the U.S. federal net operating loss carryforwards
expiring in 2003, which can be utilized solely against the taxable income of a
component member of the consolidated taxpayer group ($10,105), (b) the general
business credits, substantially all of which also can be used solely against the
taxes payable by a component member of the taxpayer group ($5,738), and (c)
certain U.S. state income tax net operating loss carryforwards ($2,612). No
other valuation allowances were deemed necessary as management believes that it
is more likely
F-23
<PAGE> 118
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
than not that, based upon prior earnings history, future taxable income will be
more than sufficient to utilize the tax loss carryforwards and the deductible
temporary differences not offset by future reversals of taxable temporary
differences.
As a result of the receipt in August 1998 of Joint Committee approval for
the settlement of various issues pertaining to federal income tax returns for
the years 1985 through 1995, income tax liabilities were reduced by $78,328. Of
this amount, $46,122 pertained to issues for which tax reserves had been
established in the purchase accounting for the acquisition of ANC by Pechiney in
1988, which was recorded as a reduction of goodwill during 1998 ($35,649
pertained to continuing operations -- Note 1). The $32,206 remainder of the tax
reserve reduction pertained to expense provisions recorded in prior years and
was recorded as a reduction of the provision for income taxes in the combined
statement of income for the year ended December 31, 1998.
Included in income (loss) from continuing operations before income taxes,
equity earnings, minority interest and cumulative effect of accounting change in
1996, 1997 and 1998, was $42,963, $75,572 and $119,497, respectively, of income
from foreign sources, none of which was remitted to ANC.
NOTE 10 -- INTEREST EXPENSE
Interest expense consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Interest cost incurred
External............................................... $ 26,599 $ 23,011 $ 19,710
Related party.......................................... 68,258 67,053 48,720
Interest imputed on obligations under capital leases..... 321 268 241
Deferred financing cost amortization..................... 146 101 102
-------- -------- --------
Total interest expense................................. $ 95,324 $ 90,433 $ 68,773
======== ======== ========
</TABLE>
Discontinued operations reflect interest expense of $28,477, $25,219 and
$18,930 for the years ended December 31, 1996, 1997 and 1998, respectively. Such
amounts give recognition to the debt of the Plastics operations, as well as an
allocation of combined entity interest based primarily on the net assets of the
component entities.
NOTE 11 -- INTEREST INCOME AND OTHER FINANCIAL INCOME (EXPENSE), NET
Interest income and other financial income (expense), net, consisted of the
following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Interest income:
External............................................... $ 7,253 $ 6,555 $ 8,641
Related party.......................................... 1,309 1,515 5,056
Expense related to the sale of accounts receivable....... (3,966) (3,038) (2,513)
Foreign currency exchange gains (losses)................. (1,811) 21,332 515
Other.................................................... 1,536 516 (1,065)
-------- -------- --------
$ 4,321 $ 26,880 $ 10,634
======== ======== ========
</TABLE>
F-24
<PAGE> 119
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Foreign currency exchange gains (losses) for the year ended December 31,
1997 includes a $21,020 non-recurring gain relating to foreign currency forward
contracts. This non-recurring gain relates to a series of unauthorized foreign
currency transactions entered into by an employee at intervals during the second
half of 1995, and again between September 1996 and March 1997. After detection
of the unauthorized transactions in April 1997, the employee was immediately
terminated and the cash proceeds related to the unauthorized transactions were
fully recovered later in 1997. ANC conducted an internal investigation that
determined all amounts related to the unauthorized transactions were recovered
and no other irregular transactions occurred. ANC has reviewed thoroughly its
existing procedures and implemented new procedures with additional authorization
and reporting requirements. ANC currently covers its foreign exchange exposures
through Pechiney.
Following the Offering, ANC plans to open foreign exchange lines and engage
in foreign exchange trading to cover firm purchase and sales commitments. ANC
has established trading authorizations and limits on the basis of its specific
requirements. ANC will monitor compliance strictly. ANC's foreign exchange
activities will also be overseen by its risk management department.
NOTE 12 -- PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
ANC has defined benefit and defined contribution retirement plans covering
substantially all current and retired U.S. employees and certain U.S. employees
of businesses that have been sold. The plans provide benefits that are based on
the employee's years of service and compensation during employment with ANC. ANC
makes contributions to the defined benefit plans at least equal to the minimum
funding requirements under the Employee Retirement Income Security Act of 1974.
Costs for government-sponsored pension plans of ANC's international operations
are expensed on a current basis. ANC's Plastics business sponsors defined
benefit retirement plans covering certain hourly employees of that business. The
remaining hourly employees of that business are included in ANC-sponsored
defined benefit plans or multi-employer union plans. The salaried employees of
the Plastics business are included in defined benefit and defined contribution
plans which cover substantially all of the salaried employees of ANC.
Obligations of the plans sponsored by the Plastics business, as well as
obligations under multi-employer plans, will remain with that business and be
included in the operations being transferred to Pechiney (Note 1). These
liabilities aggregated $4,154 at December 31, 1998 and are included in the net
assets of discontinued operations in the combined balance sheet at that date.
Benefits of Plastics business participants included in the ANC-sponsored plans
will be frozen as of the Plastics business transfer with respect to service
accrued before that date (subject to adjustments for certain future service and
pay) and new mirror offset plans will be created by the Plastics business for
those employees.
ANC provides certain healthcare and life insurance benefits for
substantially all retired U.S. employees and their dependents, including those
of the Plastics business, under various postretirement benefit plans based on
age and length of service. Certain of the plans require retiree contributions.
Benefits for employees in non-U.S. countries are generally limited due to
coverage which is already provided by national health programs. The liability
for benefits for active and retired employees of the Plastics business,
aggregating $83,561 at December 31, 1998 will be included in the liabilities
transferred to Pechiney Plastic Packaging, Inc. Further, liability for benefits
for certain additional retired employees relating primarily to closed plants
aggregating $277,236 at December 31, 1998 will also be transferred to and be
assumed by Pechiney Plastic Packaging, Inc. These liabilities aggregating
$360,797 have been included in the net assets of the discontinued operations
(Note 2). Pechiney has agreed to guarantee this obligation of Pechiney Plastic
Packaging, Inc.
F-25
<PAGE> 120
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Net pension expense (income) for benefit pension plans and net
postretirement benefit expense for the years ended December 31, 1996, 1997 and
1998 consisted of the following:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
--------------------------------- ---------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Service cost........................ $ 18,337 $ 19,475 $ 18,130 $ 2,800 $ 2,759 $ 2,549
Interest cost....................... 128,001 133,154 132,523 24,276 24,146 21,364
Expected return on plan assets...... (157,571) (180,474) (193,680) -- -- --
Amortization of:
Unrecognized transition
obligation..................... (867) (867) (819) -- -- --
Unrecognized prior service cost
(benefit)...................... 1,407 1,574 2,449 (196) (936)
Unrecognized net loss............. 4,961 5,946 (226) (199)
--------- --------- --------- ------- ------- -------
Net periodic benefit (income)
expense........................... (5,732) (21,192) (41,623) $26,880 $26,706 $22,977
======= ======= =======
Net curtailment loss................ (3,934) (1,837)
--------- --------- ---------
(5,732) (25,126) (43,460)
Defined contribution and
multi-employer plans.............. 2,498 3,358 2,613
--------- --------- ---------
Total benefit expense (income)...... $ (3,234) $ (21,768) $ (40,847)
========= ========= =========
</TABLE>
Total benefit expense (income) above excludes amounts attributed to
discontinued operations comprising pension expense of the Plastics business
sponsored plans and multi-employer union plans and Plastics business employees
who are active participants in the ANC sponsored plans. Other benefits expense
attributed to discontinued operations comprises the expense related to active
and retired employees of the Plastics business as well as for the additional
retired employees of closed plants referred to above.
F-26
<PAGE> 121
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
The following table sets forth the funded status of ANC's defined benefit
pension plans and postretirement benefit obligation and the amounts recognized
in the combined balance sheet at December 31, 1997 and 1998.
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------------ ------------------------
1997 1998 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at January 1......... $1,802,925 $1,970,724 $ 337,166 $ 352,735
Service cost -- continuing operations... 19,475 18,130 2,759 2,549
Service cost -- discontinued
operations............................ 6,336 5,204 -- --
Interest cost........................... 133,154 132,522 24,146 21,364
Plan participants' contributions........ -- -- 1,549 1,568
Plan amendments......................... 3,085 7,506 -- (7,263)
Actuarial loss.......................... 150,410 114,663 12,529 (13,655)
Benefits paid........................... (144,661) (152,518) (25,414) (24,388)
---------- ---------- ---------- ----------
Benefit obligation at December 31,...... 1,970,724 2,096,231 352,735 332,910
---------- ---------- ---------- ----------
CHANGE IN PLAN ASSETS
Fair value of plan assets at January
1,.................................... 1,775,606 2,045,173 -- --
Actual return on plan assets............ 359,363 180,709 -- --
Employer contribution................... 54,865 14,610 23,865 22,820
Plan participants' contributions........ -- -- 1,549 1,568
Benefits paid........................... (144,661) (152,518) (25,414) (24,388)
---------- ---------- ---------- ----------
Fair value of plan assets at December
31,................................... 2,045,173 2,087,974 -- --
---------- ---------- ---------- ----------
Funded status........................... 74,449 (8,257) (352,735) (332,910)
Unrecognized actuarial loss............. 81,132 202,431 18,807 5,178
Unrecognized prior service cost
(benefit)............................. 9,462 13,669 (2,119) (8,472)
Unrecognized transition asset........... (10,934) (12,772) -- --
---------- ---------- ---------- ----------
Net asset (liability) recognized........ $ 154,109 $ 195,071 $ (336,047) $ (336,204)
========== ========== ========== ==========
Amounts recognized in the statement of
financial position consist of:
Prepaid benefit cost.................... $ 194,356 $ 212,531 $ -- $ --
Accrued benefit liability............... (50,518) (43,710) (336,047) (336,204)
Intangible asset........................ 4,968 4,133 -- --
Accumulated other comprehensive
income................................ 5,303 22,117 -- --
---------- ---------- ---------- ----------
Net amount recognized................... $ 154,109 $ 195,071 $ (336,047) $ (336,204)
========== ========== ========== ==========
Weighted-average assumptions as of
December 31:
Discount rate......................... 7.0% 6.5% 7.0% 6.5%
Expected return on plan assets........ 10.0% 10.0%
Expected increase in future
salaries........................... 5.0% 5.0%
</TABLE>
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $239,859, $232,716 and $195,964 respectively, as
of December 31, 1997 and $79,068, $69,682 and $34,705, respectively, as of
December 31, 1998.
F-27
<PAGE> 122
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
The following table shows the other major assumptions used to develop the
accumulated postretirement benefit obligation and the net postretirement benefit
expense in 1998 and 1997.
<TABLE>
<CAPTION>
MANAGED
UNDER CARE UNDER OVER
AGE 65 AGE 65 AGE 65
------ ---------- ------
<S> <C> <C> <C>
Current year health care trend rate -- 1998................. 7.71% 6.86% 6.29%
Current year health care trend rate -- 1997................. 8.29% 7.14% 6.71%
Ultimate trend rate......................................... 6.00% 6.00% 5.00%
Year ultimate trend rate is achieved........................ 2001 2001 2001
</TABLE>
Assumed health care trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rate would have the following effects:
<TABLE>
<CAPTION>
1-PERCENTAGE- 1-PERCENTAGE-
POINT INCREASE POINT DECREASE
-------------- --------------
<S> <C> <C>
Effect on total of service and interest cost components..... $ 2,227 ($ 2,057)
Effect on postretirement benefit obligation................. 25,948 (23,991)
</TABLE>
NOTE 13 -- OTHER PAYABLES AND ACCRUED LIABILITIES
Other payables and accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Accrued payroll and employee benefits....................... $ 78,255 $ 65,187
Postretirement benefit obligation (Note 12)................. 27,200 27,200
Pension liabilities (Note 12)............................... 37,596 6,555
Restructuring reserves (Note 15)............................ 22,043 28,913
Litigation reserves (Note 18)............................... 104,249 102,013
Income taxes................................................ 59,322 27,742
Accrued rent................................................ 18,646 14,254
Accrued taxes other than income............................. 11,295 10,430
Other....................................................... 58,224 60,215
-------- --------
$416,830 $342,509
======== ========
</TABLE>
NOTE 14 -- OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Restructuring reserves (Note 15)............................ $ 69,888 $ 45,286
Environmental reserves...................................... 54,748 50,057
Income taxes................................................ 45,446 --
Pension liabilities (Note 12)............................... 12,922 37,155
Other long-term employee costs.............................. 13,803 13,598
Other....................................................... 28,213 23,732
-------- --------
$225,020 $169,828
======== ========
</TABLE>
F-28
<PAGE> 123
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Laws and regulations expose ANC to the risk of substantial environmental
costs and liabilities, including liabilities associated with past activities.
ANC is involved in judicial and administrative proceedings concerning
environmental compliance and the remediation of contamination at ANC properties
and other sites. The related charges are reserved when known to the extent they
can be reasonably estimated. The types of costs accrued are expenditures for
clean up of environmental contamination and other remediation activities. The
estimated reserves are based on current environmental laws and regulatory
requirements and currently available technology. The accrued costs do not
include potential recoveries from insurers and have not been discounted to their
present values.
The precision and reliability of the loss estimates varies from site to
site, depending on such factors as the quantity of data concerning contamination
at the site, the extent to which remedial requirements have been identified or
agreed upon with regulatory authorities and the availability and likelihood of
contribution from other responsible parties. ANC believes, however, that the
amount it has reserved will enable it to satisfy its known and anticipated
environmental liabilities to the extent they can be estimated. Because
environmental matters cannot be predicted with certainty, there can be no
assurance that these amounts will be adequate for all purposes. In addition, the
discovery of new sites or future developments at known sites, such as changes in
law or environmental conditions, could result in increased environmental costs
and liabilities in excess of accrued environmental reserves that could have a
material effect on ANC's results of operations in any given year or its combined
financial position, although the amount of such increases cannot be estimated.
NOTE 15 -- RESTRUCTURING
The activity in the restructuring reserve for continuing operations for the
years ended December 31, 1996, 1997 and 1998 and for the three months ended
March 31, 1999 was as follows (amounts for the three months ended March 31, 1999
are unaudited):
<TABLE>
<CAPTION>
EMPLOYEE EQUIPMENT
TERMINATION DISMANTLE
AND LEASE ENVIRONMENTAL AND OTHER NON-CASH
SEVERANCE TERMINATION TESTING AND FACILITY DISPOSAL EXIT ASSET WRITE-
PROGRAMS COST REMEDIATION COSTS COSTS COSTS DOWNS TOTAL
----------- ----------- ------------- -------- --------- ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995...................... $ 32,454 $ 762 $2,000 $13,099 $ 3,793 $1,246 $ -- $ 53,354
Charge to income............ 58,895 14,563 3,000 19,340 5,750 -- 57,158 158,706
Cash payments............... (13,129) -- -- (8,410) (1,764) -- -- (23,303)
Non-cash utilized........... (13,173) -- -- -- -- -- (57,158) (70,331)
-------- ------- ------ ------- ------- ------ -------- --------
Balance at December 31,
1996...................... 65,047 15,325 5,000 24,029 7,779 1,246 -- 118,426
Charge to income............ -- -- -- -- -- -- 10,924 10,924
Cash payments............... (15,616) -- -- (5,704) (1,233) -- -- (22,553)
Non-cash utilized........... (3,942) -- -- -- -- -- (10,924) (14,866)
-------- ------- ------ ------- ------- ------ -------- --------
Balance at December 31,
1997...................... 45,489 15,325 5,000 18,325 6,546 1,246 -- 91,931
Charge to income............ 22,610 5,606 200 3,184 965 -- 10,781 43,346
Credit to income............ (18,496) (7,293) -- (2,852) (4,950) (37) (12,155) (45,783)
-------- ------- ------ ------- ------- ------ -------- --------
Net charge (credit)....... 4,114 (1,687) 200 332 (3,985) (37) (1,374) (2,437)
-------- ------- ------ ------- ------- ------ -------- --------
Cash payments............... (9,556) (289) -- (1,793) (421) -- -- (12,059)
Non-cash utilized........... (4,610) -- -- -- -- -- 1,374 (3,236)
-------- ------- ------ ------- ------- ------ -------- --------
Balance at December 31,
1998...................... 35,437 13,349 5,200 16,864 2,140 1,209 -- 74,199
Cash payments............... (4,649) -- -- (500) -- -- -- (5,149)
Non-cash utilized........... (29) -- -- -- -- -- -- (29)
-------- ------- ------ ------- ------- ------ -------- --------
Balance at March 31, 1999... $ 30,759 $13,349 $5,200 $16,364 $ 2,140 $1,209 $ -- $ 69,021
======== ======= ====== ======= ======= ====== ======== ========
</TABLE>
F-29
<PAGE> 124
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
ANC has segregated the restructuring activities into three separate
programs; (1) pre-1996 program, (2) 1996-1997 program and (3) the 1998 program.
A summary of the activity in the reserve as described below relating to the
pre-1996 program is as follows (amounts for the three months ended March 31,
1999 are unaudited):
<TABLE>
<CAPTION>
EMPLOYEE
TERMINATION EQUIPMENT
AND LEASE ENVIRONMENTAL DISMANTLE AND NON-CASH
SEVERANCE TERMINATION TESTING AND FACILITY DISPOSAL OTHER EXIT ASSET
PROGRAMS COST REMEDIATION COSTS COSTS COSTS WRITEDOWNS
----------- ----------- ------------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995....................... $ 32,454 $ 762 $2,000 $13,099 $ 3,793 $1,246 $ --
Cash payments................ (11,569) -- -- (7,273) (1,743) -- --
Non-cash utilized............ (13,173) -- -- -- -- -- --
-------- ----- ------ ------- ------- ------ -------
Balance at December 31,
1996....................... 7,712 762 2,000 5,826 2,050 1,246 --
Cash payments................ (4,726) -- -- (2,406) (214) -- --
-------- ----- ------ ------- ------- ------ -------
Balance at December 31,
1997....................... 2,986 762 2,000 3,420 1,836 1,246 --
Credit to income............. (2,644) (762) -- (1,000) (1,460) (37) (3,238)
Cash payments................ (239) -- -- (441) (202) -- --
Non-cash utilized............ (50) -- -- -- -- -- 3,238
-------- ----- ------ ------- ------- ------ -------
Balance at December 31,
1998....................... 53 -- 2,000 1,979 174 1,209 --
Cash payments................ -- -- -- (139) -- --
-------- ----- ------ ------- ------- ------ -------
Balance at March 31, 1999.... $ 53 $ -- $2,000 $ 1,840 $ 174 $1,209 $ --
======== ===== ====== ======= ======= ====== =======
<CAPTION>
TOTAL
--------
<S> <C>
Balance at December 31,
1995....................... $ 53,354
Cash payments................ (20,585)
Non-cash utilized............ (13,173)
--------
Balance at December 31,
1996....................... 19,596
Cash payments................ (7,346)
--------
Balance at December 31,
1997....................... 12,250
Credit to income............. (9,141)
Cash payments................ (882)
Non-cash utilized............ 3,188
--------
Balance at December 31,
1998....................... 5,415
Cash payments................ (139)
--------
Balance at March 31, 1999.... $ 5,276
========
</TABLE>
In 1994 and 1995, ANC incurred restructuring charges related to the
estimated costs to close plants in Danbury, CT, Gateway, MO and St. Louis MO and
to pay employee termination benefits related to the reduction of approximately
410 employees at the plants and ANC's administrative offices. The Danbury,
Gateway and St. Louis plants were closed in the first quarter of 1994, third
quarter of 1995 and second quarter of 1996, respectively. In 1995, Pechiney sold
a business located in Greenwich, CT and subsequently closed the administrative
offices for PNA. Certain employees of PNA were transferred to the administrative
office in Chicago and a restructuring charge related to future lease costs
related to the Greenwich building was recorded.
The sale of a former plant site typically takes several years to complete
as it is normally necessary to perform environmental cleanup of the site before
it can be sold. Employee benefit costs include supplemental unemployment
benefits which are paid for over a period of approximately two years after plant
shutdown.
The balance in the restructuring reserve at December 31, 1995 relating to
the pre-1996 program was $53,354. Cash payments from December 31, 1995 to March
31, 1999 totaled $28,952. Non-cash transfers of $13,173 in 1996 related
primarily to the transfer of enhanced pension benefit amounts based upon final
actuarial determination to the separately classified pension liability account.
Plant restructuring activity including payments for employee termination
and severance costs related to the closed plants and site cleanup and sale of
the St. Louis plant were completed during 1998. Considering this 1998 activity
and management's review of its overall restructuring program, ANC recorded a
credit to income of $9,141 for changes in estimates due to lower than originally
expected employee termination and severance costs, facility costs, and equipment
dismantle and disposal costs and higher than expected proceeds on the completed
sale of the St. Louis plant. Environmental cleanup activities for the Danbury
plant site continue in anticipation of a sale by 2000.
The number of employees terminated under the pre-1996 program was 371.
Expected future cash payments for the pre-1996 restructuring program are
$2,424 in 1999, $1,784 in 2000, $443 in 2001 and $764 after 2003. Facility and
equipment disposal payments related to the closed
F-30
<PAGE> 125
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
plants and the Greenwich office building are expected to be incurred in 1999.
Some payments for the Greenwich office building will also be made in 2000.
Environmental payments for St. Louis and Danbury are expected to be made in 1999
and 2000 in conjunction with the sale of these facilities.
A summary of the activity in the reserve as described below relating to the
1996-1997 program is as follows (amounts for the three months ended March 31,
1999 are unaudited):
<TABLE>
<CAPTION>
EMPLOYEE
TERMINATION
AND LEASE ENVIRONMENTAL EQUIPMENT NON-CASH
SEVERANCE TERMINATION TESTING AND FACILITY DISMANTLE AND ASSET
PROGRAMS COST REMEDIATION COSTS DISPOSAL COSTS WRITEDOWNS TOTAL
----------- ----------- ------------- -------- -------------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995...... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Charge to income.................. 58,895 14,563 3,000 19,340 5,750 57,158 158,706
Cash payments..................... (1,560) -- -- (1,137) (21) -- (2,718)
Non-cash utilized................. -- -- -- -- -- (57,158) (57,158)
-------- ------- ------ ------- ------- -------- --------
Balance at December 31, 1996...... 57,335 14,563 3,000 18,203 5,729 -- 98,830
Charge to income.................. -- -- -- -- -- 10,924 10,924
Cash payments..................... (10,889) -- -- (3,298) (1,019) -- (15,206)
Non-cash utilized................. (3,942) -- -- -- -- (10,924) (14,866)
-------- ------- ------ ------- ------- -------- --------
Balance at December 31, 1997...... 42,504 14,563 3,000 14,905 4,710 -- 79,682
Credit to income.................. (15,852) (6,531) -- (1,852) (3,490) (8,918) (36,643)
Cash payments..................... (8,513) (289) -- (1,352) (219) -- (10,373)
Non-cash utilized................. (4,560) -- -- -- -- 8,918 4,358
-------- ------- ------ ------- ------- -------- --------
Balance at December 31, 1998...... 13,579 7,743 3,000 11,701 1,001 -- 37,024
Cash payments..................... (1,860) -- -- (361) -- -- (2,221)
Non-cash utilized................. (29) -- -- -- -- -- (29)
-------- ------- ------ ------- ------- -------- --------
Balance at March 31, 1999......... $ 11,690 $ 7,743 $3,000 $11,340 $ 1,001 $ -- $ 34,774
======== ======= ====== ======= ======= ======== ========
</TABLE>
In the fourth quarter of 1996, ANC recorded a charge of $158,706 for
restructuring and impairment of property and equipment related to actions taken
under Pechiney's Challenge program. The Challenge program was announced in 1996
and was designed to eliminate production overcapacity, reduce costs and improve
productivity and utilization of assets. After years of strong growth, the
beverage can market in the United States and Canada had reached maturity. In
1996, the market increased only slightly over the prior year resulting in an
industry supply/demand imbalance, which led to the decision by ANC to reduce
annual capacity by in excess of three billion cans. Other costs of the
restructuring plan, which include relocation of personnel and equipment,
training, process reengineering, consulting costs, and capital expenditures are
being recognized as incurred.
The 1996 restructuring charge included $107,919 related to the planned
shutdown of five can manufacturing facilities to eliminate production
overcapacity. One of these facilities (Jacksonville, FL) was shut down in
December 1996. The remaining reduction of capacity was planned to be
accomplished by the shutdown of three plants in 1997 and one in 1998. In May
1997, the San Juan, Puerto Rico facility was shutdown. In addition to the cost
of the five plant shutdowns, a restructuring charge of $50,787 covered the
reorganization of operations at certain other existing plants which would
continue operations and the elimination of certain executive and administrative
functions at ANC's headquarters and other plants as a result of cost reduction
initiatives.
The severance and other employee-related costs (primarily enhanced pension
and postretirement benefits) provided for a reduction of 540 employees at the
five plants, 120 people at plants that will remain open and 130 employees at
ANC's administrative offices. The charge for employee termination and severance
programs was based on the number of employees expected to be terminated as of
the shutdown date of each plant to be
F-31
<PAGE> 126
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
closed and the severance payments and enhanced pension benefits required under
the terms of existing collective bargaining agreements for union personnel, or
the ANC severance plan for non-union personnel.
Lease termination costs include lease cancellation penalties related to
certain equipment that would no longer be used after the five plants were
closed. The amount of the lease cancellation penalty fee was determined based on
the terms of the leases.
The charge for environmental testing and remediation was based on the
estimated costs to test and remediate environmental contamination at the five
plants to be shut down.
Facility costs include the lease costs of certain floors in the corporate
headquarters building that after December 31, 1996 would no longer be used by
ANC, partially offset by estimated sublease income. Estimated sublease income
was based on the rental market as of December 31, 1996 for space comparable to
ANC's corporate headquarters building. Facility costs also include the costs to
maintain plants from the date of closing to the date of disposition such as
building security and utility costs.
The equipment dismantle and disposition costs are based on management's
estimate of the cost to remove equipment and clean-up the facilities in
preparation for sale.
The impairment charge for property and equipment represents the writedown
to fair value of property and equipment to be disposed of or scrapped and the
recognition of impairment losses for assets to be used up to the plant closing
date for plants to be closed. The property, plant and equipment related to the
Jacksonville, FL and San Juan, Puerto Rico plants were written down to estimated
fair value less cost to sell. For certain plants that were to be operated for a
period of time, we determined that the sum of the expected future cash flows
(undiscounted and without interest charges) was less than the carrying amount of
the property, plant and equipment related to these plants. Accordingly, an
impairment loss was recorded to write down the property, plant and equipment of
these plants to their estimated fair values. The fair value of such depreciable
assets that remain in use are depreciated over the asset's remaining useful
life. Fair values for land and buildings were determined based on consultations
with local real estate agents. Fair values for equipment were determined based
on management's best estimates considering the used equipment market.
Cash payments during 1996 related primarily to severance benefits paid to
terminated employees and rental charges for vacated space. Non-cash transfers
related primarily to the writedown of plant and equipment to fair value.
In the fourth quarter of 1997, ANC made a decision to defer to 2000 the
shutdown of the remaining two plants originally scheduled for shutdown in 1997.
These two plants primarily produce special-sized cans under contracts that are
scheduled to expire in 2000. ANC's shutdown plan for one of the two plants
originally contemplated certain capital investments to be made to expand another
plant to allow for the transfer of production of the special-sized cans. A
decision was made in 1997 not to make the necessary capital investment and to
continue to operate the plant. ANC's plan for the second plant was to negotiate
an early termination of the contract or to make alternative supply arrangements.
In 1997, ANC made a decision to continue to operate the plants at approximately
50% of capacity incurring cash losses which are recorded as incurred. The
deferral of the shutdown of these two plants did not result in any adjustment of
the restructuring reserve.
The charge in 1997 of $10,924 for restructuring and writedown of property
and equipment included a $10,000 impairment loss related to ANC's operations in
China.
Cash payments for 1997 relate to the shutdown of the San Juan, Puerto Rico
plant effective May, 1997 and continuing payments related to previously closed
plants. The non-cash utilizations related primarily to (a) the transfer of
enhanced pension benefit amounts based upon final actuarial determinations to
the separately classified pension liability account and (b) the writedown of
plant and equipment to fair value.
F-32
<PAGE> 127
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
In 1998, management based on a large customer's decision to reduce its
purchases in various geographic markets and on studies by outside consultants of
market demographics, decided not to close a plant provided for in 1996 which at
that time was expected to be closed in 1998, but rather to temporarily curtail
production at several lines in our facilities. As a result, the reserve of
$17,118 previously established for employee termination and severance programs,
lease termination costs, facility costs and other exit costs related to this
plant was restored to income. The write down of property plant and equipment for
this plant was maintained as the reduced carrying amount of the property plant
and equipment has been accounted for as its new cost. A further restoration of
$19,525 related to adjustments to the restructuring reserve for changes in
estimates of the number of employees to be terminated at plants shut down or to
be shut down, and higher-than-expected proceeds on the completed sale during
1998 of the Puerto Rico plant site and the anticipated sale of the Jacksonville,
FL plant site was recorded.
The components of the $19,525 reversal for prior restructurings consisted
of the following:
<TABLE>
<S> <C>
Employee termination and severance programs................. $ (9,066)
Lease termination costs..................................... (1,591)
Environmental testing and remediation....................... 750
Facility costs.............................................. 1,790
Equipment dismantle and disposal costs...................... (2,490)
Non-cash asset write-downs.................................. (8,918)
--------
$(19,525)
========
</TABLE>
The original charge for employee termination and severance costs was based
on the number of employees expected to be terminated as of the shutdown date of
each plant to be closed. Supplemental unemployment and severance benefits were
calculated based on the terms of existing collective bargaining agreements for
union personnel, or the ANC severance plan for non-union personnel. The reversal
of employee termination and severance costs included $4,957 related to the
closing of the two plants deferred until 2000. Manning levels at these two
plants were reduced as a result of a management decision taken in 1998 to reduce
employee levels at each plant from two crews to one crew. The reversal of
employee termination and severance costs also included $3,088 related primarily
to amounts that had previously been provided for severance of sales and
administrative personnel in the U.S. beverage can business. The reversal of
employee termination and severance costs also included $1,021 related to the
completion of the Puerto Rico plant severance program.
The original charge assumed lease termination costs associated with certain
equipment leases at the Jacksonville, FL, and the two plants to be closed in
2000. In 1998, we determined that leased equipment previously used at the
Jacksonville, FL plant could be used at other ANC plants. Accordingly, the
related lease termination reserve of $1,197 was reversed.
The original charge related to non-cash asset write-downs was based on the
estimated fair value of the related assets. The reversal of non-cash asset
write-downs relates to the completion of the sale at higher than expected
selling prices of plant and equipment related to closed plants, including the
San Juan, Puerto Rico plant. In addition, estimated sales proceeds related to
the Jacksonville, FL facility were increased by $2,627.
The number of employees terminated under the 1996-1997 restructuring
programs through March 31, 1999 was 380.
The Company remains committed to closing the remaining two plants in 2000
when the supply contracts expire.
Expected future cash payments related to the 1996-1997 restructuring
program, excluding $3,537 of pension liability transfers, are $10,649 in 1999,
$6,442 in 2000, $6,519 in 2001, $2,705 in 2002, $1,327 in 2003 and $5,845
thereafter. Employee termination and severance payments will generally be paid
over a two-
F-33
<PAGE> 128
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
year period following the closing date of the plants. Lease termination payments
related to Jacksonville will be made in 1999 at the earliest termination date.
Lease termination payments for the two plants to be closed in 2000 will be made
in 2000. Facility costs related to the administrative offices in Chicago will be
made through the end of the lease period in 2008. Equipment dismantling and
disposal costs will be paid during 2000 and 2001 after the close of the two
remaining plants.
A summary of the activity in the reserve relating to the 1998 program is as
follows (amounts for the three months ended March 31, 1999 are unaudited):
<TABLE>
<CAPTION>
EMPLOYEE
TERMINATION
AND LEASE ENVIRONMENTAL EQUIPMENT NON-CASH
SEVERANCE TERMINATION TESTING AND FACILITY DISMANTLE AND ASSET WRITE-
PROGRAMS COST REMEDIATION COSTS DISPOSAL COSTS DOWNS TOTAL
----------- ----------- ------------- -------- -------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Charge to income............... 22,610 5,606 200 3,184 965 10,781 43,346
Cash payments.................. (804) -- -- -- -- -- (804)
Non-cash utilized.............. $ -- $ -- $ -- $ -- $ -- (10,781) (10,781)
------- ------ ---- ------ ---- -------- --------
Balance at December 31, 1998... 21,806 5,606 200 3,184 965 $ -- 31,761
Cash payments.................. (2,789) -- -- -- -- -- (2,789)
------- ------ ---- ------ ---- -------- --------
Balance at March 31, 1999...... $19,017 $5,606 $200 $3,184 $965 $ -- $ 28,972
======= ====== ==== ====== ==== ======== ========
</TABLE>
In connection with the 1998 decision to not close the previously identified
plant and in response to the continuing oversupply of can production capacity,
in 1998 management decided to close a different plant in late 1999. Accordingly,
a charge of $24,846 was recorded in 1998 to cover the costs of the new plant
closure. The plant closure costs cover severance and other employee related
costs to provide for the reduction of 115 employees and to write down property
and equipment to fair value. In addition, a charge of $14,100 was recorded in
1998 for severance costs for approximately 150 plant, sales and administrative
employees and an impairment charge of $4,400 was recorded relating to lease
termination costs and equipment write-offs for permanently idle equipment.
The number of employees terminated through March 31, 1999 relating to the
1998 actions was 83.
Expected cash payments for restructuring costs in future periods for the
1998 program, excluding pension liability transfers of $3,318, are $16,376 in
1999, $7,325 in 2000, $3,481 in 2001 and $1,261 in 2002. Employee termination
and severance costs related to the plant to be closed in late 1999 will be paid
in 2000 and 2001. The lease termination payments will be made at the earliest
termination date in 1999 and 2000. Facility costs will be incurred from the
closing date through 2002. Severance costs related to the top grading program
are expected to be paid during 1999.
NOTE 16 -- SEGMENT AND RELATED INFORMATION
In 1998, ANC adopted SFAS No. 131 -- "Disclosures about Segments of an
Enterprise and Related Information" (Note 1) and reflected its provisions
retroactively in these combined financial statements. SFAS No. 131 establishes
standards for reporting information about operating segments. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. ANC's continuing operations, consisting of
its worldwide beverage can business, comprise one reportable segment.
F-34
<PAGE> 129
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
Following are net sales and long-lived asset information by geographic
area.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Net sales
United States...................................... $1,573,882 $1,504,427 $1,453,992
United Kingdom..................................... 383,810 374,654 369,316
Others............................................. 562,598 585,937 635,541
---------- ---------- ----------
$2,520,290 $2,465,018 $2,458,849
========== ========== ==========
Long-lived assets
Continuing operations
United States................................... $1,069,892 $1,054,393 $ 999,151
United Kingdom.................................. 390,196 387,053 366,569
Others.......................................... 762,926 704,874 694,692
Discontinued operations............................ 776,320 758,023 776,324
---------- ---------- ----------
$2,999,334 $2,904,343 $2,836,736
========== ========== ==========
</TABLE>
Net sales are based on the country in which the legal subsidiary is
domiciled.
NOTE 17 -- CONCENTRATIONS OF RISK
One of the principal raw materials used in ANC's production process is
aluminum. Currently, we generally limit our exposure to the fluctuations in the
market price of aluminum by matching its contracts to supply cans to its
customers with aluminum forward purchase supply contracts with similar terms.
ANC had sales in excess of 10% of net sales from continuing operations to
one customer amounting to approximately $1,010,614, $1,048,168 and $1,253,200
for the years ended December 31, 1996, 1997 and 1998, respectively.
NOTE 18 -- COMMITMENTS AND CONTINGENCIES
In 1993, Viskase Corporation ("Viskase") brought a patent infringement
lawsuit against ANCC alleging infringements related to patents held by Viskase,
a unit of Envirodyne Industries, Inc., for heat shrinkable meat bags utilized in
the Plastics business. In November 1996, a federal court jury in Chicago,
Illinois awarded Viskase $102,385 in damages and found willful infringement.
Based on the facts and circumstances, ANCC recorded a charge to expense of
$103,768 in 1996 which represented the amount of the damages awarded as well as
certain out-of-pocket costs. This was recorded in discontinued operations in the
accompanying combined statement of income and in other payables and accrued
liabilities of the continuing business in the combined balance sheet. Pechiney
Plastic Packaging has agreed to indemnify ANC on a net of tax basis for any
payments we may be required to make with respect to these proceedings. Pechiney
has agreed to guarantee this obligation of Pechiney Plastic Packaging. Future
adjustments, if any, of the Viskase litigation reserve will be recorded as
income (loss) from discontinued operations in the Company's combined financial
statements. Future indemnification payments, if any, from Pechiney Plastic
Packaging related to the Viskase litigation will be recorded as a capital
contribution in the Company's combined financial statements.
In September 1997, the court granted ANCC's motion for a new trial on
liability as to part of the case and ordered a new trial on damages. In August
1998, the trial judge granted Viskase's motion for summary judgment on the
doctrine of equivalents. Viskase has moved for the damage award to be
reinstated, and ANCC has opposed that motion. No ruling has been made. In
addition, ANCC has requested the U.S. Patent
F-35
<PAGE> 130
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
and Trademark Office (known as the "PTO") to re-examine the claims of two of the
patents that Viskase alleged ANCC infringed. In March 1999, a PTO Examiner
issued an Office Action that re-examined and rejected claims of one of the two
patents, but the Office Action is not final. Concerning the second patent, the
PTO has also issued an Office Action rejecting the Viskase claims, but the PTO
recently granted Viskase's petition to change the inventorship of the patent.
Additional proceedings are ongoing. In view of the uncertainties related to this
matter, no adjustments have been made to the reserve in 1998 and 1997, other
than payments for certain out-of-pocket costs.
In addition to the above matter, the Company and its subsidiaries are
involved in various other legal and administrative proceedings which have arisen
in the ordinary course of business. While any litigation contains an element of
uncertainty, ANC believes that the outcome of such proceedings will not have a
material adverse effect on ANC's combined financial position, or cash flows. The
Viskase proceeding, if resolved in a manner different from the estimate, could
have a material adverse effect on the operating results of discontinued
operations in a future reporting period.
ANC has two agreements to purchase certain information technology services
through September 2002. Total commitments under the agreements approximated
$31,200 as of December 31, 1998.
ANC is contingently liable with respect to guarantees of indebtedness of
other companies in the amount of $26,555 at December 31, 1998.
Unaudited:
On May 10, 1999, the court granted reinstatement of the jury damage award
in the Viskase litigation. The court subsequently set a ruling date of July 30,
1999 for Viskase's request for treble damages, pre- and post-judgment interest
and expenses. This amount cannot currently be determined. Pechiney Plastic
Packaging has agreed to indemnify the Company on an after-tax basis for any
payments the Company may be required to make with respect to the proceedings.
Pechiney has agreed to guarantee this obligation of Pechiney Plastic Packaging.
NOTE 19 -- RELATED PARTY TRANSACTIONS
The beverage can business has historically operated independently of
Pechiney and its affiliates. ANC purchases a portion of its aluminum
requirements in Europe from Pechiney Rhenalu on an arms-length basis and under
market terms and conditions. In addition, Pechiney charges ANC on an arms-length
basis for information technology costs incurred at a group level. Pechiney also
provides limited treasury services and exchange rate protection services to ANC
at no cost. ANC management estimates that the annual cost to replace these
services will be less than $100. Considering the insignificant cost of these
services, no amount has been included in the combined statement of income for
these services. ANC receives no other services from Pechiney.
Significant transactions and balances with Pechiney and its affiliates,
other than those presented on the face of the combined balance sheets or
described elsewhere in the notes to the combined financial statements, included
the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1997 1998
-------- -------- --------
<S> <C> <C> <C>
Sales.................................................... $ 7,651 $ 804 $ 5,474
Purchases................................................ 249,535 151,420 165,794
Selling, general and administrative expenses............. 856 2,128 577
Charges from Pechiney for research and development
expenses............................................... 5,178 5,283 4,039
</TABLE>
F-36
<PAGE> 131
AMERICAN NATIONAL CAN GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1998
------ ------
<S> <C> <C>
Receivables................................................. 10,626 7,447
Noncurrent assets........................................... 3,000 187
Accounts payable............................................ 23,915 18,985
Other payables and accrued expenses......................... 6,406 7,535
</TABLE>
F-37
<PAGE> 132
[American National Can Group logo]
<PAGE> 133
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
An itemized statement of the estimated amount of all expenses in connection
with the distribution of the Securities registered hereby is as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 230,184
New York Stock Exchange Listing Fee......................... 172,000
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 30,500
Transfer Agent and Registration Fee......................... 5,000
Printing Expenses........................................... 250,000
Legal Fees and Expenses..................................... 1,000,000*
Accounting Fees and Expenses................................ 2,500,000*
Miscellaneous............................................... 25,000
----------
Total....................................................... $4,212,684
==========
</TABLE>
- -------------------------
* To be paid by the selling stockholder.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides that
a corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct was
unlawful. Section 145 further provides that a corporation similarly may
indemnify any such person serving in any such capacity who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgement in its
favor, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omission not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
liability for unlawful payment of dividends and unlawful stock purchase and
redemption) or (iv) for any transaction from which the director derived an
improper personal benefit.
II-1
<PAGE> 134
The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permitted by the DGCL as it existed on the date of, or is or has been amended
from time to time after, the filing of the Certificate of Incorporation. The
Certificate of Incorporation and the Company's By-Laws further provide that the
Company shall indemnify its directors and officers to the fullest extent
permitted by the DGCL.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with the formation of the Company and the reorganization of
Pechiney's packaging operations, American National Can Group, Inc. will issue
shares to Pechiney. The consideration for this issuance will be the transfer to
the Company by Pechiney of all its beverage can operations.
In the foregoing transaction, the securities will be offered and sold
pursuant to section 4(2) of the Securities Act of 1933, as amended. No
underwriting discounts or commissions will be paid in connection with such
transaction.
ITEM 16. EXHIBITS AND FINANCIAL DATA SCHEDULE.
(a) EXHIBITS
<TABLE>
<C> <S>
1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Registrant+
3.2 By-Laws of the Registrant+
4.1 Form of Registration Rights Agreement
4.2 Specimen of stock certificate for the common stock of the
Company
5.1 Amended opinion of Shearman & Sterling as to the legality of
the securities being offered+
8.1 Opinion of Shearman & Sterling with respect to certain U.S.
federal income tax matters
8.2 Opinions of PricewaterhouseCoopers LLP
8.3 Opinion of Kronish, Lieb, Weiner & Hellman LLP
10.1 Aluminum Purchase/Sales Supply Agreement between American
National Can Company and Alcan Rolled Products Company
(confidential treatment of certain portions requested)+
10.2 Aluminum Purchase Agreement between American National Can
Company and Aluminum Company of America (confidential
treatment of certain portions requested)+
10.3 Can Supply Agreement between American National Can Company
and Coca-Cola Enterprises Inc. (confidential treatment of
certain portions requested)+
10.4 Form of Shared Services Agreement with Pechiney Plastic
Packaging, Inc.
10.5 Form of Reciprocal Corporate Services Agreement with
Pechiney Plastic Packaging, Inc.
10.6 Form of Master Netting and Amendment Agreement
10.7 Form of Contribution, Assignment and Assumption Agreement
10.8 Form of Beer Bottle Technology Agreement
10.9 Form of ANC Technology Option Agreement
10.10 Form of Director Nomination Agreement
10.11 Form of Stock Purchase Agreement+
10.12 Form of Pechiney Guarantee
10.13 Form of FEEP Contribution Agreement+
10.14 Form of Foreign Subsidiary Stock Transfer Agreements
10.15 Form of Indemnification Agreement
10.16 American National Can Group 1999 Long-Term Incentive Plan
10.17 American National Can Group Annual Incentive Plan
10.18 American National Can Group Directors Stock Plan
10.19 American National Can Group Stock Compensation Conversion
Plan
10.20 Employment Agreement dated January 1, 1996 between American
National Can Company and Jean-Pierre Rodier
</TABLE>
II-2
<PAGE> 135
<TABLE>
<C> <S>
10.21 Employment Agreement dated May 28, 1999 between American
National Can Company and Edward A Lapekas
10.22 Employment Agreement dated May 28, 1999 between American
National Can Company and Michael D. Herdman
10.23 Employment Agreement dated May 28, 1999 between American
National Can Company and Alan H. Schumacher
10.24 Employment Agreement dated May 28, 1999 between American
National Can Company and Dennis R. Bankowski
10.25 Pechiney 1998 Stock Option Plan -- Summary of Plan Terms
10.26 Term sheet regarding $1.3 billion credit facility
10.27 Translation of Pension Agreement
10.28 Limited License of Pechiney name
10.29 Netting Agreement
10.30 Sublease to Pechiney Plastic Packaging, Inc.
10.31 Pension Benefits Agreement with Pechiney Plastic Packaging,
Inc.
21 Subsidiaries of the Registrant
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)+
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Coca Cola Enterprises+
23.4 Revised consent of Can Manufacturers' Institute
23.5 Consent of Beverage Can Makers Europe+
23.6 Revised consent of Beverage Marketing Corporation
23.7 Consent of Container Consulting
23.8 Consent of Canadean+
23.9 Consent of Kronish, Lieb, Weiner & Hellman LLP+
23.10 Consent of PricewaterhouseCoopers LLP relating to Exhibit
8.2
23.11 Consent of Kronish, Lieb, Weiner & Hellman LLP relating to
Exhibit 8.3
24 Powers of Attorney (included on page II-4 of the original
filing)+
27 Financial Data Schedule+
</TABLE>
- ------------------
+ Previously filed.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under "Item 14, Indemnification
of Directors and Officers" above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it
was declared effective.
II-3
<PAGE> 136
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) It will provide to the underwriter at the closing specified in the
underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
II-4
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to the registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Chicago, Illinois on June 29, 1999.
AMERICAN NATIONAL CAN GROUP, INC.
*
By:
--------------------------------------
Jean-Pierre Rodier
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board and Chief June 29, 1999
- --------------------------------------------- Executive Officer
Jean-Pierre Rodier
/s/ EDWARD A. LAPEKAS President and Chief Operating Officer June 29, 1999
- ---------------------------------------------
Edward A. Lapekas
* Senior Vice President and Chief June 29, 1999
- --------------------------------------------- Financial Officer
Alan H. Schumacher
* Vice President, Controller and Chief June 29, 1999
- --------------------------------------------- Accounting Officer
John G. LaBahn
* Director June 29, 1999
- ---------------------------------------------
Christel Bories
* Director June 29, 1999
- ---------------------------------------------
Frank W. Considine
* Director June 29, 1999
- ---------------------------------------------
Ronald J. Gidwitz
* Director June 29, 1999
- ---------------------------------------------
George D. Kennedy
* Director June 29, 1999
- ---------------------------------------------
Homer J. Livingston, Jr.
* Director June 29, 1999
- ---------------------------------------------
Roland H. Meyer, Jr.
</TABLE>
II-5
<PAGE> 138
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director June 29, 1999
- ---------------------------------------------
James J. O'Connor
Director June 29, 1999
- ---------------------------------------------
Alain Pasquier
* Director June 29, 1999
- ---------------------------------------------
Jean-Dominique Senard
* Director June 29, 1999
- ---------------------------------------------
James R. Thompson
* Director June 29, 1999
- ---------------------------------------------
Jack H. Turner
</TABLE>
- ---------------
* -- Signed by Edward A. Lapekas as Attorney-in-Fact.
II-6
<PAGE> 139
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN NATIONAL CAN GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction
of incorporation or organization)
<PAGE> 140
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
<C> <S> <C>
1 Form of Underwriting Agreement..............................
3.1 Certificate of Incorporation of the Registrant+.............
3.2 By-Laws of the Registrant+..................................
4.1 Form of Registration Rights Agreement.......................
4.2 Specimen of stock certificate for the common stock of the
Company.....................................................
5.1 Amended opinion of Shearman & Sterling as to the legality of
the securities being offered+...............................
8.1 Opinion of Shearman & Sterling with respect to certain U.S.
federal income tax matters..................................
8.2 Opinions of PricewaterhouseCoopers LLP......................
8.3 Opinion of Kronish, Lieb, Weiner & Hellman LLP..............
10.1 Aluminum Purchase/Sales Supply Agreement between American
National Can Company and Alcan Rolled Products Company
(confidential treatment of certain portions requested)+.....
10.2 Aluminum Purchase Agreement between American National Can
Company and Aluminum Company of America (confidential
treatment of certain portions requested)+...................
10.3 Can Supply Agreement between American National Can Company
and Coca-Cola Enterprises Inc. (confidential treatment of
certain portions requested)+................................
10.4 Form of Shared Services Agreement with Pechiney Plastic
Packaging, Inc..............................................
10.5 Form of Reciprocal Corporate Services Agreement with
Pechiney Plastic Packaging, Inc.............................
10.6 Form of Master Netting and Amendment Agreement..............
10.7 Form of Contribution, Assignment and Assumption Agreement...
10.8 Form of Beer Bottle Technology Agreement....................
10.9 Form of ANC Technology Option Agreement.....................
10.10 Form of Director Nomination Agreement.......................
10.11 Form of Stock Purchase Agreement+...........................
10.12 Form of Pechiney Guarantee..................................
10.13 Form of FEEP Contribution Agreement+........................
10.14 Form of Foreign Subsidiary Stock Transfer Agreements........
10.15 Form of Indemnification Agreement...........................
10.16 American National Can Group 1999 Long-Term Incentive Plan...
10.17 American National Can Group Annual Incentive Plan...........
10.18 American National Can Group Directors Stock Plan............
10.19 American National Can Group Stock Compensation Conversion
Plan........................................................
10.20 Employment Agreement dated January 1, 1996 between American
National Can Company and Jean-Pierre Rodier.................
10.21 Employment Agreement dated May 28, 1999 between American
National Can Company and Edward A Lapekas...................
10.22 Employment Agreement dated May 28, 1999 between American
National Can Company and Michael D. Herdman.................
10.23 Employment Agreement dated May 28, 1999 between American
National Can Company and Alan H. Schumacher.................
10.24 Employment Agreement dated May 28, 1999 between American
National Can Company and Dennis R. Bankowski................
10.25 Pechiney 1998 Stock Option Plan -- Summary of Plan Terms....
10.26 Term sheet regarding $1.3 billion credit facility...........
10.27 Translation of Pension Agreement............................
10.28 Limited License of Pechiney name............................
</TABLE>
<PAGE> 141
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBITS PAGE NUMBER
- -------- -----------
<C> <S> <C>
10.29 Netting Agreement...........................................
10.30 Sublease to Pechiney Plastic Packaging, Inc. ...............
10.31 Pension Benefits Agreement with Pechiney Plastic Packaging,
Inc. .......................................................
21 Subsidiaries of the Registrant..............................
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)+...
23.2 Consent of PricewaterhouseCoopers LLP.......................
23.3 Consent of Coca Cola Enterprises+...........................
23.4 Revised consent of Can Manufacturers' Institute.............
23.5 Consent of Beverage Can Makers Europe+......................
23.6 Revised consent of Beverage Marketing Corporation...........
23.7 Consent of Container Consulting.............................
23.8 Consent of Canadean+........................................
23.9 Consent of Kronish, Lieb, Weiner & Hellman LLB+.............
23.10 Consent of PricewaterhouseCoopers LLP relating to Exhibit
8.2.........................................................
23.11 Consent of Kronish, Lieb, Weiner & Hellman LLP relating to
Exhibit 8.3.................................................
24 Powers of Attorney (included on page II-4 of the original
filing)+....................................................
27 Financial Data Schedule+....................................
</TABLE>
- ------------------
+ Previously filed.
<PAGE> 1
30,000,000 SHARES
AMERICAN NATIONAL CAN GROUP, INC.
COMMON STOCK
NOMINAL VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON SMITH BARNEY INC.,
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation ("CSFBC"),
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Pechiney, a French societe anonyme ("SELLING
STOCKHOLDER"), proposes to sell (the "OFFERING") to the several Underwriters
named in Schedule A hereto ("UNDERWRITERS") outstanding shares ("FIRM
SECURITIES") of the common stock, nominal value $0.01 per share ("SECURITIES"),
of American National Can Group, Inc., a Delaware corporation ("COMPANY"). CSFBC,
Deutsche Bank Securities Inc., Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc.
shall act as representatives (the "REPRESENTATIVES") of the several
Underwriters.
In addition, as set forth below, the Selling Stockholder proposes to
sell to the Underwriters, at the option of the Underwriters, an aggregate of not
more than additional shares of Securities ("OPTIONAL SECURITIES" and,
collectively with the Firm Securities, the "OFFERED SECURITIES").
2. Representations and Warranties of the Company and the Selling
Stockholder. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-76699) relating to the
Offered Securities, including a form of prospectus relating to the
Securities, has been filed with the Securities and Exchange Commission
("Commission") and either (A) has been declared effective under the
Securities Act of 1933 ("ACT") and is not proposed to be amended or (B)
is proposed to be amended by amendment or post-effective amendment. If
such registration statement (the "INITIAL REGISTRATION STATEMENT") has
been declared effective, either (I) an additional registration
statement (the "ADDITIONAL REGISTRATION STATEMENT") relating to the
Offered Securities may have been filed with the Commission pursuant to
Rule 462(b) ("RULE 462(b)") under the Act and, if so filed, has become
effective upon filing pursuant to such Rule and the Offered Securities
all have been duly registered under the Act pursuant to the initial
registration statement and, if applicable, the additional registration
statement or (II) such an additional registration statement is proposed
to be filed with the Commission pursuant to Rule 462(b) and will become
effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration
statement has been filed and the Company does not propose to amend it,
and if any post-effective amendment to either such registration
statement has been filed with the Commission prior to the execution and
delivery of this Agreement, the
<PAGE> 2
most recent amendment (if any) to each such registration statement has
been declared effective by the Commission or has become effective upon
filing pursuant to Rule 462(c) ("RULE 462(c)") under the Act or, in the
case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "EFFECTIVE TIME" with respect to the
initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means
(A) if the Company has advised the Representatives that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c), or (B) if the Company
has advised the Representatives that it proposes to file an amendment
or post-effective amendment to such registration statement, the date
and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement
has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it
proposes to file one, "Effective Time" with respect to such additional
registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "EFFECTIVE DATE" with respect to the initial registration
statement or the additional registration statement (if any) means the
date of the Effective Time thereof. The initial registration statement,
as amended at its Effective Time, including all information contained
in the additional registration statement (if any) and deemed to be a
part of the initial registration statement as of the Effective Time of
the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("RULE
430A(b)") under the Act, is hereinafter referred to as the "INITIAL
REGISTRATION STATEMENT". The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "ADDITIONAL REGISTRATION
STATEMENT". The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"REGISTRATION STATEMENTS" and individually as a "REGISTRATION
STATEMENT". The form of prospectus relating to the Securities, as first
filed with the Commission pursuant to and in accordance with Rule
424(b) ("RULE 424(b)") under the Act or (if no such filing is required)
as included in the Registration Statement, is hereinafter referred to
as the "PROSPECTUS". No document has been or will be prepared or
distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement complied as to form in all respects to
the requirements of the Act and the rules and regulations of the
Commission ("RULES AND REGULATIONS") and did not include 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, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement complied,
or will comply, as to form in all respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of any Additional Registration Statement is prior to
the execution and delivery of this Agreement, the Additional
Registration Statement each complies as to form, and at the time of
filing of the Prospectus pursuant to Rule 424(b) or (if no such filing
is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration
Statement and the Prospectus will comply as to form, in all respects to
the requirements of the Act and the Rules and Regulations, and none of
such documents, nor the Prospectus, includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the
Initial Registration Statement is subsequent to the execution and
delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will comply as to form in all respects to the requirements
of the Act and the Rules and Regulations, none of such documents, nor
the Prospectus, will include any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein not
2
<PAGE> 3
misleading, and no Additional Registration Statement has been or will
be filed. The two preceding sentences do not apply to statements in or
omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through
the Representatives specifically for use therein, it being understood
and agreed that the only such information is that described as such in
Section 7(b) hereof.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and, except as would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole
("MATERIAL ADVERSE EFFECT"), other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except in this
latter case for such matters as would not, individually or in the
aggregate, have a Material Adverse Effect.
(iv) Each Significant Subsidiary (as defined by Rule 1-02(w)
of Regulation S-X) and , and (each, a
"Significant Subsidiary") has been duly incorporated and is an existing
corporation in good standing (with respect to the subsidiaries
incorporated in a jurisdiction of the United States) under the laws of
the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and each Significant Subsidiary of the
Company is duly qualified to do business as a foreign corporation in
good standing (with respect to the subsidiaries incorporated in a
jurisdiction of the United States) in all other jurisdictions in which
its ownership or lease of property or the conduct of its business
requires such qualification, except in this latter case for such
matters as would not, individually or in the aggregate, have a Material
Adverse Effect; all of the issued and outstanding capital stock of each
Significant Subsidiary of the Company has been duly and validly
authorized and issued and is fully paid and nonassessable; and the
capital stock of each Significant Subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued, are fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the stockholder of
the Company has no preemptive rights with respect to the Offered
Securities.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the Offering.
(vii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act.
(viii) The Offered Securities have been approved for listing
on The New York Stock Exchange (the "NYSE") subject to notice of
issuance.
(ix) Except in connection with the reorganization of the
Company as described in the Prospectus, no consent, approval,
authorization, or order of, or filing with, any governmental agency or
body or any court is required to be obtained or made by the Company for
the consummation of the transactions contemplated by this Agreement or
in connection with the sale of the Offered Securities, except such as
have been obtained and made under the Act and such as may be required
under state securities laws.
3
<PAGE> 4
(x) The execution, delivery and performance of this Agreement,
and the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, (A) any statute or any rule, regulation
or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any Significant
Subsidiary of the Company or any of their properties, except such as
would not, individually or in the aggregate, have a Material Adverse
Effect, or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Offered
Securities, (B) any agreement or instrument to which the Company or any
such Significant Subsidiary is a party or by which the Company or any
such Significant Subsidiary is bound or to which any of the properties
of the Company or any such Significant Subsidiary is subject, except
such as would not, individually or in the aggregate, have a Material
Adverse Effect, or (C) the charter or by-laws of the Company or any
such Significant Subsidiary, and the Company has full power and
authority to execute and perform its obligations under this Agreement.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(xii) Except as disclosed in the Prospectus, the Company and
its Significant Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them that,
individually or in the aggregate, are material to it or them, in each
case free from liens, encumbrances and defects that would materially
affect the value thereof or materially interfere with the use made or
to be made thereof by them; and except as disclosed in the Prospectus,
the Company and its Significant Subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof
by them.
(xiii) The Company and its Significant Subsidiaries possess
adequate certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or any
of its Significant Subsidiaries, would individually or in the aggregate
have Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent that might reasonably be expected to result in a Material
Adverse Effect.
(xv) Except as disclosed in the Prospectus, the Company and
its Significant Subsidiaries own, possess or can acquire on reasonable
terms, adequate trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "INTELLECTUAL PROPERTY RIGHTS")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any
intellectual property rights that, if determined adversely to the
Company or any of its Significant Subsidiaries, would individually or
in the aggregate result in a Material Adverse Effect.
(xvi) Except as disclosed in the Prospectus, each of the
Company and its subsidiaries is in compliance with all applicable
statutes, and all applicable rules, regulations, requirements,
decisions and orders of, and agreements with, any governmental agency
or body and any court, relating to (A) the protection of human health
and safety as related to Hazardous Substances or environmental or
workplace matters, (B) the generation, presence, use, handling,
transportation, storage, treatment, disposal, emanation or release of
hazardous or toxic substances, materials or wastes, including without
limitation petroleum or any fraction thereof, asbestos, and
polychlorinated biphenyls ("HAZARDOUS SUBSTANCES"), or (C) other
environmental matters, including without limitation pollution,
protection, investigation, cleanup or restoration of the environment or
natural resources (collectively, "HSE LAWS"), subject in each case to
such exceptions as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
4
<PAGE> 5
(xvii) Except as disclosed in the Prospectus, each of the
Company and its subsidiaries has received, and is in compliance with
all terms and conditions of, all permits, licenses, variances or other
approvals required of it under applicable HSE Laws ("HSE PERMITS") in
order to conduct its business as presently conducted, subject to such
exceptions as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(xviii) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is subject to any pending or
threatened claims or proceedings, and to the Company's knowledge there
are no past or present events, conditions or circumstances that are
reasonably likely to give rise to costs, liabilities, claims or
proceedings, in each case arising from, relating to or based on (A) HSE
Laws, (B) HSE Permits, or (C) the generation, presence, use, handling,
transportation, storage, treatment, disposal, emanation or release of
Hazardous Substances or the investigation or cleanup thereof, whether
on-site or off-site, which would reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
(xix) Except as disclosed in the Prospectus, neither the
Company nor any of its subsidiaries is subject to any pending or, to
the Company's knowledge, threatened proceeding associated with any HSE
Laws or HSE Permits to which the government is a party and which are
reasonably likely to result in monetary fines or penalties of $100,000
or more.
(xx) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect, or
would materially and adversely affect the ability of the Company to
perform its obligations under this Agreement, or which are otherwise
material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to the Company's
knowledge, contemplated.
(xxi) PriceWaterhouseCoopers LLP, who have certified the
combined financial statements of the Company and the combined companies
included in the Prospectus and delivered their report with respect to
such combined financial statements included in the Registration
Statement and the Prospectus, are independent public accountants as
required by the Act and the applicable rules and regulations
thereunder.
(xxii) The combined financial statements and the selected
financial information set forth under the caption "Summary Selected
Combined Financial Information" included in each Registration Statement
and the Prospectus, in each case together with the notes and footnotes
thereto, present fairly the financial position of the Company and the
combined companies as of the dates shown and their results of
operations and cash flows for the periods shown, and such combined
financial statements and selected combined financial information have
been prepared in conformity with the generally accepted accounting
principles in the United States ("GAAP") applied on a consistent basis;
and the assumptions used in preparing the unaudited pro forma combined
financial information included in each Registration Statement and the
Prospectus provide a reasonable basis for presenting the significant
effects directly attributable to the transactions or events described
therein, the related pro forma adjustments give appropriate effect to
those assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
combined financial statement amounts.
(xxiii) Except as disclosed in the Prospectus, since the date
of the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or event
known to the Company involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole,
and, except as disclosed in or contemplated by the Prospectus, there
has been no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(xxiv) The Company is not and, after giving effect to the
Offering and sale of the Offered Securities, will not be an "investment
company" as defined in the Investment Company Act of 1940.
5
<PAGE> 6
(xxv) The Company has not distributed and, prior to the later
of (A) any Closing Date and (B) the completion of the distribution of
the Offered Securities (as notified to the Company pursuant to the last
paragraph of Section 3 hereof), will not distribute any offering
material in connection with the Offering other than each Registration
Statement or any amendment thereto or the Prospectus or any amendment
or supplement thereto.
(xxvi) Neither the Company nor any of its affiliates (as
defined in the Act), nor any person acting on behalf of any of them
has, directly or indirectly, (A) taken any action designed to cause or
to result in, or that has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Offered Securities, or (B) since the filing
of the Initial Registration Statement (I) sold, bid for, purchased, or
paid anyone any compensation for soliciting purchases of, the Offered
Securities or (II) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
(xxvii) The Company and each of its Significant Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations; (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain asset accountability; (C)
access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability
for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(xxviii) Except as described in or contemplated by the
Prospectus, no Significant Subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the
Company, making any other distribution on such Significant Subsidiary's
capital stock, repaying to the Company any loans or advances to such
Significant Subsidiary from the Company or transferring any of such
Significant Subsidiary's property or assets to the Company or any other
Significant Subsidiary of the Company, and the Company is not currently
prohibited, directly or indirectly, from paying any dividends or making
any other distribution on its capital stock.
(xxix) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed, which returns are
true, correct and complete in all material respects, or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes shown
to be due on such tax returns and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such tax, assessment, fine or penalty that is
currently being contested in good faith or as described in or
contemplated by the Prospectuses, except in any case in which the
failure so to pay would not have a Material Adverse Effect.
(xxx) (A) No ERISA Event (as defined below) has occurred or is
expected to occur, and no condition exists, or is expected to exist,
that could reasonably be expected to result in any such ERISA Event.
The aggregate Underfunding (as defined below) with respect to all Plans
(as defined below), other than those the liability for which is
reflected in the Company's financial statements, which have any
Underfunding does not exceed $10,000,000. The reorganization of the
Company as described in the Prospectus and the Offering will not,
directly or indirectly, result in any liability, or a material risk of
any such liability, to any Plan (as defined below) or the Pension
Benefit Guaranty Corporation ("PBGC").
(B) [The PBGC has agreed with the Company that it will
not terminate any of the Plans or impose any conditions on the Company,
other than conditions which the Company has satisfied or will satisfy,
as a result of the reorganization of the Company as described in the
Prospectus and the Offering.]
(C) Neither the Company nor any of its Significant
Subsidiaries has incurred unsatisfied liabilities in connection with
withdrawals from Multiemployer Plans and Multiple Employer Plans (each
as defined below), if any, in excess of an aggregate amount of
$1,000,000. Neither the Company nor any of its ERISA Affiliates
reasonably may be expected to incur, directly or indirectly, liability
with respect to Multiemployer Plans and Multiple Employer Plans that
would, individually or in the aggregate have a Material Adverse Effect.
The reorganization of the Company as described in the Prospectus and
the
6
<PAGE> 7
Offering will not, directly or indirectly, result in any such withdrawal
liability or a material risk of any such liability.
As used herein, the following terms shall have the
respective meaning ascribed to each below.
"CODE" means the United States Internal Revenue Code
of 1986, as amended, and the regulations promulgated and the
rulings issued thereunder.
"ERISA" means the United States Employee Retirement
Income Security Act of 1974, as amended, and the regulations
promulgated and rulings issued thereunder.
"ERISA AFFILIATE" means the Company and each trade or
business (whether or not incorporated) that would be treated
together with the Company as a single employer under Title IV
or Section 302 of ERISA or Section 412 of the Code.
"ERISA EVENT" means (i) the occurrence of a
"reportable event" described in Section 4043 of ERISA (other
than a "reportable event" not subject to the provision for
30-day notice), or (ii) the provision or filing of a notice of
intent to terminate a Plan (other than in a standard
termination within the meaning of Section 4041 of ERISA) or
the treatment of a Plan amendment as a distress termination
under Section 4041 of ERISA, or (iii) the institution of
proceedings to terminate a Plan by the Pension Benefit
Guaranty Corporation, or (iv) the existence of any
"accumulated funding deficiency" or "liquidity shortfall"
(within the meaning of Section 302 of ERISA or Section 412 of
the Code), whether or not waived, or the filing of an
application pursuant to Section 412(e) of the Code or Section
304 of ERISA for any extension of an amortization period, or
(v) the receipt of notice by the Company or any ERISA
Affiliate that any Multiemployer Plan may be terminated,
partitioned or reorganized or that any Multiple Employer Plan
may be terminated, or (vi) the occurrence of any transaction
which might reasonably be expected to constitute grounds for
the imposition of liability under Section 4069 of ERISA.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"MULTIPLE EMPLOYER PLAN" means an employee benefit
plan described in Section 4063 of ERISA.
"PLAN" means an employee benefit plan subject to
Title IV of ERISA, Section 302 of ERISA or Section 412 of the
Code, other than a Multiemployer Plan, with respect to which
the Company or any of its subsidiaries could be subject to any
liability.
"UNDERFUNDING" means, with respect to any Plan, the
"amount of unfunded benefit liabilities" of such Plan with the
meaning of ERISA Section 4001(a)(18).
(xxxi) Except as disclosed in the Prospectus, no default
exists, and no event has occurred which, with notice or lapse of time
or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective
properties is bound that would, individually or in the aggregate, have
a Material Adverse Effect.
(xxxii) With respect to the consummation of the reorganization
of the Company as described in the Prospectus and the Offering, (A) all
notices required to be given to lenders, joint venture partners,
customers, suppliers and any other party to any material agreement or
instrument to which the Company or any Significant Subsidiary is a
party or by which the Company or any such Significant Subsidiary is
bound (each, a "CONTRACTING PARTY") have been given as required, (B)
all consents, approvals and authorizations
7
<PAGE> 8
required to be obtained from any Contracting Party have been obtained
as required, except for such consents, approvals and authorizations the
failure to obtain would not, individually or in the aggregate, have a
Material Adverse Effect, and (C) no consent, approval, authorization,
or order of, or filing with, any governmental agency or body or any
court is required to be obtained or made by the Company. Except as
disclosed in the Prospectus, the execution, delivery and performance of
this Agreement, and the consummation of the reorganization of the
Company as described in the Prospectus and the transactions herein
contemplated will not give any Contracting Party the right to terminate
any material agreement or instrument to which the Company or any
Significant Subsidiary is a party or by which the Company or any such
Significant Subsidiary is bound.
(b) The Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters as to the matters set forth in subsections
(a)(ii), (iii), (v), (vii), (xiv), (xx), (xxiii) and (xxxii) above, and further,
that:
(i) [Appropriate representation regarding selling stockholder
shareownership to be inserted.] The Selling Stockholder has full right,
power and authority to enter into this Agreement and will on the
Closing Date have full right, power and authority to sell, assign,
transfer and deliver the Offered Securities to be delivered by the
Selling Stockholder on such Closing Date hereunder.
(ii) The execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Selling
Stockholder; and this Agreement has been duly executed and delivered by
the Selling Stockholder and is the valid and binding agreement of the
Selling Stockholder, enforceable against the Selling Stockholder in
accordance with its terms.
(iii) Neither the Selling Stockholder nor any person acting on
its behalf has, directly or indirectly, (A) taken any action designed
to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Offered Securities or (B) since the filing of the Initial
Registration Statement (I) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Offered Securities or
(II) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company
(except for the sale of Offered Securities by the Selling Stockholder
under this Agreement).
(iv) The sale by the Selling Stockholder of Offered Securities
pursuant hereto is not prompted by any material adverse information
concerning the Company or its subsidiaries that is not set forth in the
Registration Statement or the Prospectus.
(v) The sale of the Offered Securities to the Underwriters by
the Selling Stockholder pursuant to this Agreement, the execution,
delivery and performance by the Selling Stockholder of this Agreement
and the consummation of the other transactions herein contemplated will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Selling Stockholder or any
subsidiary of the Selling Stockholder or any of their properties, or
any agreement or instrument to which the Selling Stockholder or any
such subsidiary is a party or by which the Selling Stockholder or any
such subsidiary is bound or to which any of the properties of the
Selling Stockholder or any such subsidiary is subject, or the charter
or by-laws of the Selling Stockholder or any such subsidiary.
(vi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Selling Stockholder
and any person that would give rise to a valid claim against the
Company or any Underwriter for a brokerage commission, finder's fee or
other like payment in connection with the Offering.
(vii) The Selling Stockholder has not distributed and, prior
to the later of (A) any Closing Date and (B) the completion of the
distribution of the Offered Securities, will not distribute any
offering material in connection with the Offering other than each
Registration Statement or any amendment thereto or the Prospectus or
any amendment or supplement thereto.
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<PAGE> 9
(viii) Except as disclosed in the Prospectus, since the date
of the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or event
known to the Selling Stockholder involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole, and, except as disclosed in or contemplated by the
Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(c) The above representations and warranties shall be deemed to be
repeated on each Closing Date, and all references therein to the Offered
Securities and the Closing Date shall be deemed to refer to the Firm Securities
or the Optional Securities and the First Closing Date (as defined below) or the
applicable Optional Closing Date (as defined below), each as applicable.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Selling Stockholder agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Selling Stockholder, at a purchase price of U.S.$
per share, the respective numbers of shares of Firm Securities set forth
opposite the names of the Underwriters in Schedules A and B hereto, as
applicable.
The Selling Stockholder will deliver the Firm Securities to CSFBC, for
the accounts of the Underwriters, against payment of the purchase price in U.S.
dollars in Federal (same day) funds by wire transfer to an account at a bank
notified by the Selling Stockholder to CSFBC at the office of Cleary, Gottlieb,
Steen & Hamilton, One Liberty Plaza, New York, New York, at A.M.,
New York time, on , 1999, or at such other time not later than seven
full business days thereafter as CSFBC and the Selling Stockholder determine, as
applicable, such time being herein referred to as the "FIRST CLOSING DATE". For
purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the Offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of Cleary, Gottlieb, Steen &
Hamilton, at least 24 hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and
the Selling Stockholder from time to time (but no more than a total of three
times) not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the Optional Securities at the
purchase price per Security to be paid for the Firm Securities.
The Selling Stockholder agrees to sell to the Underwriters such
Optional Securities and the Underwriters agree, severally and not jointly, to
purchase such Optional Securities. Such Optional Securities shall be purchased
for the account of each Underwriter in the same proportion as the number of
shares of Firm Securities set forth opposite such Underwriter's name bears to
the total number of Firm Securities (subject to adjustment by CSFBC to eliminate
fractions), and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm
Securities. No Optional Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered. The
right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC on behalf of
Underwriters to the Selling Stockholder. It is understood that CSFBC is
authorized to make payment for and accept delivery of such Optional Securities
on behalf of the Underwriters pursuant to the terms of CSFBC's instructions to
the Selling Stockholder.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "OPTIONAL CLOSING DATE", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "CLOSING DATE"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is received by the Selling Stockholder.
The Selling Stockholder will deliver the applicable Optional Securities being
purchased on each Optional Closing Date to CSFBC, for the accounts of the
Underwriters, against payment of the purchase price therefor in Federal (same
day) funds by wire transfer to an account at a bank notified by the Selling
Stockholder to CSFBC, at the above office of Cleary, Gottlieb, Steen & Hamilton.
The certificates for the Optional Securities
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<PAGE> 10
being purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at the above office of Cleary, Gottlieb, Steen &
Hamilton at a reasonable time in advance of such Optional Closing Date.
CSFBC shall notify the Company and the Selling Stockholder upon the
completion of the distribution of the Offered Securities.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholder. (a)
The Company agrees with the several Underwriters that:
(i) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to
by CSFBC, subparagraph (4)) of Rule 424(b), not later than the earlier
of (A) the second business day following the execution and delivery of
this Agreement or (B) the fifteenth business day after the Effective
Date of the Initial Registration Statement. The Company will advise
CSFBC promptly of any such filing pursuant to Rule 424(b).
If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the
Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the
additional registration statement or, if filed, file a post-effective
amendment thereto with the Commission pursuant to and in accordance
with Rule 462(b) at or prior to 10:00 P.M., New York time, on the date
of this Agreement or, if earlier, on or prior to the time either
Prospectus is printed and distributed to any Underwriter or Manager, or
will make such filing at such later date as shall have been consented
to by CSFBC.
(ii) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any)
or the Prospectus and will not effect such amendment or supplementation
without CSFBC's prior consent, which consent shall not be unreasonably
withheld; and the Company will also advise CSFBC promptly of the
effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and any
amendment to or supplement of a Registration Statement or the
Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its
reasonable efforts to prevent the issuance of any such stop order and
to obtain as soon as possible its lifting, if issued.
(iii) If, at any time when a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, any event occurs as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Prospectus to comply with the
Act, the Company will notify CSFBC promptly upon becoming aware of such
event and will promptly prepare and, in the case of the Prospectus,
file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent
to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in
Section 6.
(iv) Not later than the Availability Date (as defined below),
the Company will make generally available to its security holders an
earnings statement covering a period of at least 12 months beginning
after the Effective Date of the Initial Registration Statement (or, if
later, the Effective Date of the
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<PAGE> 11
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"AVAILABILITY DATE" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter.
(v) The Company will furnish to the Representatives copies of
the Registration Statement (three of which will be signed and will
include all exhibits), each preliminary prospectus relating to the
Offered Securities, and, so long as a prospectus relating to the
Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and
all amendments and supplements to such documents, in each case in such
quantities as CSFBC requests. The Prospectus shall be so furnished in
New York City on or prior to 3:00 P.M., New York time, on the business
day following the later of the execution and delivery of this Agreement
or the Effective Time of the Initial Registration Statement. All other
such documents shall be so furnished as soon as available. The Selling
Stockholder will pay the expenses of printing and distributing all such
documents to the Underwriters.
(vi) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions in the
United States as CSFBC designates and will continue such qualifications
in effect so long as required for the distribution.
(vii) During the period of five years hereafter, the Company
will furnish to the Representatives and, upon request, to each of the
other Underwriters, as soon as practicable after the end of each fiscal
year, a copy of its annual report to stockholders for such year; and
the Company will furnish to the Representatives as soon as available, a
copy of each report and any definitive proxy statement of the Company
filed with the Commission under the Securities Exchange Act of 1934 or
mailed to stockholders.
(viii) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including any
filing fees and other expenses (including fees and disbursements of
counsel) in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions in the United States as CSFBC
designates and the printing of memoranda relating thereto, the filing
fee incidental to, and the reasonable and properly documented fees and
disbursements of counsel to the Underwriters in connection with, the
review by the National Association of Securities Dealers, Inc. of the
Offered Securities, any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the
Offered Securities and expenses incurred in distributing preliminary
Prospectus and the Prospectus (including any amendments and supplements
thereto) to the Underwriters.
(ix) For a period of 180 days after the date of the initial
public offering of the Offered Securities, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or
securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC.
(b) The Selling Stockholder agrees with the several Underwriters and
the Company that:
(i) The Selling Stockholder will, unless otherwise paid by the
Company pursuant to Section 5(a)(viii), pay all expenses incident to
the performance of the obligations of the Selling Stockholder and the
obligations of the Company under this Agreement, including any filing
fees and other expenses (including fees and disbursements of counsel)
incurred in connection with qualification of the Offered Securities for
sale under the laws of such jurisdictions in the United States as CSFBC
designates and the printing of memoranda relating thereto, the filing
fee incident to, and the reasonable fees and disbursements of counsel
to the Underwriters in connection with, the preview by the National
Association of Securities Dealers, Inc. of the Offered Securities, any
travel expenses of the Company's or the Selling Stockholder's officers
and employees and any other expenses of the Company and the Selling
Stockholder in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, any transfer taxes on
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<PAGE> 12
the sale of the Offered Securities to the Underwriters and expenses
incurred in distributing preliminary Prospectus and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
(ii) The Selling Stockholder will indemnify and hold harmless
the Underwriters against any documentary, stamp or similar issue tax,
including any interest and penalties, on the sale of the Offered
Securities and on the execution and delivery of this Agreement. All
payments to be made by the Selling Stockholder hereunder shall be made
without withholding or deduction for or on account of any present or
future taxes, duties or governmental charges whatsoever unless the
Selling Stockholder is compelled by law to deduct or withhold such
taxes, duties or charges. In that event, the Selling Stockholder shall
pay such additional amounts as may be necessary in order that the net
amounts received after such withholding or deduction shall equal the
amounts that would have been received if no withholding or deduction
had been made.
(iii) The Selling Stockholder agrees to deliver to CSFBC,
attention: Transactions Advisory Group on or prior to the First Closing
date a properly completed and executed United States Treasury
Department Form W-8 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
(iv) The Selling Stockholder agrees, for a period of 180 days
after the date of the initial public offering of the Offered
Securities, not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any additional shares of the
Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, or publicly
disclose the intention to make any such offer, sale, pledge or
disposition, without the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholder herein, to the
accuracy of the written statements of Company and Selling Stockholder officers
made pursuant to subsections (f) and (g) below, to the performance by the
Company and the Selling Stockholder of their respective obligations hereunder
and to the following additional conditions precedent:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be at
or prior to the time of filing of the amendment or post-effective
amendment to the registration statement to be filed shortly prior to
such Effective Time), of PriceWaterhouseCoopers LLP confirming that
they are independent public accountants within the meaning of the Act
and the applicable published Rules and Regulations thereunder and
stating to the effect that:
(i) in their opinion the combined financial
statements examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited interim combined financial
statements included in the Registration Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available unaudited
interim combined financial statements of the Company,
inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them
to believe that:
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<PAGE> 13
(A) the unaudited interim combined financial
statements included in the Registration Statements do
not comply as to form in all material respects with
the applicable accounting requirements of the Act and
the related published Rules and Regulations or any
material modifications should be made to such
unaudited financial statements for them to be in
conformity with GAAP;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than five business
days prior to the date of such letter, there was any
change in the capital stock or any increase in
short-term indebtedness or long-term debt of the
Company and the combined companies or, at the date of
the latest available balance sheet read by such
accountants, there was any decrease in consolidated
net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in
the Prospectus; or
(C) for the period from the closing date of
the latest income statement included in the
Prospectus to the closing date of the latest
available income statement read by such accountants
there were any decreases, as compared with the
corresponding period of the previous year, in
combined net sales, net operating income or the total
or per share amounts of combined income before
extraordinary items or net income,
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus disclose
have occurred or may occur or which are described in such
letter;
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Company and the combined
companies subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to
be in agreement with such results, except as otherwise
specified in such letter; and
(v) on the basis of a reading of the unaudited pro
forma combined condensed financial information included in the
Registration Statements and the Prospectus, carrying out
certain specified procedures that would not necessarily reveal
matters of significance with respect to the comments set forth
in this clause (v), inquiries of certain officials of the
Company and the combined companies and the Selling Stockholder
who have responsibility for financial and accounting matters
and proving the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the
unaudited pro forma combined condensed financial information,
nothing came to their attention that caused them to believe
that the unaudited pro forma combined condensed financial
information do not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of such information.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement but the Effective Time of the Additional Registration
is subsequent to such execution and delivery, "Registration Statements"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, (ii) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of
this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to its Effective
Time, and (iii) "Prospectus" shall mean the prospectus relating to the
Securities included in the Registration Statements and the
corresponding form of prospectus relating to the International
Securities.
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<PAGE> 14
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or such later date as shall
have been consented to by CSFBC. If the Effective Time of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time either Prospectus is printed
and distributed to any Underwriter or Manager, or shall have occurred
at such later date as shall have been consented to by CSFBC. If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement, the Prospectus shall have
been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a)(i) of this Agreement. Prior to such
Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Selling Stockholder, the Company or the Representatives, shall be
contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) a change in U.S. or
international financial, political or economic conditions as would, in
the judgment of a majority in interest of the Underwriters including
the Representatives, be likely to prejudice materially the success of
the proposed issue, sale or distribution of the Offered Securities, or
(ii)(A) any change, or any development or event involving a prospective
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities;
(B) any downgrading in the rating of any debt securities of the Company
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or
review its rating of any debt securities or preferred stock of the
Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of
such rating); (C) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange
or in the over-the-counter market; (D) any banking moratorium declared
by U.S. Federal or New York authorities; or (E) any outbreak or
escalation of major hostilities in which the United States is involved,
any declaration of war by the U.S. Congress or any other substantial
national or international calamity or emergency if, in the judgment of
a majority in interest of the Underwriters including the
Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Shearman & Sterling, counsel for the Company and
the Selling Stockholder, [and General Counsel opinions] to the effect
that: [description to be inserted.]
(e) The Representatives shall have received from Cleary,
Gottlieb, Steen & Hamilton, counsel for the Underwriters, such opinion
or opinions, dated such Closing Date, with respect to the incorporation
of the Company, the validity of the Offered Securities delivered on
such Closing Date, the Registration Statements, the Prospectus and
other related matters as the Representatives may require, and the
Selling Stockholder and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(f) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers shall state that, to the best of their knowledge after
reasonable investigation: the representations and warranties of the
Company in this Agreement are true and correct; the Company has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to such Closing
Date; no stop order suspending the effectiveness of any Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of
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<PAGE> 15
Rule 462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the
Act, prior to the time either Prospectus was printed and distributed to
any Underwriter; and, subsequent to the date of the most recent
financial statements in the Prospectus, there has been no material
adverse change, nor any development or event known to such officer
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole except as set forth
in or contemplated by the Prospectus or as described in such
certificate.
(g) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Selling Stockholder in
which such officers shall state that, to the best of their knowledge
after reasonable investigation, the representations and warranties of
the Selling Stockholder in this Agreement are true and correct, and the
Selling Stockholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to such Closing Date.
(h) The Representatives shall have received a letter, dated
such Closing Date, of PriceWaterhouseCoopers LLP which reaffirms the
statements made in the letter furnished pursuant to subsection (a) of
this Section, except that the specified date referred to in such letter
will be a date not more than five days prior to such Closing Date for
the purposes of this subsection.
[INCLUDE ADDITIONAL CONDITIONS RELATED TO ANY ADDITIONAL STEPS
OF THE REORGANIZATION NOT COMPLETED AT THE TIME OF SIGNING]
The Selling Stockholder and the Company will furnish the
Representatives with such conformed copies of such opinions, certificates,
letters and documents required by the terms of this Agreement as the
Representatives reasonably request. The Representatives may in their sole
discretion waive on behalf of the Underwriters compliance with any conditions to
the obligations of the Underwriters hereunder, whether in respect of an Optional
Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, with respect
to the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, in the light of the circumstances under which they were
made, not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only information furnished by
any Underwriter consists of the information described as such in subsection (c)
below; and provided further, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Underwriter, or any of its partners, directors or
officers or any person, if any, who controls such Underwriter within the meaning
of Section 15 of the Act, from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such purchase
and any such loss, claim, damage or liability of such Underwriter results from
the fact that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus if the Company had previously furnished copies thereof to
such Underwriter.
15
<PAGE> 16
(b) The Selling Stockholder will indemnify and hold harmless each
Underwriter, its partners, directors and officers and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Selling Stockholder will
not be liable in any such case (i) unless and to the extent that a court holds
that the indemnification by the Company provided for in subsection (a) above is
unenforceable in whole or in part and such indemnification is therefore
unavailable or insufficient, or unless such indemnification by the Company is
otherwise insufficient, to hold fully harmless an indemnified party under such
subsection (a), and (ii) to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by an Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers, the Selling Stockholder and
each person, if any who controls the Company or the Selling Stockholder within
the meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities to which the Company, the Selling Stockholder or any such
controlling person of the Company or the Selling Stockholder may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer or controlling person or the Selling
Stockholder or controlling person of the Selling Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by any Underwriter consists of (i) the following
information in the Prospectus furnished on behalf of each Underwriter: the
concession and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting" and the information contained in the first table and the
last paragraph under the caption "Underwriting"; and (ii) the following
information in the Prospectus furnished on behalf of CSFBC: the last sentence of
the twelfth paragraph under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section, for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes (i)
an unconditional
16
<PAGE> 17
release of such indemnified party from all liability on any claims that are the
subject matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of an
indemnified party.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the Underwriters on the
other from the Offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholder on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the Offering of the
Offered Securities (before deducting expenses) received by the Selling
Stockholder bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault 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, the Selling Stockholder or any Underwriter
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay 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 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling Stockholder under
this Section shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement, to the Selling Stockholder and to each person, if any,
who controls the Company or the Selling Stockholder within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase the Offered Securities hereunder on any Closing
Date and the aggregate number of shares of Offered Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total number of shares of Offered Securities that the
Underwriters are obligated to purchase on such Closing Date, the Representatives
may make arrangements satisfactory to the Selling Stockholder for the purchase
of such Offered Securities by other persons, including any of the Underwriters,
but if no such arrangements are made by such Closing Date the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Offered Securities that such defaulting
Underwriters agreed but failed to purchase on such Closing Date. If any
Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
the Representatives and the Selling Stockholder for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholder, except as
provided in Section 9 (provided that if such default occurs with respect to the
Optional Securities after the First Closing Date, this
17
<PAGE> 18
Agreement will not terminate as to the Firm Securities or any Optional
Securities purchased prior to such termination). As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholder, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, the Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Selling Stockholder shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Company, the Selling Stockholder and the
Underwriters pursuant to Section 7 shall remain in effect and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Offered Securities by the Underwriters is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 8 or the occurrence of any event specified in clause (C),
(D) or (E) of Section 6(c)(ii), the Selling Stockholder will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the Offering of the
Offered Securities.
10. Notices. All communications hereunder will be in writing and (a) if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to: the Representatives, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department - Transactions Advisory Group; (b) if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 8770 W. Bryn Mawr
Avenue, Chicago, Illinois 60631, Attention: General Counsel; and (c) if sent to
the Selling Stockholder, will be mailed, delivered or telegraphed and confirmed
to it at 7, Place du Chancelier Adenauer, 75016 Paris, France, Attention:
Directeur Juridique du Groupe; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representatives will act for
the several Underwriters in connection with this financing. Any action under
this Agreement taken by the Representatives jointly or by CSFBC will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company and the Selling Stockholder hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. The Selling
Stockholder irrevocably appoints [insert name and address of authorized agent],
as its authorized agent in the Borough of Manhattan in The City of New York upon
which process may be served in any such suit or proceeding, and agrees that
service of process upon such agent, and written notice of said service to the
Company by the person serving the same to the address provided in Section 10,
shall be deemed in every respect effective service of process upon the Company
or the Selling Stockholder, as the case may be, in any such suit or proceeding.
The Selling Stockholder further agrees to take any and all action as may be
necessary to maintain such designation and appointment of such agent in full
force and effect for a period of seven years from the date of this Agreement.
18
<PAGE> 19
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholder, the Company and the several Underwriters in accordance with
its terms.
Very truly yours,
Pechiney,
by
-----------------------------------
Name:
Title:
American National Can Group, Inc.,
by
-----------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
The Underwriters
CREDIT SUISSE FIRST BOSTON CORPORATION
- --------------------------------------
- --------------------------------------
Acting on behalf of themselves and as
the Representatives of the several
Underwriters named in Schedule A hereto.
BY CREDIT SUISSE FIRST BOSTON CORPORATION
by
--------------------------------------
Name:
Title:
19
<PAGE> 20
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
<S> <C>
Credit Suisse First Boston Corporation....................
Deutsche Bank Securities Inc..............................
Goldman, Sachs & Co.......................................
Lehman Brothers Inc.......................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated........
Salomon Smith Barney Inc..................................
---------------
Total............................................
===============
</TABLE>
<PAGE> 1
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is
made and entered into as of June , 1999, by and between AMERICAN NATIONAL
CAN GROUP, INC., a Delaware corporation (the "Company"), and PECHINEY, a French
corporation ("Pechiney").
RECITALS
A. In connection with the initial public offering of
shares of common stock by the Company (the "Initial Public Offering"), the
Company desires to grant to Pechiney certain registration rights with respect
to the common stock of the Company acquired or held directly or indirectly by
Pechiney from time to time (collectively, the "Shares").
B. The parties hereto desire to set forth the terms and
conditions of the Company's covenants and agreements in respect of the
registration of the Shares with the Securities and Exchange Commission and all
applicable state securities agencies.
C. In consideration of the premises and the mutual
agreements contained herein, the parties hereby agree as follows:
AGREEMENT
1. DEFINITIONS
As used in this Agreement, the following capitalized shall
have the following meanings:
Advice: See the last paragraph of Section 5 hereof.
Agents: Any Person authorized to act and who acts on behalf
of Pechiney with respect to the transactions contemplated by this
Agreement.
Common Stock: Shares of the Company's common stock, par
value $.01 per share, as the same may be constituted from time to
time.
Demand Registration: See Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder as in effect
from time to time.
<PAGE> 2
2
Person: An individual, partnership, corporation trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in any Registration Statement,as
amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered
by the Registration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments and all material
incorporated by reference in such Prospectus.
Registrable Securities: (i) The Shares and (ii) any securities issued
or issuable with respect to the Shares by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization, until such Shares or
other securities are not Restricted Securities as defined in Section 2.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement of the Company
which covers Registrable Securities pursuant to the provisions of this
Agreement, including (i) the Prospectus, (ii) amendments and supplements to
such Registration Statement, (iii) post-effective amendments, (iv) all
exhibits and all material incorporated by reference in such Registration
Statement and (v) any registration statement pursuant to a Demand
Registration.
Restricted Securities: The Registrable Securities upon original
issuance thereof, subject to the provisions of Section 2 hereof.
Securities Act: The Securities Act of 1933, as amended from time
to time.
SEC: The Securities and Exchange Commission.
Shares: See Recital A.
Underwritten Offering: The offering and sale of securities of the
Company covered by any Registration Statement pursuant to a firm commitment
underwriting to an underwriter at a fixed price of reoffering or pursuant to
agency or best efforts arrangements with an underwriter.
Unless the context otherwise requires: (i) "or" is not exclusive; and (ii)
words in the singular include the plural and in the plural include the singular.
<PAGE> 3
3
2. Securities Subject to this Agreement
Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities but, with respect to any
particular Registrable Security, only so long as such security continues to be
a Restricted Security. A Registrable Security ceases to be a Restricted
Security when (i) it has been effectively registered under the Securities Act
and disposed of in accordance with the Registration Statement covering it, (ii)
it has been distributed pursuant to Rules 1444 or 144A (or any similar
provisions then in force) under the Securities Act or (iii) it has otherwise
been transferred and a new certificate or other evidence of ownership for it
not bearing a legend restricting transfer under the Securities Act and not
subject to any stop transfer order has been delivered by or on behalf of the
Company and no other restriction on transfer exists.
3. Demand Registration
(a) Requests for Registration. At any time Pechiney may make a
written request for registration with the SEC under and in accordance with the
provisions of the Securities Act of all or part of its Registrable Securities
(a "Demand Registration"). All requests made pursuant to this Section 3(a)
shall specify the number of Registrable Securities to be registered and the
intended methods of disposition thereof. All such requests shall be delivered
to the Company in accordance with the provisions of Section 9(d) of this
Agreement.
(b) Number of, and Limitations on, Registrations. Pechiney will be
entitled to request a total of [ ] Demand Registrations. The Company will not
be obligated to register any Registrable Securities pursuant to such a Demand
Registration (i) unless there is requested to be included in such registration
at least [ ] Shares (subject to such adjustments as may be necessary by reason
of the occurrence of an event contemplated by clause (ii) of the definition of
Registrable Securities) (unless, at the time of such request, Pechiney holds
less than [ ] Shares, in which case such request must be for such lesser
amount) or (ii) it a prior Demand Registration was declared effective within a
period commencing [12] months prior to the date of the written request for such
Demand Registration and such prior Demand Registration was maintained effective
for a period of not less than [180] days, or such shorter period during which
all Registrable Securities covered by such prior Demand Registration were sold
or withdrawn.
(c) Effective Registration -- Expenses. In any registration initiated
as a Demand Registration, Pechiney will pay all Registration Expenses, whether
or not the Registration Statement has become effective.
(d) Selection of Underwriters. If any of the Registrable Securities
covered by a Demand Registration are to be sold in an underwritten offering, or
in a best efforts
<PAGE> 4
4
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by Pechiney.
If Pechiney disapproves of the terms and conditions of the underwriting,
Pechiney may elect to withdraw all its Registrable Securities by written notice
to the Company and the managing underwriter. The Registrable Securities
withdrawn shall also be withdrawn from registration.
4. Incidental Registration.
(a) Subject to Section 5 and the other terms and conditions set forth
in this Section 4, if at any time 180 days after this Agreement the Company
determines that it shall file a registration statement under the Securities Act
(other than a registration statement on Form S-4 or S-8 (or successor forms
thereto) or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders) for the sale of
Common Stock for its own account or for the account of any third party (a
"Selling Securityholder"), the Company shall each such time promptly give
Pechiney written notice of such determination setting forth the date on which
the Company proposes to file such registration statement, which date shall be
no earlier than 30 days from the date of such notice, and advising Pechiney of
its right to have any Registrable Securities beneficially owned by it included
in such registration. Upon the written request of Pechiney received by the
Company no later than 15 business days after the date of the Company's notice,
the Company shall use its best efforts to cause to be registered under the
Securities Act all of the Registrable Securities that Pechiney has so requested
to be registered. The Company, in its sole discretion shall appoint the
underwriters, if any, for any registration covered by this Section 4 in the
case of a sale by the Company of Common Stock for its own account.
(b) The Company's obligation to include Registrable Securities in a
registration statement pursuant to Section 4(a) above is subject to the
following limitations: (i) if, at any time after giving written notice of its
determination to register Common Stock for its own account or for the account
of a Selling Securityholder and prior to the effective date of any registration
statement filed in connection with such registration, the Company or such
Selling Securityholder shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to Pechiney and thereupon the Company shall be relieved of its
obligation to use any efforts to register any Registrable Securities in
connection with such aborted registration and (ii) if the Registrable
Securities registered in accordance with this Section 4 is to be sold in one or
more firm commitment underwritten offerings, and the sole or managing
underwriter, as the case may be, of such underwritten offering advises the
Company, Pechiney and the Selling Securityholder to be included in such
registration that, in its opinion, the total amount of such securities to be so
registered, including such Registrable Securities, will exceed the maximum
amount (the "Maximum Offering Size") of the Company's securities that can be
marketed (1) at a price reasonably related to the then current market value of
such securities or (2) without otherwise
<PAGE> 5
5
materially and adversely affecting the entire offering, then the Company shall
include in such registration, in the following priority up to the Maximum
Offering Size: (x) first, all of the securities proposed to be registered for
offer and sale by the Company or the Selling Securityholder, as the case may be,
and (y) second, all of the Registrable Securities requested to be included in
such registration by Pechiney pursuant to this Section 4, allocated, if
necessary, for such offering not to exceed the Maximum Offering Size, pro rata
among the holders requesting registration of such Registrable Securities on the
basis of the relative number of shares of Registrable Securities each such
holder has requested to be included in such registration.
5. Registration Procedures
Whenever Pechiney has requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will promptly take all such
actions as may be necessary or desirable to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) with respect to a request to file a Registration Statement
covering Registrable Securities made pursuant to Section 3, use its best
efforts to prepare and file with the SEC not later than [90] days after
receipt of such request (which [90]-day period may be extended by the
Company for up to an additional [90] days if at the time of such request
the Company is engaged in negotiations looking toward its participation in
a material merger, acquisition or other form of business combination or, if
by reason of such transaction, the Company is not in a position to timely
prepare and file the Registration Statement and the Company furnishes to
Pechiney a certificate signed by the president or a vice president of the
Company stating that in the good faith opinion of the board of directors of
the Company such registration would interfere with such transaction then
being pursued by the Company) a Registration Statement on a form for which
the Company then qualifies which is satisfactory to the Company and
Pechiney (unless the offering is made on an underwritten basis, including
on a best efforts underwriting basis, in which event the managing
underwriter or underwriters may determine the form to be used) and which
form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, and
use its best efforts to cause such Registration Statement to become
effective; the Company shall not file any Registration Statement pursuant
to Section 3 or any amendment thereto or any Prospectus or any supplement
thereto (including such documents incorporated by reference) to which
Pechiney or the underwriters, if any, shall reasonably object in light of
the requirements of the Securities Act or any other applicable laws or
regulations;
<PAGE> 6
6
(b) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (excluding documents to be incorporated by
reference therein, except in the case of the preparation of the initial
Registration Statement), the Company will, within [five] days of filing,
furnish to Pechiney and the underwriters, if any, copies of all such documents
in substantially the form proposed to be filed (including documents
incorporated therein by reference), to enable Pechiney and the underwriters, if
any, to review such documents prior to the filing thereof, and the Company
shall make such reasonable changes thereto (including changes to, or the filing
of amendments reflecting such changes to, documents incorporated by reference)
as may be reasonably requested by Pechiney and the managing underwriter or
underwriters, if any;
(c) subject to paragraph (b) above, prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement as may
be necessary to keep the Registration Statement continuously effective for a
period of not less than 180 days or such longer period as is required for the
intended method of distribution, or such shorter Period which will terminate
when all Registrable Securities covered by such Registration Statement have
been sold or withdrawn; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by Pechiney thereof set forth in such Registration Statement or
supplement to the Prospectus;
(d) notify Pechiney and the managing underwriters, if any, promptly, and
(if requested by any such Person) confirm such advice in writing, (1) when the
prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the SEC
for amendments or supplements to the Registration Statement or the Prospectus
or for additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, (4) if at any time the representations and
warranties of the Company contemplated by paragraph (o) below cease to be true
and correct, (5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (6) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus
<PAGE> 7
7
or any document incorporated therein by reference in order to make the
statements therein not misleading:
(e) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(f) as promptly as practicable after filing with the SEC of any document
which is incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement) provides copies
of such documents to counsel to Pechiney and to the managing underwriters;
(g) furnish to Pechiney and each managing underwriter, without charge, at
least one signed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference) and a reasonable number of conformed copies of all such documents;
(h) delivery to Pechiney and the underwriters, if any, as many copies of
the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the Company consents
to the use of the Prospectus or any amendment or supplement thereto by Pechiney
and the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto;
(i) prior to the date on which the Registration Statement is declared
effective, use its best efforts to register or qualify, or cooperate with
Pechiney and the underwriters, if any, and their respective counsel in
connection with the registration or qualification of, such Registration
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any seller or underwriter reasonably requests in writing and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject; provided,
further, that the Company will not be required to qualify such Registrable
Securities in any jurisdiction in which the securities regulatory authority
requires that Pechiney submit any shares of its Registrable Securities to the
terms, provisions and restrictions of any escrow, lock-up or similar
agreement(s) for consent to sell Registrable Securities in such jurisdiction
unless Pechiney agrees to do so;
<PAGE> 8
8
(j) cooperate with Pechiney and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters may request at least two business days
prior to any sale of Registrable Securities to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities within the United States as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities;
(l) upon the occurrence of any event contemplated by paragraph (d) above,
prepare a supplement or post-effective Amendment to the Registration Statement
or the Prospectus or any document incorporated therein by reference or file any
other required documents so that, as thereafter delivered to the purchasers of
the Registrable Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(m) use its best efforts to cause all Registrable Securities covered by
the Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
Pechiney or the managing underwriters, if any;
(n) provide a transfer agent and registrar for all Registrable Securities;
(o) enter into such agreements (including an underwriting agreement) and
take all such other actions in connection therewith as Pechiney or the managing
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration (1) make such representations and
warranties to Pechiney and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in primary underwritten
offerings (including, without limitation, an agreement to not sell equity
securities during a customary lock-up period) and confirm the accuracy of the
same if and when requested, and matters relating to the compliance of the
Registration Statement and the Prospectus with the Securities Act; (2) obtain
opinions of counsel to the Company, and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters) addressed to Pechiney and the underwriters, if any,
covering the matters
<PAGE> 9
9
customary in underwritten primary offerings and such other matters as may
be reasonably requested by Pechiney and underwriters, if any; (3) obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to Pechiney and the underwriters, if
any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by underwriters in connection
with primary underwritten offerings; (4) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification
provisions and procedures of Section 7 hereof with respect to all parties
to be indemnified pursuant to said Section; and (5) the Company shall
deliver such documents and certificates as may be requested by Pechiney and
the managing underwriters, if any, to evidence compliance with clause (1)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The above shall
be done at each closing under such underwriting or similar agreement or as
and to the extent required thereunder;
(p) make available for inspection during normal business hours by
Pechiney, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by Pechiney or any such underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by Pechiney or any such underwriter,
attorney, accountant or agent in connection with such registration
statement; provided that any records, information or documents that are
designated by the Company in writing as confidential shall be kept
confidential by such Persons;
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of any
12-month period (1) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or best efforts
underwriting offering, and (2) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said 12-month periods;
and
(r) take such other reasonable steps that are necessary or advisable
to permit the sale of such Registrable Securities.
The Company may require Pechiney to furnish to the Company such
information and documents regarding the distribution of such securities and
Pechiney as the Company may from time to time reasonably request in writing.
<PAGE> 10
10
Pechiney agrees by acquisition of such Registrable Securities that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 5(d)(6) hereof, Pechiney will forthwith
discontinue disposition of Registrable Securities until Pechiney's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section 5
(1) hereof, or until it is advised in writing (the "Advice") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, Pechiney will, or will request
the underwriters to, deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in Pechiney's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. If the Company shall give such notice, the time periods
mentioned in Section 5(e) hereof shall be extended by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 5(d)(6) to and including the date when Pechiney shall have received the
copies of the supplemented or amended prospectus contemplated by Section 5(1)
hereof or the Advice.
6. Expenses
Except as otherwise provided herein, all expenses incident to the
Company's performance of or compliance with this Agreement including without
limitation all registration and filing fees, including with respect to filings
required to be made with the National Association of Securities Dealers, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters in connection
with blue sky qualification of the Registrable Securities and determination of
their eligibility for investment under the laws of such jurisdictions as the
managming underwriters or holders of a majority of the Registrable Securities
being sold may designate), printing expenses, messenger, telephone and delivery
expenses, and fees and disbursements of counsel for the Company, Pechiney and
of all independent certified public accountants (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), the fees and expenses incurred in connection with the listing of
the securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees,
securities acts liability insurance if Pechiney so requires, the reasonable
fees and expenses of any special experts retained by Pechiney or by the Company
at the request of the managing underwriters in connection with such
registration and fees and expenses of other Persons retained by Pechiney (all
such expenses being herein called "Registration Expenses") will be borne by
Pechiney. The Company shall, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties) and the expense of any annual
audit which are not "Registration Expenses" for purposes of this Agreement. In
no event shall the Company be liable for the payment of any discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar industry professionals relating to the distribution of
<PAGE> 11
11
the Registrable Securities. Pechiney shall be liable for the cost and expense of
the time spent by its officers, employees and Agents incurred in connection with
the registration of Registrable Securities owned by it.
7. Indemnification
(a) Indemnification by Company. The Company will indemnify and hold
harmless, to the full extent permitted by law, Pechiney, its officers and
directors, their Agents and each Person who controls Pechiney (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
(or actions in respect thereto) and expenses to which any such Person may be
subject, under the Securities Act or otherwise, and reimburse all such Persons
for any legal or other expenses incurred with investigating or defending against
any such losses, claims, damages or liabilities, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue or alleged
untrue statement of a material fact contained in a Registration Statement,
Prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as the same arise out of
or are based upon an untrue statement of a material fact or omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, which statement or omission is made therein in reliance
upon and in conformity with information furnished in writing to the Company by
Pechiney, expressly for use therein. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of Pechiney,
Pechiney's directors and officers, their Agents or a controlling Person, and
shall survive the transfer of such securities by Pechiney. The Company will also
indemnify underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (with the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of Pechiney of Registrable Securities.
(b) Indemnification by Pechiney. Pechiney will indemnify and hold
harmless, to the full extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities (or actions in
respect thereto) and expenses to which any such Person may be subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in a Registration Statement or Prospectus
or preliminary prospectus or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only if and to the extent, that such untrue or
alleged untrue statement or omission or alleged omission is made therein in
reliance upon and in conformity with the information furnished in writing by
Pechiney specifically for inclusion therein. In no event shall the liability of
Pechiney
<PAGE> 12
12
hereunder be greater in amount than the dollar amount of the proceeds received
by Pechiney upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The Company shall be entitled to receive indemnities
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution, to the same extent as
provided above with respect to information so furnished in writing by such
Persons.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest may exist
between such indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party and in that case the
indemnified party shall have the right to participate in the conduct of such
defense provided that it will pay for the fees of its own counsel. Whether or
not such defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without its consent
(but such consent will not be unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving of the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels. The failure to notify an
indemnifying party promptly of the commencement of any such action, if and to
the extent prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section,
but the omission so to notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section.
(d) Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party and indemnified party in connection with the actions
which resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of material fact or omission or
<PAGE> 13
13
alleged omission to state a material fact, has been made, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages or liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Transfer of Registration Rights
The registration rights of Pechiney under this Agreement with respect
to any Registrable Securities may be transferred to any transferee of such
Registrable Securities, including any affiliate of Pechiney; provided, however,
that (i) Pechiney shall give the Company written notice at or prior to the time
of such transfer stating the name and address of the transferee and identifying
the securities with respect to which the rights under this Agreement are being
transferred and (ii) such transferee shall agree in writing, in form and
substance reasonably satisfactory to the Company, to be bound by the provisions
of this Agreement.
9. Miscellaneous
(a) Remedies. Pechiney shall be entitled to exercise all rights
provided herein or granted by law, including recovery of damages, and each will
be entitled to specific performance of their rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to Pechiney in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement with respect to its securities granting any
registration rights to any Person.
<PAGE> 14
14
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Pechiney.
(d) Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in any general or branch office of the United States Postal Service, enclosed
in a registered or certified postpaid envelope, or sent by Federal Express or
other similar overnight couriers service, addressed to the address of the
parties stated below or to such changed address as such party may have fixed by
notice or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.
(i) If to Pechiney:
Pechiney S.A.
7 place du Chancelier Adenauer
75218 Paris cedex 16
France
Attn: [ ]
(ii) If to the Company:
American National Can Group, Inc.
8770 W. Bryn Mawr Avenue
Chicago, Illinois 60631
Attn: Alan H. Schumacher
(e) Successors and Assigns. This Agreement is solely for the benefit of
the parties and their respective successors and assigns. Nothing herein shall
be construed to provide any rights to any other entity or individual.
(f) Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
(g) Headings. Section headings are for convenience only and do not control
or affect the meaning or interpretation of any terms or provisions of this
Agreement.
<PAGE> 15
15
(h) Governing Law. This Agreement shall be governed by the laws of
the State of New York.
(i) Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.
(j) Entire Agreement. This Agreement constitutes the entire
understanding between the parties and supersedes all proposals, commitments,
writings, negotiations and understandings, oral and written, and all other
communications between the parties relating to the subject matter of this
Agreement. This Agreement may not be amended or otherwise modified except
writing duly executed by all of the parties. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof or thereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
<PAGE> 16
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMERICAN NATIONAL CAN GROUP, INC.
By:_____________________________________
Name
Title
PECHINEY
By:_____________________________________
Name
Title
<PAGE> 1
EXHIBIT 4.2
Temporary Certificate--Exchangeable for Definitive Engraved Certificate When
Ready for Delivery.
[AMERICAN NATIONAL CAN LOGO]
American National Can Group, Inc. CUSIP
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR
CERTAIN DEFINITIONS
This certifies that is the owner of fully paid and non-asessable
common stock of the par value $0.01 each of American National Can Group, Inc.
(hereinafter called the "Corporation") transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and facsimile signatures of its
duly authorized officers.
Dated:
[SEAL]
[SIG.]
CHAIRMAN AND CHIEF EXECUTIVE OFFICER SECRETARY
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT AND REGISTRAR,
BY [SIG]
AUTHORIZED SIGNATURE
NOTE: LOGO IS FOR POSITION ONLY
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR:
BLAIR MILL ROAD LISA MARTIN 216-630-2158
HORSEMAN, PA 14046 PROOF OF JUNE 25,1999
(215) 657-3480 AMERICAN NATIONAL CAN
M 62428fc
- ------------------------------------- ---------------------------------
SALES: B. WARNER 1-708-599-0404 OPERATOR: hj
- ------------------------------------- ---------------------------------
/NET/BANKNOTE/HOME 40/AmerNatCan62428 NEW
- ------------------------------------- ---------------------------------
<PAGE> 2
AMERICAN NATIONAL CAN GROUP, INC.
American National Can Group, Inc. will mail to the record holder of this
Certificate without charge, within five days after receipt of written request
therefor, a copy of the express terms of the stock represented by this
Certificate and of other class or classes and series of stock, if any, which
American National Can Group, Inc. is authorized to issue at the time of such
request.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S><C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as persons by the entireties -----------------------------
JT TEN - as joint tenants with right (Cust) (Minor)
of survivorship and not as tenants under Uniform Gifts to Minors
in common Act
---------------------------
(State)
UNIF TRF MIN ACT - Custodian(until age )
------------------------------
(Cust)
under Uniform Transfers
------------------------------
(Minor)
to Minors Act
-----------------
(State)
Additional abbreviations may also be used though not in the above list
FOR VALUE RECEIVED, hereby sell, assign and transfer unto
-------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------------------------
- ----------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Common Shares
- -----------------------------------------------------------------------------------------------------------------------
represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney
- ----------------------------------------------------------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated
--------------------------------------------------
X
----------------------------------------------------------------------------
X
----------------------------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By
-----------------------------------------------------------------------
THIS SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE, MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
---------------------------------------------- ---------------------------------------------------------------
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR, LISA MARTIN: 215-630-2188
660 BLAIR MILL ROAD PROOF OF JUNE 25, 1999
HORSHAM, PA 18044 American National Can
(218) 687-3480 H 62428bk
---------------------------------------------- ---------------------------------------------------------------
SALES: W. WARNER: 1-708-599-0404 OPERATOR:
---------------------------------------------- ---------------------------------------------------------------
/NET/BANKNOTE/HOME 40/AmerNatCan68428 NEW
---------------------------------------------- ---------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 8.1
[Sherman and Sterling Letterhead]
Pechiney S.A.
7 Place du Chancelier Adenauer
75116 Paris
American National Can Group, Inc.
Common Stock
Ladies and Gentleman:
We have acted as tax counsel to Pechiney S.A. in connection with the
preparation and filing of a Prospectus and Registration Statement on Form S-1,
No. 333-7669 dated April 21, 1999, as amended pursuant to which shares of Common
Stock of American National Can Group, Inc. (the "Company") are being offered.
Based upon provisions of the Internal Revenue Code of 1986, as
amended, Treasury regulations and administration and judicial interpretations as
of the date hereof (all of which are subject to change, possible with
retroactive effect, or different interpretations), we are of the opinion that
the discussion sets forth under the caption "United States Tax Consequences to
Non-U.S. Holders of Common Stock" in the Prospectus, subject to the limitations
contained therein, accurately describe the principal United States federal
income and estate tax consequences of the ownership and disposition of shares of
the Company's Common Stock.
Very truly yours
LMB/AFS
<PAGE> 1
EXHIBIT 8.2
April 14, 1999
Mr. Thomas Buckley
Vice President - Tax
American National Can Company
8770 West Bryn Mawr Avenue
Chicago, IL 60631-3542
Re: Proposed Split-Off by ANC
This letter responds to your request for our opinion regarding certain U.S.
federal income tax effects resulting from a proposed transfer by American
National Can Company ("ANC") of all of its assets that are not associated with
its beverage can business to a new corporation ("Newco") in exchange for Newco
stock and the assumption by Newco of liabilities from ANC followed by the
distribution of all of the Newco stock by ANC to Pechiney SA ("Pechiney") in
redemption of Pechiney's ANC stock. This type of transaction is known as a
"split-off" pursuant to sections 368(a)(1)(D) and 355.1
I. SCOPE OF THIS OPINION
PricewaterhouseCoopers LLP was requested to provide its opinion as to whether
ANC should take into account certain liabilities that will be assumed by Newco
in the proposed exchange for purposes of determining whether the amount of
liabilities assumed by Newco or to which the transferred assets were subject
exceeds ANC's tax basis in the transferred assets under section 357(c) and for
purposes of calculating the basis that ANC would have in the Newco stock
immediately after the exchange under section 358.
The liabilities in question are those liabilities of ANC, an accrual basis
taxpayer, as to which ANC has neither received a deduction for tax purposes nor
been afforded additional tax basis in any asset ("the Non-tax-basis
Liabilities").
(1) Unless otherwise indicated, all references are to the Internal Revenue Code
of 1986 as amended.
Mr. Thomas Buckley - 1
<PAGE> 2
II. CONCLUSIONS
In a letter dated April 12, 1999, we received confirmation of the facts and
representations set forth in this opinion letter. Based on the information and
representations provided to us and subject to the caveats and limitations set
forth herein, we have reached the following conclusions with regard to the U.S.
federal income tax effects that should result from Newco's assumption of the
Non-tax-basis Liabilities from ANC:
It is our opinion that the Non-tax-basis Liabilities are the type described in
sections 357(c)(3) and 358(d)(2), and therefore, ANC should make the calculation
required by section 357(c)(1) without regard to these liabilities and that ANC
should determine its basis in the Newco stock under section 358(a) without
reduction for the Non-tax-basis Liabilities assumed by Newco.
III. BACKGROUND FACTS
A. GENERAL STRUCTURE
Pechiney is a French corporation and the ultimate parent company for the group,
which includes the parties to the transactions described herein. Pechiney's
stock is publicly traded.
Financiere Europeenne d'Emballages Pechiney ("FEEP") is a French holding
corporation. The sole class of FEEP stock outstanding is owned 99.99985 percent
by Pechiney and 0.00015 percent by others.
Pechiney North America, Inc. ("PNA") is a Delaware holding company. Pechiney
owns the sole class of PNA stock outstanding. PNA and its U.S. subsidiaries file
their U.S. federal tax returns on a consolidated basis. Pechiney acquired an
indirect stock investment in PNA in December 1988 when its wholly-owned US
subsidiary, Pechiney Corporation, acquired the stock of PNA in a taxable
purchase. Pechiney Corporation sold the stock of PNA to Pechiney in December
1995 in a taxable transaction.
American National Can Holding, Inc. ("ANCH") is a Delaware holding company. The
sole class of ANCH stock outstanding is owned by PNA. PNA acquired the stock of
ANCH in July 1988 in a taxable purchase which was a reverse acquisition under
the US consolidated return rules.
ANC is a Delaware corporation that is engaged in the business of manufacturing
and selling metal and plastic packaging. The sole class of ANC stock outstanding
is owned 90 percent by ANCH and 10 percent by Pechiney. ANCH acquired its stock
investment in ANC in 1985 in a taxable purchase. Pechiney acquired its direct
investment in ANC in 1989 and 1992 by subscription to additional shares of ANC.
American National Can Overseas Corporation ("ANCOC") is a Delaware holding
company. The sole class of ANCOC stock outstanding is owned by ANC. ANC acquired
its stock investment
Mr. Thomas Buckley - 2
<PAGE> 3
in ANCOC by subscribing to ANCOC shares upon the 1967 incorporation of ANCOC in
a section 351 transaction.
Nacanco Holding Europe is a French holding company that was established as part
of the 1998 European Reorganization. It has two classes of stock outstanding.
All of the voting common stock of Nacanco Holding Europe is held by ANCOC. All
of the voting preferred stock of Nacanco Holding Europe is held by FEEP.
Nacanco Holding France is a French holding company that was established as part
of the 1998 European Reorganization. It has two classes of stock outstanding.
All of the voting common stock of Nacanco Holding France is held by FEEP. All of
the voting preferred stock, constituting more than 80 percent of the voting
power of Nacanco Holding France's outstanding stock, is owned by Nacanco Holding
Europe.
Nacanco Atlantic SA is a French holding company. All of the stock of Nacanco
Atlantic is owned by Nacanco Holding Europe.
Nacanco America Corporation is a U.S. corporation. All the stock of Nacanco
America Corporation is owned by Nacanco Atlantic SA.
Nacanco Finance Corporation is a U.S. finance company. Nacanco Finance
Corporation has outstanding two classes of stock, common stock and a class of
preferred stock of the type described in section 1504(a)(4). All of the Nacanco
Finance Corporation preferred stock is held by Nacanco America Corporation. All
of the common stock of Nacanco Finance Corporation is owned by ANCOC.
Nacanco (Holding) Ltd. is an English holding company. Nacanco (Holding) Ltd. has
outstanding shares of voting ordinary stock and shares of nonvoting preferred
stock. All of Nacanco (Holding) Ltd.'s outstanding stock is owned by Nacanco
Holding France.
Nacanco Netherlands BV is a Netherlands corporation that is engaged in the
business of manufacturing and selling metal container lids. The sole class of
Nacanco Netherlands BV stock outstanding is owned by Nacanco Holding France.
Nacanco SpA is an Italian corporation. The sole class of Nacanco SpA stock
outstanding is owned 57.474 percent by Nacanco Netherlands BV and 42.526 percent
by Pechiney.
Nacanco Deutschland GmbH is a German holding corporation. The sole class of
Nacanco Deutschland GmbH stock outstanding is owned by Nacanco Holding France.
Nacanco Verwaltungs GmbH is a German holding corporation. The sole class of
Nacanco Verwaltungs GmbH stock outstanding is owned 98 percent by Nacanco
Holding France and 2 percent by Nacanco Netherlands BV.
Mr. Thomas Buckley - 3
<PAGE> 4
Nacanco France SA is a French corporation. The sole class of Nacanco France SA
stock outstanding is owned by Pechiney.
Nacanco Paketleme Sanayi Ve Et A.S. is a Turkish corporation. The sole class of
Nacanco Paketleme Sanayi Ve Et A.S. stock outstanding is owned 65 percent by
Pechiney and 35 percent by an unrelated third party.
Hanil Can Co. Ltd is a Korean corporation. The sole class of Hanil Can Co. Ltd
stock outstanding is owned 40 percent by Pechiney and 60 percent by an unrelated
third party.
Vitro-American National Can, S.A. de C.V. is a Mexican corporation. The sole
class of Vitro-American National Can, S.A. de C.V. stock outstanding is owned 50
percent by Pechiney and 50 percent by an unrelated third party.
American National Can do Brazil, Ltda. is a Brazilian corporation. The sole
class of American National Can do Brazil, Ltda. stock outstanding is owned by
FEEP.
B. ANC BUSINESS OPERATIONS
ANC is an accrual basis taxpayer. The Beverage Cans Americas Division of ANC is
one of the largest manufacturers of two-piece aluminum beverage cans and ends
for the North American soft drink, beer, fruit drink and tea markets, with a
U.S. market share of approximately 27 percent on the basis of 1997 sales. In the
United States, beverage cans are produced exclusively from aluminum. The
principal product of Beverage Cans Americas is the two-piece, 12-ounce aluminum
beverage can. The division also produces an extensive range of products in other
sizes, e.g., 5.5-, 8-, 10-, 14-, 16- and 24-ounce aluminum cans. ANC has 22 US
production facilities in 17 states including one owned as a joint venture with
one of its major US customers. Eighteen of these facilities produce can bodies
and four produce can ends.
As part of Pechiney's strategy of focusing on its core aluminum and packaging
activities and reducing its level of outstanding debt, Pechiney undertook in
1995 a disposition program for non-core business segments. The disposition
program included the Food Metal and Specialty North America business, and the
Beverage Glass North America business of ANC. On July 31, 1995, ANC sold the US
food and specialty packaging business (formerly the Food Metal and Specialty
North America division) of ANC to Silgan Corp., an unrelated third party, for
cash. The business produced steel and aluminum food cans, metal caps and rigid
plastic boxes, and had 16 plants in North America with approximately 1,800
employees. On September 15, 1995, ANC sold the Beverage Glass North America
division to a US joint venture between Saint Gobain and Ball Corporation, both
unrelated third parties. In 1994, this division was the third largest US
manufacturer of glass containers and had approximately 3,271 employees.
Mr. Thomas Buckley - 4
<PAGE> 5
IV. BUSINESS OBJECTIVES
The decision to undertake a public stock offering solely with regard to the
beverage can operations is the result of an on-going strategic review of ANC's
business operations and capital investments conducted by management with the
assistance of numerous external advisors. Management has decided to pursue a
share offering after considering numerous alternatives that did not accomplish
its desired business objectives, including several potential acquisitions as
well as the formation of strategic joint ventures or the disposition of certain
operations. The decision to undertake a public stock offering with regard to the
beverage can operations also has arisen as the result of the favorable current
position of the US securities market, and such market conditions and resulting
undertaking were not known or specifically considered at the time of the
previous restructuring efforts. The public stock offering will be of a new U.S.
holding company ("New ANC").
New ANC's operations will consist solely of beverage can operations. This will
allow for a single-line-of-business strategic focus. In a letter dated April 9,
1999 Credit Suisse First Boston ("CSFB"), Pechiney's financial adviser, states
that New ANC would become one of the leading producers of aluminum and tin plate
beverage cans in the world, and it will be the only "pure-play" company in the
industry. CSFB recommends that New ANC be a U.S. corporation rather than a
foreign corporation because CSFB expects that a significant demand for the New
ANC stock will come from U.S. institutional investors. CSFB also points out that
ANC's comparable U.S. peers trade at a premium as compared to their European
counterparts. CSFB goes on to state that a singular focus on beverage can
operations should allow ANC's management to continue to improve its production
processes and to create a company which generates superior returns for its
shareholders. CSFB believes that by selling greater than 50 percent of its
ownership stake in New ANC, Pechiney will provide a clear signal to the market
that Pechiney is serious about freeing New ANC's management to focus on
improving financial performance and generating superior returns for its
shareholders. CSFB then refers to favorable market reactions from similar
transactions such as those by Pepsi Bottling Group, Infinity Media Broadcasting
and Conoco.
Finally, CSFB has advised that it would be better for ANC to allocate all the
post retirement benefits other than pensions ("OPEB" liabilities) for employees
of the plastics packaging business and as much as possible of the liability for
employees of the discontinued operations to Newco. CSFB believes that allocating
such liabilities to Newco will: (i) improve, at the margin, ANC's credit and
ability to raise debt capital to support its seasonal borrowing needs and
growth; (ii) improve ANC's earnings before interest, taxes, depreciation and
amortization ("EBITDA"), which will be the primary driver of valuation for New
ANC's stock; and (iii) confirm that ANC will be independent from Pechiney and
will not be burdened with, what the market will perceive as, Pechiney-related
liabilities. CSFB also believes that leaving only the OPEB liabilities that
relate to ANC's beverage can business together with ANC's other liabilities will
bring New ANC in line with its packaging industry peers such as Crown Cork &
Seal, Owens-Illinois and Ball Corporation.
Mr. Thomas Buckley - 5
<PAGE> 6
Management agrees that New ANC should be a U.S. corporation for the reasons
given by CSFB and for the additional reason that approximately 58 percent of
ANC's beverage can business comes from two U.S.-based multinational companies.
Management believes that it would be easier for New ANC to service these
customers as a U.S.-based company. Management believes that by having more than
50 percent of the stock of New ANC owned by the public New ANC will be viewed by
financing sources as a stand alone entity. This stand alone status should allow
New ANC to seek its own financing rather than having to compete with other
Pechiney entities for capital, as previously has been the case. Finally,
management believes that making a public stock offering with regard to the
beverage can business also will have a favorable internal effect on these
operations. New ANC's publicly held common stock, and stock options on these
shares, will be used as a component of New ANC executive compensation. The
performance of the New ANC common stock will be related directly to the
performance of the beverage can operations. This will result in the close
linking of New ANC executive compensation to the performance of the beverage can
operations, which management believes will help increase the economic
performance of the beverage can operations.
V. PROPOSED TRANSACTIONS
In order to accomplish the business objectives described above, Pechiney
proposes to undertake transactions that are substantially similar to those
described below.
1. ANC will form a new U.S. corporation ("Newco"), and ANC will transfer all
its assets that do not relate to ANC's beverage can business to Newco in
exchange for all of Newco's stock and the assumption by Newco of ANC
liabilities.
2. ANC will distribute all the stock of Newco to Pechiney in exchange for
Pechiney's ANC stock.
3. Pechiney will cause New ANC to be formed, and Pechiney will transfer an
amount of cash to New ANC equal to the value of the shares listed in
paragraph 4 in exchange for shares of New ANC stock.
4. New ANC will purchase from Pechiney the following stock interests for
cash:
(a) all the stock of PNA;
(b) all the stock of Nacanco France SA;
(c) all of Pechiney's stock (65 percent) in Nacanco Paketleme Sanayi Ve
Et A.S.;
(d) all of Pechiney's stock (40 percent) in Hanil Can Co. Ltd;
(e) all of Pechiney's stock (50 percent) in Vitro-American National Can,
S.A. de C.V.; and
Mr. Thomas Buckley - 6
<PAGE> 7
(f) Pechiney's 42.526 percent stock interest in Nacanco SpA.
5. FEEP will transfer to New ANC the following in exchange for shares of New
ANC stock:
(a) all the preferred stock of Nacanco Holding Europe;
(b) all the common stock of Nacanco Holding France; and
(c) all the outstanding shares of ANC do Brasil, which consists of
68,225,991 ordinary voting shares.
6. FEEP will sell all of its New ANC shares to Pechiney in exchange for a
note.
7. Pechiney will make an offering to the public of more than 50 percent of
the stock of New ANC.
VI. SUBSTANTIAL AUTHORITY
Providing the facts, assumptions, and representations contained herein are
correct, substantial authority, within the meaning of Section 6662 of the Code,
exists to reach the conclusions made in this opinion.
VII. CAVEATS AND LIMITATIONS
1. The conclusions reached in this opinion represent and are based upon our
best judgment regarding the application of federal income tax laws arising
under the Code, existing judicial decisions, administrative regulations
and published rulings and procedures. This opinion is not binding upon the
Internal Revenue Service or the courts. It is our opinion that the IRS
will not successfully assert a contrary position, although this cannot be
guaranteed in the absence of a private letter ruling from the IRS.
Furthermore, no assurance can be given that future legislative or
administrative changes, on either a prospective or retroactive basis,
would not adversely affect the accuracy of the conclusions stated herein.
PricewaterhouseCoopers LLP undertakes no responsibility to advise any
party or shareholder of any new developments in the application or
interpretation of the federal income tax laws.
2. This opinion does not address any federal tax consequences of the
transactions set forth above, or transactions related or proximate to the
transactions set forth above, except as specifically set forth herein.
This opinion does not address any state, local, foreign, or other tax
consequences that may result from any of the transactions set forth above,
or transactions related to the transactions set forth above.
Mr. Thomas Buckley - 7
<PAGE> 8
3. This opinion does not address any transactions other than those described
above, or any transactions whatsoever, if all the transactions described
herein are not consummated as described herein without waiver or breach of
any material provision thereof or if the representations set forth herein
are not true and accurate at all relevant times. In the event any one of
the representations is incorrect, the conclusions reached in this opinion
might be adversely affected.
Very truly yours,
PricewaterhouseCoopers LLP
Mr. Thomas Buckley - 8
<PAGE> 9
April 14, 1999
Mr. Thomas Buckley
Vice President - Tax
American National Can Company
8770 West Bryn Mawr Avenue
Chicago, IL 60631-3542
RE: PROPOSED STOCK OFFERING
Dear Mr. Buckley:
This letter responds to your request for our opinion regarding certain aspects
of a proposed stock offering by the Pechiney group of shares of a U.S.
corporation ("New ANC") that would hold all of beverage can businesses of
American National Can Company ("ANC").
I. SCOPE OF THIS OPINION
PricewaterhouseCoopers LLP was requested to provide its opinion as to whether
the proposed stock offering and the additional restructuring steps that will be
needed to prepare the new entity for the stock offering will have any adverse
effects on the U.S. federal income tax effects that otherwise result from the
restructuring undertaken by ANC of its European beverage can subsidiaries in
February 1998 (the "1998 European Reorganization"). Section VI describes the
scope and limitations of this opinion.
II. CONCLUSIONS
In a letter dated April 12, 1999, we received confirmation of the facts and the
representations set forth in this opinion letter. Based on the information and
representations provided to us and subject to the caveats and limitations set
forth herein, it is our opinion that the proposed restructuring, as described
hereinbelow, should have no adverse effect on the U.S. federal income tax
consequences resulting from the 1998 European Reorganization. We believe that
the U.S. federal income tax consequences of the 1998 European Reorganization
should continue to be the same as described in our prior opinion letter dated
February 2, 1998, as supplemented by our opinion letter dated April 13, 1998.
This opinion is expressly based on our understanding that the following debts
that currently exist will continue to be respected by the group as debt: (1)
approximately $910 million of debt
<PAGE> 10
between PNA and Nacanco Finance Corporation; and (2) approximately $900 million
of debt between Pechiney and FEEP.
III. BACKGROUND FACTS
A. General Structure
Pechiney is a French corporation and the ultimate parent company for the group,
which includes the parties to the transactions described herein. Pechiney's
stock is publicly traded.
Financiere Europeenne d'Emballages Pechiney ("FEEP") is a French holding
corporation. The sole class of FEEP stock outstanding is owned 99.99985 percent
by Pechiney and 0.00015 percent by others.
Pechiney North America, Inc. ("PNA") is a Delaware holding company. Pechiney
owns the sole class of PNA stock outstanding. PNA and its U.S. subsidiaries file
their U.S. federal tax returns on a consolidated basis.
American National Can Holding, Inc. ("ANCH") is a Delaware holding company. The
sole class of ANCH stock outstanding is owned by PNA.
American National Can Company ("ANC") is a Delaware corporation that is engaged
in the business of manufacturing and selling metal and plastic packaging. The
sole class of ANC stock outstanding is owned 90 percent by ANCH and 10 percent
by Pechiney.
American National Can Overseas Corporation ("ANCOC") is a Delaware holding
company. The sole class of ANCOC stock outstanding is owned by ANC.
Nacanco Holding Europe is a French holding company established as part of the
1998 European Reorganization. It has two classes of stock outstanding. All of
the voting common stock of Nacanco Holding Europe is held by ANCOC. All of the
voting preferred stock of Nacanco Holding Europe is held by FEEP.
Nacanco Holding France is a French holding company established as part of the
1998 European Reorganization. It has two classes of stock outstanding. All of
the voting common stock of Nacanco Holding France is held by FEEP. All of the
voting preferred stock, constituting more than 80 percent of the voting power of
Nacanco Holding France's outstanding stock, is owned by Nacanco Holding Europe.
Nacanco Atlantic SA is a French holding company. All of the stock of Nacanco
Atlantic is owned by Nacanco Holding Europe.
Mr. Thomas J. Buckley - 2
<PAGE> 11
Nacanco America Corporation is a U.S. corporation. All the stock of Nacanco
America Corporation is owned by Nacanco Atlantic SA.
Nacanco Finance Corporation is a U.S. finance company. Nacanco Finance
Corporation has outstanding two classes of stock, common stock and a class of
preferred stock of the type described in section 1504(a)(4). All of the Nacanco
Finance Corporation preferred stock is held by Nacanco America Corporation. All
of the common stock of Nacanco Finance Corporation is owned by ANCOC.
Nacanco (Holding) Ltd. is an English holding company. Nacanco (Holding) Ltd. has
outstanding shares of voting ordinary stock and shares of nonvoting preferred
stock. All of Nacanco (Holding) Ltd.'s outstanding stock is owned by Nacanco
Holding France.
Nacanco Netherlands BV is a Netherlands corporation that is engaged in the
business of manufacturing and selling metal container lids. The sole class of
Nacanco Netherlands BV stock outstanding is owned by Nacanco Holding France.
Nacanco SpA is an Italian corporation. The sole class of Nacanco SpA stock
outstanding is owned 57.474 percent by Nacanco Netherlands BV and 42.526 percent
by Pechiney.
Nacanco Deutschland GmbH is a German holding corporation. The sole class of
Nacanco Deutschland GmbH stock outstanding is owned by Nacanco Holding France.
Nacanco Verwaltungs GmbH is a German holding corporation. The sole class of
Nacanco Verwaltungs GmbH stock outstanding is owned 98 percent by Nacanco
Holding France and 2 percent by Nacanco Netherlands BV.
Nacanco France SA is a French corporation. The sole class of Nacanco France SA
stock outstanding is owned by Pechiney.
Nacanco Paketleme Sanayi Ve Et A.S. is a Turkish corporation. The sole class of
Nacanco Paketleme Sanayi Ve Et A.S. stock outstanding is owned 65 percent by
Pechiney and 35 percent by an unrelated third party.
Hanil Can Co. Ltd is a Korean corporation. The sole class of Hanil Can Co. Ltd
stock outstanding is owned 40 percent by Pechiney and 60 percent by an unrelated
third party.
Vitro-American National Can, S.A. de C.V. is a Mexican corporation. The sole
class of Vitro-American National Can, S.A. de C.V. stock outstanding is owned 50
percent by Pechiney and 50 percent by an unrelated third party.
Mr. Thomas J. Buckley - 3
<PAGE> 12
American National Can do Brazil, Ltda. is a Brazilian corporation. The sole
class of American National Can do Brazil, Ltda. stock outstanding is owned by
FEEP.
B. 1998 European Reorganization
The 1998 European Reorganization resulted in the transfer of a portion of
ownership in various European beverage can operations from ANCOC to Nacanco
Holding Finance. This transaction is addressed by our opinion letter dated
February 2, 1998 as supplemented by our opinion letter dated April 13, 1998.
The business objectives that were intended to be achieved and which have in
large part been achieved by the 1998 European Reorganization include the
following:
1. reduce operating costs as part of a major cost cutting plan that Pechiney
launched in 1996;
2. enhance Pechiney's ability to form joint ventures in Europe given the
differences in the various beverage can markets throughout the world as
discussed in our prior opinion letter;
3. facilitate cash flows within the group to allow the group to take
advantage of investment opportunities, to provide cash to fund investments
and distributions to Pechiney's shareholders, and to facilitate the
redeployment of capital among the European Subs;
4. save foreign taxes under the Parent-Subsidiary EU Directive with regard to
distributions out of the European Subs; and
5. save German taxes by placing additional debt into the German operations.
We understand that ANCOC continues to hold the stock of Nacanco Holding Europe
that it received in the 1998 European Reorganization, and the businesses of each
of the European beverage can operations have been continued. It also is our
understanding that each of the representations was true at the time of the 1998
European Reorganization and, except as otherwise described herein, continues to
be true today.
IV. PROPOSED STOCK OFFERING
A. Business Objectives
The decision to undertake a public stock offering with regard solely to the
beverage can operations is the result of an on-going strategic review of ANC's
business operations and capital investments conducted by management with the
assistance of numerous external advisors. Management has
Mr. Thomas J. Buckley - 4
<PAGE> 13
decided to pursue a share offering after considering numerous alternatives that
did not accomplish its desired business objectives, including several potential
acquisitions as well as the formation of strategic joint ventures or the
disposition of certain operations. The decision to undertake a public stock
offering with regard to the beverage can operations also has arisen as the
result of the favorable current position of the US securities market, and such
market conditions and resulting undertaking were not known nor necessarily
specifically considered at the time of the previous restructuring efforts.
New ANC's operations will consist solely of beverage can operations. This will
allow for a single-line-of-business strategic focus. In a letter dated April 9,
1999, Credit Suisse First Boston ("CSFB"), Pechiney's financial adviser, states
that New ANC would become one of the leading producers of aluminum and tin plate
beverage cans in the world, and it will be the only "pure-play" company in the
industry. CSFB recommends that New ANC be a U.S. corporation rather than a
foreign corporation because CSFB expects that a significant demand for the New
ANC stock will come from U.S. institutional investors. CSFB also points out that
ANC's comparable U.S. peers trade at a premium as compared to their European
counterparts. CSFB goes on to state that a singular focus on beverage can
operations should allow ANC's management to continue to improve its production
processes and to create a company which generates superior returns for its
shareholders. CSFB believes that by selling greater than 50 percent of its
ownership stake in New ANC, Pechiney will provide a clear signal to the market
that Pechiney is serious about freeing New ANC's management to focus on
improving financial performance and generating superior returns for its
shareholders. CSFB then refers to favorable market reactions from similar
transactions such as those by Pepsi Bottling Group, Infinity Media Broadcasting
and Conoco.
Management agrees that New ANC should be a U.S. corporation for the reasons
given by CSFB and for the additional reason that approximately 58 percent of
ANC's beverage can business comes from Pepsi and Coke, which are U.S.-based
multinational companies. Management believes that it would be easier for New ANC
to service these customers as a U.S.-based company. Management believes that by
having more than 50 percent of the stock of New ANC owned by the public New ANC
will be viewed by financing sources as a stand alone entity. This stand alone
status should allow New ANC to seek its own financing rather than having to
compete with other Pechiney entities for capital, as previously has been the
case. Finally, management believes that making a public stock offering with
regard to the beverage can business also will have a favorable internal effect
on these operations. New ANC's publicly held common stock, and stock options on
these shares will be used as a component of New ANC executive compensation. The
performance of the New ANC common stock will be directly related to the
performance of the beverage can operations. This will result in the close
linking of New ANC executive compensation to the performance of the beverage can
operations, which management believes will help increase the economic
performance of the beverage can operations.
B. Proposed Transaction Steps
Mr. Thomas J. Buckley - 5
<PAGE> 14
In order to accomplish the business objectives described above, Pechiney
proposes to undertake transactions that are substantially as described
hereinbelow.
1. ANC will form a new U.S. corporation ("Newco"), and ANC will transfer all
its assets that do not relate to ANC's beverage can business to Newco in
exchange for all of Newco's stock and the assumption by Newco of certain
ANC liabilities.
2. ANC will distribute all the stock of Newco to Pechiney in exchange for
Pechiney's ANC stock.
3. Pechiney will cause New ANC to be formed, and Pechiney will transfer an
amount of cash to New ANC equal to the value of the shares listed in
paragraph 4 in exchange for shares of New ANC stock.
4. New ANC will purchase from Pechiney the following stock interests for
cash:
(a) all the stock of PNA;
(b) all the stock of Nacanco France SA;
(c) all of Pechiney's stock (65 percent) in Nacanco Paketleme Sanayi Ve
Et A.S.;
(d) all of Pechiney's stock (40 percent) in Hanil Can Co. Ltd;
(e) all of Pechiney's stock (50 percent) in Vitro-American National Can,
S.A. de C.V.; and
(f) Pechiney's 42.526 percent stock interest in Nacanco SpA.
5. FEEP will transfer to New ANC the following in exchange for shares of New
ANC stock:
(a) all the preferred stock of Nacanco Holding Europe;
(b) all the common stock of Nacanco Holding France; and
(c) all the outstanding shares of ANC do Brasil, which consists of
68,225,991 ordinary voting shares.
6. FEEP will sell all of its New ANC shares to Pechiney in exchange for a
note.
7. Pechiney will make an offering to the public of more than 50 percent of
the stock of New ANC.
V. SUBSTANTIAL AUTHORITY
Provided that the facts, assumptions, and representations contained herein are
correct, substantial authority, within the meaning of section 6662, exists to
reach the conclusions made in this letter.
Mr. Thomas J. Buckley - 6
<PAGE> 15
VI. CAVEATS AND LIMITATIONS
1. The conclusions reached in this opinion represent and are based upon our
best judgment regarding the application of federal income tax laws arising
under the Code, existing judicial decisions, administrative regulations
and published rulings and procedures. This opinion is not binding upon the
Internal Revenue Service or the courts and there is no guarantee that the
Internal Revenue Service will not successfully assert a contrary position.
Furthermore, no assurance can be given that future legislative, judicial
or administrative changes, on either a prospective or retroactive basis,
would not adversely affect the accuracy of the conclusions stated herein.
PricewaterhouseCoopers LLP undertakes no responsibility to advise any
party or shareholder of any new developments in the application or
interpretation of the federal income tax laws.
2. This opinion does not address any federal income tax consequence of the
transactions set forth above except as specifically set forth herein. No
opinion is given as to any foreign tax consequences that may result from
any of the proposed transactions. This opinion does not address any U.S.
state, local, or other tax consequences that may result from any of the
proposed transactions.
3. This opinion only addresses the proposed transaction described above and
is premised on all steps of the proposed transaction being implemented as
described herein, including the proper execution of any and all applicable
agreements and corporate documents needed to implement the proposed
transaction. Failure to implement the proposed transaction as described
above could adversely affect the conclusions reached in this opinion.
4. This opinion is for the exclusive use and benefit of ANC. It should not be
provided to, nor relied upon by, any other person without the written
consent of PricewaterhouseCoopers LLP.
Very truly yours,
PricewaterhouseCoopers LLP
Mr. Thomas J. Buckley - 7
<PAGE> 16
We hereby consent to the inclusion of (1) our opinion dated April 14, 1999
regarding certain federal income tax consequences of the proposed stock offering
by Pechiney of shares of American National Can Group, Inc. and (2) our opinion
dated April 14, 1999 regarding certain federal income tax consequences of the
proposed split-off of the assets of American National Can Company not associated
with the beverage can business to Pechiney Plastic Packaging as Exhibit XX and
Exhibit XX, respectively, to this Registration Statement on Form S-1 of American
National Can Group, Inc. and to the reference to these opinions under the
heading "Reorganization of ANC - Tax Treatment" in such Registration Statement.
PricewaterhouseCoopers LLP
Chicago, Illinois
June 25, 1999
<PAGE> 1
[KRONISH LIEB WEINER & HELLMAN LLP LETTERHEAD]
EXHIBIT 8.3
April 14, 1999
VIA FEDERAL EXPRESS
Thomas J. Buckley, Esq.
Vice President-Tax
American National Can Company
8770 West Bryn Mawr Avenue
Chicago, IL 60631-3542
Re: Proposed Split-Off by American National Can Company
Dear Mr. Buckley:
You have requested our opinion regarding certain United States federal
income tax consequences of certain proposed transactions (the "Proposed
Transactions") involving American National Can Company ("ANC"), including the
effect of the Proposed Transactions on the February 1998 restructuring of ANC's
European beverage can subsidiaries described in our February 11, 1998, opinion
to you. The Proposed Transactions include the following steps: (i) ANC will
transfer all of its assets that are not associated with its beverage can
business to a newly formed U.S. corporation ("Newco") in exchange for all of the
stock of Newco and the assumption by Newco of ANC liabilities that are not
associated with the beverage can business; (ii) ANC will distribute all of the
stock of Newco to Pechiney S.A. ("Pechiney") in exchange for Pechiney's ANC
stock; (iii) Pechiney will contribute cash to a newly formed U.S. corporation
("New ANC") in exchange for stock of New ANC; (iv) New ANC will use the cash
contributed by Pechiney to purchase certain stock interests from Pechiney; (v)
Financiere Europeenne d'Emballages Pechiney ("FEEP") will transfer certain stock
interests to New ANC in exchange for shares of New ANC;(vi) FEEP will sell all
of its New ANC stock to Pechiney in exchange for a note; and (vi) Pechiney will
make a public offering of more than 50 percent of the stock of New ANC.
The Proposed Transactions and the ANC liabilities to be assumed by Newco
are more fully described in two opinion letters of PricewaterhouseCoopers LLP
dated April 14, 1999 (the "PricewaterhouseCoopers Opinions"). In rendering our
opinion, we have relied on the statement of facts, the description of the
Proposed Transactions, and the assumptions and
<PAGE> 2
Thomas J. Buckley, Esq.
American National Can Company
April 14, 1999
Page 2
representations set forth in the PricewaterhouseCoopers Opinions. In
addition, our opinion is based on such analysis of the law as we have
considered appropriate.
Based on the foregoing, it is our opinion that:
1. The Proposed Transactions should have no adverse impact on the
conclusions reached in our February 11, 1998, opinion relating
to the 1998 European Reorganization.*
2. The Non-tax-basis Liabilities should not be taken into account
under section 357(c)(1) in determining whether ANC recognizes
gain on its transfer to Newco.
3. ANC's basis in the Newco stock it receives should be equal to
its basis in the assets it transfers to Newco, reduced by the
amount of liabilities assumed by Newco but without reduction for
the Non-tax-basis Liabilities assumed by Newco.
Our views are based on existing law, which is subject to change
or modification at any time. We express no opinion as to any tax consequences
of the Proposed Transactions other than those explicitly addressed herein.
Very truly yours,
Kronish Lieb Weiner & Hellman LLP
- ---------------------
* Terms that are not defined herein are defined in the
PricewaterhouseCoopers Opinions.
<PAGE> 1
EXHIBIT 10.4
SHARED SERVICES AGREEMENT
THIS SHARED SERVICES AGREEMENT, dated as of June , 1999
(this "Agreement"), by and between PECHINEY PLASTIC PACKAGING, INC., a Delaware
corporation ("Pechiney Plastics") and AMERICAN NATIONAL CAN GROUP, INC., a
Delaware corporation (the "Company").
WHEREAS, Pechiney Plastics and American National Can Company,
a Delaware corporation ("ANC"), are parties to a Contribution Agreement, dated
as of May 31, 1999, pursuant to which ANC has transferred to Pechiney Plastics
all of ANC's assets and liabilities relating to ANC's plastic packaging and tube
operations (the "Contribution");
WHEREAS, following the Contribution, and pursuant to a Stock
Purchase Agreement, dated June , 1999, ANC has transferred to Pechiney, a
corporation (societe anonyme) organized and existing under the laws of the
Republic of France, all of its interest in Pechiney Plastics (the "Separation");
WHEREAS, in conjunction with the Contribution, certain
payroll, retiree, information technology, employee benefits design and
administration, communications and legal services (all of which services
together, the "Services") that were jointly utilized by Pechiney Plastics and
ANC were transferred to Pechiney Plastics;
WHEREAS, the Company has requested the continuation of the
Services by Pechiney Plastics, from and after the date of the Separation; and
WHEREAS, subsequent to the date of this Agreement, Pechiney
Plastics is willing to provide, or to cause one or more of its divisions to
provide, to the Company the Services, each upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the parties hereto agree as follows:
<PAGE> 2
2
ARTICLE I
THE SERVICES
SECTION 1.01. Provision of Services. Subject to the terms and
conditions set forth in this Agreement, Pechiney Plastics shall provide, or
cause one or more of its divisions to provide, to the Company, commencing on the
date of the Separation and continuing for the Term (as hereinafter defined), the
Services, each as more particularly described in Exhibit A hereto[, in each
case, consistent with the manner and level of care and quality with which such
Services were previously provided by ANC]. The Services shall be provided on a
timely basis and meet any applicable industry standards, if industry standards
are higher than any of the foregoing performance criteria.
SECTION 1.02. Term and Termination. Pechiney Plastics shall
continue to make each Service available through the end of the Term or, if
earlier, until canceled by either the Company or Pechiney Plastics by written
notice to the other party (i) in the case of the Services relating to the
administrative of the Acxiom MIS Service Agreement, 30 days before such
cancellation is to take effect, (ii) in the case of the legal Services and the
Services relating to communications and employee benefits design, no less than
90 days before such cancellation is to take effect, or (iii) in the case of
Services relating to payroll, retiree, information technology and employee
benefits administration, 180 days before such cancellation is to take effect.
Notwithstanding the foregoing:
(a) this Agreement may be terminated:
(i) by Pechiney Plastics, at any time, not less than 60
days after delivery of notice to the Company in the event that the
Company shall have defaulted on or breached any material term of this
Agreement and shall not have cured such breach within 15 days after
receiving notice from Pechiney Plastics specifying the nature of such
default or breach; or
(ii) by the Company, at any time, not less than 60 days
after delivery of notice to Pechiney Plastics, in the event that
Pechiney Plastics shall have defaulted on or breached any material term
of this Agreement and shall not have cured such breach within 15 days
after receiving notice from the Company specifying the nature of such
default or breach.
(b) unless otherwise extended by written agreement of the
parties, this Agreement shall terminate five years from the date of
this Agreement (the "Term") and thereafter shall be of no further force
and effect, except nothing herein shall relieve any party hereto from
liability for any willful or grossly negligent breach hereof.
<PAGE> 3
3
SECTION 1.03. Reimbursement and Payment for Services. (a) In
full compensation for the Services, the Company shall reimburse Pechiney
Plastics for the actual costs to Pechiney Plastics of providing such Services
(except those Services that are provided on negotiated fixed amount basis in
accordance with Exhibit B, in respect of which the Company will pay Pechiney
Plastics the applicable negotiated amount) on a quarterly basis and within
thirty (30) days after receipt of Pechiney Plastics's invoice therefor. Each
invoice shall set forth the calculation of the costs upon which the amount to be
reimbursed or paid is based, broken down by the Services rendered during the
quarter to which such invoice relates. If the Company has any objection to the
amounts listed on its respective invoice, it shall nevertheless pay such invoice
in full, but may thereafter cause Pechiney Plastics's records with respect
thereto to be audited in accordance with this Section. Pechiney Plastics shall
cooperate fully in such audit by providing all appropriate records and making
its officers, employees, agents and consultants reasonably available during
regular business hours without charge to the Company, as may be reasonably
required in connection with such audit. Following such audit, the parties shall
endeavor in good faith to resolve any disagreement with respect to charges
hereunder. Upon agreement of the parties, Pechiney Plastics shall refund
promptly to the Company any amounts paid to Pechiney Plastics in excess of the
amounts required hereunder.
(b) Pechiney Plastics shall maintain separate, true and
complete books of account containing an accurate record of all data necessary
for the proper computation of all costs to be paid to Pechiney Plastics by the
Company under the terms of this Agreement.
(c) The amounts to be reimbursed or paid in respect of the
Services provided under this Agreement shall be consistent with Exhibit B to
this Agreement.
SECTION 1.04. Employees. From time to time, Pechiney Plastics
shall designate such of its employees as it sees fit to perform the Services;
provided, however, that Pechiney Plastics exercises reasonable care in the
selection of personnel and monitoring of Services.
SECTION 1.05. Software License. To facilitate the performance
by Pechiney Plastics of the Services, the Company shall cause ANC to grant to
Pechiney Plastics a royalty-free license to use in perpetuity certain software
relating to the Services, including the Retiree Administration Services
software, the Supplemental Unemployment Benefit ("SUB") software. The Company
shall also cause ANC, to the extent possible, to grant Pechiney Plastics a
license to use the Lawson and Fast Tax-Unix software; provided, however, that,
in such event, Pechiney Plastics shall be responsible for the performance of all
obligations, including payment of related license expenses, maintenance and
royalties, if any.
SECTION 1.06. Return of Records. In the event that any Service
is terminated pursuant to Section 1.02 of this Agreement, Pechiney Plastics
shall, within 30 days of such termination, return to the Company all documents,
materials (including copies of all licensed software) and records relating to
such terminated Services (and not used in connection with any
<PAGE> 4
4
continuing Service) and certify to the Company that it has complied with this
Section 1.06 in all respects.
ARTICLE II
RESPONSIBILITY
SECTION 2.01. Relationship of the Parties. Nothing in this
Agreement shall be construed as: (a) an assumption by Pechiney Plastics of any
obligation to maintain or increase the sales or profits of the Company, or
otherwise to assume responsibility for the Company's operations; (b) an
assumption by Pechiney Plastics of any financial obligation of the Company; (c)
the creation of any relationship of employment or agency between the Company and
employees or consultants of Pechiney Plastics, its subsidiaries or associated
companies; (d) an assumption by Pechiney Plastics of any responsibility for the
work performed by outside suppliers employed by the Company at the suggestion or
recommendation of Pechiney Plastics; or (e) the delegation of any function or
authority of the Company to Pechiney Plastics. In all matters relating to this
Agreement, each party hereto shall be solely responsible for the acts of its own
employees, and employees of one party shall not be considered employees of the
other party. Except as specifically permitted by this Agreement, no party hereto
or any of its employees shall have any authority to negotiate, enter into any
contract or incur any obligation, on behalf of the other party.
SECTION 2.02. Limitation of Liability. Pechiney Plastics shall
have no liability for any losses or damages that the Company may incur as a
result of the provision or non-provision of Services except to the extent caused
by the gross negligence or willful misconduct of such person. In no event shall
Pechiney Plastics, its officers, directors, employees, agents, independent
contractors, affiliates and stockholders be liable for any consequential or
special damages suffered by the Company as a result of any representations,
actions or inactions by any person or entity in respect of its obligations
hereunder.
ARTICLE III
FORCE MAJEURE
SECTION 3.01. No Default for Event of Force Majeure. No party
to this Agreement shall be considered in default in the performance of its
obligations under this Agreement or be liable in damages or otherwise for any
failure or delay in performance which is due to strikes, lockouts, concerted
acts of workers or other industrial disturbances, fires, explosions, floods or
other natural catastrophes, civil disturbance, riots or armed conflict (whether
declared or undeclared), which is beyond the control of that party (and such
event or occurrence,
<PAGE> 5
5
an "Event of Force Majeure"). No party to this Agreement shall be required to
make any concession or grant any demand or request to bring to an end any strike
or other concerted act of workers.
SECTION 3.02. Written Notice. A party can only claim an Event
of Force Majeure as an excuse from its performance hereunder if such claiming
party has given written notice to the other party of such claim and if the
claiming party makes a continuing and good faith effort to lessen or avoid the
effects of such event of force majeure on the other party. Notwithstanding any
other provision of this Agreement, a claiming party shall be liable for such
failure or delay in the performance of its obligations to the extent that such
failure or delay was caused by the fault or negligence of the claiming party.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 4.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by telecopy or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 4.02):
(a) if to Pechiney Plastics:
Pechiney Plastic Packaging, Inc.
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Telecopy No.:
Attention: Vice President - Services Group
(b) if to the Company:
American National Can Group, Inc.
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
<PAGE> 6
6
Telecopy No.: (773) 399-3135
Attention: Executive Vice President - Administration
SECTION 4.03. Confidentiality Statement. (a) Each party
agrees to maintain, and to cause its Affiliates, representatives and agents to
maintain, in strict confidence, all plans, trade secrets, business arrangements,
and other proprietary information of the other party which is disclosed pursuant
to this Agreement. Violation by either party, or its Affiliates, representatives
or agents, of the foregoing provision shall entitle the other party to an
injunction or restraining order. For purposes of this Agreement, "Affiliate"
shall mean, with respect to either party, any other person or entity that
directly, or indirectly, through one or intermediaries, controls, is controlled
by, or is under common control with, such party. Notwithstanding the foregoing,
the other party shall be permitted to disclose the terms of this Agreement to
its accountants and attorneys for proper business purposes and to third parties
as required by law including legal disclosure obligations under foreign, state
or federal securities laws. the remedies stated in this paragraph are in
addition to and not exclusive of other remedies available at law or in equity.
the restrictions and obligations imposed by this section of the Agreement shall
continue in full force and effect for a period of two years from the date of
termination of this Agreement.
(b) The obligations of this section shall not apply to
confidential information that the recipient (the Company or Pechiney Plastics,
as the case may be) can demonstrate:
(1) is or becomes available to the public through no breach of
this Agreement;
(2) is received from a third party free to disclose such
information without restriction;
(3) is independently developed by the recipient without the
use of confidential information of the disclosing party (the Company or
Pechiney Plastics, as the case may be);
(4) is approved for release by written authorization of the
disclosing party, but only to the extent of such authorization;
(5) is required by law or regulation to be disclosed, but only
to the extent and for the purpose of such required disclosure, and only
if such party uses reasonable efforts to obtain assurances that
confidential treatment will be accorded such information; or
(6) is required to be disclosed in response to a valid order
of a court or other governmental body, but only to the extent of and
for the purpose of such order and only if the recipient first notifies
the disclosing party of the order and permits the disclosing party
reasonable opportunity to intervene or to seek a protective order
against disclosure, and
<PAGE> 7
7
only if such party uses reasonable efforts to obtain assurances that
confidential treatment will be accorded such information.
SECTION 4.04. Public Announcements. Except as required by
law, governmental regulation or by the requirements of any securities exchange
on which the securities of a party hereto are listed, no party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party, and the parties shall cooperate as to the timing and contents of any such
press release or public announcement.
SECTION 4.05. Headings. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 4.06. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 4.07. Entire Agreement. This Agreement constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written and
oral, with respect to the subject matter hereof.
SECTION 4.08. Assignment. This Agreement shall not be
assigned without the express written consent of the other party (which consent
may be granted or withheld in the sole discretion of such party) except that any
party hereto may assign its rights hereunder to an Affiliate of such party;
provided, however, that any such assignment shall not relieve the assigning
party of its obligations hereunder.
SECTION 4.09. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
<PAGE> 8
8
SECTION 4.10. Relationship of the Parties. The parties hereto
are independent contractors and no party is an employee, partner or joint
venturer of the other party. Under no circumstances shall any of the employees
of either party hereto be deemed to be employees of the other party for any
purpose. No party shall have the right to bind the other party to any agreement
with a third party or to represent itself as a partner or joint venturer of the
other party.
SECTION 4.11. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, each of
the parties.
SECTION 4.12. Governing Law. This Agreement shall be governed
by the laws of the State of Illinois. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in any state or
federal court sitting in the City of Chicago, County of Cook, Illinois, and the
parties hereto hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive any defense of an
inconvenient forum to the maintenance of any such action or proceeding.
SECTION 4.13. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 4.14. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 4.15. Waiver of Jury Trial. Each of the parties
hereto irrevocably and unconditionally waives trial by jury in any legal action
or proceeding relating to this Agreement or the transactions contemplated hereby
and for any counterclaim therein.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective authorized signatory thereunto duly
authorized as of the date first above written.
PECHINEY PLASTIC PACKAGING, INC.
By:
-------------------------------------------
Name:
Title:
AMERICAN NATIONAL CAN GROUP, INC.
By:
-------------------------------------------
Name:
Title:
<PAGE> 10
EXHIBIT A
PAYROLL SERVICES
- - HOURLY PAYROLL
- Prepare weekly hourly paychecks and direct deposits
- Prepare weekly SUB paychecks
- Seal, sort and overnight mail weekly hourly paychecks and
direct deposits
- Seal and mail SUB paychecks
- Notify bank of direct deposit files to be transferred
- Transmit bank recon files
- Transmit G/L data
- Transmit A/P data
- Process and Transmit Vanguard data
- Organize A/P checks and detail for Credit Unions, and
Garnishments
- Set up deduction detail for Credit Union, direct deposit, tax
and garnishment changes
- Support SUB process, i.e., spay forms for SUB recipients from
inactive plant locations
- Provide support for manual and factory fund check requests
- Provide system detail for payroll records -- time records,
deductions/taxes, register and labor detail
- Prepare special payrolls for bonuses, retro overtime
adjustments or as needed
- Process COLA changes
- Interface Kronos rate changes into Lawson
- Provide assistance for special requests
- Coordinate U.S. savings bond deductions and purchases
- Provide W2s and Statements of Earnings annually
- - SALARY PAYROLL
- Prepare semimonthly paycheck and direct deposits
- Process overtime detail
- Audit payroll maintenance generated by the plants and business
unit HR groups
- Reconcile outstanding payroll checks
- Provide net and direct deposit control totals for bank account
funding
- Support G/L inquiries regarding payroll entries
- Provide earnings information for mortgage inquiries and
garnishment orders
- Issue stop payments
- Seal, sort and overnight mail semimonthly paychecks and direct
deposits
- Notify bank of direct deposit files to be transferred
- Transmit bank recon files
- Transmit G/L data
- Transmit A/P data
- Process and transmit Vanguard and Metpay data
- Organize A/P checks and detail for Credit Unions, and
Garnishments
- Set up deduction detail for Credit Union, direct deposit, tax
and garnishment changes
- Provide support for manual check requests
- Provide system detail for payroll records -- deductions/taxes,
and register detail
- Prepare special payrolls for bonuses or as needed
- Coordinate U.S. savings bond deductions and purchases
- Provide assistance for special requests
<PAGE> 11
- Provide W2s, Statements of Earnings, and other year end
processing annually
- - PAYROLL TAX
- Set up new accounts with key third party vendors-- MetLife for
sick pay, Cendant for relocation, and Frick for unemployment
services
- Prepare and submit tax deposits (electronic and check) as
required by federal, state and local statutes for both Active
and Pension payrolls
- Prepare and submit tax reports as required by federal, state,
and local statutes for both Active and Pension payrolls
- Prepare and file successor statements with annual
reconciliations for all federal, state and local tax
jurisdictions for Active and Pension payrolls
- Prepare and submit new hire detail as required by law
- Prepare and submit state unemployment insurance detail
- Provide assistance for special requests
- Maintain deferred incentive compensation account and required
payouts
- Provide assistance to Pechiney and Arthur Andersen for current
and former Expats and Inpats
- Allocate Pension trust fund expense by IRS plan to Benefit
Accounting
- - SYSTEMS SUPPORT
- Restructure Lawson system to meet requirements of new
organization
- Provide Lawson system security support
- Develop and provide Impromptu or special non-Lawson generated
reports for Payroll and Benefit related areas
- Provide LAWSON and Impromptu system support
- -- PENSION PAYROLL
- Prepare monthly pension paychecks and direct deposits
- Prepare quarterly medicare paychecks and direct deposits
- Seal, sort and mail monthly and quarterly paychecks and direct
deposits
- Process reimbursements for overpayments due to deaths
- Provide support for pension correspondence
- Reconcile outstanding payroll checks
- Provide net and direct deposit control totals for bank account
funding
- Issue stop payments
- Reconcile PBI audit
- Process deaths and earnings changes
- Notify bank of direct deposit files to be transferred
- Transmit bank recon files
- Prepare G/L detail
- Transmit A/P data
- Process and transmit Metpay data
- Organize A/P checks and detail for Garnishments
- Set up earnings and deduction detail for new hires, medical,
insurance, direct deposit, tax and garnishment
changes
- Provide support for manual check requests
- Maintain 800 line telephone support for pension payroll
activity
- Provide system detail for payroll records -- deductions/taxes,
and register detail.
- Provide assistance for special requests
- Provide 1099Rs and other year end processing annually
A-2
<PAGE> 12
A-3
<PAGE> 13
EMPLOYEE BENEFITS DESIGN AND ADMINISTRATION
- - Negotiate benefit program vendor contracts
- - Monitor benefit vendor performance and assessment of penalties
- - Provide monthly benefit program eligibility tapes to vendors
- - Annual HMO premium solicitation and rate negotiation
- - Annual Salaried Open Enrollment
- - PBGC premium submission
- - IRS Form 5500 submission
- - SAR distribution
- - Annual accounting audit of benefit plans
- - Annual pension valuation and FAS 106 Valuation
- - Nondiscrimination testing for qualified retirement plans
- - 401(k) compliance admin - (including < $5,000 report, age 65+ report,
loan defaulting, and outstanding check reports)
- - Maintain health plan account structures
- - Maintain Intranet HR Home Page and Lawson SEA
- - Maintain remote record storage
- - Provide advice regarding legislative changes
- - Provide assistance regarding benefit changes, as requested
- - Maintain salaried plan documents and SPDs
- - Provide leadership in the development of strategic initiatives, cost
management opportunities, benefit design and new program development to
ensure benefit programs support business plans and employee needs
- - Develop benefit communications for new plans and programs -- employees
and retiree groups C Conclude benefit study analysis for ANCG and
recommend benefit design changes in response to study and competitive
practice
- - Provide guidance on task force formation to address employee issues
generated from focus group feedback on "non-traditional" benefits, such
as work/life balance, flexibility, wellness and prevention, etc.
- - Develop and execute legal plan amendments in conjunction with ERISA
counsel for all pension, welfare, and non-qualified plans.
- - Provide services to the Retirement Board on ERISA matters, formal claim
appeals and plan change proposals
- - Develop strategy for OPEB expense reduction and changes in Medicare
Choice legislation
- - Recommend annual modifications to retiree medical coverage, including
interpretation and application of terms of ACPI lawsuit settlement
- - Assist with formation of FAS-106 assumptions and predictions for annual
valuation
- - Develop and provide detailed medical expense reports and analysis
through IHIS system
- - Transmission of data to/from LAWSON and Vanguard (401(k))
- - Data from LAWSON to calculate Discretionary/Forfeiture calculation
- - RAS & LAWSON data provided to actuaries for Pension and OPEB valuations
- - Pension payroll register data reconciled for funding of monthly benefit
payments
- - Welfare plan headcount data for 5500 and 990 preparation
- - SUB payroll register data reconciled to fund weekly benefit payments
- - LAWSON data to facilitate COBRA notice preparation
- - FSA payroll deduction data on cartridge and hard copy to be sent to
benefit provider
- - LAWSON data to facilitate HMO invoice preparation
- - Provide Widows Billings data
- - Provide monthly and annual medical and life insurance deduction reports
A-4
<PAGE> 14
A-5
<PAGE> 15
RETIREE SERVICES
- - Medicare Risk HMO program
- - Provide pension estimates for salaried and hourly employees
- - Process salaried and hourly employee retirements
- - Provide all salaried and hourly retiree administration and customer
service support
A-6
<PAGE> 16
INFORMATION TECHNOLOGY SERVICES
- - Administer and monitor the services provided via the Acxiom MIS
Services Agreement
- Ensure Acxiom maintains contractual commitments
- Establish and monitor service level agreements
- Administer and allocate contract payments in accordance with
Exhibit B S Monitor outsourcing audit issues
- Attend monthly status meetings to identify and resolve issues
- Scope of services includes:
- UNIX based client/server technical support and operations
- Mainframe technical support, scheduling and production
control
- Voice and Data communications administration
- LAN and WAN technical support
- MIS Customer Service, Help Desk and Procurement Services
- - Administer and monitor MIS services provided by other external vendors
including:
- EXEC PC repair services - DecisionOne
- Office automation software support - CompuCom
- EXEC voice communication services - AT&T, US Sprint, Ameritech,
ISI & Communitech
- Mainframe processing for legacy systems - Acxiom
Note: All may become mirrored or unique agreements
- - Provide the necessary MIS support and development activities for shared
Information Systems
- Project management, administration and control
- Job scheduling
- Online/batch processing support (7x24 coverage)
- Software upgrades and releases
- System interfaces
- Security
- Reporting tools and distribution
- WEB and Workflow applications
- Other MIS related activities
- - Administer and provide HR user support for the Lawson HR/Benefits
system
- Guide HR users applying MIS solutions to solve problems,
increase productivity and exploit business opportunities.
- Provide ongoing support and assistance to the Lawson
HR/Benefits system users. Assist users in maintaining data
integrity and monitor system execution and maintenance.
- Coordinate and supervise the transfer of Lawson HR/benefits
data to all third party service providers or internally, as
required.
- Maintain system administration and security for the Lawson
system (including the intranet/internet/web based Self Evident
Application product) and the Impromptu reporting tool.
A-7
<PAGE> 17
COMMUNICATIONS SERVICES
- - EXTERNAL COMMUNICATIONS
- Strategy and Plan Development
- Media Relations
- Investor Relations and Financial Communications
- - INTERNAL COMMUNICATIONS
- Strategy and Plan Development
A-8
<PAGE> 18
LEGAL SERVICES
- - Representation of ANCG and predecessors ANC, ACPI, and NCC et al. in
owned and third party environmental Superfund, toxic tort,
environmental contribution matters, asbestos claims and suits, RCRA,
and other environmental legacy problems funded out of environmental
reserve.
- - Selection and management of outside counsel as necessary to perform the
services named in preceding bullet.
- - Representation of ANC and other predecessors in "legacy" matters,
particularly as they relate to the former food metal and glass
operations, but including any other discontinued operation, and again,
selection and management of outside counsel as necessary to perform
these services. These subject matters include but are not limited to
employment and benefits claims, contract disputes, real estate
transactions, collection matters, and insurance coverage.
- - Reports to ANCG management, auditors, and others concerning any legal
matter for which representation is provided.
- - Responses to subpoenas relating to any "legacy" matter.
- - Maintain records relating to the legal activities performed for ANCG.
- - Review, approve and arrange for payments to Superfund PRP groups, case
settlements, outside counsel, witnesses, and other consultants, for
legacy matters.
- - Provide other legal services as requested by ANCG lawyers.
- - Provide legal advice, counsel an assistance with respect to the
following:
- the design, implementation and administration of employee
benefit plans and programs, including qualified and
non-qualified retirement plans and executive compensation
plans cafeteria plans, retiree health and welfare benefit
plans and the trust agreements related thereto; including the
drafting of plan documents, summary plan descriptions and
other employee communications.
- the development, implementation and administration of HR
policy in light of laws affecting employment and benefits such
as ADEA, COBRA, the Uniform Services Employment and
Reemployment Rights Act, the Family Medical Leave Act, Health
Insurance Portability and Accountability Act of 1996, etc.
- the preparation of employee benefit matters related to labor
negotiations and with respect to contract administration
issues including labor arbitrations.
- changing employee benefit plans and programs and HR policies
as changes in the law, labor negotiations or organizational
developments dictate.
- the merge or termination employee benefit plans and programs.
- the submission of requests for Internal Revenue Service
approval of employee benefit plans where plan qualification is
required.
A-9
<PAGE> 19
- the negotiation of service carriers/provider contracts related
to the operation of employee benefit plans and programs.
- the negotiation of investment management contracts related to
the investment of trust assets associated with employee
benefit plans and programs.
- the exercise of management statutory fiduciary obligations,
delegations of authority, prohibit transactions, proposed and
investments and techniques for liability limitation.
- legal compliance, reporting and disclosure requirements
related to employee benefit plans and programs including
discrimination testing issues, and securities law registration
requirements applicable to employee benefits plans and
programs.
- the resolution of employee benefit claims.
- litigation matters involving employee benefit plans and other
Human Resource issues as well as fiduciary suits.
- the preparation and drafting of employment and severance
agreements.
- the ERISA covenants in corporate financing arrangements and
employee benefit plan audit issues.
- employee benefit plans and other Human Resource issues
associated with plant shutdowns, work force reductions,
outsourcing and reorganizations, acquisitions and
divestitures.
- multiemployer plan withdrawal liability issues.
- - Represent management before the National and all District offices of
the Internal Revenue Service, the Department of Labor and the Pension
Benefit Guaranty Corporation with respect to requests for information,
audits and other legal matters.
- - Monitor and where appropriate, participate in the formation of
regulatory policy by governmental agencies which affect employee
benefit plans and programs; provide legal advise with respect to the
development of regulatory policy and the potential for impact on
business operations relating to regulatory changes and assist Human
Resources identify employee benefit planning opportunities related
thereto.
- - Keep management, human resource personnel and business operations
counsel current on significant Human Resource legal issues, including
changes in the law that affect the design or administration of an
employee benefit plan or program.
Design, develop and conduct benefit plan seminars/programs where
appropriate.
A-10
<PAGE> 1
EXHIBIT 10.5
RECIPROCAL CORPORATE SERVICES AGREEMENT
This RECIPROCAL CORPORATE SERVICES AGREEMENT, dated as of June
__, 1999 (this "Agreement"), by and between PECHINEY PLASTIC PACKAGING, INC., a
Delaware corporation ("Pechiney Plastics") and AMERICAN NATIONAL CAN GROUP,
INC., a Delaware corporation (the "Company").
WHEREAS, Pechiney Plastics and American National Can Company,
a Delaware corporation and wholly owned subsidiary of the Company ("ANC"), have
entered into a Contribution Agreement, dated as of May 31, 1999, pursuant to
which ANC has transferred (the "Contribution") to Pechiney Plastics, all of
ANC's assets and liabilities relating to ANC's plastic packaging and tubes
operations;
WHEREAS, following the Contribution, and pursuant to a Stock
Purchase Agreement, dated June ___, 1999, ANC has transferred to Pechiney, a
corporation (societe anonyme) organized and existing under the laws of the
Republic of France, all of its interest in Pechiney Plastics (the "Separation");
WHEREAS, each of Pechiney Plastics and the Company has
requested the continuation, following the Separation, of certain services
related to the purchasing of goods and services which Pechiney Plastics and ANC
currently provide to each other in connection with their respective businesses
(all of which services together, the "Services"); and
WHEREAS, subsequent to the date of this Agreement, each of
Pechiney Plastics and the Company is willing to provide or cause to be provided
to the other party the Services in exchange for the Services to be provided by
the other.
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
THE SERVICES
SECTION 1.01. Provision of Services. Subject to the terms and
conditions set forth in this Agreement and subject to each party's ability to
negotiate continuing arrangements with any third-party providers of the
Services, the Company shall provide or cause to be provided to Pechiney
Plastics, and Pechiney Plastics shall provide or cause to be provided to the
Company, commencing on the date of the Separation and continuing for the Term
(as hereinafter defined), the Services, each as more particularly described in
Exhibit A hereto, in each case, consistent with the manner and level of care and
quality with which each of such Services was previously provided by ANC and
Pechiney Plastics prior to the date of the Separation. Each of the Services
<PAGE> 2
shall be provided on a timely basis and meet any applicable industry standards,
if industry standards are higher than any of the foregoing performance criteria.
The parties shall meet from time to time to review the quality of the Services
provided by each to ensure that the expectations of the parties are being met.
SECTION 1.02. Term and Termination. Each of Pechiney Plastics
and the Company shall continue to make each Service available through the end of
the Term or, if earlier, until canceled by either party by written notice to the
other party no less than 180 days before such cancellation is to take effect.
Notwithstanding the foregoing:
(a) this Agreement may be terminated:
(i) by the Company, at any time, not less than 30
days after delivery of notice to Pechiney Plastics in the
event that Pechiney Plastics shall have defaulted on or
breached any material term of this Agreement and shall not
have cured such breach within 15 days after receiving notice
from the Company specifying the nature of such default or
breach; or
(ii) by Pechiney Plastics, at any time, not less than
30 days after delivery of notice to the Company, in the event
that the Company shall have defaulted on or breached any
material term of this Agreement and shall not have cured such
breach within 15 days after receiving notice from Pechiney
Plastics specifying the nature of such default or breach.
(b) unless otherwise extended by written agreement of the
parties, this Agreement shall terminate five years from the date of
this Agreement (the "Term") and thereafter shall be of no further force
and effect, except nothing herein shall relieve any party hereto from
liability for any willful or grossly negligent breach hereof.
SECTION 1.03. Employees. From time to time, each of Pechiney
Plastics and the Company shall designate such of its respective employees as it
sees fit to perform the Services.
<PAGE> 3
ARTICLE II
RESPONSIBILITY
SECTION 2.01. Relationship of the Parties. Nothing in this
Agreement shall be construed as: (a) an assumption by either Pechiney Plastics
or the Company of any obligation to maintain or increase the sales or profits of
the other party, or otherwise to assume responsibility for the other party's
operations; (b) an assumption by either Pechiney Plastics or the Company of any
financial obligation of the other party; (c) the creation of any relationship of
employment or agency between either Pechiney Plastics or the Company, on the one
hand, and employees or consultants of the other party or its respective
Affiliates (as defined below), on the other hand; (d) an assumption by either
Pechiney Plastics or the Company of any responsibility for the work performed by
outside suppliers employed by the other party at the suggestion or
recommendation of Pechiney Plastics or the Company, respectively; or (e) the
delegation of any function or authority of either Pechiney Plastics or the
Company to the other party. In all matters relating to this Agreement, each
party hereto shall be solely responsible for the acts of its own employees, and
employees of one party shall not be considered employees of the other party.
Except as specifically permitted by this Agreement, no party hereto or any of
its employees shall have any authority to negotiate, enter into any contract or
incur any obligation, on behalf of the other party.
SECTION 2.02. Limitation of Liability. Neither party shall
have any liability for any losses or damages that the other party may incur as a
result of the provision or non-provision of Services, except to the extent
caused by the gross negligence or willful misconduct of such person. In no event
shall Pechiney Plastics or the Company, or any of their respective officers,
directors, employees, agents, independent contractors, Affiliates and
stockholders, be liable for any consequential or special damages suffered by the
other party as a result of any representations, actions or inactions by any
person or entity in respect of its obligations hereunder.
ARTICLE III
FORCE MAJEURE
SECTION 3.01. No Default for Event of Force Majeure. No party
to this Agreement shall be considered in default in the performance of its
obligations under this Agreement or be liable in damages or otherwise for any
failure or delay in performance which is due to strikes, lockouts, concerted
acts of workers or other industrial disturbances, fires, explosions, floods or
other natural catastrophes, civil disturbance, riots or armed conflict (whether
declared or undeclared), which is beyond the control of that party (any such
event or occurrence, an "Event of Force Majeure"). No party to this Agreement
shall be required to make any concession or grant any demand or request to bring
to an end any strike or other concerted act of workers.
SECTION 3.02. Written Notice. A party can only claim an Event
of Force Majeure as an excuse from its performance hereunder if such claiming
party has given written
<PAGE> 4
notice to the other party of such claim and if the claiming party makes a
continuing and good faith effort to lessen or avoid the effects of such event of
force majeure on the other party. Notwithstanding any other provision of this
Agreement, a claiming party shall be liable for such failure or delay in the
performance of its obligations to the extent that such failure or delay was
caused by the fault or negligence of the claiming party.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Expenses. Except as otherwise specified in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
SECTION 4.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by telecopy or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 4.02):
(a) if to the Company:
American National Can Group, Inc.
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Telecopy No.: (773) 399-3710
Attention: Vice President - Legal Affairs
(b) if to Pechiney Plastics:
Pechiney Plastic Packaging, Inc.
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Telecopy No.: (773) 399-3215
Attention: Vice President - Legal Affairs
SECTION 4.03. Confidentiality Statement. (a) Each party
agrees to maintain, and to cause its Affiliates, representatives and agents to
maintain, in strict confidence, all plans, trade secrets, business arrangements,
and other proprietary information of the other party which is disclosed pursuant
to this Agreement. Violation by either party, or its Affiliates, representatives
or agents, of the foregoing provision shall entitle the other party to an
injunction or restraining order. For purposes of this Agreement, "Affiliate"
shall mean, with respect to either party, any
<PAGE> 5
other person or entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
such party. Notwithstanding the foregoing, the other party shall be permitted to
disclose the terms of this Agreement to its accountants and attorneys for proper
business purposes and to third parties as required by law including legal
disclosure obligations under foreign, state or federal securities laws. The
remedies stated in this paragraph are in addition to and not exclusive of other
remedies available at law or in equity. The restrictions and obligations imposed
by this section of the Agreement shall continue in full force and effect for a
period of two years from the date of termination of this Agreement.
(b) The obligations of this section shall not apply to
confidential information that the recipient (Pechiney Plastics or the Company,
as the case may be) can demonstrate:
(1) is or becomes available to the public through no
breach of this Agreement;
(2) is received from a third party free to disclose such
information without restriction;
(3) is independently developed by the recipient without the
use of confidential information of the disclosing party (Pechiney
Plastics or the Company, as the case may be);
(4) is approved for release by written authorization of the
disclosing party, but only to the extent of such authorization;
(5) is required by law or regulation to be disclosed, but only
to the extent and for the purpose of such required disclosure, and only
if such party notifies the other party of such requirement and uses
reasonable efforts to obtain assurances that confidential treatment
will be accorded such information; or
(6) is required to be disclosed in response to a valid order
of a court or other governmental body, but only to the extent of and
for the purpose of such order and only if the recipient first notifies
the disclosing party of the order and permits the disclosing party
reasonable opportunity to intervene or to seek a protective order
against disclosure, and only if such party uses reasonable efforts to
obtain assurances that confidential treatment will be accorded such
information.
SECTION 4.04. Public Announcements. Except as required by
law, governmental regulation or by the requirements of any securities exchange
on which the securities of a party hereto are listed, no party to this Agreement
shall make, or cause to be made, any press release or public announcement in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without the prior written consent of the other
party, and the parties shall cooperate as to the timing and contents of any such
press release or public announcement.
<PAGE> 6
SECTION 4.05. Headings. The descriptive headings contained
in this Agreement are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 4.06. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
SECTION 4.07. Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
with respect to the subject matter hereof.
SECTION 4.08. Assignment. This Agreement shall not be assigned
without the express written consent of the other party (which consent may be
granted or withheld in the sole discretion of such party) except that any party
hereto may assign its rights hereunder to an Affiliate of such party; provided,
however, that any such assignment shall not relieve the assigning party of its
obligations hereunder.
SECTION 4.09. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other person or entity any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 4.10. Relationship of the Parties. The parties hereto
are independent contractors and no party is an employee, partner or joint
venturer of the other party. Under no circumstances shall any of the employees
of either party hereto be deemed to be employees of the other party for any
purpose. No party shall have the right to bind the other party to any agreement
with a third party or to represent itself as a partner or joint venturer of the
other party.
SECTION 4.11. Amendment. This Agreement may not be amended
or modified except by an instrument in writing signed by, or on behalf of, each
of the parties.
SECTION 4.12. Governing Law. This Agreement shall be governed
by the laws of the State of Illinois. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in any state or
federal court sitting in the City of Chicago, County of Cook, Illinois, and the
parties hereto hereby irrevocably submit to the exclusive jurisdiction of such
courts in any such action or proceeding and irrevocably waive any defense of an
inconvenient forum to the maintenance of any such action or proceeding.
<PAGE> 7
SECTION 4.13. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 4.14. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 4.15. Waiver of Jury Trial. Each of the parties hereto
irrevocably and unconditionally waives trial by jury in any legal action or
proceeding relating to this Agreement or the transactions contemplated hereby
and for any counterclaim therein.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective authorized signatory thereunto duly
authorized as of the date first above written.
PECHINEY PLASTIC PACKAGING, INC.
By:
--------------------------------
Name:
Title:
AMERICAN NATIONAL CAN GROUP, INC.
By:
--------------------------------
Name:
Title:
<PAGE> 9
EXHIBIT A
SERVICES
Services to be provided by the Company:
Thermal Labels, Ribbons, Thermal Direct Media
VideoJet Supplies
Maintenance, Labor
Janitorial Services
Uniforms
Security Systems, Security Services
Equipment Service Agreements
Temporary Services
Pest Control
Landscaping
Autofill Dyne Test Pen Program
Equipment Rentals
Lamp Recycling
Trash Removal
Electric Motor Repair
Industrial Supplies
Absorbants
Lab Supplies
Belting
Mailing Machines, Postage by Phone
Office Supplies
Toner Cartridges
Stationery, Business Cards, Paper
Copiers, Copier Service/Maintenance Agreements
Personal Protective Equipment
Medical Supplies
Audiometric Testing
Corporate Identity
Specialty Printing
Promotional Items
Hazardous Waste
Natural Gas
Propane
Electricity
Fork Lift Trucks
Utilities & Water
All MRO items (i.e., Power Transmission, Electrical, Industrial Mill Supplies,
Hydraulic Oils)
<PAGE> 10
Services to be provided by Pechiney Plastics:
Car Rental (i.e., Hertz)
Corporate Fleet
Air Travel
Hotel
Generic Chemicals
Relocation
American Express Cards
Overnight Express Contracts (i.e., Airborne)
Airfreight Contracts
<PAGE> 1
EXHIBIT 10.6
June , 1999
---
MASTER NETTING & AMENDMENT AGREEMENT
Pechiney S.A., a company incorporated under the laws of the Republic of
France ("COMPANY"), and each of the entities listed on Schedule 1 hereto
(individually, "COUNTERPARTY" and collectively, "COUNTERPARTIES") hereby amend
the terms of all foreign exchange transactions, interest rate and currency
swaps, options, caps, collars, and floors, and any similar transactions, which
have been entered into between the parties and are listed on Schedule 2 hereto
("EXISTING FX TRANSACTIONS") as evidenced by a trade ticket, term sheet,
confirmation or other similar documentation (collectively, "TRADE
DOCUMENTATION"). The parties hereby agree that the terms of this Agreement shall
apply with respect to all foreign exchange transactions, interest rate and
currency swaps, options, caps, collars, and floors, and any similar transaction
that may be entered into in the future between Company and each Counterparty
("FUTURE FX TRANSACTIONS") (Existing FX Transactions and Future FX Transactions
shall be collectively referred to as "FX TRANSACTIONS").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Company and each Counterparty agree to the
following terms, and to the extent such terms have not been previously specified
or agreed to in any Trade Documentation, the same shall be deemed amended, and
any conflicting terms shall be deemed superseded to the extent of any such
conflict.
Each party agrees that it is entering into and maintaining the FX
Transactions in reliance on the fact that the terms and obligations under each
of the FX Transactions form a single agreement between the parties, and the
parties would not otherwise enter into any such FX Transactions.
I. OTHER DEFINED TERMS
"BUSINESS DAY" means a day on which commercial banks are open for
business in New York City and Paris, France.
"CLOSE-OUT AMOUNT" has the meaning specified in Paragraph III(B).
"CLOSE-OUT DATE" has the meaning specified in Paragraph III(A).
"DEFAULTING PARTY" has the meaning specified in Paragraph II(A).
"EUROS" means the lawful currency of the member states of the European
Union that adopt the single currency in accordance with the Treaty establishing
the European Community, as amended by the Treaty on European Union.
"EVENT PARTY" has the meaning specified in Paragraph IV(A).
"GUARANTEE" means the guarantee dated as of the date hereof by the
Guarantor in favor of Company in the form attached hereto as Exhibit A.
"GUARANTOR" means American National Can Group, Inc., a corporation
organized under the laws of the State of Delaware.
"MARKET VALUE" means, with respect to each Terminated Transaction, an
amount determined by the Non-defaulting Party, that would be paid to the
Non-defaulting Party (expressed as a negative number) or by the Non-defaulting
Party (expressed as a positive number) pursuant to any agreement between the
Non-defaulting Party and a leading dealer to enter into a transaction that would
have the effect of preserving for the Non-defaulting Party the economic
equivalent of any payment by the parties under the Terminated Transaction that
would, but for the Close-Out
<PAGE> 2
Date, have been required after such date. Such amount shall be converted by the
Non-defaulting Party into Euros at a rate of exchange at which the
Non-defaulting Party would be able, acting in a reasonable manner and in good
faith, to purchase the relevant amount of Euros.
"NETTING EVENT" has the meaning specified in Paragraph IV(A).
"NON-DEFAULTING PARTY" has the meaning specified in Paragraph III(A).
"NON-EVENT PARTY" has the meaning specified in Paragraph IV(B).
"PROCEEDINGS" has the meaning specified in Paragraph V(B).
"TERMINATED TRANSACTIONS" has the meaning specified in Paragraph
III(B).
"UNPAID AMOUNTS" means, with respect to amounts owing to Company
(expressed as a negative number) and with respect to amounts owing to
Counterparty (expressed as a positive number), the amounts that became payable
to such party in respect of Terminated Transactions on or prior to the Close-Out
Date and which remain unpaid as of such Close-Out Date. Such amount shall be
converted by the Non-defaulting Party into Euros at a rate of exchange at which
the Non-defaulting Party would be able, acting in a reasonable manner and in
good faith, to purchase the relevant amount of Euros.
II. CROSS DEFAULT
(A) Each party agrees that the occurrence of any of the following
events with respect to a party ("DEFAULTING PARTY") shall constitute an event of
default ("EVENT OF DEFAULT") with respect to such party under each of the FX
Transactions between Company and the relevant Counterparty:
(1) failure to make, when due, any payment under any FX Transaction
required to be made by it if such failure is not remedied on or before the
second Business Day after notice of such failure is given to the Defaulting
Party;
(2) it: (a) is dissolved; (b) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to pay its debts
as they become due; (c) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (d) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (i) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the making of an
order for its winding-up or liquidation or (ii) is not dismissed, discharged,
stayed or restrained, in each case within 15 days of the institution or
presentation thereof; (e) has a resolution passed for its winding-up, official
management or liquidation; (f) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all its assets; (g)
has a secured party take possession of all or substantially all its assets or
has a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 15 days thereafter; (h)
causes or is subject to any event with respect to it which, under the applicable
laws of any jurisdiction, has an analogous effect to any of the events specified
in clauses (a) to (g) (inclusive); or (i) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(3) any other default or event of default by or in respect of it,
or any other similar condition or event (however described) in respect of any of
the FX Transactions.
2
<PAGE> 3
(B) Each obligation of each party under each FX Transaction is subject
to the condition precedent that no Event of Default or any event which, with the
giving of notice or the lapse of time or both, would constitute an Event of
Default with respect to the other party to such FX Transaction has occurred and
is continuing.
III. CLOSE-OUT
(A) At any time after an Event of Default has occurred and is
continuing, the non-defaulting party to the relevant FX Transaction
("NON-DEFAULTING PARTY") shall be entitled to terminate all, but not less than
all, FX Transactions outstanding between the Defaulting Party and the
Non-defaulting Party on the date designated by the Non-defaulting Party as the
close-out date ("CLOSE-OUT DATE") in a written notice from the Non-defaulting
Party to the Defaulting Party. Such Close-Out Date shall be a day not earlier
than the date such notice is effective.
(B) Upon termination of the parties' FX Transactions, Counterparty or
Company, as the case may be, shall be obligated to pay to the other party with
respect to such terminated FX Transactions ("TERMINATED TRANSACTIONS") an amount
("CLOSE-OUT AMOUNT") equal to the sum of (i) the Market Value of each Terminated
Transaction on the Close-Out Date and (ii) any Unpaid Amounts.
(C) If the Close-Out Amount is a positive number, that amount shall be
immediately due and payable by Company to Counterparty; if the Close-Out Amount
is a negative number, the absolute value of that amount shall be immediately due
and payable by Counterparty to Company and such Close-Out Amount shall be
immediately due and payable by Guarantor under the terms of the Guarantee. The
Close-Out Amount shall be due and payable, together with interest on the unpaid
portion thereof (determined by the Non-defaulting Party in its discretion and in
good faith) from the Close-Out Date until paid in full.
(D) The parties agree that (1) the amount recoverable by a party
hereunder is a reasonable estimate of the loss it would have incurred on its FX
Transactions and is not a penalty, (2) such amount is payable for the loss of
bargain and the loss of protection against future risk and (3) neither party
shall be entitled to recover additional damages in respect of such losses.
IV. MULTILATERAL NETTING
(A) Each party agrees that the occurrence of any of the following
events shall constitute a netting event ("NETTING EVENT") and for purposes of
Paragraphs IV(A)(1), (2), (3), and (4), Counterparty will be the party with
respect to which the Netting Event has occurred, and for the purposes of
Paragraph IV(A)(5), Company will be the party with respect to which the Netting
Event has occurred ("EVENT PARTY").
(1) Guarantor fails to comply with or perform its obligations
under the Guarantee and such failure is continuing after the lapse of
any applicable grace period;
(2) Guarantor disaffirms, disclaims, repudiates, or rejects,
in whole or in part, or challenges the validity of, or otherwise
dishonors the Guarantee;
(3) the Guarantee terminates or fails or ceases to be in full
force and effect at any time during the term of any FX Transaction;
(4) any event or condition analogous to an event or condition
to Paragraph II(A)(2) herein occurs with respect to Guarantor; or
(5) any event or condition analogous to an event or condition
to Paragraph II(A)(2) herein occurs with respect to Company.
3
<PAGE> 4
(B) Upon the occurrence of a Netting Event, an Event of Default and a
Close-Out Date shall be deemed automatically to occur on the Business Day next
following the Netting Event with respect to each FX Transaction between Company
and each and every Counterparty, and a Close-Out Amount with respect to all FX
Transactions between Company and each and every Counterparty shall be determined
in accordance with Paragraph III(B). Any such Close-Out Amount payable may, at
the option of the party that is not the Event Party ("NON-EVENT PARTY"), be
reduced by its set-off against any other Close-Out Amounts payable by any other
Counterparty to Company or be reduced by its set-off against any other Close-Out
Amounts payable by Company to any other Counterparty (as the case may be).
(C) If an obligation is unascertained, the Non-event Party may in good
faith estimate that obligation and set-off in respect of the estimate, subject
to the Non-event Party accounting to the other party when the obligation is
ascertained. These set-off provisions shall be without prejudice and in addition
to any right of set-off otherwise available to a party (whether by operation of
law, contract, or otherwise).
V. GOVERNING LAW AND JURISDICTION
(A) This Agreement and all FX Transactions shall be governed by, and
construed in accordance with, the laws of the State of New York.
(B) With respect to any suit, action or proceedings relating to any FX
Transaction or this Agreement ("PROCEEDINGS"), each party irrevocably submits to
the non-exclusive jurisdiction of the courts of the State of New York, and
waives any objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings
have been brought in an inconvenient forum and further waives the right to
object, with respect to such Proceedings, that such court does not have any
jurisdiction over such party.
VI. SERVICE OF PROCESS
Each party irrevocably appoints its process agent to receive, on its
behalf, service of process in any Proceedings. If for any reason any party's
process agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. Nothing in this Agreement will affect the right of either party
to serve process in any other matter permitted by law.
Company appoints CT Corporation, having an address on the date hereof
at 1633 Broadway, New York, New York 10019, as its agent for service of process.
Each Counterparty appoints CT Corporation, having an address on the date hereof
at 1633 Broadway, New York, New York 10019, as its agent for service of process.
Promptly after the execution of this Agreement, each party shall arrange for its
process agent to issue a letter to all other parties wherein it accepts its
appointment.
VII. NOTICES
Notices and other communications shall be in writing and shall be
delivered to: (A) Company shall be sent to it at its address at 7 place du
Chancelier Adenauer, 75218 Paris Cedex 16 France, facsimile no.
011-331-5628-3318, attention: Xavier Langois d'Estaintot, and (B) each
Counterparty and the Guarantor at the address specified on Schedule 1 hereto.
Each party may by notice to the other change its banking details or the
address, telex or facsimile number at which notices or other communications are
to be given to it.
VIII. ESCROW
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<PAGE> 5
If, by reason of the time difference between the cities in which
payments are to be made under any FX Transaction, it is not possible for
simultaneous payments to be made on any date on which both parties thereto are
required to make such payments, either party may at its option and in its sole
discretion notify the other party that payments on such date are to be made into
escrow. In such case, the deposit of the payment due earlier on that date must
be made by 2:00 p.m. (local time at the place for the earlier payment) on that
date with an escrow agent that is a commercial bank, independent of either
party, with a minimum net worth of US $100,000,000 or its equivalent in another
currency, selected by such notifying party, accompanied by irrevocable payment
instructions (A) to release the deposited payment to the intended recipient upon
receipt by the escrow agent of the required deposit of the corresponding payment
from the intended recipient on the same date accompanied by irrevocable payment
instructions to the same effect, or (B) if the required deposit of the
corresponding payment is not made on that same date by the intended recipient,
to return the payment deposited to the party that paid it into escrow. The
notifying party must pay the costs of the escrow arrangements and will cause
those arrangements to provide that, in the case of a payment obligation under
any FX Transaction, the intended recipient of the payment due to be deposited
first will be entitled to interest on that deposited payment for each day in the
period of its deposit at the rate offered by the escrow agent for that day for
overnight deposits in the relevant currency in the office where it holds the
deposited payment (at 11:00 a.m. local time on that day) if the payment is not
released by 5:00 p.m. local time on the date it is deposited for any reason
other than the intended recipient's failure to make the escrow deposit it was
required to make in a timely manner.
IX. TERMINATION
This Agreement shall continue in force until terminated by Company upon
not less than ten (10) Business Days' prior written notice to the other parties
hereto; provided that notwithstanding any such termination, the provisions of
this Agreement shall remain in full force and effect as to any FX Transaction
entered into prior to such termination date and the provisions of this Agreement
shall continue to apply until all obligations of each party hereunder have been
fully performed.
X. REPRESENTATIONS AND WARRANTIES
Each party hereto, as an inducement to the other parties to enter into
this Agreement and each FX Transaction, represents and warrants to the other
parties hereto that: (A) it has the power to execute, deliver and perform this
Agreement; (B) this Agreement has been duly authorized, executed, and delivered
by it and does not contravene its governing documents or any contractual
restriction binding on it; (C) its obligations under this Agreement constitute
its legal, valid, and binding obligations, enforceable in accordance with the
terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)); (D) no
Event of Default has occurred and is continuing with respect to it; (E) all
authorizations of, exemptions by, or filings with any governmental or regulatory
authority that are required to be obtained or made by it in connection with this
Agreement have been made and are in full force and effect; and (F) it is
authorized under all applicable law to enter into this Agreement and each of the
FX Transactions.
XI. AMENDMENT AND ASSIGNMENT
This Agreement may only be amended by mutual written consent of the
parties hereto and such written consent shall be designated as an amendment to
this Agreement. Neither party may assign its rights, interests or obligations
under this Agreement or under any FX Transaction without the prior written
consent of the other parties.
XII. COUNTERPARTS
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument and agreement.
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IN WITNESS WHEREOF, the parties have caused this document to be duly
executed on the day and year first written above.
PECHINEY S.A.
By:
------------------------------
Name:
Title:
[COUNTERPARTY]
By:
------------------------------
Name:
Title:
[COUNTERPARTY]
By:
------------------------------
Name:
Title:
[COUNTERPARTY]
By:
------------------------------
Name:
Title:
[COUNTERPARTY]
By:
------------------------------
Name:
Title:
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<PAGE> 7
SCHEDULE 1
[Names) of each Counterparty]
Guarantor:
American National Can Group, Inc.
8770 West Bryn Mawr Avenue
Chicago, IL 60631-3542
Attention: Dennis M. Byrd
Facsimile No.: 773-399-3115
<PAGE> 8
SCHEDULE 2
[ List of Trades]
<PAGE> 9
EXHIBIT A
[Form of Guarantee]
<PAGE> 1
EXHIBIT 10.7
EXECUTION COPY
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of
May 31, 1999, between American National Can Company, a Delaware corporation
("ANC") and Pechiney Plastic Packaging, Inc., a Delaware corporation ("Pechiney
Plastics").
W I T N E S S E T H:
WHEREAS, in addition to certain beverage can operations, ANC
is engaged in certain plastic packaging operations including, without
limitation, flexible packaging, plastic bottles and plastic and laminated tubes
(the "Business");
WHEREAS, ANC has caused Pechiney Plastics to be organized as a
new corporation to receive the Business, and certain assets and liabilities
associated therewith;
WHEREAS, ANC desires to contribute, transfer and assign to
Pechiney Plastics, and Pechiney Plastics desires to acquire from ANC, the
Business, including all of its assets, subject to the liabilities thereof,
except as otherwise provided herein;
WHEREAS, in consideration for the transfer by ANC of such
assets and liabilities to Pechiney Plastics, Pechiney Plastics agrees to issue
to ANC 45 shares of common stock (the "Stock"), such Stock, together with the 5
shares of stock currently owned by ANC representing all of the issued and
outstanding shares of capital stock of Pechiney Plastics immediately after
giving effect to such issuance;
WHEREAS, the exchange of the assets and liabilities described
herein for the Stock is intended to qualify as transfer described in Section 351
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, following the contribution, pursuant to a Stock
Purchase Agreement, ANC will distribute stock of Pechiney Plastics to Pechiney
in exchange for ANC stock (the "Distribution");
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
<PAGE> 2
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections of this Agreement set
forth below:
"Action" means any action, suit, arbitration, inquiry, proceeding
or investigation by or before any Governmental Authority.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Agreement" means this Contribution, Assignment and Assumption
Agreement, including any amendments hereto and each Schedule and Exhibit
attached hereto.
"Ancillary Agreements" means the Intellectual Property Assignment,
all deeds, any other agreements or conveyance documents referred to in this
Agreement or necessary or desirable to effectuate the transfers provided for in
this Agreement, and any agreements providing for transitional, corporate or
shared services between the parties.
"Business Intellectual Property" means all of the Contributed
Trademarks and Contributed Patents and all other Intellectual Property primarily
used or intended to be primarily used in the conduct of the Business and which
is owned by ANC or licensed or sublicensed by ANC from a third party, in each
case, other than the Excluded Intellectual Property.
"Contributed Patents" means the patents set forth in Schedule
1.01A.
"Contributed Trademarks" means the trademarks set forth in
Schedule 1.01B.
"Distribution Date" means the date on which the Distribution
occurs.
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement, or restriction of any
kind, including, without limitation, any arrangement, restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership.
"Environment" means surface waters, ground waters, soil,
subsurface strata and ambient air.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation,
<PAGE> 3
3
investigations, proceedings, consent orders or consent agreements relating in
any way to any Environmental Law or any Environmental Permit (hereinafter
"Claims"), including, without limitation, (a) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (b) any and
all Claims by any Person seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from a Release of
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the Environment.
"Environmental Laws" means any Law, now or hereafter in effect and
as amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the Environment, health, safety or Hazardous Materials.
"Environmental Permits" means all Permits required under any
applicable Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means, with respect to any person, another
person who is treated as a single employer with such person within the meaning
of Section 414 of the Code, without giving effect to Section 1563(b)(3) of the
Code.
"Governmental Authority" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Hazardous Materials" means (a) petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas, (b) any other chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words or similar import, under any applicable
Environmental Law, and (c) any other chemical, material or substance exposure to
which is regulated by any Governmental Authority.
"Indemnitee" means either an ANC Indemnitee or a Pechiney Plastics
Indemnitee.
<PAGE> 4
4
"Intellectual Property" means any (a) inventions, ideas and
conceptions of inventions, whether or not patentable, whether or not reduced to
practice, and whether or not yet made the subject of a pending patent
application or applications, (b) all United States, international and foreign
statutory invention registrations, patents, patent registrations and patent
applications (including, without limitation, all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations thereof) and
all rights therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each such registration, patent or
application, (c) trademarks, service marks, certification marks, collective
marks, trade dress, logos, domain names, product configurations, trade names,
business names, corporate names and other source identifiers, whether or not
registered and whether or not currently in use, including all common law rights,
and registrations and applications for registration thereof, including, but not
limited to, all marks registered in the United States Patent and Trademark
Office or in any office or agency of any State or Territory thereof or of any
foreign country, and all rights therein provided by international treaties or
conventions, and all reissues, extensions and renewals of any of the foregoing,
(d) copyrighted works, copyrights, whether or not registered, and registrations
and applications for registration thereof in the United States and any foreign
country, and all rights therein provided by international treaties or
conventions, (e) moral rights (including, without limitation, rights of
paternity and integrity), and waivers of such rights by others, (f) confidential
and proprietary information, including know-how, trade secrets, manufacturing
and production processes and techniques, research and development information,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (g) copies and tangible embodiments of all the foregoing, in
whatever form or medium, (h) all rights to obtain and rights to register
trademarks and copyrights, and (i) all rights to sue or recover and retain
damages and costs and attorneys' fees for past, present and future infringement
of any of the foregoing.
"Intellectual Property Assignment" means the Intellectual Property
Assignment Agreement, to be executed and delivered with this Agreement
substantially in the form attached as Exhibit A to this Agreement.
"Inventories" means all inventory, merchandise, works in process,
finished goods, and raw materials, packaging, supplies and other personal
property related to the Business, maintained, held or stored by or for the
Business and any prepaid deposits for any of the same.
"Law" means any federal, state, local or foreign statute, law
ordinance, regulation, rule, code, order requirement or rule of common law.
"Loss" means either an ANC Loss or a Pechiney Plastics Loss.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any
<PAGE> 5
5
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Permits" means any permit, license, authorization, certificate,
exemption or approval of Governmental Authorities.
"Receivables" means any and all accounts receivable, notes and
other amounts receivable from third parties, including, without limitation,
customers and employees, arising from the conduct of the Business whether or not
in the ordinary course, together with any unpaid financing charges accrued
thereon.
"Release" means any disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like into or upon any land or water or air or otherwise entering the
Environment.
"Separation Date" means the date as of which ANC and Pechiney
Plastics cease to be treated as ERISA Affiliates or, in the case of any action
provided for in this Agreement to be taken with respect to any ANC Benefit Plan
or any pension or welfare benefit plan to be established by Pechiney Plastics,
such other date as may be mutually agreed by ANC and Pechiney Plastics.
"Subsidiaries" means the corporations, limited liability
companies, partnerships, associations and other entities specified in Schedule
1.01C.
"Tax" or "Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges, or arising under any Tax Law or agreement, including without
limitation, any joint venture or partnership agreement or any tax
indemnification agreement.
"Tax Separation Date" means the date of this Agreement.
"Transferred Employees" means all (a) employees of the Business
who become employees of Pechiney Plastics as of the Transfer Date and (b) other
employees of ANC who become employees of Pechiney Plastics as of the Transfer
Date pursuant to the mutual agreement of ANC and Pechiney Plastics.
<PAGE> 6
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"U.S. GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied consistently
throughout the periods involved.
SECTION 1.02. Other Defined Terms. The following terms shall have
meanings defined for such terms in the Sections of this Agreement set forth
below:
Term Section
---- -------
ANC Preamble
ANC Benefit Plans 8.01(b)
ANC Deferred Plans 8.01(b)
ANC Indemnitee 11.02
ANC Loss 11.02
ANC RBEP 8.01(b)
Assumed Liabilities 3.01
Assumed OPEB Obligations 8.03(a)
Business Recitals
Code Recitals
Contributed Assets 2.01
Contributed Real Property 2.01(n)
Discount Percentage 11.04(a)(ii)
Distribution Recitals
Excluded Assets 2.02
Excluded Intellectual Property 2.02(c)
Excluded Liabilities 3.03
Pechiney Plastics Preamble
Pechiney Plastics Indemnitee 11.01
Pechiney Plastics Loss 11.01
Pechiney Plastics Participants 3.02(a)
Post-Tax Separation Date Taxes 9.01
Post-Retirement Welfare Plans 3.02(a)
Pre-Tax Separation Date Taxes 9.01
Registration Statement 8.01(d)
SARs 8.07(a)
Savings Plans 8.01(e)
Stock Recitals
Tax Benefit Item 11.04(a)(ii)
Tax Cost Item 11.04(a)(ii)
Third Party Claims 11.03
Transfer Date 8.01(a)
Transfer Taxes 9.02
<PAGE> 7
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ARTICLE II
CONTRIBUTION AND ASSIGNMENT OF ASSETS
SECTION 2.01. Contribution, Transfer and Assignment of Assets and
Properties. ANC does hereby sell, assign, transfer, convey, grant, bargain, set
over, release, deliver and confirm unto Pechiney Plastics, its successors and
assigns, as a capital contribution, the entire right, title and interest of ANC
to and in all of the assets, properties, goodwill and business of every kind and
description (excepting only Excluded Assets as set forth in Section 2.02
hereof), wherever located, whether real, personal or mixed, tangible or
intangible, directly or indirectly owned by ANC, or to which it is directly or
indirectly entitled and, in any case, belonging to or used primarily or intended
to be used primarily in the Business, as they exist on the date hereof
(collectively referred to as the "Contributed Assets"), including, without
limitation, all right, title and interest of ANC in, to and under:
(a) the Business as a going concern;
(b) all machinery, equipment, tools, furniture and fixtures,
office equipment and other tangible personal property primarily used or
held for use by ANC at the locations at which the Business is
conducted, or otherwise owned or held by ANC primarily for the conduct
of the Business;
(c) all vehicles and rolling stock primarily used in the Business;
(d) all contracts (written or oral), agreements, leases,
commitments, and sales and purchase orders, and under all commitments,
bids and offers (to the extent such offers are transferable) to the
extent primarily used or intended to be primarily used in the Business
including, without limitation, confidential agreements, engagement
letters, leases and subleases for personal property, plans,
instruments, licenses, registrations, certificates of occupancy,
permits relating primarily to the Business, and any and all prepayments
or deposits made for, or in connection with, any of the foregoing;
(e) all Inventories primarily used or intended to be used in the
Business;
(f) all Receivables, to the extent related to the Business;
(g) all of ANC's right, title and interest in, to and under the
Business Intellectual Property;
(h) computer software, including, without, limitation, source
code, object code, objects, comments, screens, user interfaces, report
formats, templates, memos, buttons and icons, and all files, data,
documentation and other materials related thereto, but only to the
extent owned by ANC and used exclusively in the conduct of the
Business;
<PAGE> 8
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(i) all books of account, general, financial, tax and personnel
records, invoices, shipping records, supplier lists, correspondence and
other documents, records and files primarily used in, or primarily
relating to, the Business, other than organization documents, minute
and stock record books and the corporate seal of ANC;
(j) all goodwill of ANC relating to the Business;
(k) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind (including rights to
insurance proceeds and rights under and pursuant to all warranties,
representations and guarantees made by suppliers of products, materials
or equipment, or components thereof), primarily pertaining to or
primarily, arising out of the Business, except to the extent any of the
foregoing relates to the Excluded Assets or the Excluded Liabilities;
(l) all sales and promotional literature, customer lists and other
sales-related materials designed for and intended to be used in the
Business by ANC;
(m) all municipal, state and federal franchises, permits,
licenses, agreements, waivers and authorizations held primarily for, or
used primarily in connection with, or required for, the Business, to
the extent transferable;
(n) all of ANC's right, title and interest in and to all of the
real property and the rights in the leasehold interests (to the extent
assignable) set forth in Schedule 2.01(n), together with all buildings
and other structures, facilities or improvements currently or hereafter
located thereon, all fixtures, systems, equipment and items of personal
property attached or appurtenant thereto, and all easements, licenses
rights and appurtenances relating to the foregoing (the "Contributed
Real Property");
(o) all of ANC's rights to, and interests in, the Subsidiaries;
(p) all bank lockboxes related to the Business; and
(q) except for the Excluded Assets, all of ANC's right, title and
interest on the date of this Agreement in, to and under all other
assets, rights and claims of every kind and nature primarily used or
intended to be primarily used in the operation of the Business.
SECTION 2.02. Excluded Assets. The following are, and Pechiney
Plastics understands and acknowledges that the following are, specifically
excluded from the assets, properties, goodwill and business contributed, sold,
transferred and assigned to Pechiney Plastics pursuant to Section 2.01 of this
Agreement (the "Excluded Assets"):
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9
(a) any rights to or claims for tax refunds credits or similar
benefits relating to the Business or the Contributed Assets
attributable to periods ending, or an event occurring, on or prior to
the Tax Separation Date;
(b) all cash, cash equivalents and bank accounts owned by ANC;
(c) all right, title and interest of ANC in and to (i) all
trademarks, trademark registrations and trademark applications owned by
ANC that are not Contributed Trademarks, including without limitation,
the name "American National Can Company" or any derivation thereof and
ANC's logo or any logo or symbol identical or confusingly similar to
such logo, or the logo of any ANC predecessor, and (ii) all other
Intellectual Property owned by ANC or used by ANC in advertising,
promotional material, packaging material or other material and not used
primarily in connection with the sale, offer or distribution of
products bearing or embodying the Contributed Trademarks or not
otherwise used primarily in, or held primarily for the benefit of, the
Business ("Excluded Intellectual Property");
(d) all rights of ANC under this Agreement and the Ancillary
Agreements; and
(e) subject to Section 7.06 of this Agreement, all insurance
policies of ANC and all rights of ANC with respect to insurance
coverage, insurance claims and under insurance policies.
ARTICLE III
ASSUMPTION OF LIABILITIES
SECTION 3.01. Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, Pechiney Plastics hereby assumes and agrees to
pay, fulfill, perform or otherwise discharge when due any and all of the debts,
liabilities and obligations of ANC (whether fixed or contingent, matured or
unmatured, arising by law or by contract or otherwise, on or prior to the date
hereof or hereafter) (the "Assumed Liabilities") to the extent relating to the
Business or the Contributed Assets, other than the liabilities set forth in
Section 3.02 below. The Assumed Liabilities include, without limitation:
(a) any and all liabilities in respect of Environmental Claims
relating to or arising out of the Business or the Contributed Assets;
(b) obligations and liabilities in respect of employee and
employee benefits matters to the extent set forth in Article VIII;
<PAGE> 10
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(c) any and all liabilities in respect of any pending or
threatened litigation, claims, suits, actions, investigations,
indictments, or proceedings to which ANC is or may become a party or
any of the Contributed Assets is or may become subject (other than
those relating to, or arising out of, the patent infringement
litigation, claims and proceedings involving the Viskase Corporation
and ANC, in respect of which Pechiney Plastics has agreed to indemnify
ANC under Section 11.02(iii) of this Agreement), arising out of, or
relating to, the conduct of the Business, including, without
limitation, the litigations set forth in Schedule 3.01(c);
(d) all liabilities and obligations relating to the Contributed
Real Property;
(e) all letters of credit, guarantees or other financial
accommodations which support any Assumed Liabilities or Contributed
Assets; and
(f) all liabilities of the general type reflected in the December
31, 1998 Pro-Forma Balance Sheet set forth in Schedule 3.01(f),
recognizing that such Balance Sheet is only illustrative of the
liabilities of the Business that may exist as of the date of this
Agreement and further recognizing that it does not necessarily reflect
all contingent liabilities relating to the Business.
SECTION 3.02. Excluded Liabilities. Notwithstanding Section 3.01,
Pechiney Plastics shall have no liability or obligation whatsoever for, and
shall not assume by virtue of this Agreement or otherwise, any of the following
(the "Excluded Liabilities"):
(a) any liability for Tax arising from or with respect to the
Contributed Assets or the operations of the Business which is incurred
in or attributable to any period of time ending on or before the Tax
Separation Date;
(b) any liabilities relating to or arising out of the Excluded
Assets; and
(c) other than relating to the Contributed Assets and the Assumed
Liabilities, all debts and obligations of ANC not primarily related to,
or primarily arising out of, the conduct of the Business.
ARTICLE IV
ISSUANCE OF THE SHARES
SECTION 4.01. Issuance of Stock. As of the date hereof,
Pechiney Plastics has authorized 100 shares of Common Stock, no par value. In
exchange for the Contributed Assets and the Assumed Liabilities being
transferred to Pechiney Plastics pursuant to this Agreement Pechiney Plastics
shall issue to ANC, effective as of the date hereof, the Stock, which, together
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with the 5 shares of stock currently owned by ANC, will represent all of the
issued and outstanding shares of capital stock of Pechiney Plastics immediately
after giving effect to such issuance. Pechiney Plastics agrees to cause a
certificate for such Stock to be issued to ANC as of the date hereof. Such
Stock, when issued, will be fully paid and non-assessable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ANC
ANC represents, warrants and agrees that:
SECTION 5.01. Corporate Organization and Qualification. ANC (a) is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (b) has the corporate power to own and to carry
on the Business as now being conducted by it and is duly qualified to do
business and in good standing in various jurisdictions (c) is in compliance with
all provisions of its Certificate of Incorporation and By-Laws as they relate
directly to the transactions contemplated hereunder.
SECTION 5.02. Authorization of Transaction. The execution and
delivery of this Agreement and all other instruments and documents contemplated
herein by ANC, and the contribution, assignment, sale and transfer of the
Contributed Assets contemplated herein, have been duly authorized by all
necessary corporate action of ANC.
SECTION 5.03. Absence of Restrictions. Subject to the provisions
of Article VII hereof, to the best knowledge of ANC, neither the execution or
delivery of this Agreement by ANC, nor the fulfillment of or compliance with the
terms hereof by ANC, will result in the creation of any lien, security interest,
charge or encumbrance upon any of the Contributed Assets, other than any lien,
security interest, charge or encumbrance that may be created under the terms of
any contracts or agreements transferred pursuant to this Agreement. This
Agreement, the Ancillary Agreements and all other instruments and documents
contemplated herein, when executed, will constitute the legal, valid and binding
obligations of ANC, enforceable in accordance with their terms.
SECTION 5.04. Title to Contributed Assets, Etc. ANC believes it
has good and marketable title to all property included in the Contributed
Assets, with full power to sell, transfer and assign the same, free and clear of
any security interest, lien, mortgage, pledge, encumbrance, charge or
restriction.
SECTION 5.05. Disclaimer of Merchantability or Fitness of
Contributed Assets. Each party hereto further understands and agrees that there
are no warranties, express or implied, as to the merchantability or fitness of
any of the Contributed Assets transferred by ANC pursuant
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to this Agreement or any Ancillary Agreement, and that all Contributed Assets
will be transferred on an "AS IS, WHERE IS" basis.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PECHINEY PLASTICS
Pechiney Plastics represents, warrants and agrees that:
SECTION 6.01. Organization. Pechiney Plastics is a corporation
duly formed, validly existing and in good standing under the laws of the State
of Delaware. This Agreement constitutes the legal, valid and binding obligation
of Pechiney Plastics, enforceable in accordance with its terms.
SECTION 6.02. Authorization of Transaction. The execution and
delivery of this Agreement and all other instruments and documents contemplated
herein by Pechiney Plastics, and the assumption of the Assumed Liabilities
contemplated herein, have been duly authorized by all necessary corporate action
of Pechiney Plastics. Neither the execution nor delivery of this Agreement nor
the fulfillment of nor compliance with the terms hereof will conflict with or
result in a breach of the terms, conditions or provisions of or constitute a
default under or any agreement or instrument to which Pechiney Plastics is a
party.
ARTICLE VII
COVENANTS OF THE PARTIES
SECTION 7.01. Further Assurances. ANC and Pechiney Plastics shall
use all reasonable efforts to: (a) take or cause to be taken all actions, and to
do or cause to be done all things reasonably necessary, proper or advisable,
under any applicable Law, agreement or otherwise, to consummate and make
effective the transactions contemplated hereby, including without limitation
using commercially reasonable efforts to obtain any consents and approvals from,
enter into any amendatory agreements with and make any applications,
registrations or filings with, any third Person or any Governmental Authority
necessary or desirable in order to consummate the transfers contemplated hereby
or to carry out the purposes of this Agreement, and (b) execute and deliver such
further agreements, instruments and documents and take such other actions as the
other party may reasonably request in order to consummate the transfers
contemplated hereby and effectuate the purposes of this Agreement.
SECTION 7.02. Consents, Permits, Etc. To the extent that any of
the contracts, leases, agreements, licenses, permits, plans, commitments or
other binding arrangements relating to the Contributed Assets (in this Section
7.02 called "agreements") that hereby are assumed by or assigned to Pechiney
Plastics are not assumable or assignable without the consent of another
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party, this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. ANC and Pechiney Plastics agree to use reasonable best efforts
to obtain (which will not include the payment of money or expenditures by ANC)
the consent of the other party to any such agreements to their assumption by or
assignment to Pechiney Plastics in all cases in which such consent is required
for such assumption or assignment. If such consent is not obtained, each of the
parties hereto agrees to cooperate with the other in any reasonable arrangement
designed to enable ANC to perform its obligations under, and to provide for
Pechiney Plastics the benefits of, any such agreements, including enforcement at
the cost, and for the account, of Pechiney Plastics of any and all rights of ANC
against the other party thereto arising out of the non-performance, breach or
cancellation thereof by such other party or otherwise. ANC will promptly pay to
Pechiney Plastics when received all monies received by ANC under any such
agreements.
SECTION 7.03. Books and Records. (a) ANC agrees that it shall
preserve and keep all books and records in respect of the Business in ANC's
possession for retention periods consistent with the ANC Records Management
Program. During such retention periods, duly authorized representatives of
Pechiney Plastics shall, upon reasonable notice, have access thereto during
normal business hours to examine, inspect and copy such books and records.
(b) If, in order properly to prepare documents required to be
filed with Governmental Authorities or its financial statements, it is necessary
that either party hereto or any successors be furnished with additional
information relating to the Business, the Contributed Assets or the Assumed
Liabilities, and such information is in the possession of the other party hereto
or any of its Affiliates, such party agrees to use its best efforts to furnish
such information to such other party, at the cost and expense of the party being
furnished such information.
SECTION 7.04. Confidentiality. Each party agrees to, and will
cause its agents, representatives, Affiliates, employees, officers and directors
to (i) treat and hold as confidential (and not disclose or provide access to any
Person to) all information relating to trade secrets, processes, patent or
trademark applications, product development, price, customer and supplier lists,
pricing and marketing plans, policies and strategies, operations methods,
product development techniques, business acquisition plans, new personnel
acquisition plans and any other confidential information related solely to the
business of the other party, (ii) in the event that either party or its
respective agents, representatives, Affiliates, employees, officers or directors
becomes legally compelled to disclose any such information, provide the other
party with prompt written notice of such requirement so that the other party may
seek a protective order or other remedy or waive compliance with this Section
7.04 and (iii) in the event that such protective order or other remedy is not
obtained, or the other party waives compliance with this Section 7.04, furnish
only that portion of such confidential information which is legally required to
be provided and exercise all reasonable efforts to obtain assurances that
confidential treatment will be accorded such information; provided, however,
that this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of
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this Section 7.04 by either party or its respective agents, representatives,
Affiliates, employees, officers or directors.
SECTION 7.05. Use of Names. Pechiney Plastics acknowledges and
agrees that, notwithstanding anything to the contrary in this Agreement, it is
not acquiring pursuant to this Agreement, and shall have, no interest in or to
the name "American National Can Company", "Nacanco" or "ANC" or any trademark,
service mark, trade dress, logo, trade name or corporate name similar or related
thereto, and shall not use any such name, trademark, service mark, trade dress,
logo, trade name or corporate name in any capacity or for any purpose except as
expressly provided for in this Agreement and the Ancillary Agreements; provided
that for a transitional period not to exceed 120 days from the Distribution
date, Pechiney Plastics shall have the right to use the signs, advertising,
promotional materials, packaging materials and supplies (including, without
limitation, stationery, cartons and labels), and other materials remaining in
its possession or under its control, and to sell the existing Inventory
transferred by ANC and the Subsidiaries to Pechiney Plastics pursuant to this
Agreement; provided, however, that Pechiney Plastics shall use such materials
and supplies and sell such inventories prior to introducing Pechiney Plastics'
own materials and supplies.
SECTION 7.06. Insurance. Up to 12:01 a.m. on the day after the
Distribution date, ANC and the Subsidiaries will maintain insurance with respect
to the Contributed Assets and Assumed Liabilities generally comparable to the
standalone insurance that ANC maintains as of the date of this Agreement.
Effective 12:01 a.m. on the day after the Distribution date, the Contributed
Assets and Assumed Liabilities shall cease to be insured by ANC's or the
Subsidiaries' insurance policies, such that (i) with respect to insurance
coverage written on an "occurrence basis," ANC and the Subsidiaries will have no
liability for occurrences which take place on and after 12:01 a.m. on the day
after the Distribution date and (ii) with respect to insurance coverage written
on a "claims made basis," ANC and the Subsidiaries will have no liability for
claims made after 12:01 a.m. on the day after the Distribution date.
SECTION 7.07. Ancillary Agreements. The parties shall cooperate in
good faith to prepare, execute, deliver and, when appropriate, file or cause to
be filed with a Governmental Authority, the Ancillary Agreements as promptly as
practicable after the date hereof.
ARTICLE VIII
EMPLOYEE MATTERS
SECTION 8.01. General Employment Matters. (a) As of June 30, 1999
(or such other date as may be mutually agreed by ANC and Pechiney Plastics
occurring after the date hereof and no later than the Separation Date) (the
"Transfer Date"), all Transferred Employees shall become employed by Pechiney
Plastics. The initial compensation (base salary or wage
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level) of each Transferred Employee shall be the same as his or her compensation
(base salary or wage level) immediately prior to the Transfer Date. Nothing in
this Agreement shall give any Transferred Employee any right to continued
employment with Pechiney Plastics or ANC beyond the Transfer Date.
(b) As of the Transfer Date, Pechiney Plastics will
participate in each of the employee benefit plans (including all retirement
plans, welfare benefit plans and deferred compensation plans) which, immediately
prior to the Transfer Date, cover employees of ANC who are Transferred Employees
(collectively, the "ANC Benefit Plans"). As a participating employer under the
ANC Benefit Plans, Pechiney Plastics shall grant to the ANC ERISA Committee and
to the ANC Retirement Board the same powers, rights, duties and responsibilities
to act on behalf of Pechiney Plastics with respect to the ANC Benefit Plans as
are stated in the July 6, 1994 resolution of the Board of Directors of American
National Can Company setting forth the powers, rights, duties and
responsibilities of the ANC ERISA Committee and the ANC Retirement Board to act
on behalf of ANC with respect to such plans. ANC shall take all necessary action
so that Pechiney Plastics will be designated a "successor employer" for purposes
of the ANC Benefit Plans (including, without limitation, the American National
Can Company Severance Pay Plan For Salaried Employees), so that the Transferred
Employees will not be deemed to have had a separation of service from ANC or a
termination of employment from ANC merely because they are transferred to
Pechiney Plastics or because Pechiney Plastics and ANC cease to be ERISA
Affiliates.
(c) Pechiney Plastics shall withdraw as a participating employer
from each ANC Benefit Plan as of the Separation Date. Except as otherwise
provided in this Agreement, as of the Separation Date Pechiney Plastics:
(i) shall assume sponsorship of, and all liabilities relating to:
(A) the American National Can Company Pension Plan for
Cleveland Hourly Employees;
(B) the American National Can Company Retirement Plan for
Bargaining Employees of Illinois;
(C) the American National Can Company Pension Plan for
Organized Pressroom Employees of American National Can, Mt.
Vernon, Ohio Plant;
(D) the American National Can Company Pension Plan for
U.P.I.U. Local 271 Employees, Mr. Vernon, Ohio; and
(E) the 1987 Performance Plastics Deferred Compensation Plan;
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and of any other ANC Benefit Plans that ANC and Pechiney Plastics
mutually agree should be subject to this clause (i); and
(ii) shall establish "mirror" plans that will provide the same
level of benefits (as in effect immediately prior to the Separation
Date) for the Transferred Employees and their eligible dependents and
beneficiaries as those provided under the ANC Benefit Plans other than
those described in the foregoing clause (i).
(d) Prior to the Separation Date, ANC and Pechiney Plastics will
enter into an agreement to reflect the "mirror offset" arrangements described in
Note 12 to the combined financial statements of American National Can Group,
Inc. included in its Registration Statement on Form S-1, SEC File No. 333-76699
(the "Registration Statement"). Such agreement will provide, among other things,
for an amendment to the American National Can Company Combined Pension Plan and
for the establishment by Pechiney Plastics of certain "mirror offset" plans
covering the Transferred Employees.
(e) Effective as of the Separation Date, Transferred Employees
shall no longer participate in the American National Can Company Capital
Accumulation Plan, the American National Can Company Retirement and Savings Plan
for Non-Union Employees, and the American National Can Company Retirement and
Savings Plan for Union Employees (collectively, the "Savings Plans"). Effective
as of the Separation Date, Pechiney Plastics shall establish pursuant to Section
8.01(c) above "mirror" defined contribution plans intended to be qualified under
Sections 401(a) and 401(k) of the Code and related trusts intended to be exempt
from taxation under Section 501(a) of the Code (except to the extent that such
"mirror" plans and related trusts have previously been established by ANC and
are assumed by Pechiney Plastics in accordance with Section 8.01(c)(i)). As soon
as practicable following the Separation Date, ANC shall cause to be transferred
from the Savings Plans to such defined contribution plans and related trusts, as
Pechiney Plastics shall direct, assets equal to the account balances as of the
transfer date of the Transferred Employees who participate in the Savings Plans
(with subsequent "true up" adjustment, if necessary). ANC shall amend the
Savings Plans to fully vest accounts of all Transferred Employees as of the
Separation Date.
(f) In connection with all employee pension benefit plans and
employee welfare benefit plans assumed or to be established by Pechiney Plastics
pursuant to this Agreement, Pechiney Plastics shall credit Transferred Employees
for all periods of service with ANC prior to the Transfer Date for all purposes,
to the same extent that such service was credited under the applicable ANC
Benefit Plan. In addition, any welfare plan that Pechiney Plastics establishes
hereto shall take account of amounts credited against deductibles for 1999 prior
to the Separation Date under the corresponding ANC Benefit Plan, as well as of
amounts charged against out-of-pocket or other annual or other (including
lifetime) limitations under the corresponding ANC Benefit Plan prior to the
Separation Date. Pechiney Plastics will cause the waiver of any waiting periods
or pre-existing condition limitations or exclusions that otherwise
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might apply to Transferred Employees (or their eligible dependents or
beneficiaries) under the terms of the "mirror" plans established pursuant to
Section 8.01(c), to the extent that such periods, limitations or exclusions
would not have applied to the Transferred Employees (and their eligible
dependents and beneficiaries) had they continued to participate in the ANC
Benefit Plans after the Separation Date.
SECTION 8.02. Collective Bargaining. (a) As of the Transfer Date,
ANC shall assign to Pechiney Plastics, and Pechiney Plastics shall assume, all
collective bargaining agreements covering the Transferred Employees as of such
date, which collective bargaining agreements are listed in Schedule 8.02. This
assumption shall not restrict any right Pechiney Plastics may have with respect
to such agreements.
(b) Pechiney Plastics shall recognize all labor organizations
which, as of the Transfer Date, represent any Transferred Employees.
(c) Without limiting the generality of Pechiney Plastics's
obligations as stated above, Pechiney Plastics shall provide Transferred
Employees the terms and conditions of whose employment is subject to collective
bargaining agreements with the wages, benefits and terms and conditions of
employment required by such agreements.
(d) To the extent required under any collective bargaining
agreement or otherwise required by law, Pechiney Plastics shall notify the
relevant collective bargaining representative of the assignment and assumption
provided for herein.
SECTION 8.03. OPEB Obligations. (a) As of the date hereof, ANC
delegates and assigns to Pechiney Plastics, and Pechiney Plastics assumes and
accepts obligations and responsibility for, all of ANC's obligations and
liabilities to provide post-retirement health care and life insurance benefits
to the Transferred Employees and former employee groups listed in Schedule 8.03
(the "Assumed OPEB Obligations") under the welfare benefit plans identified in
such Schedule (the "Post-Retirement Welfare Plans").
(b) Pechiney Plastics acknowledges and agrees that from the date
hereof it will be the primary obligor with respect to the Assumed OPEB
Obligations and agrees to perform fully and in timely fashion all of its
obligations under the Assumed OPEB Obligations, in the same manner and to the
same extent that ANC would have been required to perform such obligations if ANC
had retained the Assumed OPEB Obligations. Except as otherwise provided in this
Agreement, from and after the date hereof, ANC assigns to Pechiney Plastics all
of its rights and powers with respect to the administration and (to the extent
permitted under the terms of the Post-Retirement Welfare Plans and applicable
law, including ERISA) the amendment and termination of the Post-Retirement
Welfare Plans as they apply to the Transferred Employees and former employees
the liabilities with respect to whom are included in the Assumed OPEB
Obligations, together with the eligible dependents and beneficiaries of such
employees.
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(c) As of the date hereof, Pechiney Plastics will establish
benefit plans (including, where appropriate, by assuming sponsorship of existing
Post-Retirement Welfare Plans of ANC) that will provide the benefits the
obligation to provide which are included in the Assumed OPEB Obligations. The
establishment (or assumption) of such benefit plans shall not in any way
restrict any right Pechiney Plastics may have to amend or terminate such plans.
Pechiney Plastics will prepare and distribute any notices required under
applicable law advising interested parties of its assumption of the Assumed OPEB
Obligations.
SECTION 8.04. ANC Deferred Plans. (a) Participation by Transferred
Employees in future benefit accruals under:
(i) the American National Can Company Non-Qualified Deferred
Compensation Plan;
(ii) the American National Can Company Retirement Benefit
Equalization Plan (the "ANC RBEP"); and
(iii) the American National Can Company Deferred Incentive
Compensation Plan (collectively with the plans referred to in clauses
(i) and (ii) above, the "ANC Deferred Plans")
shall cease as of the Separation Date. Prior to the Separation Date, ANC will
amend each of the ANC Deferred Plans to provide that a transfer of employment
from ANC to Pechiney Plastics in connection with the transactions contemplated
by this Agreement will not constitute a termination of employment or otherwise
confer on any participant in such plans the right to receive any early payment
or other distribution. As of the Separation Date, Pechiney Plastics will assume
liability:
(I) for all benefits under the ANC RBEP in respect of the
Transferred Employees, former salaried employees of the Business
who became eligible for long-term disability benefits on or after
January 1, 1989, and their respective designated beneficiaries, it
being understood that ANC will retain all liabilities under such
plan in respect of former employees of the Business who have
retired or otherwise have terminated employment prior to the
Separation Date and their designated beneficiaries; and
(II) for all benefits under the ANC Deferred Plans (other than the
ANC RBEP) in respect of the Transferred Employees, the former
employees of the Business who have retired or otherwise have
terminated employment prior to the Separation Date and former
salaried employees of the Business who became eligible for
long-term disability benefits on or after January 1, 1989,
together with their respective designated beneficiaries.
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To the extent that an ANC Deferred Plan is an individual account plan, the
balance of each Transferred Employee's account thereunder as of the Separation
Date shall become the opening balance of his or her account in the "mirror"
non-qualified deferred plan established by Pechiney Plastics in accordance with
Section 8.01(c).
(b) As soon as practicable after the end of the month in which the
Separation Date occurs, ANC will make a cash payment to Pechiney Plastics in an
amount equal to the product obtained by multiplying:
(i) the fair value, determined as of the end of the month in which
the Separation Date occurs, of the assets held in that certain grantor
trust established pursuant to the Trust Agreement, effective July 1,
1998, between American National Can Company and Boston Safe Deposit and
Trust Company, as trustee; by
(ii) 0.088 (such amount being the ratio of (A) the value of the
liabilities under the ANC RBEP assumed by Pechiney Plastics as stated
in the most recent actuarial valuation report (as of January 1, 1998)
to (B) the total value of all liabilities under the ANC RBEP as stated
in such report).
SECTION 8.05. Certain Other Plans and Benefits. This Section 8.05
sets forth the understanding of ANC and Pechiney Plastics concerning the
allocation of responsibility for certain employee benefits. Assumption of
liabilities by Pechiney Plastics pursuant to this Section 8.05 shall in each
instance be effective as of the Separation Date.
(a) Pechiney Plastics will assume all liabilities under the
American National Can Company 25-year Survivorship Plan and the American
National Can Company 10-Year Survivorship Plan in respect of the Transferred
Employees and former salaried employees of the Business who became eligible for
long-term disability benefits on or after January 1, 1989.
(b) Pechiney Plastics will be responsible for all claims by
Transferred Employees and former salaried employees of the Business who became
eligible for long-term disability benefits on or after January 1, 1989 (and
their eligible dependents and beneficiaries) incurred on or after the Separation
Date, or incurred prior to the Separation Date but not reported until on or
after the Separation Date, for the following types of benefits:
(i) medical and dental;
(ii) reimbursement of expenses under medical spending and eligible
dependent care accounts (Section 125 plans); and
(iii) life insurance.
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As soon as practicable after the end of the month in which the Separation Date
occurs, ANC will transfer to Pechiney Plastics an amount of cash equal to the
aggregate net medical spending and eligible dependent care account balances of
the Transferred Employees as of the Separation Date.
(c) (i) Pechiney Plastics will assume liability for health and
other welfare benefits (including, as applicable, medical benefit
continuation, life insurance, retiree medical plan coverage to age 65
and post-retirement medical coverage, if eligible) provided under the
ANC Benefit Plans to Transferred Employees and former salaried
employees of the Business who became eligible for long-term disability
benefits on or after January 1, 1989. Liability for benefits accrued
under any retirement plan of ANC by any such former salaried employee
through the Separation Date will remain with ANC (except as otherwise
specified in Sections 8.03, 8.04 and 8.05(a), (b), (e), (f) and (g)),
whereas Pechiney Plastics shall be responsible for any such benefit
accrued on or after the Separation Date.
(ii) Pechiney Plastics will assume liability for all long-term
disability benefits provided under the ANC Benefit Plans to any former
hourly employees of the ANC plant located in Minneapolis, Minnesota who
are eligible for such benefits as of the Separation Date.
(d) Except for retirement benefits which are retained by ANC as
provided in Section 8.01(d), Pechiney Plastics shall assume liability for all
benefits provided under the ANC Benefit Plans to Transferred Employees who are
eligible to receive short-term disability benefits as of the Separation Date.
(e) With respect to "COBRA" continuation coverage: (i) ANC shall
retain all obligations to provide such coverage to former salaried employees of
the Business who have elected or are eligible to elect COBRA continuation
benefits as of the Separation Date; and (ii) Pechiney Plastics shall assume all
obligations to provide such coverage to former hourly employees of the Business
who have elected or are eligible to elect COBRA continuation as of the
Separation Date.
(f) Pechiney Plastics will assume liability for all worker's
compensation benefits payable to Transferred Employees or former employees of
the Business who are eligible for such benefits as of the Separation Date.
(g) Pechiney Plastics will assume liability for all vacation
accruals of the Transferred Employees under the ANC Benefit Plans, determined as
of the Separation Date.
SECTION 8.06. "Mirror" Plans. Benefits for which Pechiney Plastics
is responsible pursuant to Sections 8.04 and 8.05 above will be provided
pursuant to the "mirror"
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plans that Pechiney Plastics will establish in accordance with Section 8.01(c)
in respect of the corresponding ANC plans.
SECTION 8.07. Bonus and Other Incentive Arrangements. (a) All
outstanding stock appreciation rights ("SARs") based on Pechiney American
Depositary Shares and granted to Transferred Employees pursuant to any ANC
long-term incentive plan prior to the Separation Date shall be assumed under
"mirror" long-term incentive plans established by Pechiney Plastics under
Section 8.01(c). As so assumed, such SARs shall remain outstanding in accordance
with their terms, except that each SAR shall constitute an obligation of
Pechiney Plastics, rather than of ANC. No such SAR shall be forfeited solely on
account of a transfer of the grantee's employment from ANC to Pechiney Plastics,
and for purposes of the vesting provisions of any SAR, service with ANC shall
count as service with Pechiney Plastics.
(b) Liability for all bonus, incentive and similar arrangements of
ANC in which any Transferred Employee participates for 1999, or for any other
performance period which includes the Separation Date, shall be assumed by
Pechiney Plastics as of the Separation Date.
SECTION 8.08. General Matters. (a) In fulfilling its obligations
with respect to the employee liabilities assumed hereunder (including without
limitation the Assumed OPEB Obligations), Pechiney Plastics covenants and agrees
to comply with all provisions of applicable law, including without limitation
ERISA. Pechiney Plastics further covenants and agrees that, at any time and from
time to time following the date hereof, it will promptly execute and deliver, or
cause to be executed and delivered, to ANC all such further instruments and take
all such further action as may be reasonably necessary or appropriate to more
effectively assume such liabilities or otherwise to confirm or carry out the
provisions and intent of this Agreement.
(b) To the extent that benefits liability for which is assumed by
Pechiney Plastics hereunder (including benefits under any Post-Retirement
Welfare Plan) are provided under a policy or contract issued to ANC by an
insurance company or other provider of welfare benefits, ANC shall make
reasonable efforts to cause such provider to continue coverage for Transferred
Employees and former employees of the Business and their eligible dependents and
beneficiaries. ANC will retain the reserves under any policy or contract
currently issued to ANC.
(c) Except (i) for benefits for which the liability or
responsibility is provided for herein and (ii) as provided in the agreement
referred to in Section 8.01(d), Pechiney Plastics shall be responsible for any
and all employment, compensation and benefit liabilities with respect to all
Transferred Employees and former employees of the Business (including but not
limited to Transferred Employees and former employees of the Business who, as of
the Separation Date, are on leave of absence, long-term disability, short-term
disability or layoff with recall rights) and eligible dependents and
beneficiaries of those persons.
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ARTICLE IX
TAX MATTERS
SECTION 9.01. Taxes; General. Any liability or other obligation
for any and all Taxes imposed or otherwise assessed on or with respect to the
Contributed Assets or the operations of the Business, including the
Subsidiaries, for any taxable period or portion thereof ending on or before the
Tax Separation Date ("Pre-Tax Separation Date Taxes") shall be for the account
of ANC and ANC shall indemnify and hold harmless Pechiney Plastics against any
such Pre-Tax Separation Date Taxes. Any liability or other obligation for any
and all Taxes imposed or otherwise assessed on or with respect to the
Contributed Assets or the operations of the Business, including the
Subsidiaries, for any taxable period or portion thereof beginning after the Tax
Separation Date ("Post-Tax Separation Date Taxes") shall be for the account of
Pechiney Plastics and Pechiney Plastics shall indemnify and hold harmless ANC
against any such Post-Tax Separation Date Taxes.
SECTION 9.02. Conveyance Taxes. ANC and Pechiney Plastics shall
each be 50% liable for any real property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, and any similar taxes
which become payable in connection with the transaction contemplated hereby
("Transfer Taxes"), and each party shall prepare and timely file all forms and
documents required to be filed in respect of such Transfer Taxes that are the
primary responsibility of such party under applicable Law.
SECTION 9.03. Section 351 Reporting Requirements. ANC shall
prepare and file any and all records, information statements and reporting
statements required to be prepared or filed under Treasury Regulation Section
1.351-3. Pechiney Plastics shall have the right to review and comment on any
such items prior to filing.
SECTION 9.04. Tax Benefits. ANC agrees that it will not take any
tax deduction or claim any other Tax benefit in respect of any Assumed Liability
paid by Pechiney Plastics. In the event that Pechiney Plastics pays any Assumed
Liability and ANC derives a net Tax benefit from such payment, then ANC shall
pay Pechiney Plastics the amount of any net Tax benefit actually realized by ANC
arising from the payment by Pechiney Plastics within 30 days after such Tax
benefit is actually realized by ANC. In computing the amount of any such Tax
benefit, ANC shall be deemed to recognize all other items of loss, deduction or
credit before recognizing any item arising from the payment of an Assumed
Liability. For purposes of this Section 9.04, ANC shall be deemed to have
"actually realized" a net Tax benefit to the extent that, and at such time as,
the amount of Taxes payable (including Taxes payable on an estimated basis) by
ANC is reduced below the amount of Taxes that ANC would be required to pay but
for the payment of such Assumed Liability. If any payments are made pursuant to
this Section 9.04 and the amount of such payment required by this Section 9.04
would have been different if the computation of such payment were made at a
later time (because of final settlements or final dispositions of audit
adjustments, administrative or judicial proceedings, amended returns, the
execution of Form 870-
<PAGE> 23
23
AD or successor forms or other reasons), then the amount of such payment shall
be recomputed by ANC and Pechiney Plastics at such later time by taking into
account such subsequent events and the parties shall make an adjusting payment
between each other as is appropriate because of such recomputation within 15
business days of their agreement as to the amount of such adjusting payment. For
purposes of this Section 9.04, references to ANC or Pechiney Plastics shall
include any subsidiary of ANC or Pechiney Plastics (as the case may be) and any
group which has ANC or Pechiney Plastics (as the case may be) or any such
subsidiary as a member and that files a Tax return on a combined, consolidated
or unitary basis.
ARTICLE X
POWER OF ATTORNEY
SECTION 10.01. ANC hereby constitutes and appoints Pechiney
Plastics, its successors and assigns, the true and lawful attorney and attorneys
of ANC, with full power of substitution, in the name of Pechiney Plastics or in
the name and stead of ANC, but on behalf of, for the benefit of, and at the
expense of Pechiney Plastics:
(a) to collect, demand and receive any and all Contributed Assets
transferred hereunder and to give receipts and releases for and in
respect of the same;
(b) to institute and prosecute in ANC's name, or otherwise, at the
expense and for the benefit of Pechiney Plastics any and all actions,
suits or proceedings, at law, in equity or otherwise, which Pechiney
Plastics may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Contributed Assets
hereby assigned to Pechiney Plastics or intended so to be, to defend or
compromise any and all such actions, suits or proceedings in respect of
any of such Contributed Assets, and to do all such acts and things in
relation thereto as Pechiney Plastics shall deem advisable for the
collection or reduction to possession of any of such Contributed
Assets;
(c) to take any and all other reasonable actions designed to vest
more fully in Pechiney Plastics the Contributed Assets hereby assigned
to Pechiney Plastics or intended so to be and in order to provide for
Pechiney Plastics the benefit, use, enjoyment and possession of such
Contributed Assets.
ANC acknowledges that the foregoing powers are coupled with an
interest and shall be irrevocable by it or upon its subsequent dissolution or in
any manner or for any reason. Pechiney Plastics shall be entitled to retain for
its own account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest with respect thereto. ANC shall from
time to time pay to Pechiney Plastics, when received, any amounts which shall be
received directly or indirectly by ANC (including amounts received as interest)
in respect of any Contributed Assets sold, assigned or transferred to Pechiney
Plastics pursuant hereto.
<PAGE> 24
24
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. Indemnification of Pechiney Plastics by ANC.
Subject to the terms and conditions of this Article XI, ANC agrees to indemnify,
defend and hold harmless Pechiney Plastics, its officers, directors, employees,
agents, successors and permitted assigns (each, an "Pechiney Plastics
Indemnitee") from and against any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable attorney's fees and expenses) actually suffered
or incurred by them (each, a "Pechiney Plastics Loss") resulting from, based
upon, or arising out of:
(i) the inaccuracy or untruth of any representation or warranty of
ANC contained in or made pursuant to this Agreement;
(ii) a breach of or failure to perform any covenant or agreement
of ANC made in this Agreement;
(iii) the Excluded Assets; and
(iv) the Excluded Liabilities.
SECTION 11.02. Indemnification of ANC by Pechiney Plastics.
Subject to the terms and conditions of this Agreement, Pechiney Plastics agrees
to indemnify, defend and hold harmless ANC, its officers, directors, employees,
agents, successors and permitted assigns (each, an "ANC Indemnitee") from and
against any and all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without limitation,
reasonable attorney's fees and expenses) actually suffered or incurred by them
(each, an "ANC Loss") resulting from, based upon, or arising out of:
(i) the inaccuracy or untruth of any representation or warranty of
Pechiney Plastics contained in or made pursuant to this Agreement;
(ii) a breach of or failure to perform any covenant or agreement
of Pechiney Plastics made in this Agreement;
(iii) any and all liabilities relating to, or arising out of, the
patent infringement litigation instituted against ANC in the U.S.
District Court for the Northern District of Illinois in December 1993
by Viskase Corporation, the declaratory judgment action brought by ANC
against Viskase in May 1999, and various proceedings in the U.S. Patent
Office relating to the Viskase patents which are the subject of such
actions; and
<PAGE> 25
25
(iv) the Assumed Liabilities.
SECTION 11.03. Indemnification Procedures. An Indemnitee shall
give the indemnifying party notice of any matter which an Indemnitee determines
has given or could give rise to a right of indemnification under this Agreement,
within 60 days of such determination, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to the provisions
of this Agreement in respect of which such right of indemnification is claimed
or arises. Subject to Section 11.04(b), the obligations and liabilities of the
indemnifying party under this Article XI with respect to Losses arising from
claims of any third party which are subject to the indemnification provided for
in this Article XI ("Third Party Claims") shall be governed by the following
additional terms and conditions: if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give the indemnifying party notice of
such Third Party Claim within 30 days of the receipt by the Indemnitee of such
notice; provided, however, that the failure to provide such notice shall not
release the indemnifying party from any of its obligations under this Article XI
except to the extent the indemnifying party is materially prejudiced by such
failure and shall not relieve the indemnifying party from any other obligation
or liability that it may have to any Indemnitee otherwise than under this
Article XI. If the indemnifying party acknowledges in writing its obligation to
indemnify the Indemnitee hereunder against any Losses that may result from such
Third Party Claim, then the indemnifying party shall be entitled to assume and
control the defense of such Third Party Claim at its expense and through counsel
of its choice upon notice of its intention to do so to the Indemnitee within 30
days of the receipt of such notice from the Indemnitee; provided, however, that
if there exists or is reasonably likely to exist a conflict of interest that
would make it inappropriate in the judgment of the Indemnitee for the same
counsel to represent both the Indemnitee and the indemnifying party, then the
Indemnitee shall be entitled to retain its own counsel (which shall not in any
way limit or restrict the right of the indemnifying party under this Section
11.03 to assume and control such Third Party Claim), in each jurisdiction for
which the Indemnitee determines counsel is required, at the expense of the
indemnifying party. In the event the indemnifying party exercises the right to
undertake any such defense against any such Third Party Claim, the Indemnitee
shall cooperate with the indemnifying party in such defense and make available
to the indemnifying party, at the indemnifying party's expense, all witnesses,
pertinent records, materials and information in the Indemnitee's possession or
under the Indemnitee's control relating thereto as is reasonably required by the
indemnifying party. Similarly, in the event the Indemnitee is, directly
conducting or participating in the defense against any such Third Party Claim,
the indemnifying party shall cooperate with the Indemnitee in such defense and
make available to the Indemnitee, at the indemnifying party's expense, all such
witnesses, records, materials and information in the indemnifying party's
possession or under the indemnifying party's control relating thereto as is
reasonably required by the Indemnitee. No Third Party Claim may be settled by
the indemnifying party without the written consent of the Indemnitee, unless the
settlement only requires payment of money damages which will be indemnified.
<PAGE> 26
26
SECTION 11.04. Adjustments for Taxes. (a) (i) Except as provided
in Section 11.04(a)(ii) in respect of an ANC Loss, the amount of any Loss shall
be: (i) increased to take into account any net Tax cost actually incurred by the
Indemnitee arising from any payments by the indemnifying party (grossed up to
take into account the net Tax cost actually incurred by the Indemnitee arising
from such increase), and (ii) reduced to take account of any net Tax benefit
actually realized by the Indemnitee arising from the incurrence or payment of
any such Loss. In computing the amount of such Tax cost or Tax benefit, the
Indemnitee shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnity payment hereunder with respect to a Loss or the
incurrence or payment of any amount indemnified against in respect of a Loss,
except that, in the case of an ANC Loss, ANC shall be deemed to recognize any
Tax deduction or other Tax benefit arising from the incurrence or payment of any
such ANC Loss before recognizing any other items of loss, deduction (including,
without limitation, carryforwards of net operating losses from prior periods) or
credit or other Tax benefit for tax years or portions thereof starting in 2004
and thereafter. For purposes of this Agreement, the Indemnitee shall be deemed
to have "actually incurred" or "actually realized" a net Tax cost or a net Tax
benefit to the extent that and at such time as, the amount of Taxes payable
(including Taxes payable on estimated basis) by such Indemnitee is increased
above or reduced below, as the case may be, the amount of Taxes that such
Indemnitee would be required to pay, but for the receipt or accrual of the
indemnity payment or the incurrence or payment of such indemnified amount, as
the case may be. Any indemnity payment made hereunder shall be increased or
reduced to reflect any such net Tax cost (including gross-up) or net Tax benefit
and payment shall be made to reflect such increase or reduction between the
Indemnitee and the indemnifying party within 30 days after the Indemnitee has
actually realized such Tax cost or benefit. For purposes of this Section
11.04(a)(i), references to an Indemnitee shall include any subsidiary of such
Indemnitee and any group which has such Indemnitee or any such subsidiary as a
member and that files a Tax return on a combined, consolidated or unitary basis.
(ii) In the event the parties agree in writing on or before the
Distribution Date on a discount percentage (the "Discount Percentage") which
shall be used to compute the Discounted Tax Rate (as defined below), then the
amount of any ANC Loss indemnified against by Pechiney Plastics pursuant to
Section 11.02 shall be: (A) increased by (1) the product of the amount of any
taxable income to ANC arising from the receipt or accrual of an indemnity
payment from Pechiney Plastics for any ANC Loss and the Discounted Tax Rate and
(2) the amount of any other item of income or gain (each a "Tax Cost Item")
which increases the Tax liability of ANC to the extent the Tax Cost Item is
attributable to the receipt or accrual of an indemnity payment by Pechiney
Plastics in respect of an ANC Loss; and (B) reduced by (1) the product of the
amount of any income tax deduction for ANC arising from the incurrence or
payment of any such ANC Loss and the Discounted Tax Rate and (2) the amount of
any other Tax credit, benefit, or similar item, including without limitation, an
increase in the tax basis for ANC in its shares of Pechiney Plastics prior to
the Distribution Date, (each a "Tax Benefit Item"), that reduces the Tax
liability of ANC to the extent the Tax Benefit Item is attributable to the
incurrence or payment of any such ANC
<PAGE> 27
26
Loss or payment of an amount indemnified against by Pechiney Plastics in respect
of such ANC Loss. In the case of any Tax, the Discounted Tax Rate shall mean the
product of the Discount Percentage and the maximum marginal statutory rate for
such Tax for corporations (exclusive of any surtax or other marginal rate
imposed in lieu of a surtax to eliminate the benefit of lower rates) in effect
for the Tax period to which the taxable income or tax deduction for ANC is taken
into account in computing its Tax liability. If the parties cannot agree in
writing on the Discount Percentage on or before the Distribution Date, then this
Section 11.04(a)(ii) shall have no force and effect and Section 11.04(a)(i)
shall control. For purposes of this Section 11.04(a)(ii) references to ANC shall
include any subsidiary of ANC and any group which has ANC or any subsidiary of
ANC as a member and that files a Tax return on a combined, consolidated or
unitary basis.
(iii) If any indemnity payments are made pursuant to Section 11.01
or 11.02 (as adjusted pursuant to this Section 11.04(a)) and the amount of the
adjustment required by this Section 11.04(a) would have been different if the
computation of such indemnification payment were made at a later time (because
of final settlements or final dispositions of audit adjustments, administrative
or judicial proceedings, amended returns, the execution of Form 870-AD or
successor forms or other reasons), then the amount of such adjustment shall be
recomputed by the Indemnitee and the indemnifying party at such later time by
taking into account such subsequent events and the parties shall make an
adjusting payment between each other as is appropriate because of such
recomputation within 15 business days of their agreement as to the amount of
such adjusting payment. The Indemnitee and the indemnifying party shall notify
each other promptly of any change or event that would give rise to such a
recomputation of an adjustment as required by this Section 11.04(a).
(b) ANC shall consult with Pechiney Plastics and ANC and Pechiney
Plastics shall jointly determine the Tax treatment by ANC of any indemnity
payment, loss, expense or other amount indemnified against by Pechiney Plastics
provided that neither ANC nor Pechiney Plastics shall be required to take a
position on any Tax return for which there is no reasonable basis. The parties
shall report the payments consistent with the treatment as determined by them
for Tax purposes. In the event that ANC and Pechiney Plastics differ on the Tax
treatment for an item and ANC takes a position on its Tax return as requested by
Pechiney Plastics, Pechiney Plastics will pay and indemnify ANC for the interest
and penalties imposed on ANC as a result of a successful challenge by a Taxing
authority to the position taken by ANC at Pechiney Plastics' request and the
parties will enter into an agreement (reasonably satisfactory to each) by which
Pechiney Plastics will indemnify ANC against any net incremental Tax cost to ANC
without duplication of adjustments provided under Section 11.04(a).
(c) (i) ANC shall notify Pechiney Plastics promptly (and in any
event within seven business days) after receipt by ANC of written notice of any
demand or claim or information request by a Taxing authority relating to the Tax
treatment of an indemnity payment, loss, expense or other amount indemnified
against by Pechiney Plastics or other item used to make the
<PAGE> 28
28
computations required by Section 11.04(a) or (b). Such notice shall contain
factual information (to the extent known to ANC) describing the asserted tax
treatment in reasonable detail and shall include copies of any notice or other
document received from any Taxing authority.
(ii) If Pechiney Plastics requests within 30 days (or sooner if
the nature of the proposed adjustment so requires) after the notice by ANC
referred to in Section 11.04(c)(i) above that a proposed adjustment in respect
of Taxes be contested, ANC shall contest the proposed adjustment in good faith
by appropriate administrative and/or judicial processes, as directed by Pechiney
Plastics; provided, that (i) ANC shall determine the court of competent
jurisdiction in which to contest the proposed adjustment either before or after
payment of the Tax asserted to be payable as a result thereof, (ii) Pechiney
Plastics shall control with counsel selected by Pechiney Plastics (provided,
that such counsel is not reasonably objected to by ANC) the prosecution of any
contested adjustment or asserted deficiency arising from any amount indemnified
against by Pechiney Plastics, (iii) Pechiney Plastics shall keep ANC informed as
to the progress of any administrative or judicial contest or litigation and, if
requested by ANC, shall consult with ANC's tax counsel, and (iv) Pechiney
Plastics shall not settle, compromise or otherwise concede the adjustment or
deficiency that Pechiney Plastics is contesting without the consent of ANC,
which consent shall not be unreasonably withheld. ANC shall not be required to
take any action pursuant to this Section 11.04(c)(ii) in respect of a contest
relating to an amount indemnified against by Pechiney Plastics unless Pechiney
Plastics shall have agreed to pay (with no net after-Tax cost to ANC) all
penalties, interest and additions to tax that ANC may incur in connection with
contesting such proposed adjustment. Pechiney Plastics shall pay all
out-of-pocket expenses and costs relating to a contest of an adjustment relating
to an amount indemnified against by Pechiney Plastics, including but not limited
to fees for attorneys, accountants, expert witnesses or other consultants
retained by (or selected or controlled by) Pechiney Plastics incurred at any
time during which Pechiney Plastics is controlling and directing the proceeding
in respect of which such fees are incurred.
(iii) If asserted liabilities unrelated to the matters
contemplated herein become grouped with contests arising hereunder, the parties
shall use their respective best efforts to cause the contest arising hereunder
to be the subject of a separate proceeding. If such severance is not possible,
Pechiney Plastics shall control the prosecution of any contested adjustment or
asserted deficiency arising from or otherwise attributable to an amount
indemnified against or an indemnity payment by Pechiney Plastics, and any Tax
items related thereto, and ANC shall have sole discretion to determine the court
of competent jurisdiction in which to contest the proposed adjustment either
before or after payment of the tax asserted to be payable, provided that ANC
shall not settle, compromise or otherwise concede any such contested adjustment
or asserted deficiency without the consent of Pechiney Plastics. If ANC pays a
disputed amount of Taxes resulting from an amount indemnified against or
indemnity payment by Pechiney Plastics, and files claim or brings suit for
refund, Pechiney Plastics shall advance the disputed amount of Taxes (but only
to the extent of the portion of such disputed Taxes as is attributable to the
amount indemnified against or indemnity payment by Pechiney Plastics) to
ANC within 15 business
<PAGE> 29
29
days of such payment of disputed Taxes by ANC. If ANC subsequently receives a
refund, credit or offset, of all or a part of the amount of disputed Taxes
advanced by Pechiney Plastics, ANC shall promptly pay (and in any event within
15 business days) to Pechiney Plastics an amount equal to the portion of such
refund, credit, or offset attributable to the amount indemnified against by
Pechiney Plastics together with any interest received (including by credit or
offset) by ANC from the Taxing authority with respect to such portion. With
respect to matters arising hereunder controlled by Pechiney Plastics, and where
deemed necessary by Pechiney Plastics, ANC shall authorize by appropriate powers
of attorney such persons as Pechiney Plastics shall designate to represent ANC,
with respect to such matters.
SECTION 11.05. Survival of Indemnities. The obligations of ANC and
Pechiney Plastics under this Article XI shall survive the sale or other transfer
by any of them of any assets or businesses or the assignment by any of them of
any assumed liabilities, with respect to any Loss of any Indemnitee related to
such assets, businesses or liabilities.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Illinois, applicable
to contracts executed in and to be performed entirely within that state.
SECTION 12.02. Currency. Unless otherwise specified in this
Agreement, all references to currency, monetary values and dollars set forth
herein mean United States (U.S.) Dollars and all payments hereunder shall be
made in United States Dollars.
SECTION 12.03. Specific Performance. Each of the parties
acknowledges that money damages would not be a sufficient remedy for any breach
of this Agreement and that irreparable harm would result if this Agreement were
not specifically enforced. Therefore, the rights and obligations of the parties
under this Agreement shall be enforceable by a decree of specific performance
issued by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith. A party's right to
specific performance shall be in addition to all other legal or equitable
remedies available to such party.
SECTION 12.04. Waiver of Jury Trial. Each of the parties
irrevocably waives to the extent permitted by law all rights to trial by jury in
any action, proceeding or counterclaim arising out of or relating to this
Agreement.
SECTION 12.05. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
<PAGE> 30
30
SECTION 12.06. Entire Agreement. This Agreement and the Ancillary
Agreements embody the entire agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein and supersede all
prior agreements and understandings between the parties with respect to the
subject matter hereof and thereof.
SECTION 12.07. Severability. If any one or more provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
SECTION 12.08. No Third Party Beneficiaries. Except for the
provisions of Article XI relating to Indemnification, this Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 12.09. Arbitration. (a) Any controversy, claim or dispute
arising out of or in connection with this Agreement or the breach, termination,
enforceability or validity hereof, including without limitation the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 12.09, shall be fully and finally determined exclusively
by binding arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association (the "AAA Rules"). The seat of the
arbitration shall be the City of Chicago, State of Illinois. The arbitral
tribunal shall be comprised of three arbitrators appointed in accordance with
the AAA Rules.
(b) No provision of, nor the exercise of any rights under, this
Section 12.09 shall limit the right of any party to request and obtain from a
court of competent jurisdiction in the City of Chicago, State of Illinois (which
shall have exclusive jurisdiction for purposes of this Section 12.09(b)) before,
during or after the pendency of any arbitration, solely for the purpose of
seeking provisional or conservatory remedies in aid of the arbitration,
including, but not limited to, injunctive relief, in accordance with the AAA
Rules. The institution and maintenance of an action or judicial proceeding for,
or pursuit of, provisional or conservatory remedies shall not constitute a
waiver of the right of any party, even if it is the plaintiff, to submit the
dispute to arbitration if such party would otherwise have such right.
(c) Judgment upon the award rendered may be entered in any court
having jurisdiction. The parties hereby expressly consent to the nonexclusive
jurisdiction of the state and federal courts situated in the City of Chicago,
State of Illinois for this purpose and waive objection to the venue of any
proceeding in such court or that such court provides an inconvenient forum.
<PAGE> 31
31
(d) Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees. The arbitrators shall
have the power to award recovery of all costs (including attorneys' fees,
administrative fees, arbitrators' fees and court costs) to the prevailing party.
SECTION 12.10. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of Law or
otherwise without the express written consent of ANC and Pechiney Plastics
(which consent may be granted or withheld in the sole discretion of ANC and
Pechiney Plastics); provided, however, that (i) Pechiney Plastics may assign
this Agreement, in whole and not in part, or any of its rights hereunder, to an
Affiliate of Pechiney Plastics, without the consent of ANC (provided that
Pechiney Plastics shall nevertheless remain obligated to perform its obligations
hereunder following any such assignment), and (ii) ANC may assign this
Agreement, in whole and not in part, to a Person who acquires all or
substantially all of the assets and liabilities of ANC, without the consent of
Pechiney Plastics.
SECTION 12.11. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN NATIONAL CAN COMPANY
By:
-----------------------------------
Name:
Title:
PECHINEY PLASTIC PACKAGING, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 33
EXHIBIT A
INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT
This INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT (the "Agreement"),
dated as of May 31, 1999, is entered by and between AMERICAN NATIONAL CAN
COMPANY, a Delaware corporation, having a place of business at 8770 W. Bryn Mawr
Avenue, Chicago, Illinois ("ANC"), and PECHINEY PLASTIC PACKAGING, INC., a
Delaware corporation, having a place of business at 8770 W. Bryn Mawr Avenue,
Chicago, Illinois ("Pechiney Plastics").
WHEREAS, ANC and Pechiney Plastics have entered into a
Contribution, Assignment and Assumption Agreement, dated as of May 31, 1999 (the
"Contribution Agreement");
WHEREAS, the Contribution Agreement requires ANC and Pechiney
Plastics to execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
agreements and covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below.
"Patents" means the patents and patent applications set forth
on Schedule A, all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, and all
rights therein provided by international treaties or conventions.
"Trademarks" means the trademarks and service marks set forth
on Schedule B, the goodwill of the business symbolized thereby, all
common law rights with respect thereto, all applications and
registrations thereof, all rights therein provided by international
treaties or conventions, and all extensions and renewals thereof.
SECTION 2. Transfer and Assignment of Intellectual Property. ANC
hereby sells, assigns, and transfers to Pechiney Plastics all of its right,
title and interest in and to the Patents, Trademarks, and the goodwill of the
business symbolized by the Trademarks.
SECTION 3. Governmental Filings. ANC shall furnish Pechiney
Plastics with such necessary information and reasonable assistance, including
execution of such other required documents, as Pechiney Plastics may reasonably
request in connection with recording its ownership interest in the Patents and
Trademarks, with any governmental authority.
<PAGE> 34
SECTION 4. Construction. The parties agree that, to the extent
that any terms or provisions of this Agreement differ or conflict with any
provision or term of the Contribution Agreement, the applicable terms and
provisions of the Contribution Agreement shall control and take precedence.
SECTION 5. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois, United States
of America, without giving effect to the conflicts of law principles thereof.
SECTION 6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same instrument.
<PAGE> 35
IN WITNESS WHEREOF, ANC has caused this Agreement to be executed
as of the date and year first above written.
AMERICAN NATIONAL CAN COMPANY
By
----------------------------------
Name:
Title:
PECHINEY PLASTIC PACKAGING, INC.
By
----------------------------------
Name:
Title:
<PAGE> 36
SCHEDULE A
PATENTS
[Schedule to contain the list of Contributed Patents set
forth in Schedule 1.01A of the Contribution Agreement]
<PAGE> 37
SCHEDULE B
TRADEMARKS
[Schedule to contain the list of Contributed Trademarks set
forth in Schedule 1.01B of the Contribution Agreement]
<PAGE> 38
SCHEDULE 1.01A
CONTRIBUTED PATENTS
[see attached list]
<PAGE> 39
SCHEDULE 1.01B
CONTRIBUTED TRADEMARKS
[see attached list]
<PAGE> 40
SCHEDULE 1.01C
SUBSIDIARIES
Name Jurisdiction of Incorporation
---- -----------------------------
ANC-Respire, L.L.C. Illinois
American National Can Canada, Inc. Ontario, Canada
Kenpak, Incorporated California
Guardian Packaging Corporation California
<PAGE> 41
SCHEDULE 2.01(n)
CONTRIBUTED REAL PROPERTY
[see attached list]
<PAGE> 42
SCHEDULE 3.01(c)
CERTAIN ASSUMED LITIGATION LIABILITIES
[see attached list]
<PAGE> 43
SCHEDULE 3.01(f)
PRO-FORMA BALANCE SHEET
[see attached]
<PAGE> 44
SCHEDULE 8.02
PECHINEY PLASTIC PACKAGING, INC.
COLLECTIVE BARGAINING AGREEMENTS
1. Agreement between American National Can Company, on behalf of its
Batavia, IL Bottle Plant and the Union of Needletrades, Industrial and
Textile Employees, A.F.L.-C.I.O., C.L.C. and its Local No. 1557,
effective July 18, 1998 through July 21, 2001.
2. Agreement between American National Can Company, on behalf of its
Batavia, IL Flexible Packaging Plant and the General Teamsters,
Chauffeurs, Salesdrivers & Helpers Union, Local #673, effective
February 1, 1995 through April 30, 1999 and subsequently extended
through May 31, 1999.
3. Agreement between American National Can Company with respect only to
its Menasha Plant in Menasha, Wisconsin; the Neenah Plant and Graphic
Center in Neenah, Wisconsin; and the Des Moines Plant in Des Moines,
Iowa and the Graphic Communications International Union and Locals
#77-P and #727-S, effective July 1, 1998 through June 30, 2001.
4. Agreement between American National Can Company with respect only to
its Graphics Center, located in Neenah, Wisconsin and the Engravers
Chapel of the Graphic Communications International Union and its Fox
Valley Local #77-P, effective November 1, 1997 through October 31,
2000.
5. Agreement between American National Can Company with respect only to
its Minneapolis, Minnesota Plant and the Twin Cities Printing Trades
Union No. 29-C, effective May 1, 1997 through April 30, 2000.
6. Agreement between American National Can Company, Newark, California
Plant, party of the first part, and the Graphic Communications Union
District Council No. 2, Local 388M, party of the second part, effective
August 1, 1997 through July 31, 2001.
7. Agreement between American National Can Company, on behalf of its Saint
Louis Park, Minnesota Flexible Packaging Plant and the Upper Midwest
Local #1-M, Graphic Communications International Union, effective
February 29, 1996 through February 28, 1999.
8. Agreement between American National Can Company with respect to its
Cleveland Operations in Cleveland, Ohio and the United Steelworkers of
America, on behalf of Local Union 15489, effective April 28, 1996
through April 29, 2001.
<PAGE> 45
9. Agreement between American National Can Company with respect only to
its Neenah Plant, Pilot Plant and Graphics Center in Neenah, Wisconsin;
and its Menasha Plant in Menasha, Wisconsin and the United Paperworkers
International Union and its Local #148, effective August 1, 1996
through July 31, 1999.
10. Agreement between American National Can Company, Menasha, Wisconsin and
the International Association of Machinists and Aerospace Workers and
its Local #1855, effective October 1, 1996 through September 30, 1999.
11. National Master Freight Agreement Covering Over-The-Road and Local
Cartage Employees of Private, Common, Contract and Local Cartage
Carriers, between the Company as a participating employer and the
National Freight Industry Negotiating Committee representing Local
Unions affiliated with the International Brotherhood of Teamsters,
Chauffeurs, Chauffeurs & Helpers Union, and Local Union #563, effective
April 1, 1998 through March 31, 2003.
<PAGE> 46
SCHEDULE 8.03
ASSUMED OPEB OBLIGATIONS
[see attached list]
<PAGE> 1
EXHIBIT 10.8
BEER BOTTLE TECHNOLOGY OPTION AGREEMENT
This BEER BOTTLE TECHNOLOGY OPTION AGREEMENT, dated as of June
___, 1999, (this "Agreement") is between AMERICAN NATIONAL CAN GROUP, INC., a
Delaware corporation ("ANC Group"), and PECHINEY, a corporation (societe
anonyme) organized and existing under the laws of the Republic of France
("Pechiney").
WHEREAS, Pechiney owns or controls certain patents, related to
the development and production of multi-layer plastic beer bottles which are
listed in Exhibit A to this Agreement (the "Bottle Technology");
WHEREAS, Pechiney wishes to provide ANC Group with, and ANC
Group wishes to have, access to the Bottle Technology, subject to the terms of
this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
SECTION 1. Bottle Technology Joint Venture Negotiation. ANC
Group and Pechiney agree that, if ANC Group determines to enter into the market
for production of multi-layer plastic beer bottles, ANC Group may, at any time,
within two years from the date of this Agreement, request in writing from
Pechiney access to the Bottle Technology. Pechiney shall have 30 calendar days
after receiving ANC Group's written request to notify ANC Group that Pechiney
desires to negotiate with ANC Group concerning the formation of a joint venture
arrangement between Pechiney and ANC Group in respect of the Bottle Technology.
If Pechiney shall timely provide such notice to ANC Group, Pechiney and ANC
Group shall undertake to negotiate diligently and in good faith for a period of
up to 120 calendar days in order to attempt to agree upon the terms and
structure of a joint venture in respect of the Bottle Technology.
SECTION 2. Agreement to License Bottle Technology. (a) If
Pechiney shall fail to deliver the notice required under Section 1 by the expiry
of the 30 calendar day period or if the negotiations conducted in accordance
with Section 1 shall fail to result in an agreement between Pechiney and ANC
Group with respect to the Bottle Technology upon the expiry of the 120 day
period, Pechiney and ANC Group shall enter into a non-exclusive license
agreement relating to the Bottle Technology, with a right to sublicense as
defined therein, at market rates (or at a reasonably equivalent rate agreed by
the parties in good faith) and substantially in the same form as the License
Agreement attached hereto as Exhibit B.
(b) If ANC Group and Pechiney are unable to agree in good
faith upon the rate and related financial terms for the license of the Bottle
Technology within [60] calendar days following the expiry of the 120 day period
in Section 1 or, if applicable, the 30 day period in Section 2(a), the parties
will submit the unresolved terms to an independent expert to be mutually
<PAGE> 2
agreed by the parties for review and determination. The parties shall cause such
expert to review the unresolved terms as promptly as practicable. The
independent expert shall issue a written report of its review, and the
determination of the terms submitted for review shall be conclusive and binding
on ANC Group and Pechiney.
SECTION 3. Duration; Termination. This Agreement shall
terminate 2 years from the date of this Agreement and thereafter shall be of no
further force and effect. Notwithstanding the immediately preceding sentence,
either party may terminate this Agreement upon the occurrence of a Change of
Control Event involving the other party. With respect to each party, a "Change
of Control Event" shall mean a transaction involving (i) a sale of all or a
substantial portion of such party's assets (ii) a sale of 50% or more of such
party's capital stock or (iii) a merger in which such party is not the surviving
entity. The party seeking to terminate this Agreement shall deliver notice of
such termination within 14 calendar days of receiving written notice of such
Change of Control Event from the other party.
SECTION 4. Non-Exclusivity. Nothing in this Agreement shall
restrict the right of Pechiney to enter into agreements or arrangements with any
third party in respect of the Bottle Technology.
SECTION 5. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to its conflicts of law principles.
SECTION 6. Arbitration. (a) Any controversy, claim or dispute
arising out of or in connection with this Agreement or the breach, termination,
enforceability or validity hereof, including without limitation the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 6, shall be fully and finally determined exclusively by
binding arbitration in accordance with the rules of the International Chamber of
Commerce (the "ICC Rules"). The seat of the arbitration shall be the Paris,
France. The arbitral tribunal shall be comprised of three arbitrators appointed
in accordance with the ICC Rules.
(b) No provision of, nor the exercise of any rights under,
this Section 6 shall limit the right of any party to request and obtain from a
court of competent jurisdiction in the County of New York, State of New York
(which shall have exclusive jurisdiction for purposes of this Section 6(b))
before, during or after the pendency of any arbitration, solely for the purpose
of seeking provisional remedies in aid of the arbitration, including, but not
limited to, injunctive relief, in accordance with the ICC Rules. The institution
and maintenance of an action or judicial proceeding for, or pursuit of,
provisional remedies shall not constitute a waiver of the right of any
party, even if it is the plaintiff, to submit the dispute to arbitration if such
party would otherwise have such right.
(c) Judgment upon any award rendered during arbitration may be
entered in any court having jurisdiction. The parties hereby expressly consent
to the nonexclusive jurisdiction of the state and federal courts situated in the
County of New York, State of New
<PAGE> 3
York for this purpose and waive objection to the venue of any proceeding in such
court or that such court provides an inconvenient forum.
(d) Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees.
SECTION 7. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 8. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to the subject matter hereof
and thereof.
SECTION 9. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of law or
otherwise without the express written consent of ANC and Pechiney (which consent
may be granted or withheld in the sole discretion of ANC and Pechiney).
SECTION 10. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PECHINEY
By:
------------------------------
Name:
Title:
AMERICAN NATIONAL CAN GROUP, INC.
By:
-----------------------------
Name:
Title:
<PAGE> 5
EXHIBIT A
BEER BOTTLE TECHNOLOGY AGREEMENT
LICENSED PATENTS
The U.S. Patent Number is provided herein, but the Licensed Patents also include
all worldwide corresponding cases.
<TABLE>
<CAPTION>
ANC REF # TITLE U.S. PATENT NO.
- ---------- ------ (APPL'N NO.)
------------
<S> <C> <C>
14,148 Apparatus for Simultaneously Driving Valve means Through Co- 4,497,621
14,147 Plastic Containers with Folded-Over Internal Layers and 4,554,190
14,147(&-1) Plastic Containers with Folded-Over Internal Layers and 4,751,035
14,085(&-2) Method of Obtaining Acceptable Configuration of a Plastic 4,880,129
14,145 Polymer Flow Stream Redirecting and Feeding Device 4,512,730
14,110 Plastic Containers for Use in Packaging and Thermal 4,579,757
14,146 Flow Stream Channel Splitter Devices for Multi-Coinjection 4,511,528
14,085(&-1) Method of Obtaining Acceptable Configuration of a Plastic 4,667,454
13,982(&-2) Multi-Laminate Structure Containing a Scrap Layer and Containers 4,705,708
P88-0027C1 Method of Packaging Products in Plastic Containers 5,251,424
14,590(&C) Seal Testable Container Structure 5,156,857
13,982(&-1) Apparatus and Method for Producing Multi-Layered Laminates 4,522,775
13,389(&-1) Drying Agent in Multi-layer Polymeric Structure 4,425,410
PA1156(&C3) Easy Open Closure 5,692,635
(F)14,085 Method of Obtaining Acceptable Configuration of a Plastic 4,642,968
13,626D1(&C6) Methods for Injection Molding and Blow-Molding Multi-Layer (654,569)
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
13,626D1(&C5) Methods for Injection Molding and Blow-Molding Multi-Layer 5,523,045
13,626-1 Apparatus for Injection Molding Multi-Layer Articles 4,934,915
13,626D1(&C9) Methods for Injection Molding and Blow-Molding Multi-Layer (655,951)
13,626 Apparatus for Injection Molding and Injection Blow-Molding 4,712,990
13,486(&-1) Oxygen Scavenger 4,702,966
13,389(&-3) Polymeric Structure Having Improved Barrier Properties and 4,770,944
13,626D2A Methods and Apparatus for Injection Molding and Injection Blow 4,925,100
13,626 D1C Apparatus for Injection Molding and Injection Blow Molding 5,037,285
13,948 Methods and Apparatus for Maintaining a Pressure Contact 4,518,344
13,626D5 Methods for Injection Molding and Injection Blow Molding 4,892,699
13,626D4 Method for Injection Molding Multi-Layer Articles 4,931,246
13,626D3 Apparatus for Injection Molding and Injection Blow Molding 4,895,504
13,626D6 Multi-Layer Molded Articles 4,745,013
13,389(&-3A) Polymeric Structure Having Improved Barrier Properties 4,816,342
13,283(&-2) Apparatus for Making a Multi-Layer Injection Blow Molded Container 4,568,261
13,389(&-2) Drying Agent in Multi-Layer Polymeric Structure 4,464,443
13,626D1B Apparatus for Injection Molding and Injection Blow Molding 4,946,365
13,284 Multi-Layer Container and Method of Making Same 4,526,821
13,283(&-1) Apparatus for Making a Multi Layered Blow Molded Container 4,525,134
13,486 Oxygen Scavenger 4,536,409
Spin Welding Apparatus & Method of Securing a Closure Ring (08/997,954)
13626(&D1C7) Methods for Injection Molding and Blow-Molding Multi-Layer (08/657,622)
13,626(&D1C8) Methods for Injection Molding and Blow-Molding Multi-Layer (657,656)
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
Multilayer Injection Nozzle Assembly (09/086,994)
24180-124 Transparent Multi-Layer Polypropylene Container with Barrer (60/082,118)
Cebal Patents
BR2814 Aluminum based composite and containers produced 5,221,576
Rhenalu Patents
BR 2940 Strong formable isotropic aluminum alloys for drawing and ironing 5,516,382
</TABLE>
<PAGE> 8
EXHIBIT B
[Form of License Agreement to be attached.]
<PAGE> 1
EXHIBIT 10.9
ANC TECHNOLOGY OPTION AGREEMENT
This ANC TECHNOLOGY OPTION AGREEMENT, dated as of June ___,
1999, (this "Agreement") is between AMERICAN NATIONAL CAN GROUP, INC., a
Delaware corporation ("ANC Group"), and PECHINEY, a corporation (societe
anonyme) organized and existing under the laws of the Republic of France
("Pechiney").
WHEREAS, ANC Group owns or controls certain patents listed on
Exhibit A hereto relating to, but not limited to, drawn and wall-ironed aluminum
can forming technology that may be useful in Pechiney's non-beverage can
business (the "ANC Technology"); and
WHEREAS, ANC Group wishes to provide Pechiney with, and
Pechiney wishes to have, access to the ANC Technology, upon request, and subject
to the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
SECTION 1. Request to License ANC Technology. (a) ANC Group
and Pechiney agree that, if Pechiney requests in writing access to the ANC
Technology within two years following the date of this Agreement, ANC Group and
Pechiney shall enter into a non-exclusive license agreement relating to the ANC
Technology, at market rates (or a reasonably equivalent rate agreed to by the
parties in good faith) and substantially in the same form as the License
Agreement attached hereto as Exhibit B.
(b) If ANC Group and Pechiney are unable to agree in good
faith upon the rate and related financial terms for the license of the ANC
Technology within [60] calendar days following ANC Group's receipt of Pechiney's
written request for access, the parties will submit the unresolved terms to an
independent expert to be mutually agreed by the parties for review and
determination. The parties shall cause such expert to review the unresolved
terms as promptly as practicable. The independent expert shall issue a written
report of its review, and the determination of the terms resolved shall be
conclusive and binding on ANC Group and Pechiney.
SECTION 2. Duration; Termination. This Agreement shall
terminate 2 years from the date of the Agreement and thereafter shall be of no
further force and effect. Notwithstanding the immediately preceding sentence,
either party may terminate this Agreement upon the occurrence of a "Change of
Control Event" involving the other party. With respect to each party, a "Change
of Control Event" shall mean a transaction involving (i) a sale of all or a
substantial portion of such party's assets (ii) a sale of 50% or more of such
party's capital stock or (iii) a merger in which such party is not the surviving
entity. The party seeking to terminate
<PAGE> 2
this Agreement shall deliver notice of such termination within 14 calendar days
of receiving written notice of such Change of Control Event from the other
party.
SECTION 3. Non-Exclusivity. Nothing in this Agreement shall
restrict the right of ANC Group to enter into agreements or arrangements with
any third party in respect of the ANC Technology.
SECTION 4. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to its conflicts of law principles.
SECTION 5. Arbitration. (a) Any controversy, claim or dispute
arising out of or in connection with this Agreement or the breach, termination,
enforceability or validity hereof, including without limitation the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 5, shall be fully and finally determined exclusively by
binding arbitration in accordance with the rules of the International Chamber of
Commerce (the "ICC Rules"). The seat of the arbitration shall be the Paris,
France. The arbitral tribunal shall be comprised of three arbitrators appointed
in accordance with the ICC Rules.
(b) No provision of, nor the exercise of any rights under,
this Section 5 shall limit the right of any party to request and obtain from a
court of competent jurisdiction in the County of New York, State of New York
(which shall have exclusive jurisdiction for purposes of this Section 5(b))
before, during or after the pendency of any arbitration, solely for the purpose
of seeking provisional remedies in aid of the arbitration, including, but not
limited to, injunctive relief, in accordance with the ICC Rules. The institution
and maintenance of an action or judicial proceeding for, or pursuit of,
provisional remedies shall not constitute a waiver of the right of any party,
even if it is the plaintiff, to submit the dispute to arbitration if such party
would otherwise have such right.
(c) Judgment upon any award rendered during arbitration may be
entered in any court having jurisdiction. The parties hereby expressly consent
to the nonexclusive jurisdiction of the state and federal courts situated in the
of County of New York, State of New York for this purpose and waive objection to
the venue of any proceeding in such court or that such court provides an
inconvenient forum.
(d) Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees.
SECTION 6. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 7. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and
<PAGE> 3
therein and supersede all prior agreements and understandings between the
parties with respect to the subject matter hereof and thereof.
SECTION 8. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of law or
otherwise without the express written consent of ANC and Pechiney (which consent
may be granted or withheld in the sole discretion of ANC and Pechiney).
SECTION 9. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PECHINEY
By:
-------------------------------
Name:
Title:
AMERICAN NATIONAL CAN GROUP, INC.
By:
-------------------------------
Name:
Title:
<PAGE> 5
EXHIBIT A
[Schedule of specific Patents to be attached.]
<PAGE> 6
EXHIBIT B
[The form of License Agreement to be attached.]
<PAGE> 1
10.10
DIRECTOR NOMINATION AGREEMENT
This DIRECTOR NOMINATION AGREEMENT, dated as of June ___,
1999, (this "Agreement") is between AMERICAN NATIONAL CAN GROUP, INC., a
Delaware corporation ("ANC Group"), and PECHINEY, a corporation (societe
anonyme) organized and existing under the laws of the Republic of France
("Pechiney").
WHEREAS, in connection with an initial public offering ("IPO")
by Pechiney of the common stock of ANC Group, Pechiney and ANC Group wish to
provide Pechiney with the opportunity following the IPO to nominate directors to
the board of directors of ANC Group (the "Board") upon the terms of this
Agreement;
WHEREAS, as of the date of this Agreement, the Board consists
of thirteen (13) directors, divided into three (3) classes;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
SECTION 1. Nomination of Directors. ANC Group and Pechiney
agree that, so long as Pechiney owns not less than twenty percent (20%) of the
outstanding voting common stock of ANC Group, Pechiney shall be entitled to
nominate four (4) individuals to the Board, in accordance with, and subject to,
the following procedures and limitations:
(a) As long as the Board is divided into three classes,
Pechiney shall be entitled to nominate, subject to the notice procedures set
forth in the by-laws of ANC Group in effect from time to time (the "By-Laws"),
two (2) individuals to Class I of the Board and one (1) individual for each of
Class II and Class III of the Board, in each case, at the special or annual
meeting where the nomination and election of such directors is properly brought
before such meeting.
(b) In the event of any increase or decrease in the authorized
number of directors on the Board, Pechiney will be entitled to nominate a number
of individuals equal to the product of (i) the total number of directors
constituting the Board immediately following such increase or decrease and (ii)
4/13, in each case rounded up or down to the nearest whole number. As long as
the Board is divided into three classes, Pechiney's right to nominate
individuals should apply, (i) in respect of any newly created directorships, to
those classes whose terms of office are to expire at the latest date following
such increase, or (ii) in respect of any newly eliminated
<PAGE> 2
directorships, to those classes whose terms of office are to expire at the
earliest dates following such decrease.
(c) In the event a vacancy is created on the Board at any time
by death, disability, retirement, resignation or removal (in accordance with the
then current By-laws of ANC Group) of any director that was a Pechiney nominee,
Pechiney shall have the right to designate a replacement director to fill such
vacancy. ANC Group agrees to take all necessary action to cause the election of
such replacement director to the Board.
SECTION 2. Covenant to Not Oppose. ANC Group agrees and
covenants that it will not oppose the nominations made by Pechiney pursuant to
this Agreement.
SECTION 3. No Conflict. Nothing in this Agreement shall be
construed in a manner which conflicts with any provisions of the By-laws in
effect as of the date hereof.
SECTION 4. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to its conflicts of law principles.
SECTION 5. Arbitration. (a) Any controversy, claim or dispute
arising out of or in connection with this Agreement or the breach, termination,
enforceability or validity hereof, including without limitation the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 5, shall be fully and finally determined exclusively by
binding arbitration in accordance with the rules of the International Chamber of
Commerce (the "ICC Rules"). The seat of the arbitration shall be the Paris,
France. The arbitral tribunal shall be comprised of three arbitrators appointed
in accordance with the ICC Rules.
(b) No provision of, nor the exercise of any rights under,
this Section 5 shall limit the right of any party to request and obtain from a
court of competent jurisdiction in the County of New York, State of New York
(which shall have exclusive jurisdiction for purposes of this Section 5(b))
before, during or after the pendency of any arbitration, solely for the purpose
of seeking provisional remedies in aid of the arbitration, including, but not
limited to, injunctive relief, in accordance with the ICC Rules. The institution
and maintenance of an action or judicial proceeding for, or pursuit of,
provisional remedies shall not constitute a waiver of the right of any party,
even if it is the plaintiff, to submit the dispute to arbitration if such party
would otherwise have such right.
(c) Judgment upon any award rendered during arbitration may be
entered in any court having jurisdiction. The parties hereby expressly consent
to the nonexclusive jurisdiction of the state and federal courts situated in the
of County of New York, State of New York for this purpose and waive objection to
the venue of any proceeding in such court or that such court provides an
inconvenient forum.
<PAGE> 3
(d) Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees.
SECTION 6. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 7. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to the subject matter hereof
and thereof.
SECTION 8. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of law or
otherwise without the express written consent of ANC and Pechiney (which consent
may be granted or withheld in the sole discretion of ANC and Pechiney).
SECTION 9. Severability. If any one or more provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
SECTION 10. No Third Party Beneficiaries. This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PECHINEY
By:
-------------------------------------
Name:
Title:
AMERICAN NATIONAL CAN GROUP, INC.
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.12
PECHINEY
GUARANTEE
RELATING TO CERTAIN
LIABILITIES OF
PECHINEY PLASTIC PACKAGING, INC
Draft 22.6.99
<PAGE> 2
THIS GUARANTEE is made as of July 1999 and is given by
PECHINEY, a French societe anonyme of 7, Place du Chancelier Adenauer - 75218
Paris Cedex 16 ("THE Guarantor") in favour of
AMERICAN NATIONAL CAN COMPANY, a Delaware Corporation who principal place of
business is 8770 West Bryn Mawr Avenue - Chicago - Illinois 60631-3542 U.S.A.
("ANC")
WHEREAS
A. Pursuant to a Contribution Agreement, dated as of May 31, 1999, by and
between Pechiney Plastic Packaging, Inc., a Delaware corporation
("PECHINEY PLASTICS"), and ANC (the "CONTRIBUTION AGREEMENT"), Pechiney
Plastics has agreed to indemnify ANC in respect of (i) any and all
payments relating to, or arising out of, the patent infringement
litigation instituted against ANC in the U.S. District Court for the
Northern District of Illinois in December 1993 by Viskase Corporation,
the declaratory judgment action brought by ANC against Viskase in May
1999 and various proceedings in the U.S. Patent Office relating to the
Viskase patents which are the subject of such actions("the VISKASE
OBLIGATIONS") , and (ii) the ASSUMED OPEB OBLIGATIONS (as defined in
Section 8.03 of the Contribution Agreement) (the Viskase Obligations
together with the Assumed OPEB Obligations being collectively referred
to herein as the "INDEMNIFICATION OBLIGATIONS").
B. Pechiney has agreed to guarantee the execution by Pechiney Plastics of
the Indemnification Obligations and has the requisite corporate
approval to enter in to this guarantee.
THE GUARANTOR hereby agrees as follows
1. The Guarantor guarantees to ANC that in the event of a failure by
Pechiney Plastics to perform the Indemnification Obligations and such
failure remains un-remedied for a period of 10 BUSINESS DAYS (defined
as days excluding Saturday, on which banks are open for business in
France and U.S.A.) the Guarantor subject to the terms of this guarantee
will make, perform or procure the performance of the Indemnification
Obligations.
2. The Guarantor shall not be discharged or released by any modification
of any of the terms conditions and provisions of the Contribution
Agreement unless such modifications were to increase the obligations of
the Guarantor hereunder. Any allowance of time by ANC under or in
respect of the Contribution Agreement shall not release, reduce or
affect the liability of the Guarantor.
3. Notwithstanding any other provision of this Guarantee the Guarantor has
the benefit of and may assert as a defence to a demand for payment and
performance of this Guarantee any defence available to Pechiney
Plastics to the enforcement of Pechiney Plastic's obligations under the
terms of the Contribution Agreement.
4. Any notice, payment, demand, or communication required or permitted to
be given by any provision of this Guarantee shall be given or made (and
shall be deemed to have
<PAGE> 3
been duly made or given upon receipt) by delivery in person, by carrier
service, by telecopy, by telegram, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties
at the following addresses :
If to ANC :
American National Can Company
8770 W. Bryn Mawr Avenue
Chicago, Illinois 60631
Fax : (773) 399 3527
Attention : General Counsel
If to the Guarantor :
Pechiney
7, Place du Chancelier Adenauer
75218 Paris Cedex
France
Fax : 011.331.5628.3306
Attention : General Counsel
5. No failure on the part of ANC to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
6. The Guarantor agrees that it will upon demand pay to ANC the amount of
any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that ANC may
incur in connection with the exercise or enforcement of any of the
rights of ANC hereunder as a result of the failure by the Guarantor to
perform or observe any of the provisions hereof.
7. This Guarantee constitutes the entire agreement between the Guarantor
and ANC (and supersedes all prior written and oral agreements and
understandings) with respect to the subject matter hereof between the
Guarantor and ANC.
8. If any one or more provisions contained in this Guarantee shall, for
any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
other provisions of this Guarantee, but this Guarantee shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
9. This Guarantee shall be governed by, and construed in accordance with,
the laws of the Republic of France and Pechiney hereby submits to the
exclusive jurisdiction of the courts of Paris.
<PAGE> 4
Executed by
For and on behalf of PECHINEY
<PAGE> 1
EXHIBIT 10.14
PECHINEY
- AND -
AMERICAN NATIONAL CAN GROUP INC.
-----------------------------------------------------------------
SHARE PURCHASE AGREEMENT RELATING
TO SHARES IN [ ]
-----------------------------------------------------------------
Draft 22.6.99
<PAGE> 2
THIS AGREEMENT is made with effect [ ] July 1999
BETWEEN PECHINEY whose registered office is situated at 7, Place du Chancelier
Adenauer - 75218 Paris cedex 16 (hereinafter called "Seller") of the one part,
and
AMERICAN NATIONAL CAN GROUP INC. whose registered office is situate at 8770 West
Bryn Mawr Avenue - Chicago - Illinois 60631 - 3542 - U.S.A. (hereinafter called
"BUYER") of the other part;
WHEREAS
A. The Seller is the beneficial owner of the shares the details of which
are set out in Schedule A ("the Sale Shares") and has the right to sell
or procure the sale of the Sale Shares free from all liens charges and
encumbrances.
B. The Seller has agreed with the Buyer to sell to the Buyer the Sale
Shares on the terms and subject to the conditions of this Agreement.
NOW IT IS HEREBY AGREED as follows :
1. SALE AND PURCHASE OF SALE SHARES
Subject to the terms of this Agreement the Seller shall as beneficial
owner sell or procure the sale of the Sale Shares and the Buyer shall
purchase for the Purchase Price (as defined below) all of the Sale
Shares free from all liens charges and encumbrances and with all rights
attached or accrued rights as at the Completion Date (as defined
below).
2. CONSIDERATION
The consideration payable for the Sale Shares shall be that sum set out
in Schedule B ("the Purchase Price") payable in the manner provided by
Clause 3.2 below.
3. COMPLETION
Completion of the said sale and purchase will take place on [ ] (or at
such later date as may be agreed between the Seller and the Buyer)
("the Completion Date") at the offices of ANC at 8770 West Bryn Mawr
Avenue - Chicago - Illinois 60631 - 3542 - U.S.A. or such other place
as may be agreed.
When :
3.1 the Seller will deliver to the Buyer or to his order a document
effecting transfer of title in the Sale Shares, duly executed by the
Seller in favour of the Buyer (or as it in writing directs) or such
letters of direction waivers consents or other documents as may be
required to give good title to the Sale Shares and to enable the Buyer
or its nominees to become registered holders thereof together with, if
relevant, any share certificate.
<PAGE> 3
3.2 the Buyer shall effect payment to the Seller of the Purchase Price by
telegraphic transfer of cleared funds to an account of the Seller
designated for the purpose.
4. WARRANTIES
4.1 The Seller warrants and represents to the Buyer that :
4.1.1 It is the beneficial owner of the Sale Shares and of all rights
attaining thereto and it is entitled to sell the full legal and
beneficial interest in the Sale Shares to the Buyer; and
4.1.2 the Sale Shares are free from all liens charges and encumbrances
and are freely transferable ; and
4.1.3 the Seller is duly authorised to enter into this Agreement
4.2 Save as provided in Clause 4.1 above the Seller gives no warranty and
makes no representation whatsoever in respect of the Sale Shares
5. THIS Agreement shall (except for any obligation fully performed on the
date hereof) continue in full force and effect after the Completion
Date notwithstanding completion of the sale and purchase hereby agreed
to be made.
6. THE parties hereto will after as well as before and upon the Completion
Date do all acts and things and sign and execute all documents and
deeds requisite for the purposes of implementing the terms hereof
7. THIS agreement is governed by French law and the parties submit to the
nonexclusive jurisdiction of the courts of Paris.
SIGNED by
For and on behalf of PECHINEY
SIGNED by
For and on behalf of AMERICAN NATIONAL CAN GROUP INC.
<PAGE> 4
SCHEDULE A
Share Details
<PAGE> 5
SCHEDULE B
Purchase Price
<PAGE> 1
EXHIBIT 10.15
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT, dated as of June ___, 1999, is
between AMERICAN NATIONAL CAN COMPANY, a Delaware corporation ("ANC") and
PECHINEY, a corporation (societe anonyme) organized and existing under the laws
of the Republic of France ("Pechiney").
WHEREAS, in contemplation of an initial public offering
("IPO") of common stock of American National Can Group, Inc., a Delaware
corporation ("ANC Group"), (i) ANC has transferred to Pechiney Plastic
Packaging, Inc., a Delaware corporation ("Pechiney Plastics"), all of ANC's
assets and liabilities relating to flexible packaging, plastic bottles and
laminated and plastic tube operations conducted by ANC (the "Plastic Packaging
and Tube Operations"), and (ii) Pechiney has transferred, or caused to be
transferred, all of the beverage can operations conducted by its direct and
indirect subsidiaries to ANC Group;
WHEREAS, in connection with the IPO, Pechiney has agreed to
provide indemnification to ANC for and against any direct losses incurred in
respect of certain potential and unidentified environmental liabilities relating
to its past and present operations and facilities (other than its beverage
operations or the Plastic Packaging and Tube Operations transferred to Pechiney
Plastics), as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. The following terms
shall have the meanings defined for such terms in the Sections of this Agreement
set forth below:
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Law" means any federal, state, local or foreign statute, law
ordinance, regulation, rule, code, order requirement or rule of common law.
"Person" means any individual, partnership, limited liability
company, firm, corporation, association, trust, unincorporated organization or
other entity, as well as any
1
<PAGE> 2
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
["Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority.]
SECTION 1.02. Other Defined Terms. The following terms shall
have meanings defined for such terms in the Sections of this Agreement set forth
below:
Term Section
AAA Rules 3.09
ANC Preamble
ANC Group Recitals
Indemnitee 2.01(a)
IPO Recitals
Loss 2.01(a)
Pechiney Preamble
Pechiney Plastics Recitals
Plastic Packaging and Tube Operations Recitals
Third Party Claims 2.03
ARTICLE II
INDEMNIFICATION
SECTION 2.01. Indemnification by Pechiney. (a) Subject to the
terms and conditions of this Agreement, Pechiney agrees to indemnify, defend and
hold harmless ANC, its officers, directors, employees, agents, successors and
permitted assigns (each, an "Indemnitee") from and against any and all
liabilities, losses, damages, claims, costs (including the costs of any
investigation, testing, compliance or remedial action) and expenses, interest,
awards, judgments, fines and penalties (including, without limitation,
reasonable attorney's fees and expenses) actually suffered or incurred by them
(each, a "Loss") resulting directly from, based directly upon, or arising
directly out of any environmental matter or condition related to the business,
assets or operations of ANC (other than the Plastic Packaging and Tube Business,
assets and operations transferred to Pechiney Plastics and ANC's beverage can
business, assets and operations) that has not been identified on or prior to the
date of the IPO.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Pechiney shall not be required to indemnify, defend or hold harmless
any Indemnitee against or reimburse any Indemnitee for any Losses with respect
to any claim (i) unless such claim involves
2
<PAGE> 3
Losses in excess of $500,000 (which amount will not be applied to or considered
for purposes of calculating the aggregate amount that Pechiney shall be required
to indemnify), (ii) unless such claim or demand is notified to Pechiney in
accordance with Section 2.03 on or before the tenth anniversary of the date of
the IPO, and (iii) the procedures set out in Section 2.04(a) have been complied
with; provided, however, that, in each case, Pechiney's indemnification
obligations shall not exceed 80% of the amount of any Loss claimed.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the maximum aggregate amount of indemnifiable Losses which may be
recovered from Pechiney pursuant to this Agreement shall not exceed
U.S.$75,000,000.
(d) Notwithstanding anything to the contrary contained in this
Agreement, Pechiney shall not be liable for any indirect or consequential Loss.
[SECTION 2.02. Adjustments for Taxes. The amount of any Loss
shall be: (i) increased to take into account any net Tax cost actually incurred
by the Indemnitee arising from any payments received from Pechiney (grossed up
to take into account the net Tax cost actually incurred by the Indemnitee
arising from such increase), and (ii) reduced to take account of any net Tax
benefit actually realized by the Indemnitee arising from the incurrence or
payment of any such Loss. In computing the amount of such Tax cost or Tax
benefit, the Indemnitee shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising for the
receipt of any payment with respect to an Loss or the incurrence or payment of
any Loss.]
SECTION 2.03. Notice of Claims. An Indemnitee shall give
Pechiney notice of any matter which an Indemnitee determines has given or could
give rise to a right of indemnification under this Agreement, within 60 days of
such determination, stating the amount of the Loss, if known, and method of
computation thereof.
SECTION 2.04. Defense of Third Party Claims. The obligations
and liabilities of Pechiney under this Agreement with respect to Losses arising
from claims of any third party which are subject to the indemnification provided
for in this Agreement ("Third Party Claims") shall be governed by the following
additional terms and conditions:
(a) if an Indemnitee shall receive notice of any
Third Party Claim, the Indemnitee shall give Pechiney notice of such
Third Party Claim within 30 days of the receipt by the Indemnitee of
such notice; provided, however, that the failure to provide such notice
shall not release Pechiney from any of its obligations under this
Agreement, except to the extent Pechiney is materially prejudiced by
such failure;
(b) if Pechiney acknowledges in writing its
obligation to indemnify the Indemnitee hereunder against any Losses
that may result from such Third Party Claim, then Pechiney shall be
entitled to assume and control the defense of such Third Party Claim,
at its expense and through counsel of its choice, upon notice of its
intention to do
3
<PAGE> 4
so to the Indemnitee within 30 days of the receipt of
such notice from the Indemnitee; provided, however, that if there
exists or is reasonably likely to exist a conflict of interest that
would make it inappropriate in the judgment of the Indemnitee for the
same counsel to represent both the Indemnitee and Pechiney, then the
Indemnitee shall be entitled to retain its own counsel (which shall not
in any way limit or restrict the right of Pechiney to assume and
control such Third Party Claim), in each jurisdiction for which the
Indemnitee determines counsel is required, at its own expense;
(c) in the event Pechiney exercises the right to
undertake any such defense against any such Third Party Claim, the
Indemnitee shall cooperate with Pechiney in such defense and make
available to Pechiney, at Pechiney's expense, all witnesses, pertinent
records, materials and information in the Indemnitee's possession or
under the Indemnitee's control relating thereto as is reasonably
required by Pechiney;
(d) in the event the Indemnitee is, directly
conducting or participating in the defense against any such Third Party
Claim, Pechiney shall cooperate with the Indemnitee in such defense and
make available to the Indemnitee, at the Indemnitee's expense, all such
witnesses, records, materials and information in Pechiney's possession
or under Pechiney's control relating thereto as is reasonably required
by the Indemnitee; and
(e) no Third Party Claim may be settled by Pechiney
without the written consent of the Indemnitee, unless the settlement
only requires payment of money damages which trigger Pechiney's
indemnification obligations under this Agreement.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.01. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Illinois,
applicable to contracts executed in and to be performed entirely within that
state.
SECTION 3.02. Currency. Unless otherwise specified in this
Agreement, all references to currency, monetary values and dollars set forth
herein mean United States (U.S.) Dollars and all payments hereunder shall be
made in United States Dollars.
SECTION 3.03. Specific Performance. Each of the parties
acknowledges that money damages would not be a sufficient remedy for any breach
of this Agreement and that irreparable harm would result if this Agreement were
not specifically enforced. Therefore, the rights and obligations of the parties
under this Agreement shall be enforceable by a decree of specific performance
issued by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith. A party's right to
specific performance shall be in addition to all other legal or equitable
remedies available to such party.
4
<PAGE> 5
SECTION 3.04. Waiver of Jury Trial. Each of the parties
irrevocably waives to the extent permitted by law all rights to trial by jury in
any action, proceeding or counterclaim arising out of or relating to this
Agreement.
SECTION 3.05. Headings. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 3.06. Entire Agreement. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to the subject matter hereof
and thereof.
SECTION 3.07. Severability. If any one or more provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.
SECTION 3.08. No Third Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 3.09. Arbitration. (a) Any controversy, claim or
dispute arising out of or in connection with this Agreement or the breach,
termination, enforceability or validity hereof, including without limitation the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 3.09, shall be fully and finally determined exclusively by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA Rules"). The seat of the arbitration
shall be the City of Chicago, State of Illinois. The arbitral tribunal shall be
comprised of three arbitrators appointed in accordance with the AAA Rules.
(b) No provision of, nor the exercise of any rights under,
this Section 3.09 shall limit the right of any party to request and obtain from
a court of competent jurisdiction in the City of Chicago, State of Illinois
(which shall have exclusive jurisdiction for purposes of this Section 3.09(b))
before, during or after the pendency of any arbitration, solely for the purpose
of seeking provisional or conservatory remedies in aid of the arbitration,
including, but not limited to, injunctive relief, in accordance with the AAA
Rules. The institution and maintenance of an action or judicial proceeding for,
or pursuit of, provisional or conservatory remedies shall not constitute a
waiver of the right of any party, even if it is the plaintiff, to submit the
dispute to arbitration if such party would otherwise have such right.
5
<PAGE> 6
(c) Judgment upon the award rendered may be entered in any
court having jurisdiction. The parties hereby expressly consent to the
nonexclusive jurisdiction of the state and federal courts situated in the City
of Chicago, State of Illinois for this purpose and waive objection to the venue
of any proceeding in such court or that such court provides an inconvenient
forum.
(d) Each of the parties shall, subject to the award of the
arbitrators, pay an equal share of the arbitrators' fees.
SECTION 3.10. Assignment. This Agreement or any rights or
obligations arising hereunder may not be assigned by operation of Law or
otherwise without the express written consent of ANC and Pechiney (which consent
may be granted or withheld in the sole discretion of ANC and Pechiney);
provided, however, that (i) Pechiney may assign this Agreement, in whole and not
in part, or any of its rights hereunder, to an Affiliate of Pechiney, without
the consent of ANC (provided that Pechiney shall nevertheless remain obligated
to perform its obligations hereunder following any such assignment), and (ii)
ANC may assign this Agreement, in whole and not in part, to a Person who
acquires all or substantially all of the assets and liabilities of ANC, without
the consent of Pechiney.
SECTION 3.11. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become a
binding Agreement when one or more of the counterparts have been signed by each
of the parties and delivered to the other party.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PECHINEY
By:
----------------------------
Name:
Title:
AMERICAN NATIONAL CAN COMPANY
By:
---------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.16
AMERICAN NATIONAL CAN GROUP, INC.
1999 LONG-TERM INCENTIVE PLAN
1. THE PLAN
a) Purpose. The purpose of the Long-Term Incentive Plan (the "Plan") is to
promote the longer-term financial success of American National Can Group,
Inc. (the "Company") by providing a means to attract, retain and reward
individuals who contribute to long-term success or who are selected as
having the future potential to contribute to long-term success. By using
stock-based compensation, the recipients of awards under the Plan will
further identify their interests with those of the Company's shareowners.
b) Effective Date. To serve this purpose, the Plan will become effective upon
its adoption by the Board and approval by the holders of the Common Stock,
provided, however, that in no event shall the Plan become effective until
immediately prior to the occurrence of the Initial Public Offering.
2. ADMINISTRATION
a) Committee. The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company. All grants under the Plan shall be
made by a Grant Committee consisting of those members of the Compensation
Committee who are both "outside directors" as defined for purposes of
Section 162(m) of the Internal Revenue Code and regulations thereunder and
"non employee directors" as defined for purposes of Section 16 of the
Securities Exchange Act of 1934.
b) Powers and Authority. The Committee's powers and authority include, but are
not limited to, selecting individuals to participate in the Plan from among
the Eligible Employees (defined below) ; determining the types and terms
and conditions of all awards granted, including performance and other
earnout and/or vesting contingencies; permitting transferability of awards
to third parties; interpreting the Plan's provisions; and administering the
Plan in a manner that is consistent with its purpose.
c) Eligible Employees. Includes any employee of the Company and any
subsidiary of the Company or other entity in which the Company has a
significant equity or other interest as determined by the Committee. An
award may be granted to an employee, in connection with hiring, retention
or otherwise, prior to the date the employee first performs services for
the Company or its subsidiaries, provided that such awards shall not
become vested prior to the date the employee first performs such services.
d) Award Agreement. An award under the Plan shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Committee shall, in its
sole discretion, prescribe. The terms and conditions of any award to any
Participant shall be reflected in a written document, the form of which
will be determined by the Committee. A copy of such document will be
provided to the Participant, and the Committee may, but need not require
that the Participant sign a copy of the document. Such document is referred
to in the Plan as an "Award Agreement" regardless of whether any
Participant signature is required.
e) Award Prices. For the Plan purposes, all stock options and stock
appreciation rights shall
<PAGE> 2
have an exercise price which shall reflect at least the average traded
price of a share of the common stock of the Company, par value $0.01 per
share ("Share") on the applicable date as determined by the Committee, or
if Shares are not traded on such date, the average price on the next
preceding day on which such stock is traded. The applicable date shall be
the date on which the award is granted, except that the Committee may
provide that the applicable date may be: (i) the day on which an award
recipient was hired, promoted or such similar singular event occurred,
provided that the grant of such award occurs within 90 days following such
applicable date; or (ii) in the case of a stock option or stock
appreciation right granted retroactively in tandem with, or as a
substitution for, another previously granted stock option or stock
appreciation right, the applicable date for such prior award. Except as
provided for in Section 4(d), the per Share exercise price of any stock
option or stock appreciation right may not be decreased after the grant of
the award, and a stock option or stock appreciation right may not be
surrendered as consideration in exchange for the grant of a new award with
a lower per Share exercise price.
3. SHARES SUBJECT TO THE PLAN
a) Maximum Shares Available for Delivery. Subject to Section 3(c), the maximum
number of Shares that may be delivered to participants and their
beneficiaries under the Plan shall be equal to the sum of (i) 7,000,000 and
(ii) up to 7,000,000 additional Shares, if authorized by the Company's
Board of Directors, which are reacquired in the open market or in a private
transaction after the effective date of this Plan using proceeds from stock
option exercises. In addition, any Shares granted under the Plan which are
forfeited back to the Company because of the failure to meet an award
contingency or condition shall again be available for delivery pursuant to
new awards granted under the Plan. Any Shares covered by an award (or
portion of an award) granted under the Plan, which is forfeited or
canceled, expires or is settled in cash, shall be deemed not to have been
delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan. Likewise, if any stock option is
exercised by tendering Shares, either actually or by attestation, to the
Company as full or partial payment in connection with the exercise of a
stock option under this Plan or any prior plan of the Company, only the
number of Shares issued net of the Shares tendered or withheld to settle
tax liability shall be deemed delivered for purposes of determining the
maximum number of Shares available for delivery under the Plan. Further,
Shares issued under the Plan through the settlement, assumption or
substitution of outstanding awards or obligations to grant future awards as
a condition of the Company acquiring another entity shall not reduce the
maximum number of Shares available for delivery under the Plan.
b) Other Plan Limits. Subject to Section 3(c), the following additional
maximums are imposed under the Plan. The maximum number of Shares that may
be covered by stock options intended to comply with Section 422 of the
Internal Revenue Code ("incentive stock options") shall be 1,000,000. The
maximum number of Shares that may be issued in conjunction with awards
granted pursuant to Section 4(d) shall be 800,000 plus up to an additional
800,000 to the extent that such Shares are reacquired by the Company
pursuant to Section 3(a). The maximum number of shares that may be covered
by awards granted to any one individual pursuant to Sections 4(b) and 4(c)
shall be 800,000 during any consecutive three calendar years. The maximum
payment that can be made for awards granted to any one individual pursuant
to Sections 4(d) or 4(e) shall be $2,000,000 for any single or combined
performance goals established for a specified performance period. If a
payment under Sections 4(d) or 4(e) is made in Shares, the value of such
Shares for determining this maximum individual payment
<PAGE> 3
amount will be the closing price of a Share on the first day of the
applicable performance period. A specified performance period for purposes
of this performance goal payment limit shall not exceed a sixty (60)
consecutive month period.
c) Payment Shares. Subject to the overall limitation on the number of Shares
that may be delivered under the Plan, the Committee may use available
Shares as the form of payment for compensation, grants or rights earned or
due under any other compensation plans or arrangements of the Company,
including the plan of any entity acquired by the Company.
d) Adjustments for Corporate Transactions. The Committee may determine that a
corporate transaction has affected the price per Share such that an
adjustment or adjustments to outstanding awards are required to preserve
(or prevent enlargement of) the benefits or potential benefits intended at
time of grant. For this purpose a corporate transaction will include, but
is not limited to, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares, or other similar
occurrence. In the event of such a corporate transaction, the Committee
may, in such manner as the Committee deems equitable, adjust (i) the number
and kind of shares which may be delivered under the Plan pursuant to
Sections 3(a) and 3(b); (ii) the number and kind of shares subject to
outstanding awards; (iii) the exercise price of outstanding stock options
and stock appreciation rights; (iv) any other adjustments the Committee
determines to be equitable.
4. TYPES OF AWARDS
a) General. An award may be granted singularly, in combination with another
award(s) or in tandem whereby exercise or vesting of one award held by a
participant cancels another award held by the participant. Subject to
Section 2(e), an award may be granted as an alternative to or replacement
of an existing award under the Plan or under any other compensation plans
or arrangements of the Company, including the plan of any entity acquired
by the Company. The types of awards that may be granted under the Plan
include:
b) Stock Option. A stock option represents a right to purchase a specified
number of Shares during a specified period at a price per Share which is no
less than that required by Section 2(e). A stock option may be in the form
of an incentive stock option or in a form, which does not qualify for
favorable federal tax treatment. The Shares covered by a stock option may
be purchased by means of a cash payment or such other means as the
Committee may from time-to-time permit, including (i) tendering (either
actually or by attestation) Shares valued using the market price at the
time of exercise, (ii) authorizing a third party to sell Shares (or a
sufficient portion thereof) acquired upon exercise of a stock option and to
remit to the Company a sufficient portion of the sale proceeds to pay for
all the Shares acquired through such exercise and any tax withholding
obligations resulting from such exercise; (iii) crediting towards the
purchase price amounts from individuals' deferred compensation account
balances, including accrued dividend equivalent balances; or (iv) any
combination of the above.
c) Stock Appreciation Right. A stock appreciation right is a right to receive
a payment in cash. Shares or a combination, equal to the excess of the
aggregate market price at time of exercise of a specified number of Shares
over the aggregate exercise price of the stock appreciation rights being
exercised.
d) Stock Award. A stock award is a grant of Shares or of a right to receive
Shares (or their cash equivalent or a combination of both) in the future.
Each stock award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine. These may include
continuous service and/or the achievement of performance goals. The
performance
<PAGE> 4
goals that may be used by the Committee for such awards shall consist of
cash generation targets, profit, revenue and market share targets,
profitability targets as measured by return ratios, and shareholder
returns. The Committee may designate a single goal criterion or multiple
goal criteria for performance measurement purposes with the measurement
based on absolute Company or business unit performance and/or on
performance as compared with that of other publicly-traded companies.
e) Cash Award. A cash award is a right denominated in cash or cash units to
receive a payment which may be in the form of cash, Shares or a
combination, based on the attainment of pre-established performance goals
and such other conditions, restriction and contingencies as the Committee
shall determine. The performance goals that may be used by the Committee
for such awards shall consist of cash generation targets, profits, revenue
and market share targets, profitability targets as measured by return
ratios and shareholder returns. The Committee may designate a single goals
criterion or multiple goals criteria for performance measurement purposes
with the measurement based on absolute Company or business unit performance
and/or on performance as compared with that of other publicly-traded
companies.
5. AWARD SETTLEMENTS AND PAYMENTS
a) Dividends and Dividend Equivalents. An award may contain the right to
receive dividends or dividend equivalent payments, which may be paid either
currently or credited to a participant's account. Any such crediting of
dividends or dividend equivalents or reinvestment in Shares may be subject
to such conditions, restrictions and contingencies as the Committee shall
establish, including the reinvestment of such credited amounts in Share
equivalents.
b) Payments. Awards may be settled through cash payments, the delivery of
Shares, the granting of awards or combination thereof as the Committee
shall determine. Any award settlement, including payment deferrals, may be
subject to such conditions, restrictions and contingencies as the Committee
shall determine. The Committee may permit or require the deferral of any
award payment. Subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Share
equivalents.
6. PLAN AMENDMENT AND TERMINATION.
a) Amendments. The Company's Board of Directors may amend this Plan as it
deems necessary and appropriate to better achieve the Plan's purpose
provided, however, that (i) the Share limitations set forth in Sections
3(a) and 3(b) cannot be increased and (ii) the minimum stock option and
stock appreciation right exercise prices set forth in Section 2(e) cannot
be changed, unless such a plan amendment is properly approved by the
Company's shareowners.
b) Plan Suspensions and Terminations. The Board of Directors of the Company
may suspend or terminate this Plan at any time. Any such suspension or
termination shall not of itself impair any outstanding award grant under
the Plan or the applicable participant's rights regarding such award.
7. MISCELLANEOUS
a) No Individual Rights. No person shall have any claim or right to be granted
an award under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee or other person any right to
continue to be employed by or to perform services for
<PAGE> 5
the Company, any subsidiary or related entity. The right to terminate the
employment of or performance of services by any Plan participant at any
time and for any reason is specifically reserved to the employing entity.
b) Binding Arbitration. Any dispute or disagreement regarding participation
and/or an award recipient's rights under the Plan shall be settled solely
by binding arbitration in accordance with the applicable rules of the
American Arbitration Association.
c) Unfunded Plan. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall
not establish any fiduciary relationship between the Company and any
participant or beneficiary of a participant. To the extent any person holds
any obligation of the Company by virtue of an award granted under the Plan,
such obligation shall merely constitute a general unsecured liability of
the Company and accordingly shall not confer upon such person any right,
title or interest in any assets of the Company.
d) Other Benefit and Compensation Programs. Unless otherwise specifically
determined by the Committee, settlements of awards received by participants
under the Plan shall not be deemed a part of a participant's regular,
recurring compensation for purposes of calculating payments or benefits
from any Company benefit plan or severance program. Further, the Company
may adopt other compensation programs, plans or arrangements as it deems
appropriate.
e) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any award, and the Committee shall determine
whether cash shall be paid or transferred in lieu of any fractional Shares,
or whether such fractional Shares or any rights thereto shall be canceled.
<PAGE> 1
EXHIBIT 10.17
AMERICAN NATIONAL CAN GROUP, INC.
ANNUAL INCENTIVE PLAN
<PAGE> 2
AMERICAN NATIONAL CAN GROUP, INC.
ANNUAL INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION TOPIC PAGE
------- ----- ----
<S> <C> <C>
1. Purpose 2
2. Participation 2
3. Objectives 3
4. Return on Capital Employed Definition 5
5. Rating Performance 6
6. Award Calculation 7
7. Administration 8
</TABLE>
2
<PAGE> 3
SECTION 1 - PURPOSE OF THE PLAN
The Annual Incentive Plan is designed to provide motivation for participants to
achieve the annual business profit and return objectives, established by the
senior management of American National Can Group, Inc. (the "Company"), and
their individual personal performance objectives.
SECTION 2 - PARTICIPATION
The Annual Incentive Plan includes all key employees whose responsibilities
involve the exercise of discretion and judgment in making decisions and in
formulating programs for guiding the work of others and/or whose work has a
substantial impact on the business results of the Company or its business units.
This would normally include all employees in bands 1 through 4 of the Company's
broadbanding position classification structure.
Participants are notified annually by their business or corporate unit of their
inclusion in the plan and their level of participation.
3
<PAGE> 4
SECTION 3 - OBJECTIVES IN AWARD DETERMINATION
INCENTIVE The objectives of the Annual Incentive Plan
OBJECTIVES are linked to the short-term strategic plans for the
Company, each business unit and the individual
participant.
The business objectives are established by the senior
management of the Company and reviewed and approved
annually by the Management Committee of the Company and
the Compensation Committee of the Board of Directors of
the Company. The participant and their managers
establish individual objectives.
The components used in the determination of awards are:
- Individual performance against established
objectives
- Business unit (major unit and/or sub-unit) or
Company Return on Capital
Employed performance
WEIGHTING OF The weighting of each component is illustrated in the
COMPONENTS graph below.
[GRAPH]
Individual *Business Unit or Company
50% 50%
*Business Unit component may include a major business
unit, a sub-unit of that business, or a combination of
both major and sub-units
4
<PAGE> 5
SETTING OBJECTIVES
5
<PAGE> 6
INDIVIDUAL Individual objectives are established annually for all
OBJECTIVES participants. These objectives are specific to the
participant's position and are aligned with strategic
business objectives. Individual objectives are defined
as those actions the participant is expected to
accomplish during the plan year. They are results
oriented, identifying a specific end product. They are
clear, concise, and measurable, and may have time
commitments associated with them. They may include
day-to-day responsibilities or can be project oriented,
with emphasis on an entire project or important
milestones within a project. Objectives provide a
short-term perspective and are focused around the
annual fiscal cycle.
Once the individual objectives are established, each is
weighted to reflect the importance of the objective.
Individual weightings of objectives can be reviewed at
mid-year to reflect unpredictable events or projects
that may have influenced the original weighting. No
objectives should be dropped or added after their
identification and approval by managers. Unforeseen
circumstances, which may have impacted the successful
completion of identified objectives, will be reviewed
and considered at year end as part of overall
performance.
6
<PAGE> 7
SECTION 4 - RETURN ON CAPITAL EMPLOYED
RETURN ON Return on Capital Employed (ROCE) is defined as annual
CAPITAL income from operations divided by average capital
EMPLOYED employed. For the purposes of the plan, to determine
year-end actual ROCE performance, the amount BUDGETED
for fixed assets and fixed assets vendor payables will
replace the year-end ACTUAL amount for fixed assets and
fixed asset vendor payables.
ROCE CALCULATION
ROCE FORMULA INCOME FROM OPERATIONS
AVERAGE CAPITAL EMPLOYED
7
<PAGE> 8
ROCE TARGETS ROCE targets at three performance levels will
be established annually for the Company and each
business unit. The ROCE targets, identified as Minimum,
Target and Maximum, will reflect a reasonably demanding
level, with consideration for the current year's budget
and the prior year's performance.
8
<PAGE> 9
SECTION 5 - RATING PERFORMANCE
INDIVIDUAL An individual performance rating will be calculated
PERFORMANCE based on the participant's performance against the
RATINGS objectives established and approved by their manager.
Each objective will be rated using the scale below. The
combined sum of each objective's weighting multiplied
by each objective's rating will comprise the overall
individual performance rating. The overall rating can
range from 0 to 2.0. Individual objectives will be
rated using the scale below.
<TABLE>
<S> <C>
0.0 Did Not Attain
0.3 Partially Attained
0.8 Nearly Attained
1.0 Attained
1.5 Exceeded Expectations in Attainment of Objectives
2.0 Best Possible Outcome Occurred Within Projected Timeframe
</TABLE>
9
<PAGE> 10
ROCE Upon final approval of the business results, actual
PERFORMANCE ROCE performance is measured against the ROCE targets
RATINGS and a numerical performance rating is identified. The
range of ratings is contained in the table below.
<TABLE>
<S> <C> <C>
MINIMUM 0%
TARGET 100%
MAXIMUM 150% For participants in Band 4
200% For participants in Bands 1-3
</TABLE>
10
<PAGE> 11
Performance at or below the Minimum level will result
in an ROCE performance rating of 0%. Performance
between the targets will generate a prorated value
(example: performance between Minimum and Target levels
will generate a rating between 0% and 99.9%)
SECTION 6 - AWARD CALCULATION
BASE AWARD A participant's base award is calculated by multiplying
the participant's eligible base salary earned during
the plan year by the participant's target award
percentage. The target award percentage is linked to
the participant's band or level of responsibility.
Individual target award percentages will be
communicated to the participants annually by their
business or corporate unit.
The base award represents the award amount that would
be paid if all components were achieved at the targeted
(100%) level.
Eligible BASE SALARY Earned During the Plan Year
X
Individual Target Award Percentage
FINAL AWARD The final award is determined by applying the
participant's individual performance rating and the
ROCE performance ratings to the formula.
Base Award X 50% X Individual Performance Rating
+
Base Award X 50% X Business Unit or Company ROCE Rating
11
<PAGE> 12
SECTION 7 - ADMINISTRATION
CHANGES IN Promotions to a higher band or level may affect the
RESPONSIBILITY participant's target award percentage and base award.
If a participant is promoted to a higher band during
the Plan Year the award calculation will reflect both
levels on a prorated basis.
If a change in responsibilities results in a move to
a lower band or level which is not eligible for
participation in the Annual Incentive Plan, the
participant will be considered for a prorated award
reflecting the period of time during the year they were
in an eligible position.
MINIMUM Participants must be in an eligible position for a
PARTICIPATION minimum of three continuous months during the Plan Year
to receive any award.
TERMINATION Except for termination resulting from normal or early
retirement, disability, death or job elimination, a
participant will not be eligible to be considered for
an award if they terminate prior to the end of the Plan
Year. In the case of normal or early retirement,
disability, death or job elimination any awards will be
prorated to reflect the actual time of participation.
PAYMENT OF The Compensation Committee of the Company's Board of
AWARDS Directors will pay awards, if applicable, after
finalization of business results and approvals.
This document, as interpreted by the Compensation Committee, shall govern the
administration of the Annual Incentive Plan. The Company reserves the right to
adjust the operation of the plan to account for significant financial events
which could materially affect the overall goals of the plan and to make changes
to the plan, at any time, as circumstances warrant without prior notification to
the participants.
12
<PAGE> 1
EXHIBIT 10.18
AMERICAN NATIONAL CAN GROUP, INC.
DIRECTOR'S STOCK PLAN
1. THE PLAN
a) Purpose. The purpose of the American National Can Group, Inc. Director's
Stock Plan (the "Plan") is to promote the longer-term financial success of
American National Can Group, Inc. (the "Company") by providing a means for
directors to own shares in the Company.
b) Effective Date. To serve this purpose, the Plan will become effective upon
its adoption by the Company's Board of Directors, but in no event shall the
Plan become effective until the occurrence of the initial public offering
of shares of the Company's stock.
2. ADMINISTRATION
a) Committee. The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee").
b) Powers and Authority. The Committee's powers and authority include
interpreting the Plan's provisions and administering the Plan in a manner
that is consistent with its purpose. All actions taken, and determinations
made, by the Committee in respect of the Plan shall be conclusive and
non-appealable.
c) Eligible Participants. Includes any member of the Board of Directors of the
Company who is not a current employee of the Company on the date of the
annual grants.
d) Award Agreement. An award under the Plan shall be subject to the terms and
conditions provided for in the Plan. The terms and conditions of any award
to any eligible participant shall be reflected in a written document, the
form of which will be determined by the Committee. A copy of such document
will be provided to the participant, and the Committee may, but need not
require that the participant sign a copy of the document. Such document is
referred to in the Plan as an "Award Agreement" regardless of whether any
participant signature is required.
e) Award Prices. For the Plan purposes, each stock option shall have an
exercise price which shall reflect the average traded price of a share of
the common stock of the Company, par value $0.01 per share ("Share") on the
applicable grant date. The per Share exercise price of any stock option may
not be decreased after the grant of the award, and a stock option may not
be surrendered as consideration in exchange for the grant of a new award
with a lower per Share exercise price.
3. SHARES SUBJECT TO THE PLAN
a) Maximum Shares Available for Delivery. The maximum number of Shares that
may be delivered to participants and their beneficiaries under the Plan
shall be equal to the sum of (i) 400,000 and (ii) up to 400,000 additional
Shares, if authorized by the Company's Board of Directors, which are
reacquired in the open market or in a private transaction after the
effective date of this Plan using proceeds from stock option exercises. In
addition, any Shares granted under the Plan which are forfeited back to the
Company because of the failure to meet an award contingency or condition
shall again be available for delivery pursuant to new awards granted under
the Plan. Any Shares covered by an award (or portion of an award) granted
under the Plan, which is forfeited or canceled, expires or is settled in
cash,
<PAGE> 2
shall be deemed not to have been delivered for purposes of determining the
maximum number of Shares available for delivery under the Plan. Likewise,
if any stock option is exercised by tendering Shares, either actually or by
attestation, to the Company as full or partial payment in connection with
the exercise of a stock option under this Plan or any prior plan of the
Company, only the number of Shares issued net of the Shares tendered or
withheld to settle tax liability shall be deemed delivered for purposes of
determining the maximum number of Shares available for delivery under the
Plan. Further, Shares issued under the Plan through the settlement,
assumption or substitution of outstanding awards or obligations to grant
future awards as a condition of the Company acquiring another entity shall
not reduce the maximum number of Shares available for delivery under the
Plan.
b) Adjustments for Corporate Transactions. The Committee may determine that a
corporate transaction has affected the price per Share such that an
adjustment or adjustments to outstanding awards are required to preserve
(or prevent enlargement of) the benefits or potential benefits intended at
time of grant. For this purpose a corporate transaction will include, but
is not limited to, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares, or other similar
occurrence. In the event of such a corporate transaction, the Committee
may, in such manner as the Committee deems equitable, adjust (i) the number
and kind of shares which may be delivered under the Plan; (ii) the number
and kind of shares subject to outstanding awards; (iii) the exercise price
of outstanding stock options; and (iv) any other adjustments the Committee
determines to be equitable.
4. TYPES, TERMS AND AMOUNTS OF AWARDS
The types of awards that may be granted under the Plan include:
a) Stock Option. A stock option represents a right to purchase a specified
number of Shares during a specified period at a price per Share which is no
less than that required by Section 2(e). A stock option shall only be in
the form of a non-qualified stock option, with a ten-year term. The options
shall vest immediately upon grant. The value of the annual stock option
award will be $30,000 per director and such value will be determined using
a modified Black-Scholes option-pricing model and the following
assumptions:
(i) Current price of the underlying stock will equal the fair market
value ("FMV") of the stock on the date of grant. The FMV is defined
by the average of the high and the low trading prices on the grant
date.
(ii) The exercise price of the option will remain the same through the
term of the option regardless of when it is exercised. As such, the
price must be discounted to reflect the present value. The discount
rate used will reflect the yield on a U.S. Treasury Bond of equal
maturity to the option.
(iii) Expected volatility of the stock price will reflect the volatility
of the company stocks in the Dow Jones Container and Packaging
Index during the previous 12 months until 2002. Beginning in 2002,
the volatility used in the calculation will reflect the Company's
actual stock price volatility for the previous 12 months.
(iv) Expected divided yield for 1999 will be the anticipated annualized
dividend to be paid by the Company during the 12 months following
its initial public offering. Beginning in 2000 the dividend yield
will reflect the most recent paid dividend on an annualized basis.
(v) Expected life of the option will equal the maximum option term.
<PAGE> 3
The Shares covered by a stock option may be purchased by means of a cash
payment or such other means as the Committee may from time-to-time permit,
including (i) tendering (either actually or by attestation) Shares valued
using the market price at the time of exercise, (ii) authorizing a third
party to sell Shares (or a sufficient portion thereof) acquired upon
exercise of a stock option and to remit to the Company a sufficient portion
of the sale proceeds to pay for all the Shares acquired through such
exercise; or (iii) any combination of the above.
b) Stock Award. A stock award is a grant of Shares or of a right to receive
Shares (or their cash equivalent or a combination of both) in the future.
Each stock award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine. An annual stock award will
be granted with a FMV of $15,000 to each qualified participant on the date
of grant.
5. DIVIDENDS AND DIVIDEND EQUIVALENTS
Stock awards granted under the plan include the right to receive dividends
or dividend equivalent payments. Stock options have no dividend or dividend
equivalent rights.
6. PLAN AMENDMENT, SUSPENSIONS AND TERMINATION.
The Company's Board of Directors may amend this Plan as it deems necessary
and appropriate to better achieve the Plan's purpose. The Board of
Directors of the Company may amend, suspend or terminate this Plan at any
time. Any such amendment, suspension or termination shall not of itself
impair any outstanding award grant under the Plan or the applicable
participant's rights regarding such award.
7. MISCELLANEOUS
a) No Individual Rights. Neither the Plan nor any action taken hereunder shall
be construed as giving any director any right to continue to perform
services for the Company, any subsidiary or related entity.
b) Binding Arbitration. Any dispute or disagreement regarding participation
and/or a recipient's rights under the Plan shall be settled solely by
binding arbitration in accordance with the applicable rules of the American
Arbitration Association. The Company's Board of Director's has the sole
right to select the arbitrator.
c) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any award, and the Committee shall determine
whether cash shall be paid or transferred in lieu of any fractional Shares,
or whether such fractional Shares or any rights thereto shall be canceled.
d) Transferability. Except as otherwise provided by the Committee, awards
under the plan are not transferable other than as designated by the
participant by will or by the laws of descent and distribution.
e) Governing Law. The Plan shall be governed by the laws of the State of
Illinois, U.S.A.
<PAGE> 1
EXHIBIT 10.19
AMERICAN NATIONAL CAN GROUP, INC.
STOCK COMPENSATION CONVERSION PLAN AT THE INITIAL PUBLIC OFFERING
1. THE PLAN
a) Purpose. The purpose of this Plan is to align the interests of employees
with shareholders of American National Can Group, Inc. (the "Company") by
allowing participants to obtain an immediate ownership position in the
Company.
b) Effective Date. The Plan will become effective upon its adoption by the
Company's Board of Directors, provided, however, that in no event shall the
Plan become effective until the occurrence of the IPO.
2. DEFINITIONS
a) Black-Scholes Value - the compensation value calculated at the time of the
original Pechiney SAR or stock option grant. The Black-Scholes methodology
is commonly accepted in the United States to value stock options.
b) Board - the Board of Directors of the Company.
c) Committee - the Compensation Committee of the Board.
d) Conversion Shares - grant of shares of stock or of a right to receive
shares of stock (or their cash equivalent or a combination of both) under
the provisions of this Plan.
e) Conversion Share Price - $22.50 per share.
f) IPO - Initial Public Offering of shares of the Company's stock.
g) Original Grants - SARs or stock options given to a participant under the
Pechiney Stock Option Plans of 1996, 1997 and 1998 or the American National
Can Company Long-Term Incentive Plans of 1997 and 1998 or the American
National Can Company Extraordinary Grant of 1999.
h) Pechiney - the former parent company of American National Can Company.
i) Plan - the Company's Stock Compensation Conversion Plan.
j) Restricted Period - that period of time during which the Conversion Shares
cannot be sold or transferred.
k) SAR - Stock Appreciation Right, the right of a participant to receive an
amount calculated as the difference between the grant price of the Original
Grant and the fair market value (average of the high and low trading
prices) of Pechiney stock on the date of exercise.
<PAGE> 2
3. ADMINISTRATION
a) Committee. The Plan shall be administered by the Committee or such other
committee or entity as may be charged by the Board with responsibility for
administering the Plan.
b) Powers and Authority. The Committee shall have the power to interpret the
Plan and make all determinations necessary or desirable for its
administration. All actions taken, and determinations made, by the
Committee in respect of the Plan shall be conclusive and non-appealable.
c) Eligible Participants. Participants will include any employee of the
Company, or its subsidiaries, currently holding Pechiney stock options or
SARs distributed under any Original Grant.
d) Grant Agreement. The Conversion Shares shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Committee shall, in its
sole discretion, prescribe. The terms and conditions shall be reflected in
a written document, the form of which will be determined by the Committee.
A copy of such document will be provided to the participant, and the
Committee may, but need not require that the participant sign a copy of the
document.
4. SHARES SUBJECT TO THE PLAN
The maximum number of Conversion Shares that may be delivered to
participants under the Plan shall be equal to the sum of 350,000. Any
Conversion Shares withheld in settlement of the participant's tax
liabilities will not be considered utilized. Only the number of Conversion
Shares issued net of the Conversion Shares tendered will be deemed
delivered for purposes of determining the maximum number of Conversion
Shares available for delivery under this Plan.
5. STOCK COMPENSATION ELIGIBLE FOR CONVERSION
a) SARs. All SARs eligible for conversion under the Plan will be immediately
canceled upon the date of the Company's IPO. The Black-Scholes Value of the
SARs will be exchanged for Conversion Shares at the Conversion Share Price.
b) Options. Participants may elect to convert Pechiney stock options they hold
at their discretion. The Black-Scholes Value of the Options will be
exchanged for Conversion Shares at the Conversion Share Price.
6. RESTRICTIONS AND DIVIDENDS
a) Restricted Periods. All Conversion Shares will have a Restricted Period,
which approximates the vesting schedule of the Original Grant.
b) Dividends and Dividend Equivalents. During the Restricted Period
participants shall have no rights shareholder rights and no rights to
receive dividends or dividend equivalents. Upon the expiration of the
Restricted Periods, the participant will obtain full rights to all
Conversion Shares awarded under the Plan including voting rights and the
right to receive dividends or dividend equivalents. No dividends or
dividend equivalents shall be paid to the participant with respect to any
Conversion Shares that are forfeited by the participant for any reason.
<PAGE> 3
7. MISCELLANEOUS
a) No Guarantee of Employment. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee or other person any right to
continue to be employed by or to perform services for the Company, any
subsidiary or related entity. The right to terminate the employment of, or
performance of services, by any participant at any time and for any reason
is specifically reserved to the employing entity.
b) Binding Arbitration. Any dispute or disagreement regarding participation
and/or an award recipient's rights under the Plan shall be settled solely
by binding arbitration in accordance with the applicable rules of the
American Arbitration Association. The Company's Board of Director's has the
sole right to select the arbitrator.
c) Other Benefit and Compensation Programs. Unless otherwise specifically
determined by the Committee, Conversion Shares received by participants
under the Plan shall not be deemed a part of a participant's regular,
recurring compensation for purposes of calculating payments or benefits
from any Company benefit plan or severance program. Further, the Company
may adopt other compensation programs, plans or arrangements, as it deems
appropriate.
d) No Fractional Shares. No fractional shares shall be issued or delivered
pursuant to the Plan or any award, and the Committee shall determine
whether cash shall be paid or transferred in lieu of any fractional shares,
or whether such fractional shares or any rights thereto shall be canceled.
e) Governing Law. The Plan shall be governed by the laws of the State of
Illinois, U.S.A.
8. PLAN AMENDMENT AND TERMINATION.
The Committee may amend, suspend or terminate this Plan at any time. Any
such amendment, suspension or termination shall not of itself impair any
outstanding grant under the Plan or the applicable participant's rights
regarding such grant.
<PAGE> 1
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1996, by and
between AMERICAN NATIONAL CAN COMPANY, a Delaware corporation (the "Company"),
and JEAN-PIERRE RODIER (the "Executive").
WHEREAS, the Company is a member of an affiliated group of
corporations (the "Pechiney Group") of which Pechiney, a societe anonyme
organized under the laws of France ("Pechiney"), is the parent corporation; and
WHEREAS, the Board of Directors of the Company (the "Board")
has appointed the Executive as its Chief Executive Officer; and
WHEREAS, the compensation committee of the conseil
d'administration (board of directors) of Pechiney (the "Pechiney Board"),
following the privatization of Pechiney, reviewed and adjusted the Executive's
overall compensation level for services rendered to the Pechiney Group, taking
into account, among other things, compensation practices and incentives provided
at other corporate groups that are comparable, in business and size, to the
Pechiney Group; and
WHEREAS, in view of the services that the Executive has
performed and will continue to perform on behalf of the Company as its Chief
Executive Officer, the contributions the Executive is expected to continue to
make to the Company's businesses and affairs, and the Executive's overall
compensation from the Pechiney Group, the Board has determined that it is
appropriate and in the best interests of the Company and its stockholder to set
forth in an employment agreement the terms and conditions of the Executive's
employment with the Company and his compensation therefor;
NOW, THEREFORE, in consideration of the covenants and
agreements herein contained, the parties hereto hereby agree as follows:
1. Employment and Duties.
(a) Position.
The Company hereby agrees to employ the Executive, and the
Executive agrees to be employed during the Term (as hereinafter defined) and
upon the terms and conditions hereinafter set forth, as Chief Executive Officer
of the Company. The Executive further agrees, if elected or appointed, to serve
for no additional compensation as an officer of any of the Company's United
States affiliates or subsidiaries.
<PAGE> 2
(b) Duties and Reporting.
The Executive shall have general and active management and
control of the business and affairs of the Company, and shall have all the
powers, duties and responsibilities typical of the chief executive officer of a
United States corporation similar to the Company in business and size, including
overall responsibility for strategic planning, budgets and executive and
personnel management. In addition, the Executive shall have such other
managerial duties as the Board may from time to time assign to him consistent
with his status as Chief Executive Officer. In his capacity as Chief Executive
Officer, the Executive shall report directly to the Board.
(c) Understandings Concerning Residency
The Executive represents and warrants to the Company, and the
Company acknowledges, that the Executive is, and intends to remain, a citizen
and permanent resident of France. The Company acknowledges and agrees that under
no circumstances will the Executive's duties hereunder require him to spend more
than 99 days in any calendar year in the United States Nothing in this Agreement
shall be construed to require the Executive to establish or maintain a residence
in the United States.
2. Term of Employment.
The term of the Executive's employment under this Agreement
(the "Term") will commence on January 1, 1996 (the "Effective Date") and shall
continue for an initial period of two years. On the first anniversary of the
Effective Date (and on each subsequent anniversary date thereafter), the Term
shall automatically renew for an additional year unless, within ninety days
prior to the applicable anniversary date, either party shall have given the
other party hereto written notice of the intention not to so extend the Term;
provided, however, that the Term shall not extend beyond the last day of the
month in which Executive attains age 65.
3. Compensation and Benefits.
(a) Salary.
The Company shall pay to the Executive during the Term an
annual base salary equal to $________. The Executive's salary may be adjusted
(upward or downward) periodically by the Board. The Executive's annual base
salary will be payable in accordance with the Company's normal payroll
practices, unless the Executive and the Board agree to another payment schedule.
<PAGE> 3
(b) Bonus.
The Executive shall be paid a bonus (the "Bonus") for each
full or partial calendar year during the Term, beginning with 1996. The amount
of the Bonus shall be determined by the Board in its discretion based on the
Executive's performance, taking into account the financial results of the
Company and any other considerations that the Board considers appropriate,
provided, however, that the Bonus for any calendar year shall not exceed 50% of
the Executive's annual base salary for that year. The Bonus will be paid to the
Executive in accordance with the Company's normal payment practices for bonuses
as soon as practicable after the amount has been determined as provided in the
preceding sentence.
(c) Regular Reimbursed Business Expenses.
The Company will reimburse the Executive for all reasonable
business-related expenses incurred by him in the performance of his duties for
the Company.
(d) No Participation in Benefit Plans. The Executive
acknowledges that as an officer of Pechiney he participates in retirement,
medical and other benefit plans or arrangements sponsored by Pechiney or
otherwise provided for Pechiney officers pursuant to applicable French law and
custom. Consequently, the Executive agrees with the Company that, except as
otherwise specifically agreed to by the Company, he will not be eligible to
participate in any retirement, severance, medical (including, without
limitation, major medical, health and hospitalization), dental, disability, life
insurance or other welfare or fringe benefit plan sponsored by the Company for,
or otherwise applicable to, its officers. In addition, the Executive will not be
eligible to participate in any cash-based incentive programs applicable to other
officers of the Company, and his cash incentive compensation will instead be
determined exclusively as provided in Section 3(b) of this Agreement. The
Executive hereby waives any right he might have to participate in any of the
plans, programs or arrangements described in the preceding two sentences and
consents to the Company's amendment of any such plan, program or arrangement to
exclude his participation therefrom.
(e) Paying Agent Arrangement. The Executive and the Company
acknowledge that from the Effective Date and until November 30, 1996, Pechiney
has acted as the Company's paying agent for purposes of paying the compensation
provided for in this Agreement. Until the Company implements procedures to
provide the compensation provided herein for the Executive (which is expected to
occur no later than December 1, 1996), Pechiney will continue so to act. The
Executive acknowledges and agrees that compensation payments received or to be
received by him from Pechiney will, to the extent of the Company's obligations
hereunder, be considered to satisfy such obligations and that he will have no
further claim against the Company with respect to such amounts.
<PAGE> 4
4. Termination of Employment
(a) General. Subject to the provisions of this Section
4, the Company shall have the right to terminate the Executive's employment with
the Company, and the Executive shall have the right to resign therefrom, at any
time for any reason or for no reason.
(b) Termination by the Company Other Than for Cause. If
the Executive's employment is terminated by the Company other than for Cause (as
hereinafter defined) prior to the end of the Term, the Executive shall be
entitled to payment of the following:
(i) any unpaid annual base salary earned or accrued but
not paid through and including the date of such termination;
(ii) any unpaid Bonus for a prior year; and
(iii) a severance payment (the "Severance Payment") the
amount of which shall be determined by the Board at the time
of termination of the Executive's employment but which shall
not exceed two times the Executive's rate of annual base
salary in effect as of the effective date of termination of
employment; provided, however, that the Executive shall not be
entitled to the Severance Payment unless (A) his employment
shall have been terminated not simply with the Company but
with all members of the Pechiney Group and (B) the Pechiney
Board shall have authorized the payment to the Executive of
severance (or other benefit in the nature of severance pay) by
Pechiney or another member of the Pechiney Group.
The Severance Payment and all other amounts required under this Section
4(b) shall be paid to the Executive in a lump sum within thirty (30)
days after the effective date of his termination of employment.
(c) Definition of "Cause". For purposes of this
Agreement, "Cause" means:
(i) The commission by the Executive of any act or
omission that would constitute a faute lourde under the labor
laws of the Republic of France with respect to his employment
by the Company or any member of the Pechiney Group; or
(ii) The Executive's conviction of, pleading guilty to or
indictment for (where such indictment is not dismissed or
otherwise resolved favorably to the Executive within six
months) a fraud against the Company or any other member of the
Pechiney Group or a felony.
The Executive shall be permitted to respond and defend himself before the Board
within fifteen (15) days after written notification of any proposed termination
for Cause which shall specify in detail the reasons for termination.
<PAGE> 5
5. Indemnification.
(a) Insurance.
To the extent permitted by applicable law, the Company shall
maintain directors' and officers' liability insurance sufficient to protect the
Executive against all costs, charges and expenses (including attorneys' fees)
incurred or sustained by him in connection with any action, suit or proceeding
to which he may be made a party by reason of being an officer, director or
employee of the Company or any of its subsidiaries; provided, however, that such
insurance shall not apply with respect to (i) criminal acts, acts of gross
negligence or willful misconduct by the Executive or (ii) such other risks as
are customarily excluded by directors' and officers' liability insurance
policies. The insurance coverage required by this Section 5(a) must survive for
the duration of any statute of limitations applicable to any such action, suit
or proceeding or, if earlier, until the termination of all similar insurance
coverage for officers and directors and former officers and directors of the
Company.
(b) Indemnity.
The Company shall indemnify and hold harmless the Executive to
the fullest extent permitted by law with respect to any act or omission
committed by the Executive in the performance of his duties hereunder. Amounts
payable pursuant to such indemnity shall be paid as the related expense or
liability arises. The Company hereby represents that, as of the Effective Date,
its by-laws and articles of incorporation provide the Executive with the maximum
limitation of the Executive's liability permitted by applicable law. The
obligations of this Section 5(b) shall survive the termination of the Term and
this Agreement.
6. Tax Withholding.
All amounts payable to the Executive pursuant to this
Agreement shall be subject to all legal requirements with respect to the
withholding of taxes. The Company recognizes that the Executive may perform
services for the Company and its affiliates in many jurisdictions. In connection
therewith, the Company agrees to withhold taxes out of amounts payable to the
Executive and file applicable tax reports as advised by in-house or outside
counsel to the Company.
<PAGE> 6
7. Source of Payments.
Except to the extent contemplated by the paying agent
arrangement set forth in Section 3(e), all payments provided under this
Agreement shall be paid in cash from the general funds of the Company. No
special or separate fund shall be established, and no other segregation of
assets made, to assure payment of an amount provided for hereunder. The
Executive shall have no right, title or interest whatever in or to any
investments which the Company may make to aid the Company in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship, between the Company and the Executive or
any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
8. Notices.
All notices, requests, consents or other communications
required or permitted to be given hereunder shall be in writing and shall be
given in writing by personal delivery, telex, telecopy or certified or
registered mail, return receipt requested, to the applicable address set forth
below, or to such other address as either party shall furnish in writing to the
other:
(i) To the Company: American National Can Company
8770 West Bryn Mawr Avenue
Chicago, IL 60631-3542
Attention: Corporate Secretary
with a copy to: Pechiney
Immeuble Balzac
10, place des Vosges
La Defense 5 -- Courbevoie,
Hauts de Seine
Cedex 68
92048 Paris la Defense
Attention: Directeur des
Affaires Juridiques
(ii) To the Executive: Jean-Pierre Rodier
c/o Pechiney at the address
indicated above
<PAGE> 7
9. Entire Understanding.
This Agreement constitutes the entire understanding between
the Company and the Executive relating to the employment of the Executive by the
Company and supersedes and cancels all prior negotiations, understandings and
agreements.
10. Assignment and Delegation.
Neither this Agreement nor any right, duty or obligation
hereunder shall be assignable or delegable by the Executive. This Agreement and
all the Company's rights and obligations hereunder may be assigned, delegated or
transferred by it to any business entity which at any time by merger,
consolidation or other business combination acquires all or substantially all of
the assets of the Company or to which the Company transfers all or substantially
all of its assets. Upon any such assignment, delegation or transfer, any such
business entity shall be deemed to be substituted for all purposes as the
Company hereunder, except that the Company shall not be released from any of its
obligations hereunder.
11. Amendment and Waiver.
This Agreement may not be modified, amended or waived in any
manner except by an instrument in writing signed by the Executive and the
Company, pursuant to a resolution of the Board. The waiver by either party of
compliance with any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any other provision of this Agreement or
of any subsequent breach by such party of a provision of this Agreement.
12. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
13. Headings.
The headings of the Sections of this Agreement are included
solely for convenience of reference and shall not be construed or interpreted in
any way as affecting the meaning of such Sections.
14. Governing Law.
This Agreement is governed by, and construed and interpreted
in accordance with, the laws of the State of Illinois.
<PAGE> 8
15. Severability.
Each provision hereof is severable from this Agreement, and if
one or more provisions hereof are declared invalid the remaining provisions
shall nevertheless remain in full force and effect. If any provision of this
Agreement is so broad, in scope or duration or otherwise, as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
16. Condition Precedent
The obligations of the parties hereunder, including without
limitation the Company's obligations under Section 3, shall be conditioned upon
the making of any filing, and the obtaining of any consents or approvals,
required under applicable law, including any applicable visa, work permit or
similar authorization of the United States or any of its instrumentalities.
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of January, 1996.
AMERICAN NATIONAL CAN COMPANY
By:
------------------------------------------
Name:
Title: Director, acting pursuant to
resolution of the Board of
Directors
EXECUTIVE
---------------------------------------------
<PAGE> 1
EXHIBIT 10.21
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 28, 1999 ("Effective Date"), by and between
AMERICAN NATIONAL CAN COMPANY, a Delaware corporation, AMERICAN NATIONAL CAN
GROUP, INC., a Delaware corporation (collectively, subject to Section
11(a), the "Company"), and the individual named on the signature page hereof
(the "Executive").
WHEREAS, the Executive is employed by American National Can Company
"ANCC"), and the Executive and ANCC desire to enter into this Agreement, in
connection with the anticipated reorganization of ANCC, which will result in its
operations being continued by American National Can Group, Inc. ("ANCG"),
pertaining to the terms of the employment of the Executive by the Company; and
WHEREAS, the Executive and ANCC desire that this Agreement shall
constitute an Amendment and Restatement of the existing Agreement between them
with respect to Executive's employment with ANCC, and the Executive and the
Company desire that this Amendment and Restatement shall remain effective
irrespective of whether the aforementioned reorganization occurs;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "AFFILIATE" means, with respect to any person (including
without limitation the Company), any corporation or other
entity that, directly or indirectly, controls or is controlled
by such person, or that is under common control with such
person.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means (A) serious misconduct or gross negligence in
the performance of the Executive's employment duties; (B)
willful disobedience by the Executive of lawful directions
received from or policies established by the Board or the
Chairman of the Executive Committee of the Board, which
continues for more than thirty (30) days after the Company
notifies the Executive of its intention to terminate his
employment on account of such disobedience; or (C) commission
by the Executive of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on
the business, reputation or financial situation of the
Company. The Executive shall be permitted to respond and
defend himself before the Executive Committee of the Board
within 15 days
<PAGE> 2
after written notification of any proposed termination for
Cause which shall specify in detail the reasons for such
termination.
(d) "CHANGE OF CONTROL" means a change in control of ANCC or ANCG
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not it is then subject to such reporting
requirement; provided that, without limitation, a Change of
Control shall be deemed to have occurred if (A) any
individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any
syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 or the General Rules and
Regulations under the Exchange Act), directly or indirectly,
of securities of ANCC or ANCG representing 25% or more of the
combined voting power of its then outstanding securities
entitled to vote in the election of directors; (B) the
stockholders of ANCC or ANCG approve a merger, consolidation
or other transaction involving ANCC or ANCG as a result of
which the stockholders of ANCC or ANCG immediately before the
transaction will not own at least 50% of the surviving or
resulting entity; or (c) during any period of two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constituted the Board and any new directors, whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters
(3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least two-thirds thereof.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMPANY EQUITY PLAN" means any stock option, restricted
stock, stock appreciation right, phantom stock, equity
incentive or similar plan under which awards are denominated
in, or the value of which is determined by reference to,
equity securities of the Company.
(g) "CONFIDENTIAL INFORMATION" includes, without limitation, the
client lists of Pechiney and its Subsidiaries and Affiliates
(including the Company), their respective trade secrets, any
confidential information about (or provided by) any customer
or supplier, or prospective or former customer or supplier, of
Pechiney or any of its Subsidiaries or Affiliates (including
the Company), information concerning the business or financial
affairs of Pechiney or any of its Subsidiaries or Affiliates
(including the Company), including books and records,
commitments, procedures, plans and prospectuses, strategies,
or
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<PAGE> 3
current or prospective transactions or businesses, and any
other "inside information": (i) which has not been disclosed
publicly by Pechiney or one of its Subsidiaries or Affiliates
(including the Company), or with its consent, (ii) which is
otherwise not a matter of public knowledge or (iii) which is a
matter of public knowledge and the Executive has reason to
know that such information became a matter of public knowledge
through an unauthorized disclosure.
(h) "CONTINUATION PERIOD" means the period beginning on the
Termination Date and ending on (i) for purposes of a
termination of the Executive's employment described in clause
(i) or (ii) of Section 3, the second anniversary thereof; or
(ii) for purposes of a termination of the Executive's
employment described in clause (iii) of Section 3, the date
that is 36 months after the Termination Date.
(i) "COVENANT PERIOD" means the period beginning on the Effective
Date and ending on the second anniversary of the Termination
Date.
(j) "GOOD REASON" means (A) a material reduction in the
Executive's status, duties or responsibilities as in effect on
the date of this Agreement, or (B) a reduction in the
Executive's annual target compensation opportunity, defined as
the sum of (I) base salary; (II) targeted annual incentive
award; and (III) subject to the next sentence, the targeted
long-term incentive award under any Company Equity Plan,
payable by either the Company or a successor company for a
calendar year, or (C) the Executive is required to relocate
outside of a fifty mile radius of his current office without
his prior written consent following a Change of Control, or
(D) the Company fails to pay Executive any amount otherwise
vested and due under the Agreement, any prior agreement, or
any plan or policy of the Company, which such failure is not
cured within thirty (30) days following written notice of
failure given to the Company, or (E) the Company fails to
obtain an agreement to expressly assume the executive
employment Agreement from any successor company to the
Company, or (F) the Company is in material breach of the
Agreement, which breach is not cured within thirty (30) days
following written notice of breach given to the Company. For
purposes of clause (B): (i) the value of an option grant shall
be determined based on the methodology utilized by the
Company, from time to time, to determine the size of awards to
employees eligible for long-term incentive compensation; (ii)
if, at the time that a long-term incentive award is made, it
is designated by the Company as being made on account of more
than one calendar year, then it shall be prorated, for
purposes of determining the amount of the targeted long-term
incentive award for any such calendar year, over the years on
account of which it is being made; and (iii) the Executive's
targeted long-term incentive award will be considered to have
been materially reduced if his targeted award is reduced at a
rate greater than, or increased at a rate lesser than the rate
that the awards of the other senior executives of the Company
are reduced or increased, respectively.
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<PAGE> 4
(k) "MIP" means the Company's Management Incentive Plan, as the
same may be amended from time to time, or any successor plan.
(1) "PECHINEY GROUP" means Pechiney and its Subsidiaries and
Affiliates (including the Company).
(m) "PENSION PLANS" means, collectively, the Company's Pension
Plan for Salaried Employees and certain other non-qualified
pension plans or arrangements that the Company maintains for
its senior executives.
(n) "SUBSIDIARY" of a person (including without limitation the
Company) means a corporation with respect to which such
person, directly or indirectly, has the power, whether through
the ownership of voting securities, by contract or otherwise,
to elect at least a majority of the members of such
corporation's board of directors.
(o) "TERMINATION DATE" means the effective date of the Executive's
termination of employment with the Company.
2. GENERAL TERMS OF EMPLOYMENT.
(a) NATURE AND TERM OF THIS AGREEMENT. The term of this Agreement
shall commence on the Effective Date. This Agreement does not
constitute a guarantee of continued employment but instead
provides for certain rights and benefits for the Executive
during his employment, and in the event his employment with
the Company terminates under the circumstances described
herein.
(b) DUTIES AND RESPONSIBILITIES. For so long as the Executive's
employment with the Company continues, the Executive will
devote his full business time, attention and best efforts to
the affairs of the Company, will faithfully serve the Company,
and in all respects conform to and comply with the lawful
directions and instructions consistent with his position as
Senior Vice President and Chief Operating Officer -- Beverage
Cans Worldwide of ANCC, and President and Chief Executive
Officer of ANCG, given to him by the Board or the Chairman of
the Executive Committee of the Board.
(c) AUTHORITY. In performing his duties hereunder, the Executive
shall have the authority customarily held by others holding
similar senior executive level positions within the Company,
as defined in the authority guidelines established by the
Board or the Chairman of the Executive Committee of the Board.
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<PAGE> 5
(d) OUTSIDE BOARD MEMBERSHIPS. Executive may serve on the boards
of directors of up to two (2) for-profit business corporations
which do not compete with the business of the Company, such
memberships subject to prior approval by the Chairman and
Chief Executive Officer of the Company.
(e) BASE SALARY. The Executive shall receive a salary of $43,750
per month, $525,000 on an annual basis. The Executive's base
salary shall be reviewed periodically by the Company at the
times and in a manner consistent with the review of base
salaries of the Company's other senior executives, and, based
on such review, the amount of the Executive's base salary may
be adjusted upwards but not downwards, in the discretion of
the Company, taking into account the Executive's performance
and any other factors the Company deems relevant; provided
that, while the Executive is employed hereunder, his salary
shall be increased for each calendar year by a rate that
equals or exceeds the average rate of increase of the base
salaries of employees of the Company generally.
(f) ANNUAL INCENTIVE PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company's annual incentive plan, the MIP, at a target
and maximum opportunity as established by the Compensation
Committee of the Board. The MIP may be adjusted or modified
from time to time by the Company in its discretion.
(g) COMPANY EQUITY PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company Equity Plan, at a target opportunity similar in
amount to other senior executives at his level. The Company
Equity Plan may be adjusted or modified from time to time by
the Company in its discretion.
(h) COMPANY CAR. The Executive will be eligible for a company car
in accordance with the provisions of the Company's Lease Car
Program.
(i) EMPLOYEE BENEFITS. The Executive shall be eligible to
participate in employee benefit plans sponsored or maintained
by the Company, including, without limitation, life insurance,
medical insurance, hospitalization, dental insurance, short
and long term disability insurance, pension, retirement,
401(k) and deferred compensation plans, whether now existing
or established hereafter. Nothing in this Section 2(i) shall
limit the Company's right to amend or terminate any such plan
in accordance with the procedures set forth therein.
(j) AGE 60 POST-TERMINATION BENEFITS.
(i) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, and the Executive
does not have thirty (30) years of service credit
towards the total
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<PAGE> 6
pension benefit calculation under the Pension Plans,
then the Company will pay to the Executive pursuant
to this Agreement a supplemental monthly pension
benefit equal to the excess, if any, of "A" over "B",
where:
"A" equals the aggregate monthly benefit the
Executive would have received under the
Pension Plans upon retirement assuming that
the Executive had thirty (30) years of
service credit towards the total pension
benefit calculation under the Pension Plans
based upon the highest consecutive sixty
(60) months of compensation (as defined for
purposes of the Pension Plans) the Executive
received from the Company during his
employment (including, for purposes of the
calculation, but subject to Section 3(a) and
(b)(i) if the Executive makes the lump sum
election described therein, any amount of
compensation continued during any
Continuation Period under Section 3); and
"B" equals the aggregate monthly amount
payable to the Executive under the Pension
Plans, such amount to be calculated in
accordance with the provisions of the
Pension Plans.
Amounts payable to a survivor of the Executive under
the Pension Plans shall be calculated similarly. The
Company shall determine in its discretion whether,
and to the extent that, any supplemental monthly
pension benefit required under this subsection shall
be paid through a Pension Plan that is intended to be
qualified under Section 401(a) of the Code, or any
successor provision thereto, or under a Pension Plan
or other arrangement that is not intended to be so
qualified. The amount, if any, payable under this
subsection will be determined based on the same form
of payment (e.g. single life annuity or joint and
survivor annuity) that the Executive elects under the
Pension Plans. Payment of such amount will begin at
the time the Executive (or such survivor) starts to
receive monthly benefits under the Pension Plans. If
supplemental pension payment begins before the
Executive's 62nd birthday, the benefit calculation
set forth in "A" above shall not be reduced for early
commencement, notwithstanding any reduction provided
under the Pension Plans.
(ii) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, the Executive and
his family will remain eligible for retiree medical
and life insurance benefits under the applicable
plans of the Company, on the same terms and
conditions (including without limitation any
provisions concerning payment of premiums,
deductibles and co-payments) that apply to retirees
of the Company on the Effective Date; provided,
however, that such coverage shall be secondary to any
benefits the Executive or his family becomes eligible
to receive under a comparable program of a subsequent
employer.
-6-
<PAGE> 7
(iii) Nothing in this Agreement shall be construed to
reduce or impair in any way the Executive's rights
and benefits under any plans of the Company,
including any rights and benefits that he may accrue
under such plans after the date hereof and prior to
his termination of employment with the Company.
(k) VACATION AND PERQUISITES.
(i) The Executive shall be entitled to a minimum of four
weeks paid vacation annually and shall also be
entitled to receive such perquisites as are generally
provided to other senior executives of the Company in
accordance with the then current policies and
practices of the Company.
(ii) The Company shall reimburse the Executive for all
business expenses incurred in the normal course of
business.
(iii) The Company shall reimburse the Executive for all
legal fees attendant to the review of this Agreement,
and shall advance and reimburse the Executive for all
legal fees attendant to the enforcement of his rights
hereunder; provided that, to the extent that the
Company is successful in its defense of a claim by
the Executive to enforce rights hereunder, the
Executive shall not be entitled to reimbursement and
shall repay any amount advanced to him, for the
Executive's legal fees attributable to the portion of
the claim with respect to which the Company is
successful.
3. SEVERANCE BENEFITS UPON TERMINATION. If the Executive's employment
with the Company: (i) other than as described in clause (iii), is terminated by
the Company for any reason other than for Cause; (ii) other than as described in
clause (iii), is terminated by the Executive's resignation under circumstances
constituting Good Reason; or (iii) following a Change of Control, is terminated
by the Company other than for Cause or is terminated by the Executive for Good
Reason, then, during the Continuation Period, the Executive shall be eligible to
receive the severance benefits described in this Section 3.
(a) BASE SALARY CONTINUATION. The Company will pay the Executive
his base salary equivalent, at the rate in effect immediately
prior to the Termination Date (or if the Executive has
resigned for Good Reason by virtue of the Company having
reduced his rate of base salary, at the rate of base salary in
effect prior to such reduction) consistent with normal payroll
practice The payments following the Termination Date shall be
in lieu of any and all severance pay to which the Executive
might otherwise be entitled under any plan or program of the
Company or any of its Subsidiaries or Affiliates. The
Executive may elect that, following a Change of Control, the
Executive shall receive such payments (or any remaining
payments) in a discounted lump sum (calculated using the
Federal short-term rate under Section
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<PAGE> 8
1274(d) of the Code prevailing at the time that payment is to
be made (as described in the next sentence)). Such election
may be made within the first 30 days of this Agreement or
within the last 30 days of any calendar year during the term
of this Agreement and any payment pursuant to such election
shall be made on the later of (i) the first day of the
calendar year that is at least twelve months after such
election; (ii) the date that the Executive becomes entitled to
such payment; and (iii) the date of the Change of Control. The
Executive's election of a lump sum hereunder shall not affect
his rights to receive the other amounts described in this
Section 3 for the entire Continuation Period. If the Executive
receives such lump sum payment, then for purposes of the
pension calculations under Section 2(j) and 3(h), and for
purposes of all employee benefits provided by the Company
(hereunder or otherwise) that are affected by the compensation
or earnings of the Executive, the payments shall nonetheless
be deemed to have been received at the time they otherwise
would have been payable hereunder if the Executive had not
elected the lump sum.
(b) INCENTIVE COMPENSATION.
(i) The Executive will be eligible for an equivalent MIP
award reflecting business and personal performance at
target level; such award will be paid to the
Executive in accordance with the Company's normal
payment practices for the MIP at the time payments
under the MIP are made to other executives of the
Company. The Executive's equivalent MIP award for any
partial calendar year at the end of the Continuation
Period will be prorated based on a fraction, the
numerator of which is the number of days in such
calendar year up to and including the last day of the
Continuation Period, and the denominator of which is
365. If the Executive has elected a discounted lump
sum payment as described in subsection (a), then the
payments provided in this subsection (b)(i) shall
also be paid in a discounted lump sum, which shall be
calculated and paid as (and have the impact on
employee benefits) described in subsection (a).
(ii) The Executive will be fully vested in any awards that
were made to him under any Company Equity Plan prior
to the Termination Date to the extent that the
vesting of such awards was conditioned upon continued
service; provided that, the term of such awards shall
be determined in accordance with the provisions of
the applicable Company Equity Plan.
Except for the payments and other benefits provided in this
subsection (b), the Executive shall have no right to any other
payment or benefit under the MIP, the Company Equity Plan or
any other annual or long-term incentive plan of the Company.
Without limiting the generality of the preceding sentence,
this Agreement shall not confer any right on the Executive
following the Termination Date to be
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<PAGE> 9
granted any further awards under any Company Equity Plan or
any subsequent long-term incentive plan.
(c) HEALTH AND WELFARE BENEFIT. The Executive will be considered
to have attained the greater of his actual age or age 55 for
purposes of qualifying for retiree benefits provided by the
Company. In lieu of any benefit described under Section
2(j)(ii), until the later of the end of the Continuation
Period or the date the Executive attains age 55 (at which time
the Executive shall be eligible for retiree benefits), the
Executive and his family will remain eligible for medical,
life insurance and dental benefits under the applicable plans
of the Company, on the same terms and conditions (including
without limitation any provisions concerning payment of
premiums, deductibles and co-payments) that apply to employees
of the Company; provided, however, that such coverage shall be
secondary to any benefits the Executive or his family becomes
eligible to receive under a comparable program of a subsequent
employer. For the Continuation Period, the Executive shall be
eligible to participate (or continue to participate) in the
Company's other insurance and welfare programs which are
generally available to senior executives of the Company. If
any of the coverage described in this subsection (c) is
ordinarily provided on a self-insured basis but would be
taxable to the Executive on that basis, such coverage shall be
provided on an insured basis at the Company's expense.
(d) COMPANY CAR. Title to the automobile made available to the
Executive immediately prior to the Termination Date will be
transferred to him at no additional cost as of the Termination
Date; provided, however, that the Executive will be
responsible for all additional costs for the vehicle over and
above the Company's category cost for vehicles at his
executive level, and all income taxes, transfer taxes and
similar governmental charges regarding the transfer and new
registration of the vehicle
(e) OUTPLACEMENT SERVICES. The Executive will be eligible for
senior executive level Outplacement counseling with an
outplacement service selected and paid for by the Company
which outplacement service is reasonably acceptable to the
Executive.
(f) CAPITAL ACCUMULATION PLAN MAKE-UP. Following the Termination
Date, the Executive will be ineligible to participate in the
Company's Capital Accumulation Plan (the "CAP"). The Company
will pay the Executive the amounts it would have contributed
on his behalf to the CAP as matching contributions and/or
discretionary Company profit-sharing contributions during the
Continuation Period, assuming the Executive had elected to
participate in the CAP at the maximum level permitted
thereunder. All such payments will be made on an after-tax
basis. Subject to the last sentence of Section 3(a), payment
of matching contribution equivalents will be paid at
approximately the same time as the base salary equivalent
payments. Discretionary profit-sharing contribution
equivalents will be made at approximately the same time as the
Company makes such contributions (if any) to the CAP.
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<PAGE> 10
(g) LIFE INSURANCE AND LONG-TERM DISABILITY. The Executive shall
continue to be eligible for life insurance and long-term
disability benefits equals to those applicable to him on the
Termination Date, subject to the same terms and conditions
(including without limitation any provisions concerning
payment of premiums) that generally apply to senior executives
of the Company.
(h) PENSION BENEFITS. In lieu of any benefit otherwise payable
under Section 2(j)(i), the Executive (and his survivor) shall
be entitled to a supplemental benefit with respect to his
benefit under the Pension Plans calculated and payable in the
same manner as the benefit provided under Section 2(j)(i)
hereof, based on the greater of thirty (30) years of service
credit towards the total pension payable under the Pension
Plans and the actual years of such service credit that the
Executive would have earned if he continued to earn such
service credit through the Continuation Period (and including
for purposes of either calculation, in the same manner as in
Section 2(j)(i), but subject to Section 3(a) and (b)(i) if the
Executive makes the lump sum election described therein, any
amount of compensation continued during the Continuation
Period under this Section), irrespective of his age at the
time of his termination of employment. If supplemental pension
payment begins before the Executive's 62nd birthday, the
benefit calculation set forth in paragraph "A" of Section
2(j)(i) will only be reduced for early commencement if payment
begins before the Executive's 60th birthday and will utilize
an early commencement reduction factor of 3% per annum, rather
than 6%, if such benefit calculation is subject to such a
reduction under the Pension Plans.
(i) TAX GROSS-UP. If any payment or benefit to or for the benefit
of the Executive in connection with a Change of Control
(whether pursuant to the terms of this Agreement, or any other
plan or arrangement or agreement) is subject to the Excise Tax
(as hereinafter defined), the Company shall pay to the
Executive a full cash gross-up in an amount equal to (i) the
Excise Tax allocable to such payment or benefit; and (ii) any
Excise Tax and any state, federal or other income taxes on the
amounts described in clause (i) and this clause. For purposes
of this Section 3(i), the term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") and any similar tax that may hereafter be
imposed.
The amount of the gross-up payments to the Executive under
this Section 3(i) shall be estimated by a nationally
recognized firm of certified public accountants, which firm
shall not have provided services to the Company or any
Affiliate of the Company within the previous twelve months and
shall not provide services thereto in the following twelve
months, based upon the following assumptions:
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<PAGE> 11
(i) all payments and benefits to or for the benefit of
the Executive in connection with a Change of Control
or termination of the Executive's employment
following a Change of Control shall be deemed to be
"parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute
payments" shall be deemed to be subject to the Excise
Tax except to the extent that, in the opinion of tax
counsel selected by the firm of certified public
accountants charged with estimating the gross-up
payments to the Executive under this Section 3(i),
such payments or benefits are not subject to the
Excise Tax; and
(ii) the Executive shall be deemed to pay federal, state
and other income taxes at the highest marginal rate
of taxation for the applicable calendar year.
The estimated amount of the gross-up payments due the
Executive pursuant to this Section 3(i) shall be paid to the
Executive in a lump sum not later than thirty (30) business
days following the effective date of the termination. In the
event that the amount of the estimated payment is less than
the amount actually due to the Executive under this Section
3(i), the amount of any such shortfall shall be paid to the
Executive within ten (10) days after the existence of the
shortfall is discovered.
(j) NO IMPAIRMENT OF EXISTING RIGHTS. Nothing in this Agreement
shall be construed to reduce or impair in any way the
Executive's rights and benefits under the Pension Plans,
including any rights and benefits that he may accrue under the
Pension Plans after the date hereof and prior to his
termination of employment with the Company.
4. DEATH AND DISABILITY. For the purposes of this Agreement the
Executive will be determined to be totally disabled if he is unable to perform
the major duties of his position with the Company, as a result of illness or
injury, for a period of time exceeding 26 consecutive weeks.
(a) DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies
or becomes totally disabled during his employment with the
Company, the Executive or his estate, as the case may be, will
be entitled to receive benefits in accordance with the
policies of the Company.
(b) DEATH OR DISABILITY DURING CONTINUATION PERIOD. If the
Executive dies or becomes totally disabled during the
Continuation Period, the Executive or his estate, as the case
may be, will be entitled to the severance benefits provided
for in this Agreement (other than outplacement services), as
well as to the standard benefits and insurance payments under
the benefits plans of the Company then in effect (determined
as though his employment with the Company had terminated by
virtue of death or total disability).
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<PAGE> 12
5. CERTAIN COVENANTS.
(a) COVENANT NOT TO COMPETE. The Executive agrees that during the
period of his employment with the Company and continuing
through the Covenant Period:
(i) he will not engage in any executive-level activities,
whether as employee, agent proprietor, owner,
partner, contractor, stockholder (other than the
holder of less than 5% of the stock of a corporation
the securities of which are traded on a national
securities exchange or in the over-the-counter
market), director or otherwise, in competition with
the businesses conducted by the Company and its
Subsidiaries on the date hereof or in which they are
substantially engaged at any time during the Covenant
Period; and
(ii) he will not solicit, in competition with the Company
or any of its Subsidiaries, any person who is a
customer of the businesses conducted by the Company
or any of its Subsidiaries at the date hereof or any
businesses in which the Company or any of its
Subsidiaries are substantially engaged at any time
during the Covenant Period.
(b) TERRITORIAL REACH. The covenants contained in clauses (i) and
(ii) of subsection (a) of this Section 5 shall apply within
the territories in which the Company or any of its
Subsidiaries are actively engaged in the conduct of the
businesses described in such covenants at the relevant time,
including, without limitation, the territory in which
customers are then solicited.
(c) COVENANT NOT TO INDUCE TERMINATION OF EMPLOYMENT. The
Executive agrees that during the Covenant Period he will not,
without the prior written consent of the Company (which
consent may be withheld by the Company at its sole
discretion), induce or attempt to persuade any employee of the
Company or any of its Subsidiaries to terminate his or her
employment relationship in order to enter into any other
employment, whether or not such other employment is
competitive with the Company or any of its Subsidiaries.
(d) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The
Executive agrees that he will not, at any time during the
Covenant Period or thereafter, make use, for his own benefit
or the benefit of any other person or entity, of Confidential
Information of any kind or character, nor divulge Confidential
Information except to the extent the Chairman and Chief
Executive Officer of the Company(1) or the Board may so
authorize in writing, and that within ten days of the
Termination Date the Executive will surrender to the Company
all records, in whatever form maintained (including without
limitation records maintained as computer files) and other
documents and materials obtained by the Executive or entrusted
to him during the course of his employment by the Company or
any of its Subsidiaries or
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<PAGE> 13
Affiliates (together with all copies thereof) which related to
any such Confidential Information. Nothing set forth in this
subsection (d), however, shall be interpreted to prohibit the
Executive from disclosing any such information as may be
required by law, including pursuant to any court or government
decree or subpoena, or from disclosing or using information
generally known by people of his expertise and position in the
industry.
(e) REMEDIES. Without limiting the right of the Company to pursue
all other legal and equitable remedies available for violation
by the Executive of the covenants contained in this Section,
it is expressly agreed that if the Executive materially
breaches the covenants set forth in this Section and fails to
cure such breach to the reasonable satisfaction of the Company
within 30 days after written notice thereof, the Company will
have no further obligation to pay or provide any of the
severance benefits described in Section 3(a) or (b) above. In
addition, the Executive acknowledges that a breach of any of
the covenants set forth in this Section may result in material
irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be
entitled, in addition to any other rights or remedies it may
have (including without limitation the remedy provided in the
preceding sentence), to obtain a temporary restraining order
and a preliminary or permanent injunction enjoining or
restraining the Executive from engaging in activities
prohibited by this Section or requiring his compliance with
the affirmative obligations provided for herein.
(f) ENFORCEABILITY. It is the intent and understanding of each
party hereto that if in any action before any court or agency
legally empowered to enforce the covenants contained in this
Section any term, restriction, covenant or promise contained
herein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to
make it enforceable by such court or agency.
(g) APPLICATION TO PECHINEY. Notwithstanding any provision in this
Agreement to the contrary, the restrictions described in
subsections (a) - (c) of this Section shall only limit the
Executive's activities with respect to Pechiney and its
employees, if Pechiney announces, following appropriate action
of its Board of Directors, that it has abandoned plans to
dispose of the operations of the Company.
6. NO UNFAVORABLE COMMENTS. The Company agrees to refrain from making
now or any time in the future any comment reflecting unfavorably upon the
Executive to the press, any individual or entity with whom the Executive has a
business relationship or any individual or entity making an inquiry as to the
Executive's employment relationship with the Company, except to the extent that
any such comment may relate to circumstances underlying a termination of the
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<PAGE> 14
Executive's employment for Cause. The Executive agrees to refrain from making
now or at any time in the future any comment reflecting unfavorably upon any
member of the Pechiney Group (including the Company) or any current or former
directors, officers or employees of any member of the Pechiney Group to the
press, any employees of any member of the Pechiney Group or any individual or
entity with whom any member of the Pechiney Group has a business relationship,
except to the extent that any such comment may relate to circumstances
underlying a termination of the Executive's employment for Good Reason.
7. FULL SATISFACTION; RELEASE. The Executive agrees that the payments
and other benefits to be provided pursuant to this Agreement shall be in full
satisfaction of any and all claims for payment or any other benefits that he may
have against the Company or any of its Subsidiaries or Affiliates arising out of
(i) his employment with the Company or his status as an executive of the Company
or any of the Company's Subsidiaries, Affiliates or divisions, or (ii) the
termination of such employment and status; excluding (A) claims that arise out
of an asserted breach of this Agreement and (B) claims for indemnification the
Executive may now or in the future have under any bylaw, agreement or otherwise.
In addition, in consideration of the agreements set forth herein, the Company,
on the one hand, and the Executive, on the other hand, release and waive all
claims, causes of action or the like arising on or before the date hereof,
regardless of whether or not known at present (including, without limitation,
any claims arising under the Age Discrimination in Employment Act of 1967, Title
VII of the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991,
the Equal Pay Act of 1962, the Americans with Disabilities Act of 1990, or any
other federal, state or local statute or ordinance; but excluding, in the case
of both the Company and the Executive, any claims that arise out of an asserted
breach of the terms of this Agreement), that either has or may have in the
future against the other and, in the case of the Company, their respective
successors, shareholders, directors, officers, agents and employees, regarding
all matters relating to the Executive's service as an employee of the Company or
any of its Subsidiaries, Affiliates or divisions, and to the termination of such
relationships, including, without limitation, all claims related to the payment
of compensation and benefits and all claims arising under any Federal or state
statute or regulation. The Executive and the Company shall execute as of the
Termination Date any further documents as may reasonably be requested by the
other in order to evidence and give effect to the provisions of this Section.
8. SOURCE OF PAYMENTS. All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Executive shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create, a
trust of any kind, or a fiduciary relationship, between the Company and the
Executive or any other person. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company.
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<PAGE> 15
9. FUTURE COOPERATION. The Executive agrees that following termination
of his employment with the Company he will make himself available to assist with
or consult in transition matters or any then pending or future governmental or
regulatory investigation, civil or administrative proceeding or arbitration
related to the Executive's duties while employed by the Company, subject to the
Executive's other personal and business commitments. The Company will promptly
pay the Executive, at the rate of $3,000 for each day or portion thereof for
which the Executive so assists or consults, and reimburse the Executive for all
reasonable costs and expenses, including attorneys' fees, incurred by the
Executive in connection with any such activities, proceedings or arbitration.
10. TAX WITHHOLDING. All amounts payable to the Executive pursuant to
this Agreement shall be subject to all legal requirements with respect to the
withholding of taxes including FICA.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; CONDITION; AMENDMENTS. This Agreement sets
forth the entire understanding of the parties hereto with
respect to the subject matter hereof and cannot be amended or
modified except by a writing signed by all such parties. If
Pechiney announces, following appropriate action of its Board
of Directors, that it has abandoned plans to dispose of the
operations of the Company, this Agreement shall continue to be
in force and effect and shall govern the employment
relationship between the Executive and the Company. The waiver
by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement or of any
subsequent breach by such party of a provision of this
Agreement.
(b) ASSIGNMENT AND DELEGATION. Neither this Agreement nor any
right, duty or obligation hereunder shall be assignable or
delegable by the Executive. This Agreement and all the
Company's rights, duties and obligations hereunder may be
assigned by the Company to any person or entity that succeeds
to the interest of the Company (regardless of whether such
succession does or does not occur by operation of law) by
reason of the sale of all or a portion of the Company's stock,
a merger, consolidation or reorganization involving the
Company, or, unless the Company otherwise elects in writing, a
sale of the assets of the business of the Company (or a
portion thereof) in which the Executive performs, or will
perform, a majority of his services. Upon any such assignment,
delegation or transfer, any such business entity shall be
deemed to be substituted for all purposes as the Company
hereunder, and the Company shall cause such successor
expressly to assume such obligations. Notwithstanding the
foregoing, (i) no assignment, delegation or transfer by the
Company shall relieve the Company of its obligations under
this Agreement; and (ii) nothing in this subsection shall
affect the definition of "Change of Control," or the rights
that the Executive accrues in connection with a Change of
Control, even if the Company assigns, transfers or delegates
(or may do so) its rights, duties or obligations in connection
therewith.
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<PAGE> 16
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and
the same instrument.
(d) HEADINGS. The headings of the Sections of this Agreement are
included solely for convenience of reference and shall not be
construed or interpreted in any way as affecting the meaning
of such Sections.
(e) GOVERNING LAW. This Agreement is governed by, and construed
and interpreted in accordance with, the internal laws of the
State of Illinois without giving effect to the choice of law
provisions thereof. Any dispute under this Agreement shall be
adjudicated by a court of competent jurisdiction in the State
of Illinois.
(f) INDEMNIFICATION. The Company will indemnify the Executive to
the fullest extent permitted by the laws of the state of
incorporation in effect at that time, or certificate of
incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The foregoing
indemnification shall continue to apply following the
Termination Date for acts or omissions by the Executive while
an employee of the Company. To the extent that the Company
maintains insurance providing coverage to its officers or
former officers within the scope of the foregoing, such
insurance shall cover the Executive.
(g) SURVIVORSHIP. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 28th day of May, 1999.
AMERICAN NATIONAL CAN COMPANY
By: /s/ JEAN-PIERRE RODIER
--------------------------------------
Jean-Pierre Rodier
Chairman of the Board
AMERICAN NATIONAL CAN GROUP, INC.
By: /s/ JEAN-PIERRE RODIER
--------------------------------------
Jean-Pierre Rodier
Chairman of the Board
EXECUTIVE
/s/ EDWARD A. LAPEKAS
-----------------------------------------
Edward A. Lapekas
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<PAGE> 1
EXHIBIT 10.22
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 28, 1999 ("Effective Date"), by and between
AMERICAN NATIONAL CAN COMPANY, a Delaware corporation, AMERICAN NATIONAL CAN
GROUP, INC., a Delaware corporation (collectively, subject to Section 11(a), the
"Company"), and the individual named on the signature page hereof (the
"Executive").
WHEREAS, the Executive is employed by American National Can Company
("ANCC"), and the Executive and ANCC desire to enter into this Agreement, in
connection with the anticipated reorganization of ANCC, which will result in its
operations being continued by American National Can Group, Inc. ("ANCG"),
pertaining to the terms of the employment of the Executive by the Company; and
WHEREAS, the Executive and ANCC desire that this Agreement shall
constitute an Amendment and Restatement of the existing Agreement between them
with respect to Executive's employment with ANCC, and the Executive and the
Company desire that this Amendment and Restatement shall remain effective
irrespective of whether the aforementioned reorganization occurs;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "AFFILIATE" means, with respect to any person (including
without limitation the Company), any corporation or other
entity that, directly or indirectly, controls or is controlled
by such person, or that is under common control with such
person.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means (A) serious misconduct or gross negligence in
the performance of the Executive's employment duties; (B)
willful disobedience by the Executive of lawful directions
received from or policies established by the Chairman and
Chief Executive Officer of the Company, any other executive or
executives to whom the Executive reports or the Board, which
continues for more than thirty (30) days after the Company
notifies the Executive of its intention to terminate his
employment on account of such disobedience; or (C) commission
by the Executive of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on
the business, reputation or financial situation of the
Company. The Executive shall be permitted to respond and
defend himself before the Executive Committee of the Board
within 15 days
<PAGE> 2
after written notification of any proposed termination for
Cause which shall specify in detail the reasons for such
termination.
(d) "CHANGE OF CONTROL" means a change in control of ANCC or ANCG
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not it is then subject to such reporting
requirement; provided that, without limitation, a Change of
Control shall be deemed to have occurred if (A) any
individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any
syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 or the General Rules and
Regulations under the Exchange Act), directly or indirectly,
of securities of ANCC or ANCG representing 25% or more of the
combined voting power of its then outstanding securities
entitled to vote in the election of directors; (B) the
stockholders of ANCC or ANCG approve a merger, consolidation
or other transaction involving ANCC or ANCG as a result of
which the stockholders of ANCC or ANCG immediately before the
transaction will not own at least 50% of the surviving or
resulting entity; or (c) during any period of two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constituted the Board and any new directors, whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters
(3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least two-thirds thereof.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMPANY EQUITY PLAN" means any stock option, restricted
stock, stock appreciation right, phantom stock, equity
incentive or similar plan under which awards are denominated
in, or the value of which is determined by reference to,
equity securities of the Company.
(g) "CONFIDENTIAL INFORMATION" includes, without limitation, the
client lists of Pechiney and its Subsidiaries and Affiliates
(including the Company), their respective trade secrets, any
confidential information about (or provided by) any customer
or supplier, or prospective or former customer or supplier, of
Pechiney or any of its Subsidiaries or Affiliates (including
the Company), information concerning the business or financial
affairs of Pechiney or any of its Subsidiaries or Affiliates
(including the Company), including books and records,
commitments, procedures, plans and prospectuses, strategies,
or
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<PAGE> 3
current or prospective transactions or businesses, and any
other "inside information": (i) which has not been disclosed
publicly by Pechiney or one of its Subsidiaries or Affiliates
(including the Company), or with its consent, (ii) which is
otherwise not a matter of public knowledge or (iii) which is a
matter of public knowledge and the Executive has reason to
know that such information became a matter of public knowledge
through an unauthorized disclosure.
(h) "CONTINUATION PERIOD" means the period beginning on the
Termination Date and ending on the second anniversary thereof.
(i) "COVENANT PERIOD" means the period beginning on the Effective
Date and ending on the second anniversary of the Termination
Date.
(j) "GOOD REASON" means (A) a material reduction in the
Executive's status, duties or responsibilities as in effect on
the date of this Agreement, or (B) a reduction in the
Executive's annual target compensation opportunity, defined as
the sum of (I) base salary; (II) targeted annual incentive
award; and (III) subject to the next sentence, the targeted
long-term incentive award under any Company Equity Plan,
payable by either the Company or a successor company for a
calendar year, or (C) the Executive is required to relocate
outside of a fifty mile radius of his current office without
his prior written consent following a Change of Control, or
(D) the Company fails to pay Executive any amount otherwise
vested and due under the Agreement, any prior agreement, or
any plan or policy of the Company, which such failure is not
cured within thirty (30) days following written notice of
failure given to the Company, or (E) the Company fails to
obtain an agreement to expressly assume the executive
employment Agreement from any successor company to the
Company, or (F) the Company is in material breach of the
Agreement, which breach is not cured within thirty (30) days
following written notice of breach given to the Company. For
purposes of clause (B): (i) the value of an option grant shall
be determined based on the methodology utilized by the
Company, from time to time, to determine the size of awards to
employees eligible for long-term incentive compensation; (ii)
if, at the time that a long-term incentive award is made, it
is designated by the Company as being made on account of more
than one calendar year, then it shall be prorated, for
purposes of determining the amount of the targeted long-term
incentive award for any such calendar year, over the years on
account of which it is being made; and (iii) the Executive's
targeted long-term incentive award will be considered to have
been materially reduced if his targeted award is reduced at a
rate greater than, or increased at a rate lesser than the rate
that the awards of the other senior executives of the Company
are reduced or increased, respectively.
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(k) "MIP" means the Company's Management Incentive Plan, as the
same may be amended from time to time, or any successor plan.
(1) "PECHINEY GROUP" means Pechiney and its Subsidiaries and
Affiliates (including the Company).
(m) "PENSION PLANS" means, collectively, the Company's Pension
Plan for Salaried Employees and certain other non-qualified
pension plans or arrangements that the Company maintains for
its senior executives.
(n) "SUBSIDIARY" of a person (including without limitation the
Company) means a corporation with respect to which such
person, directly or indirectly, has the power, whether through
the ownership of voting securities, by contract or otherwise,
to elect at least a majority of the members of such
corporation's board of directors.
(o) "TERMINATION DATE" means the effective date of the Executive's
termination of employment with the Company.
2. GENERAL TERMS OF EMPLOYMENT.
(a) NATURE AND TERM OF THIS AGREEMENT. The term of this Agreement
shall commence on the Effective Date. This Agreement does not
constitute a guarantee of continued employment but instead
provides for certain rights and benefits for the Executive
during his employment, and in the event his employment with
the Company terminates under the circumstances described
herein.
(b) DUTIES AND RESPONSIBILITIES. For so long as the Executive's
employment with the Company continues, the Executive will
devote his full business time, attention and best efforts to
the affairs of the Company, will faithfully serve the Company,
and in all respects conform to and comply with the lawful
directions and instructions consistent with his position as
Senior Vice President -- Beverage Cans Europe and Asia of
ANCC, and Executive Vice President -- ANCG and President --
Beverage Cans Europe and Asia of ANCG given to him by the
Company's Chairman and Chief Executive Officer, any other
executive or executives to whom he reports, or the Board.
(c) AUTHORITY. In performing his duties hereunder, the Executive
shall have the authority customarily held by others holding
similar senior executive level positions within the Company,
as defined in the authority guidelines established by the
Board of Directors or the Chairman and Chief Executive Officer
of the Company.
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<PAGE> 5
(d) OUTSIDE BOARD MEMBERSHIPS. Executive may serve on the boards
of directors of up to two (2) for-profit business corporations
which do not compete with the business of the Company, such
memberships subject to prior approval by the Chairman and
Chief Executive Officer of the Company.
(e) BASE SALARY. The Executive shall receive a salary of
$25,916.67 per month, $311,000 on an annual basis. The
Executive's base salary shall be reviewed periodically by the
Company at the times and in a manner consistent with the
review of base salaries of the Company's other senior
executives, and, based on such review, the amount of the
Executive's base salary may be adjusted upwards but not
downwards, in the discretion of the Company, taking into
account the Executive's performance and any other factors the
Company deems relevant; provided that, while the Executive is
employed hereunder, his salary shall be increased for each
calendar year by a rate that equals or exceeds the average
rate of increase of the base salaries of employees of the
Company generally.
(f) ANNUAL INCENTIVE PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company's annual incentive plan, the MIP, at a target
and maximum opportunity as established by the Compensation
Committee of the Board. The MIP may be adjusted or modified
from time to time by the Company in its discretion.
(g) COMPANY EQUITY PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company Equity Plan, at a target opportunity similar in
amount to other senior executives at his level. The Company
Equity Plan may be adjusted or modified from time to time by
the Company in its discretion.
(h) COMPANY CAR. The Executive will be eligible for a company car
in accordance with the provisions of the Company's Lease Car
Program.
(i) EMPLOYEE BENEFITS. The Executive shall be eligible to
participate in employee benefit plans sponsored or maintained
by the Company, including, without limitation, life insurance,
medical insurance, hospitalization, dental insurance, short
and long term disability insurance, pension, retirement,
401(k) and deferred compensation plans, whether now existing
or established hereafter. Nothing in this Section 2(i) shall
limit the Company's right to amend or terminate any such plan
in accordance with the procedures set forth therein.
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<PAGE> 6
(j) AGE 60 POST-TERMINATION BENEFITS.
(i) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, and the Executive
does not have thirty (30) years of service credit
towards the total pension benefit calculation under
the Pension Plans, then the Company will pay to the
Executive pursuant to this Agreement a supplemental
monthly pension benefit equal to the excess, if any,
of "A" over "B", where:
"A" equals the aggregate monthly benefit the
Executive would have received under the
Pension Plans upon retirement assuming that
the Executive had thirty (30) years of
service credit towards the total pension
benefit calculation under the Pension Plans
based upon the highest consecutive sixty
(60) months of compensation (as defined for
purposes of the Pension Plans) the Executive
received from the Company during his
employment (including, for purposes of the
calculation, but subject to Section 3(a) and
(b)(i) if the Executive makes the lump sum
election described therein, any amount of
compensation continued during any
Continuation Period under Section 3); and
"B" equals the aggregate monthly amount
payable to the Executive under the Pension
Plans, such amount to be calculated in
accordance with the provisions of the
Pension Plans.
Amounts payable to a survivor of the Executive under
the Pension Plans shall be calculated similarly. The
Company shall determine in its discretion whether,
and to the extent that, any supplemental monthly
pension benefit required under this subsection shall
be paid through a Pension Plan that is intended to be
qualified under Section 401(a) of the Code, or any
successor provision thereto, or under a Pension Plan
or other arrangement that is not intended to be so
qualified. The amount, if any, payable under this
subsection will be determined based on the same form
of payment (e.g. single life annuity or joint and
survivor annuity) that the Executive elects under the
Pension Plans. Payment of such amount will begin at
the time the Executive (or such survivor) starts to
receive monthly benefits under the Pension Plans. If
supplemental pension payment begins before the
Executive's 62nd birthday, the benefit calculation
set forth in "A" above shall not be reduced for early
commencement, notwithstanding any reduction provided
under the Pension Plans.
(ii) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, the Executive and
his family will remain eligible for retiree medical
and life insurance benefits under the applicable
plans of the Company, on the same terms and
conditions (including without limitation any
provisions
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<PAGE> 7
concerning payment of premiums, deductibles and
co-payments) that apply to retirees of the Company on
the Effective Date; provided, however, that such
coverage shall be secondary to any benefits the
Executive or his family becomes eligible to receive
under a comparable program of a subsequent employer.
(iii) Nothing in this Agreement shall be construed to
reduce or impair in any way the Executive's rights
and benefits under any plans of the Company,
including any rights and benefits that he may accrue
under such plans after the date hereof and prior to
his termination of employment with the Company.
(k) VACATION AND PERQUISITES.
(i) The Executive shall be entitled to a minimum of four
weeks paid vacation annually and shall also be
entitled to receive such perquisites as are generally
provided to other senior executives of the Company in
accordance with the then current policies and
practices of the Company.
(ii) The Company shall reimburse the Executive for all
business expenses incurred in the normal course of
business.
(iii) The Company shall reimburse the Executive for all
legal fees attendant to the review of this Agreement,
and shall advance and reimburse the Executive for all
legal fees attendant to the enforcement of his rights
hereunder; provided that, to the extent that the
Company is successful in its defense of a claim by
the Executive to enforce rights hereunder, the
Executive shall not be entitled to reimbursement and
shall repay any amount advanced to him, for the
Executive's legal fees attributable to the portion of
the claim with respect to which the Company is
successful.
3. SEVERANCE BENEFITS UPON TERMINATION. If the Executive's employment
with the Company: (i) is terminated by the Company for any reason other than for
Cause; or (ii) is terminated by the Executive's resignation under circumstances
constituting Good Reason, then, during the Continuation Period (except for the
benefits described in subsection (c), which shall be provided as described in
such subsection), the Executive shall be eligible to receive the severance
benefits described in this Section 3.
(a) BASE SALARY CONTINUATION. The Company will pay the Executive
his base salary equivalent, at the rate in effect immediately
prior to the Termination Date (or if the Executive has
resigned for Good Reason by virtue of the Company having
reduced his rate of base salary, at the rate of base salary in
effect prior to such reduction) consistent with normal payroll
practice The payments following the Termination Date shall be
in lieu of any and all severance pay to which the Executive
might
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<PAGE> 8
otherwise be entitled under any plan or program of the Company
or any of its Subsidiaries or Affiliates. The Executive may
elect that, following a Change of Control, the Executive shall
receive such payments (or any remaining payments) in a
discounted lump sum (calculated using the Federal short-term
rate under Section 1274(d) of the Code prevailing at the time
that payment is to be made (as described in the next
sentence)). Such election may be made within the first 30 days
of this Agreement or within the last 30 days of any calendar
year during the term of this Agreement and any payment
pursuant to such election shall be made on the later of (i)
the first day of the calendar year that is at least twelve
months after such election; (ii) the date that the Executive
becomes entitled to such payment; and (iii) the date of the
Change of Control. The Executive's election of a lump sum
hereunder shall not affect his rights to receive the other
amounts described in this Section 3 for the entire
Continuation Period. If the Executive receives such lump sum
payment, then for purposes of the pension calculations under
Section 2(j) and 3(h), and for purposes of all employee
benefits provided by the Company (hereunder or otherwise) that
are affected by the compensation or earnings of the Executive,
the payments shall nonetheless be deemed to have been received
at the time they otherwise would have been payable hereunder
if the Executive had not elected the lump sum.
(b) INCENTIVE COMPENSATION.
(i) The Executive will be eligible for an equivalent MIP
award reflecting business and personal performance at
target level; such award will be paid to the
Executive in accordance with the Company's normal
payment practices for the MIP at the time payments
under the MIP are made to other executives of the
Company. The Executive's equivalent MIP award for any
partial calendar year at the end of the Continuation
Period will be prorated based on a fraction, the
numerator of which is the number of days in such
calendar year up to and including the last day of the
Continuation Period, and the denominator of which is
365. If the Executive has elected a discounted lump
sum payment as described in subsection (a), then the
payments provided in this subsection (b)(i) shall
also be paid in a discounted lump sum, which shall be
calculated and paid as (and have the impact on
employee benefits) described in subsection (a).
(ii) The Executive will be fully vested in any awards that
were made to him under any Company Equity Plan prior
to the Termination Date to the extent that the
vesting of such awards was conditioned upon continued
service; provided that, the term of such awards shall
be determined in accordance with the provisions of
the applicable Company Equity Plan.
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<PAGE> 9
Except for the payments and other benefits provided in this
subsection (b), the Executive shall have no right to any other
payment or benefit under the MIP, the Company Equity Plan or
any other annual or long-term incentive plan of the Company.
Without limiting the generality of the preceding sentence,
this Agreement shall not confer any right on the Executive
following the Termination Date to be granted any further
awards under any Company Equity Plan or any subsequent
long-term incentive plan.
(c) HEALTH AND WELFARE BENEFIT. The Executive will be considered
to have attained the greater of his actual age or age 55 for
purposes of qualifying for retiree benefits provided by the
Company. In lieu of any benefit described under Section
2(j)(ii), until the later of the end of the Continuation
Period or the date the Executive attains age 55 (at which time
the Executive shall be eligible for retiree benefits), the
Executive and his family will remain eligible for medical,
life insurance and dental benefits under the applicable plans
of the Company, on the same terms and conditions (including
without limitation any provisions concerning payment of
premiums, deductibles and co-payments) that apply to employees
of the Company; provided, however, that such coverage shall be
secondary to any benefits the Executive or his family becomes
eligible to receive under a comparable program of a subsequent
employer. For the Continuation Period, the Executive shall be
eligible to participate (or continue to participate) in the
Company's other insurance and welfare programs which are
generally available to senior executives of the Company. If
any of the coverage described in this subsection (c) is
ordinarily provided on a self-insured basis but would be
taxable to the Executive on that basis, such coverage shall be
provided on an insured basis at the Company's expense.
(d) COMPANY CAR. Title to the automobile made available to the
Executive immediately prior to the Termination Date will be
transferred to him at no additional cost as of the Termination
Date; provided, however, that the Executive will be
responsible for all additional costs for the vehicle over and
above the Company's category cost for vehicles at his
executive level, and all income taxes, transfer taxes and
similar governmental charges regarding the transfer and new
registration of the vehicle
(e) OUTPLACEMENT SERVICES. The Executive will be eligible for
senior executive level Outplacement counseling with an
outplacement service selected and paid for by the Company
which outplacement service is reasonably acceptable to the
Executive.
(f) CAPITAL ACCUMULATION PLAN MAKE-UP. Following the Termination
Date, the Executive will be ineligible to participate in the
Company's Capital Accumulation Plan (the "CAP"). The Company
will pay the Executive the amounts it would have contributed
on his behalf to the CAP as matching contributions and/or
discretionary Company profit-sharing contributions during the
Continuation Period, assuming the Executive had elected to
participate in the CAP at the maximum level permitted
thereunder. All such payments will be made on an after-tax
basis. Subject to the last
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<PAGE> 10
sentence of Section 3(a), payment of matching contribution
equivalents will be paid at approximately the same time as the
base salary equivalent payments. Discretionary profit-sharing
contribution equivalents will be made at approximately the
same time as the Company makes such contributions (if any) to
the CAP.
(g) LIFE INSURANCE AND LONG-TERM DISABILITY. The Executive shall
continue to be eligible for life insurance and long-term
disability benefits equals to those applicable to him on the
Termination Date, subject to the same terms and conditions
(including without limitation any provisions concerning
payment of premiums) that generally apply to senior executives
of the Company.
(h) PENSION BENEFITS. In lieu of any benefit otherwise payable
under Section 2(j)(i), the Executive (and his survivor) shall
be entitled to a supplemental benefit with respect to his
benefit under the Pension Plans calculated and payable in the
same manner as the benefit provided under Section 2(j)(i)
hereof, based on the greater of thirty (30) years of service
credit towards the total pension payable under the Pension
Plans and the actual years of such service credit that the
Executive would have earned if he continued to earn such
service credit through the Continuation Period (and including
for purposes of either calculation, in the same manner as in
Section 2(j)(i), but subject to Section 3(a) and (b)(i) if the
Executive makes the lump sum election described therein, any
amount of compensation continued during the Continuation
Period under this Section), irrespective of his age at the
time of his termination of employment. If supplemental pension
payment begins before the Executive's 62nd birthday, the
benefit calculation set forth in paragraph "A" of Section
2(j)(i) will only be reduced for early commencement if payment
begins before the Executive's 60th birthday and will utilize
an early commencement reduction factor of 3% per annum, rather
than 6%, if such benefit calculation is subject to such a
reduction under the Pension Plans.
(i) TAX GROSS-UP. If any payment or benefit to or for the benefit
of the Executive in connection with a Change of Control
(whether pursuant to the terms of this Agreement, or any other
plan or arrangement or agreement) is subject to the Excise Tax
(as hereinafter defined), the Company shall pay to the
Executive a full cash gross-up in an amount equal to (i) the
Excise Tax allocable to such payment or benefit; and (ii) any
Excise Tax and any state, federal or other income taxes on the
amounts described in clause (i) and this clause. For purposes
of this Section 3(i), the term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") and any similar tax that may hereafter be
imposed.
The amount of the gross-up payments to the Executive under
this Section 3(i) shall be estimated by a nationally
recognized firm of certified public accountants, which firm
shall not have provided services to the Company or any
Affiliate of the
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<PAGE> 11
Company within the previous twelve months and shall not
provide services thereto in the following twelve months, based
upon the following assumptions:
(i) all payments and benefits to or for the benefit of the
Executive in connection with a Change of Control or
termination of the Executive's employment following a
Change of Control shall be deemed to be "parachute
payments" within the meaning of Section 280G(b)(2) of
the Code, and all "excess parachute payments" shall be
deemed to be subject to the Excise Tax except to the
extent that, in the opinion of tax counsel selected by
the firm of certified public accountants charged with
estimating the gross-up payments to the Executive
under this Section 3(i), such payments or benefits are
not subject to the Excise Tax; and
(ii) the Executive shall be deemed to pay federal, state
and other income taxes at the highest marginal rate of
taxation for the applicable calendar year.
The estimated amount of the gross-up payments due the
Executive pursuant to this Section 3(i) shall be paid to the
Executive in a lump sum not later than thirty (30) business
days following the effective date of the termination. In the
event that the amount of the estimated payment is less than
the amount actually due to the Executive under this Section
3(i), the amount of any such shortfall shall be paid to the
Executive within ten (10) days after the existence of the
shortfall is discovered.
(j) NO IMPAIRMENT OF EXISTING RIGHTS. Nothing in this Agreement
shall be construed to reduce or impair in any way the
Executive's rights and benefits under the Pension Plans,
including any rights and benefits that he may accrue under the
Pension Plans after the date hereof and prior to his
termination of employment with the Company.
4. DEATH AND DISABILITY. For the purposes of this Agreement the
Executive will be determined to be totally disabled if he is unable to perform
the major duties of his position with the Company, as a result of illness or
injury, for a period of time exceeding 26 consecutive weeks.
(a) DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies
or becomes totally disabled during his employment with the
Company, the Executive or his estate, as the case may be, will
be entitled to receive benefits in accordance with the
policies of the Company.
(b) DEATH OR DISABILITY DURING CONTINUATION PERIOD. If the
Executive dies or becomes totally disabled during the
Continuation Period, the Executive or his estate, as the case
may be, will be entitled to the severance benefits provided
for in this Agreement (other than outplacement services), as
well as to the standard benefits and insurance
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<PAGE> 12
payments under the benefits plans of the Company then in
effect (determined as though his employment with the Company
had terminated by virtue of death or total disability).
5. CERTAIN COVENANTS.
(a) COVENANT NOT TO COMPETE. The Executive agrees that during the
period of his employment with the Company and continuing
through the Covenant Period:
(i) he will not engage in any executive-level activities,
whether as employee, agent proprietor, owner, partner,
contractor, stockholder (other than the holder of less
than 5% of the stock of a corporation the securities
of which are traded on a national securities exchange
or in the over-the-counter market), director or
otherwise, in competition with the businesses
conducted by the Company and its Subsidiaries on the
date hereof or in which they are substantially engaged
at any time during the Covenant Period; and
(ii) he will not solicit, in competition with the Company
or any of its Subsidiaries, any person who is a
customer of the businesses conducted by the Company or
any of its Subsidiaries at the date hereof or any
businesses in which the Company or any of its
Subsidiaries are substantially engaged at any time
during the Covenant Period.
(b) TERRITORIAL REACH. The covenants contained in clauses (i) and
(ii) of subsection (a) of this Section 5 shall apply within
the territories in which the Company or any of its
Subsidiaries are actively engaged in the conduct of the
businesses described in such covenants at the relevant time,
including, without limitation, the territory in which
customers are then solicited.
(c) COVENANT NOT TO INDUCE TERMINATION OF EMPLOYMENT. The
Executive agrees that during the Covenant Period he will not,
without the prior written consent of the Company (which
consent may be withheld by the Company at its sole
discretion), induce or attempt to persuade any employee of the
Company or any of its Subsidiaries to terminate his or her
employment relationship in order to enter into any other
employment, whether or not such other employment is
competitive with the Company or any of its Subsidiaries.
(d) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The
Executive agrees that he will not, at any time during the
Covenant Period or thereafter, make use, for his own benefit
or the benefit of any other person or entity, of Confidential
Information of any kind or character, nor divulge Confidential
Information except to the extent the Chairman and Chief
Executive Officer of the Company(1) or the Board may so
authorize in writing, and that within ten days of the
Termination
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<PAGE> 13
Date the Executive will surrender to the Company all records,
in whatever form maintained (including without limitation
records maintained as computer files) and other documents and
materials obtained by the Executive or entrusted to him during
the course of his employment by the Company or any of its
Subsidiaries or Affiliates (together with all copies thereof)
which related to any such Confidential Information. Nothing
set forth in this subsection (d), however, shall be
interpreted to prohibit the Executive from disclosing any such
information as may be required by law, including pursuant to
any court or government decree or subpoena, or from disclosing
or using information generally known by people of his
expertise and position in the industry.
(e) REMEDIES. Without limiting the right of the Company to pursue
all other legal and equitable remedies available for violation
by the Executive of the covenants contained in this Section,
it is expressly agreed that if the Executive materially
breaches the covenants set forth in this Section and fails to
cure such breach to the reasonable satisfaction of the Company
within 30 days after written notice thereof, the Company will
have no further obligation to pay or provide any of the
severance benefits described in Section 3(a) or (b) above. In
addition, the Executive acknowledges that a breach of any of
the covenants set forth in this Section may result in material
irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be
entitled, in addition to any other rights or remedies it may
have (including without limitation the remedy provided in the
preceding sentence), to obtain a temporary restraining order
and a preliminary or permanent injunction enjoining or
restraining the Executive from engaging in activities
prohibited by this Section or requiring his compliance with
the affirmative obligations provided for herein.
(f) ENFORCEABILITY. It is the intent and understanding of each
party hereto that if in any action before any court or agency
legally empowered to enforce the covenants contained in this
Section any term, restriction, covenant or promise contained
herein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to
make it enforceable by such court or agency.
(g) APPLICATION TO PECHINEY. Notwithstanding any provision in this
Agreement to the contrary, the restrictions described in
subsections (a) - (c) of this Section shall only limit the
Executive's activities with respect to Pechiney and its
employees, if Pechiney announces, following appropriate action
of its Board of Directors, that it has abandoned plans to
dispose of the operations of the Company.
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<PAGE> 14
6. NO UNFAVORABLE COMMENTS. The Company agrees to refrain from making
now or any time in the future any comment reflecting unfavorably upon the
Executive to the press, any individual or entity with whom the Executive has a
business relationship or any individual or entity making an inquiry as to the
Executive's employment relationship with the Company, except to the extent that
any such comment may relate to circumstances underlying a termination of the
Executive's employment for Cause. The Executive agrees to refrain from making
now or at any time in the future any comment reflecting unfavorably upon any
member of the Pechiney Group (including the Company) or any current or former
directors, officers or employees of any member of the Pechiney Group to the
press, any employees of any member of the Pechiney Group or any individual or
entity with whom any member of the Pechiney Group has a business relationship,
except to the extent that any such comment may relate to circumstances
underlying a termination of the Executive's employment for Good Reason.
7. FULL SATISFACTION; RELEASE. The Executive agrees that the payments
and other benefits to be provided pursuant to this Agreement shall be in full
satisfaction of any and all claims for payment or any other benefits that he may
have against the Company or any of its Subsidiaries or Affiliates arising out of
(i) his employment with the Company or his status as an executive of the Company
or any of the Company's Subsidiaries, Affiliates or divisions, or (ii) the
termination of such employment and status; excluding (A) claims that arise out
of an asserted breach of this Agreement and (B) claims for indemnification the
Executive may now or in the future have under any bylaw, agreement or otherwise.
In addition, in consideration of the agreements set forth herein, the Company,
on the one hand, and the Executive, on the other hand, release and waive all
claims, causes of action or the like arising on or before the date hereof,
regardless of whether or not known at present (including, without limitation,
any claims arising under the Age Discrimination in Employment Act of 1967, Title
VII of the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991,
the Equal Pay Act of 1962, the Americans with Disabilities Act of 1990, or any
other federal, state or local statute or ordinance; but excluding, in the case
of both the Company and the Executive, any claims that arise out of an asserted
breach of the terms of this Agreement), that either has or may have in the
future against the other and, in the case of the Company, their respective
successors, shareholders, directors, officers, agents and employees, regarding
all matters relating to the Executive's service as an employee of the Company or
any of its Subsidiaries, Affiliates or divisions, and to the termination of such
relationships, including, without limitation, all claims related to the payment
of compensation and benefits and all claims arising under any Federal or state
statute or regulation. The Executive and the Company shall execute as of the
Termination Date any further documents as may reasonably be requested by the
other in order to evidence and give effect to the provisions of this Section.
8. SOURCE OF PAYMENTS. All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Executive shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company
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<PAGE> 15
in meeting its obligations hereunder. Nothing contained in this Agreement, and
no action taken pursuant to its provisions, shall create or be construed to
create, a trust of any kind, or a fiduciary relationship, between the Company
and the Executive or any other person. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.
9. FUTURE COOPERATION. The Executive agrees that following
termination of his employment with the Company he will make himself available to
assist with or consult in transition matters or any then pending or future
governmental or regulatory investigation, civil or administrative proceeding or
arbitration related to the Executive's duties while employed by the Company,
subject to the Executive's other personal and business commitments. The Company
will promptly pay the Executive, at the rate of $1,500 for each day or portion
thereof for which the Executive so assists or consults, and reimburse the
Executive for all reasonable costs and expenses, including attorneys' fees,
incurred by the Executive in connection with any such activities, proceedings or
arbitration.
10. TAX WITHHOLDING. All amounts payable to the Executive pursuant to
this Agreement shall be subject to all legal requirements with respect to the
withholding of taxes including FICA.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; CONDITION; AMENDMENTS. This Agreement sets
forth the entire understanding of the parties hereto with
respect to the subject matter hereof and cannot be amended or
modified except by a writing signed by all such parties. If
Pechiney announces, following appropriate action of its Board
of Directors, that it has abandoned plans to dispose of the
operations of the Company, this Agreement shall continue to be
in force and effect and shall govern the employment
relationship between the Executive and the Company. The waiver
by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement or of any
subsequent breach by such party of a provision of this
Agreement.
(b) ASSIGNMENT AND DELEGATION. Neither this Agreement nor any
right, duty or obligation hereunder shall be assignable or
delegable by the Executive. This Agreement and all the
Company's rights, duties and obligations hereunder may be
assigned by the Company to any person or entity that succeeds
to the interest of the Company (regardless of whether such
succession does or does not occur by operation of law) by
reason of the sale of all or a portion of the Company's stock,
a merger, consolidation or reorganization involving the
Company, or, unless the Company otherwise elects in writing, a
sale of the assets of the business of the Company (or a
portion thereof) in which the Executive performs, or will
perform, a majority of his services. Upon any such assignment,
delegation or transfer, any such business entity shall be
deemed to be substituted for all purposes as the Company
hereunder, and the Company shall cause such successor
expressly to assume such obligations. Notwithstanding the
foregoing, (i) no assignment, delegation or transfer by the
Company shall relieve the Company of its obligations
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<PAGE> 16
under this Agreement; and (ii) nothing in this subsection
shall affect the definition of "Change of Control," or the
rights that the Executive accrues in connection with a Change
of Control, even if the Company assigns, transfers or
delegates (or may do so) its rights, duties or obligations in
connection therewith.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and
the same instrument.
(d) HEADINGS. The headings of the Sections of this Agreement are
included solely for convenience of reference and shall not be
construed or interpreted in any way as affecting the meaning
of such Sections.
(e) GOVERNING LAW. This Agreement is governed by, and construed
and interpreted in accordance with, the internal laws of the
State of Illinois without giving effect to the choice of law
provisions thereof. Any dispute under this Agreement shall be
adjudicated by a court of competent jurisdiction in the State
of Illinois.
(f) INDEMNIFICATION. The Company will indemnify the Executive to
the fullest extent permitted by the laws of the state of
incorporation in effect at that time, or certificate of
incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The foregoing
indemnification shall continue to apply following the
Termination Date for acts or omissions by the Executive while
an employee of the Company. To the extent that the Company
maintains insurance providing coverage to its officers or
former officers within the scope of the foregoing, such
insurance shall cover the Executive.
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<PAGE> 17
(g) SURVIVORSHIP. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 28th day of May, 1999.
AMERICAN NATIONAL CAN COMPANY
By: /s/ JEAN-PIERRE RODIER
-------------------------------------
Jean-Pierre Rodier
Chairman of the Board
AMERICAN NATIONAL CAN GROUP, INC.
By: /s/ JEAN-PIERRE RODIER
-------------------------------------
Jean-Pierre Rodier
Chairman of the Board
EXECUTIVE
/s/ MICHAEL D. HERDMAN
----------------------------------------
Michael D. Herdman
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<PAGE> 1
EXHIBIT 10.23
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 28, 1999 ("Effective Date"), by and between
AMERICAN NATIONAL CAN COMPANY, a Delaware corporation, AMERICAN NATIONAL CAN
GROUP, INC., a Delaware corporation (collectively, subject to Section 11(a), the
"Company"), and the individual named on the signature page hereof (the
"Executive").
WHEREAS, the Executive is employed by American National Can Company
"ANCC"), and the Executive and ANCC desire to enter into this Agreement, in
connection with the anticipated reorganization of ANCC, which will result in its
operations being continued by American National Can Group, Inc. ("ANCG"),
pertaining to the terms of the employment of the Executive by the Company; and
WHEREAS, the Executive and ANCC desire that this Agreement shall
constitute an Amendment and Restatement of the existing Agreement between them
with respect to Executive's employment with ANCC, and the Executive and the
Company desire that this Amendment and Restatement shall remain effective
irrespective of whether the aforementioned reorganization occurs;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "AFFILIATE" means, with respect to any person (including
without limitation the Company), any corporation or other
entity that, directly or indirectly, controls or is controlled
by such person, or that is under common control with such
person.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means (A) serious misconduct or gross negligence in
the performance of the Executive's employment duties; (B)
willful disobedience by the Executive of lawful directions
received from or policies established by the Chairman and
Chief Executive Officer of the Company, any other executive or
executives to whom the Executive reports or the Board, which
continues for more than thirty (30) days after the Company
notifies the Executive of its intention to terminate his
employment on account of such disobedience; or (C) commission
by the Executive of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on
the business, reputation or financial situation of the
Company. The Executive shall be permitted to respond and
defend himself before the Executive Committee of the Board
within 15 days
<PAGE> 2
after written notification of any proposed termination for
Cause which shall specify in detail the reasons for such
termination.
(d) "CHANGE OF CONTROL" means a change in control of ANCC or ANCG
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not it is then subject to such reporting
requirement; provided that, without limitation, a Change of
Control shall be deemed to have occurred if (A) any
individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any
syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 or the General Rules and
Regulations under the Exchange Act), directly or indirectly,
of securities of ANCC or ANCG representing 25% or more of the
combined voting power of its then outstanding securities
entitled to vote in the election of directors; (B) the
stockholders of ANCC or ANCG approve a merger, consolidation
or other transaction involving ANCC or ANCG as a result of
which the stockholders of ANCC or ANCG immediately before the
transaction will not own at least 50% of the surviving or
resulting entity; or (c) during any period of two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constituted the Board and any new directors, whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters
(3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least two-thirds thereof.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMPANY EQUITY PLAN" means any stock option, restricted
stock, stock appreciation right, phantom stock, equity
incentive or similar plan under which awards are denominated
in, or the value of which is determined by reference to,
equity securities of the Company.
(g) "CONFIDENTIAL INFORMATION" includes, without limitation, the
client lists of Pechiney and its Subsidiaries and Affiliates
(including the Company), their respective trade secrets, any
confidential information about (or provided by) any customer
or supplier, or prospective or former customer or supplier, of
Pechiney or any of its Subsidiaries or Affiliates (including
the Company), information concerning the business or financial
affairs of Pechiney or any of its Subsidiaries or Affiliates
(including the Company), including books and records,
commitments, procedures, plans and prospectuses, strategies,
or
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<PAGE> 3
current or prospective transactions or businesses, and any
other "inside information": (i) which has not been disclosed
publicly by Pechiney or one of its Subsidiaries or Affiliates
(including the Company), or with its consent, (ii) which is
otherwise not a matter of public knowledge or (iii) which is a
matter of public knowledge and the Executive has reason to
know that such information became a matter of public knowledge
through an unauthorized disclosure.
(h) "CONTINUATION PERIOD" means the period beginning on the
Termination Date and ending on the second anniversary thereof.
(i) "COVENANT PERIOD" means the period beginning on the Effective
Date and ending on the second anniversary of the Termination
Date.
(j) "GOOD REASON" means (A) a material reduction in the
Executive's status, duties or responsibilities as in effect on
the date of this Agreement, or (B) a reduction in the
Executive's annual target compensation opportunity, defined as
the sum of (I) base salary; (II) targeted annual incentive
award; and (III) subject to the next sentence, the targeted
long-term incentive award under any Company Equity Plan,
payable by either the Company or a successor company for a
calendar year, or (C) the Executive is required to relocate
outside of a fifty mile radius of his current office without
his prior written consent following a Change of Control, or
(D) the Company fails to pay Executive any amount otherwise
vested and due under the Agreement, any prior agreement, or
any plan or policy of the Company, which such failure is not
cured within thirty (30) days following written notice of
failure given to the Company, or (E) the Company fails to
obtain an agreement to expressly assume the executive
employment Agreement from any successor company to the
Company, or (F) the Company is in material breach of the
Agreement, which breach is not cured within thirty (30) days
following written notice of breach given to the Company. For
purposes of clause (B): (i) the value of an option grant shall
be determined based on the methodology utilized by the
Company, from time to time, to determine the size of awards to
employees eligible for long-term incentive compensation; (ii)
if, at the time that a long-term incentive award is made, it
is designated by the Company as being made on account of more
than one calendar year, then it shall be prorated, for
purposes of determining the amount of the targeted long-term
incentive award for any such calendar year, over the years on
account of which it is being made; and (iii) the Executive's
targeted long-term incentive award will be considered to have
been materially reduced if his targeted award is reduced at a
rate greater than, or increased at a rate lesser than the rate
that the awards of the other senior executives of the Company
are reduced or increased, respectively.
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<PAGE> 4
(k) "MIP" means the Company's Management Incentive Plan, as the
same may be amended from time to time, or any successor plan.
(l) "PECHINEY GROUP" means Pechiney and its Subsidiaries and
Affiliates (including the Company).
(m) "PENSION PLANS" means, collectively, the Company's Pension
Plan for Salaried Employees and certain other non-qualified
pension plans or arrangements that the Company maintains for
its senior executives.
(n) "SUBSIDIARY" of a person (including without limitation the
Company) means a corporation with respect to which such
person, directly or indirectly, has the power, whether through
the ownership of voting securities, by contract or otherwise,
to elect at least a majority of the members of such
corporation's board of directors.
(o) "TERMINATION DATE" means the effective date of the Executive's
termination of employment with the Company.
2. GENERAL TERMS OF EMPLOYMENT.
(a) NATURE AND TERM OF THIS AGREEMENT. The term of this Agreement
shall commence on the Effective Date. This Agreement does not
constitute a guarantee of continued employment but instead
provides for certain rights and benefits for the Executive
during his employment, and in the event his employment with
the Company terminates under the circumstances described
herein.
(b) DUTIES AND RESPONSIBILITIES. For so long as the Executive's
employment with the Company continues, the Executive will
devote his full business time, attention and best efforts to
the affairs of the Company, will faithfully serve the Company,
and in all respects conform to and comply with the lawful
directions and instructions consistent with his position as
Senior Vice President and Chief Financial Officer of ANCC, and
Executive Vice President -- ANCG and Chief Financial Officer
of ANCG given to him by the Company's Chairman and Chief
Executive Officer, any other executive or executives to whom
he reports, or the Board.
(c) AUTHORITY. In performing his duties hereunder, the Executive
shall have the authority customarily held by others holding
similar senior executive level positions within the Company,
as defined in the authority guidelines established by the
Board of Directors or the Chairman and Chief Executive Officer
of the Company.
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<PAGE> 5
(d) OUTSIDE BOARD MEMBERSHIPS. Executive may serve on the boards
of directors of up to two (2) for-profit business corporations
which do not compete with the business of the Company, such
memberships subject to prior approval by the Chairman and
Chief Executive Officer of the Company.
(e) BASE SALARY. The Executive shall receive a salary of $22,125
per month, $265,500 on an annual basis. The Executive's base
salary shall be reviewed periodically by the Company at the
times and in a manner consistent with the review of base
salaries of the Company's other senior executives, and, based
on such review, the amount of the Executive's base salary may
be adjusted upwards but not downwards, in the discretion of
the Company, taking into account the Executive's performance
and any other factors the Company deems relevant; provided
that, while the Executive is employed hereunder, his salary
shall be increased for each calendar year by a rate that
equals or exceeds the average rate of increase of the base
salaries of employees of the Company generally.
(f) ANNUAL INCENTIVE PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company's annual incentive plan, the MIP, at a target
and maximum opportunity as established by the Compensation
Committee of the Board. The MIP may be adjusted or modified
from time to time by the Company in its discretion.
(g) COMPANY EQUITY PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company Equity Plan, at a target opportunity similar in
amount to other senior executives at his level. The Company
Equity Plan may be adjusted or modified from time to time by
the Company in its discretion.
(h) COMPANY CAR. The Executive will be eligible for a company car
in accordance with the provisions of the Company's Lease Car
Program.
(i) EMPLOYEE BENEFITS. The Executive shall be eligible to
participate in employee benefit plans sponsored or maintained
by the Company, including, without limitation, life insurance,
medical insurance, hospitalization, dental insurance, short
and long term disability insurance, pension, retirement,
401(k) and deferred compensation plans, whether now existing
or established hereafter. Nothing in this Section 2(i) shall
limit the Company's right to amend or terminate any such plan
in accordance with the procedures set forth therein.
(j) AGE 60 POST-TERMINATION BENEFITS.
(i) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, and the
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<PAGE> 6
Executive does not have thirty (30) years of service credit
towards the total pension benefit calculation under the
Pension Plans, then the Company will pay to the Executive
pursuant to this Agreement a supplemental monthly pension
benefit equal to the excess, if any, of "A" over "B", where:
"A" equals the aggregate monthly benefit the
Executive would have received under the
Pension Plans upon retirement assuming that
the Executive had thirty (30) years of
service credit towards the total pension
benefit calculation under the Pension Plans
based upon the highest consecutive sixty
(60) months of compensation (as defined for
purposes of the Pension Plans) the Executive
received from the Company during his
employment (including, for purposes of the
calculation, but subject to Section 3(a) and
(b)(i) if the Executive makes the lump sum
election described therein, any amount of
compensation continued during any
Continuation Period under Section 3); and
"B" equals the aggregate monthly amount
payable to the Executive under the Pension
Plans, such amount to be calculated in
accordance with the provisions of the
Pension Plans.
Amounts payable to a survivor of the Executive under
the Pension Plans shall be calculated similarly. The
Company shall determine in its discretion whether,
and to the extent that, any supplemental monthly
pension benefit required under this subsection shall
be paid through a Pension Plan that is intended to be
qualified under Section 401(a) of the Code, or any
successor provision thereto, or under a Pension Plan
or other arrangement that is not intended to be so
qualified. The amount, if any, payable under this
subsection will be determined based on the same form
of payment (e.g. single life annuity or joint and
survivor annuity) that the Executive elects under the
Pension Plans. Payment of such amount will begin at
the time the Executive (or such survivor) starts to
receive monthly benefits under the Pension Plans. If
supplemental pension payment begins before the
Executive's 62nd birthday, the benefit calculation
set forth in "A" above shall not be reduced for early
commencement, notwithstanding any reduction provided
under the Pension Plans.
(ii) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, the Executive and
his family will remain eligible for retiree medical
and life insurance benefits under the applicable
plans of the Company, on the same terms and
conditions (including without limitation any
provisions concerning payment of premiums,
deductibles and co-payments) that apply to retirees
of the Company on the Effective Date; provided,
however, that such coverage shall be secondary to any
benefits the Executive or his
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<PAGE> 7
family becomes eligible to receive under a comparable
program of a subsequent employer.
(iii) Nothing in this Agreement shall be construed to
reduce or impair in any way the Executive's rights
and benefits under any plans of the Company,
including any rights and benefits that he may accrue
under such plans after the date hereof and prior to
his termination of employment with the Company.
(k) VACATION AND PERQUISITES.
(i) The Executive shall be entitled to a minimum of four
weeks paid vacation annually and shall also be
entitled to receive such perquisites as are generally
provided to other senior executives of the Company in
accordance with the then current policies and
practices of the Company.
(ii) The Company shall reimburse the Executive for all
business expenses incurred in the normal course of
business.
(iii) The Company shall reimburse the Executive for all
legal fees attendant to the review of this Agreement,
and shall advance and reimburse the Executive for all
legal fees attendant to the enforcement of his rights
hereunder; provided that, to the extent that the
Company is successful in its defense of a claim by
the Executive to enforce rights hereunder, the
Executive shall not be entitled to reimbursement and
shall repay any amount advanced to him, for the
Executive's legal fees attributable to the portion of
the claim with respect to which the Company is
successful.
3. SEVERANCE BENEFITS UPON TERMINATION. If the Executive's employment
with the Company: (i) is terminated by the Company for any reason other than for
Cause; or (ii) is terminated by the Executive's resignation under circumstances
constituting Good Reason, then, during the Continuation Period (except for the
benefits described in subsection (c), which shall be provided as described in
such subsection), the Executive shall be eligible to receive the severance
benefits described in this Section 3.
(a) BASE SALARY CONTINUATION. The Company will pay the Executive
his base salary equivalent, at the rate in effect immediately
prior to the Termination Date (or if the Executive has
resigned for Good Reason by virtue of the Company having
reduced his rate of base salary, at the rate of base salary in
effect prior to such reduction) consistent with normal payroll
practice The payments following the Termination Date shall be
in lieu of any and all severance pay to which the Executive
might otherwise be entitled under any plan or program of the
Company or any of its Subsidiaries or Affiliates. The
Executive may elect that, following a Change of Control, the
Executive shall receive such payments (or any remaining
payments) in
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<PAGE> 8
a discounted lump sum (calculated using the Federal short-term
rate under Section 1274(d) of the Code prevailing at the time
that payment is to be made (as described in the next
sentence)). Such election may be made within the first 30 days
of this Agreement or within the last 30 days of any calendar
year during the term of this Agreement and any payment
pursuant to such election shall be made on the later of (i)
the first day of the calendar year that is at least twelve
months after such election; (ii) the date that the Executive
becomes entitled to such payment; and (iii) the date of the
Change of Control. The Executive's election of a lump sum
hereunder shall not affect his rights to receive the other
amounts described in this Section 3 for the entire
Continuation Period. If the Executive receives such lump sum
payment, then for purposes of the pension calculations under
Section 2(j) and 3(h), and for purposes of all employee
benefits provided by the Company (hereunder or otherwise) that
are affected by the compensation or earnings of the Executive,
the payments shall nonetheless be deemed to have been received
at the time they otherwise would have been payable hereunder
if the Executive had not elected the lump sum.
(b) INCENTIVE COMPENSATION.
(i) The Executive will be eligible for an equivalent MIP
award reflecting business and personal performance at
target level; such award will be paid to the
Executive in accordance with the Company's normal
payment practices for the MIP at the time payments
under the MIP are made to other executives of the
Company. The Executive's equivalent MIP award for any
partial calendar year at the end of the Continuation
Period will be prorated based on a fraction, the
numerator of which is the number of days in such
calendar year up to and including the last day of the
Continuation Period, and the denominator of which is
365. If the Executive has elected a discounted lump
sum payment as described in subsection (a), then the
payments provided in this subsection (b)(i) shall
also be paid in a discounted lump sum, which shall be
calculated and paid as (and have the impact on
employee benefits) described in subsection (a).
(ii) The Executive will be fully vested in any awards that
were made to him under any Company Equity Plan prior
to the Termination Date to the extent that the
vesting of such awards was conditioned upon continued
service; provided that, the term of such awards shall
be determined in accordance with the provisions of
the applicable Company Equity Plan.
Except for the payments and other benefits provided in this
subsection (b), the Executive shall have no right to any other
payment or benefit under the MIP, the Company Equity Plan or
any other annual or long-term incentive plan of the Company.
Without limiting the generality of the preceding sentence,
this Agreement
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<PAGE> 9
shall not confer any right on the Executive following the
Termination Date to be granted any further awards under any
Company Equity Plan or any subsequent long-term incentive
plan.
(c) HEALTH AND WELFARE BENEFIT. The Executive will be considered
to have attained the greater of his actual age or age 55 for
purposes of qualifying for retiree benefits provided by the
Company. In lieu of any benefit described under Section
2(j)(ii), until the later of the end of the Continuation
Period or the date the Executive attains age 55 (at which time
the Executive shall be eligible for retiree benefits), the
Executive and his family will remain eligible for medical,
life insurance and dental benefits under the applicable plans
of the Company, on the same terms and conditions (including
without limitation any provisions concerning payment of
premiums, deductibles and co-payments) that apply to employees
of the Company; provided, however, that such coverage shall be
secondary to any benefits the Executive or his family becomes
eligible to receive under a comparable program of a subsequent
employer. For the Continuation Period, the Executive shall be
eligible to participate (or continue to participate) in the
Company's other insurance and welfare programs which are
generally available to senior executives of the Company. If
any of the coverage described in this subsection (c) is
ordinarily provided on a self-insured basis but would be
taxable to the Executive on that basis, such coverage shall be
provided on an insured basis at the Company's expense.
(d) COMPANY CAR. Title to the automobile made available to the
Executive immediately prior to the Termination Date will be
transferred to him at no additional cost as of the Termination
Date; provided, however, that the Executive will be
responsible for all additional costs for the vehicle over and
above the Company's category cost for vehicles at his
executive level, and all income taxes, transfer taxes and
similar governmental charges regarding the transfer and new
registration of the vehicle
(e) OUTPLACEMENT SERVICES. The Executive will be eligible for
senior executive level Outplacement counseling with an
outplacement service selected and paid for by the Company
which outplacement service is reasonably acceptable to the
Executive.
(f) CAPITAL ACCUMULATION PLAN MAKE-UP. Following the Termination
Date, the Executive will be ineligible to participate in the
Company's Capital Accumulation Plan (the "CAP"). The Company
will pay the Executive the amounts it would have contributed
on his behalf to the CAP as matching contributions and/or
discretionary Company profit-sharing contributions during the
Continuation Period, assuming the Executive had elected to
participate in the CAP at the maximum level permitted
thereunder. All such payments will be made on an after-tax
basis. Subject to the last sentence of Section 3(a), payment
of matching contribution equivalents will be paid at
approximately the same time as the base salary equivalent
payments. Discretionary profit-sharing contribution
equivalents will be made at approximately the same time as the
Company makes such contributions (if any) to the CAP.
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<PAGE> 10
(g) LIFE INSURANCE AND LONG-TERM DISABILITY. The Executive shall
continue to be eligible for life insurance and long-term
disability benefits equals to those applicable to him on the
Termination Date, subject to the same terms and conditions
(including without limitation any provisions concerning
payment of premiums) that generally apply to senior executives
of the Company.
(h) PENSION BENEFITS. In lieu of any benefit otherwise payable
under Section 2(j)(i), the Executive (and his survivor) shall
be entitled to a supplemental benefit with respect to his
benefit under the Pension Plans calculated and payable in the
same manner as the benefit provided under Section 2(j)(i)
hereof, based on the greater of thirty (30) years of service
credit towards the total pension payable under the Pension
Plans and the actual years of such service credit that the
Executive would have earned if he continued to earn such
service credit through the Continuation Period (and including
for purposes of either calculation, in the same manner as in
Section 2(j)(i), but subject to Section 3(a) and (b)(i) if the
Executive makes the lump sum election described therein, any
amount of compensation continued during the Continuation
Period under this Section), irrespective of his age at the
time of his termination of employment. If supplemental pension
payment begins before the Executive's 62nd birthday, the
benefit calculation set forth in paragraph "A" of Section
2(j)(i) will only be reduced for early commencement if payment
begins before the Executive's 60th birthday and will utilize
an early commencement reduction factor of 3% per annum, rather
than 6%, if such benefit calculation is subject to such a
reduction under the Pension Plans.
(i) TAX GROSS-UP. If any payment or benefit to or for the benefit
of the Executive in connection with a Change of Control
(whether pursuant to the terms of this Agreement, or any other
plan or arrangement or agreement) is subject to the Excise Tax
(as hereinafter defined), the Company shall pay to the
Executive a full cash gross-up in an amount equal to (i) the
Excise Tax allocable to such payment or benefit; and (ii) any
Excise Tax and any state, federal or other income taxes on the
amounts described in clause (i) and this clause. For purposes
of this Section 3(i), the term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") and any similar tax that may hereafter be
imposed.
The amount of the gross-up payments to the Executive under
this Section 3(i) shall be estimated by a nationally
recognized firm of certified public accountants, which firm
shall not have provided services to the Company or any
Affiliate of the Company within the previous twelve months and
shall not provide services thereto in the following twelve
months, based upon the following assumptions:
(i) all payments and benefits to or for the benefit of
the Executive in connection with a Change of Control
or termination of the Executive's employment
following a Change of Control shall be deemed to be
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<PAGE> 11
"parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute
payments" shall be deemed to be subject to the Excise
Tax except to the extent that, in the opinion of tax
counsel selected by the firm of certified public
accountants charged with estimating the gross-up
payments to the Executive under this Section 3(i),
such payments or benefits are not subject to the
Excise Tax; and
(ii) the Executive shall be deemed to pay federal, state
and other income taxes at the highest marginal rate
of taxation for the applicable calendar year.
The estimated amount of the gross-up payments due the
Executive pursuant to this Section 3(i) shall be paid to the
Executive in a lump sum not later than thirty (30) business
days following the effective date of the termination. In the
event that the amount of the estimated payment is less than
the amount actually due to the Executive under this Section
3(i), the amount of any such shortfall shall be paid to the
Executive within ten (10) days after the existence of the
shortfall is discovered.
(j) NO IMPAIRMENT OF EXISTING RIGHTS. Nothing in this Agreement
shall be construed to reduce or impair in any way the
Executive's rights and benefits under the Pension Plans,
including any rights and benefits that he may accrue under the
Pension Plans after the date hereof and prior to his
termination of employment with the Company.
4. DEATH AND DISABILITY. For the purposes of this Agreement the
Executive will be determined to be totally disabled if he is unable to perform
the major duties of his position with the Company, as a result of illness or
injury, for a period of time exceeding 26 consecutive weeks.
(a) DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies
or becomes totally disabled during his employment with the
Company, the Executive or his estate, as the case may be, will
be entitled to receive benefits in accordance with the
policies of the Company.
(b) DEATH OR DISABILITY DURING CONTINUATION PERIOD. If the
Executive dies or becomes totally disabled during the
Continuation Period, the Executive or his estate, as the case
may be, will be entitled to the severance benefits provided
for in this Agreement (other than outplacement services), as
well as to the standard benefits and insurance payments under
the benefits plans of the Company then in effect (determined
as though his employment with the Company had terminated by
virtue of death or total disability).
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<PAGE> 12
5. CERTAIN COVENANTS.
(a) COVENANT NOT TO COMPETE. The Executive agrees that during the
period of his employment with the Company and continuing
through the Covenant Period:
(i) he will not engage in any executive-level activities,
whether as employee, agent proprietor, owner,
partner, contractor, stockholder (other than the
holder of less than 5% of the stock of a corporation
the securities of which are traded on a national
securities exchange or in the over-the-counter
market), director or otherwise, in competition with
the businesses conducted by the Company and its
Subsidiaries on the date hereof or in which they are
substantially engaged at any time during the Covenant
Period; and
(ii) he will not solicit, in competition with the Company
or any of its Subsidiaries, any person who is a
customer of the businesses conducted by the Company
or any of its Subsidiaries at the date hereof or any
businesses in which the Company or any of its
Subsidiaries are substantially engaged at any time
during the Covenant Period.
(b) TERRITORIAL REACH. The covenants contained in clauses (i) and
(ii) of subsection (a) of this Section 5 shall apply within
the territories in which the Company or any of its
Subsidiaries are actively engaged in the conduct of the
businesses described in such covenants at the relevant time,
including, without limitation, the territory in which
customers are then solicited.
(c) COVENANT NOT TO INDUCE TERMINATION OF EMPLOYMENT. The
Executive agrees that during the Covenant Period he will not,
without the prior written consent of the Company (which
consent may be withheld by the Company at its sole
discretion), induce or attempt to persuade any employee of the
Company or any of its Subsidiaries to terminate his or her
employment relationship in order to enter into any other
employment, whether or not such other employment is
competitive with the Company or any of its Subsidiaries.
(d) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The
Executive agrees that he will not, at any time during the
Covenant Period or thereafter, make use, for his own benefit
or the benefit of any other person or entity, of Confidential
Information of any kind or character, nor divulge Confidential
Information except to the extent the Chairman and Chief
Executive Officer of the Company(1) or the Board may so
authorize in writing, and that within ten days of the
Termination Date the Executive will surrender to the Company
all records, in whatever form maintained (including without
limitation records maintained as computer files) and other
documents and materials obtained by the Executive or entrusted
to him during the course of his employment by the Company or
any of its Subsidiaries or
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<PAGE> 13
Affiliates (together with all copies thereof) which related to
any such Confidential Information. Nothing set forth in this
subsection (d), however, shall be interpreted to prohibit the
Executive from disclosing any such information as may be
required by law, including pursuant to any court or government
decree or subpoena, or from disclosing or using information
generally known by people of his expertise and position in the
industry.
(e) REMEDIES. Without limiting the right of the Company to pursue
all other legal and equitable remedies available for violation
by the Executive of the covenants contained in this Section,
it is expressly agreed that if the Executive materially
breaches the covenants set forth in this Section and fails to
cure such breach to the reasonable satisfaction of the Company
within 30 days after written notice thereof, the Company will
have no further obligation to pay or provide any of the
severance benefits described in Section 3(a) or (b) above. In
addition, the Executive acknowledges that a breach of any of
the covenants set forth in this Section may result in material
irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be
entitled, in addition to any other rights or remedies it may
have (including without limitation the remedy provided in the
preceding sentence), to obtain a temporary restraining order
and a preliminary or permanent injunction enjoining or
restraining the Executive from engaging in activities
prohibited by this Section or requiring his compliance with
the affirmative obligations provided for herein.
(f) ENFORCEABILITY. It is the intent and understanding of each
party hereto that if in any action before any court or agency
legally empowered to enforce the covenants contained in this
Section any term, restriction, covenant or promise contained
herein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to
make it enforceable by such court or agency.
(g) APPLICATION TO PECHINEY. Notwithstanding any provision in this
Agreement to the contrary, the restrictions described in
subsections (a) - (c) of this Section shall only limit the
Executive's activities with respect to Pechiney and its
employees, if Pechiney announces, following appropriate action
of its Board of Directors, that it has abandoned plans to
dispose of the operations of the Company.
6. NO UNFAVORABLE COMMENTS. The Company agrees to refrain from making
now or any time in the future any comment reflecting unfavorably upon the
Executive to the press, any individual or entity with whom the Executive has a
business relationship or any individual or entity making an inquiry as to the
Executive's employment relationship with the Company, except to the extent that
any such comment may relate to circumstances underlying a termination of the
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<PAGE> 14
Executive's employment for Cause. The Executive agrees to refrain from making
now or at any time in the future any comment reflecting unfavorably upon any
member of the Pechiney Group (including the Company) or any current or former
directors, officers or employees of any member of the Pechiney Group to the
press, any employees of any member of the Pechiney Group or any individual or
entity with whom any member of the Pechiney Group has a business relationship,
except to the extent that any such comment may relate to circumstances
underlying a termination of the Executive's employment for Good Reason.
7. FULL SATISFACTION; RELEASE. The Executive agrees that the payments
and other benefits to be provided pursuant to this Agreement shall be in full
satisfaction of any and all claims for payment or any other benefits that he may
have against the Company or any of its Subsidiaries or Affiliates arising out of
(i) his employment with the Company or his status as an executive of the Company
or any of the Company's Subsidiaries, Affiliates or divisions, or (ii) the
termination of such employment and status; excluding (A) claims that arise out
of an asserted breach of this Agreement and (B) claims for indemnification the
Executive may now or in the future have under any bylaw, agreement or otherwise.
In addition, in consideration of the agreements set forth herein, the Company,
on the one hand, and the Executive, on the other hand, release and waive all
claims, causes of action or the like arising on or before the date hereof,
regardless of whether or not known at present (including, without limitation,
any claims arising under the Age Discrimination in Employment Act of 1967, Title
VII of the Civil Rights Act of 1964 as amended by the Civil Rights Act of 1991,
the Equal Pay Act of 1962, the Americans with Disabilities Act of 1990, or any
other federal, state or local statute or ordinance; but excluding, in the case
of both the Company and the Executive, any claims that arise out of an asserted
breach of the terms of this Agreement), that either has or may have in the
future against the other and, in the case of the Company, their respective
successors, shareholders, directors, officers, agents and employees, regarding
all matters relating to the Executive's service as an employee of the Company or
any of its Subsidiaries, Affiliates or divisions, and to the termination of such
relationships, including, without limitation, all claims related to the payment
of compensation and benefits and all claims arising under any Federal or state
statute or regulation. The Executive and the Company shall execute as of the
Termination Date any further documents as may reasonably be requested by the
other in order to evidence and give effect to the provisions of this Section.
8. SOURCE OF PAYMENTS. All payments provided under this Agreement,
other than payments made pursuant to a benefit plan which may provide otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Executive shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. Nothing contained in this Agreement, and no action
taken pursuant to its provisions, shall create or be construed to create, a
trust of any kind, or a fiduciary relationship, between the Company and the
Executive or any other person. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company.
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<PAGE> 15
9. FUTURE COOPERATION. The Executive agrees that following termination
of his employment with the Company he will make himself available to assist with
or consult in transition matters or any then pending or future governmental or
regulatory investigation, civil or administrative proceeding or arbitration
related to the Executive's duties while employed by the Company, subject to the
Executive's other personal and business commitments. The Company will promptly
pay the Executive, at the rate of $1,500 for each day or portion thereof for
which the Executive so assists or consults, and reimburse the Executive for all
reasonable costs and expenses, including attorneys' fees, incurred by the
Executive in connection with any such activities, proceedings or arbitration.
10. TAX WITHHOLDING. All amounts payable to the Executive pursuant to
this Agreement shall be subject to all legal requirements with respect to the
withholding of taxes including FICA.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; CONDITION; AMENDMENTS. This Agreement sets
forth the entire understanding of the parties hereto with
respect to the subject matter hereof and cannot be amended or
modified except by a writing signed by all such parties. If
Pechiney announces, following appropriate action of its Board
of Directors, that it has abandoned plans to dispose of the
operations of the Company, this Agreement shall continue to be
in force and effect and shall govern the employment
relationship between the Executive and the Company. The waiver
by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement or of any
subsequent breach by such party of a provision of this
Agreement.
(b) ASSIGNMENT AND DELEGATION. Neither this Agreement nor any
right, duty or obligation hereunder shall be assignable or
delegable by the Executive. This Agreement and all the
Company's rights, duties and obligations hereunder may be
assigned by the Company to any person or entity that succeeds
to the interest of the Company (regardless of whether such
succession does or does not occur by operation of law) by
reason of the sale of all or a portion of the Company's stock,
a merger, consolidation or reorganization involving the
Company, or, unless the Company otherwise elects in writing, a
sale of the assets of the business of the Company (or a
portion thereof) in which the Executive performs, or will
perform, a majority of his services. Upon any such assignment,
delegation or transfer, any such business entity shall be
deemed to be substituted for all purposes as the Company
hereunder, and the Company shall cause such successor
expressly to assume such obligations. Notwithstanding the
foregoing, (i) no assignment, delegation or transfer by the
Company shall relieve the Company of its obligations under
this Agreement; and (ii) nothing in this subsection shall
affect the definition of "Change of Control," or the rights
that the Executive accrues in connection with a Change of
Control, even if the Company assigns, transfers or delegates
(or may do so) its rights, duties or obligations in connection
therewith.
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<PAGE> 16
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and
the same instrument.
(d) HEADINGS. The headings of the Sections of this Agreement are
included solely for convenience of reference and shall not be
construed or interpreted in any way as affecting the meaning
of such Sections.
(e) GOVERNING LAW. This Agreement is governed by, and construed
and interpreted in accordance with, the internal laws of the
State of Illinois without giving effect to the choice of law
provisions thereof. Any dispute under this Agreement shall be
adjudicated by a court of competent jurisdiction in the State
of Illinois.
(f) INDEMNIFICATION. The Company will indemnify the Executive to
the fullest extent permitted by the laws of the state of
incorporation in effect at that time, or certificate of
incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The foregoing
indemnification shall continue to apply following the
Termination Date for acts or omissions by the Executive while
an employee of the Company. To the extent that the Company
maintains insurance providing coverage to its officers or
former officers within the scope of the foregoing, such
insurance shall cover the Executive.
(g) SURVIVORSHIP. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 28th day of May, 1999.
AMERICAN NATIONAL CAN COMPANY
By: /s/ JEAN-PIERRE RODIER
-------------------------------
Jean-Pierre Rodier
Chairman of the Board
AMERICAN NATIONAL CAN GROUP, INC.
By: /s/ JEAN-PIERRE RODIER
-------------------------------
Jean-Pierre Rodier
Chairman of the Board
EXECUTIVE
/s/ ALAN H. SCHUMAHER
----------------------------------
Alan H. Schumaher
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<PAGE> 1
EXHIBIT 10.24
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 28, 1999 ("Effective Date"), by and between
AMERICAN NATIONAL CAN COMPANY, a Delaware corporation, AMERICAN NATIONAL CAN
GROUP, INC., a Delaware corporation (collectively, subject to Section 11(a), the
"Company"), and the individual named on the signature page hereof (the
"Executive").
WHEREAS, the Executive is employed by American National Can Company
"ANCC"), and the Executive and ANCC desire to enter into this Agreement, in
connection with the anticipated reorganization of ANCC, which will result in its
operations being continued by American National Can Group, Inc. ("ANCG"),
pertaining to the terms of the employment of the Executive by the Company; and
WHEREAS, the Executive and ANCC desire that this Agreement shall
constitute an Amendment and Restatement of the existing Agreement between them
with respect to Executive's employment with ANCC, and the Executive and the
Company desire that this Amendment and Restatement shall remain effective
irrespective of whether the aforementioned reorganization occurs;
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINED TERMS. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "AFFILIATE" means, with respect to any person (including
without limitation the Company), any corporation or other
entity that, directly or indirectly, controls or is controlled
by such person, or that is under common control with such
person.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CAUSE" means (A) serious misconduct or gross negligence in
the performance of the Executive's employment duties; (B)
willful disobedience by the Executive of lawful directions
received from or policies established by the Chairman and
Chief Executive Officer of the Company, any other executive or
executives to whom the Executive reports or the Board, which
continues for more than thirty (30) days after the Company
notifies the Executive of its intention to terminate his
employment on account of such disobedience; or (C) commission
by the Executive of a crime involving fraud or moral turpitude
that can reasonably be expected to have an adverse effect on
the business, reputation or financial situation of the
Company. The Executive shall be permitted to respond and
defend himself before the Executive Committee of the Board
within 15 days
<PAGE> 2
after written notification of any proposed termination for
Cause which shall specify in detail the reasons for such
termination.
(d) "CHANGE OF CONTROL" means a change in control of ANCC or ANCG
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not it is then subject to such reporting
requirement; provided that, without limitation, a Change of
Control shall be deemed to have occurred if (A) any
individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, or any
syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 or the General Rules and
Regulations under the Exchange Act), directly or indirectly,
of securities of ANCC or ANCG representing 25% or more of the
combined voting power of its then outstanding securities
entitled to vote in the election of directors; (B) the
stockholders of ANCC or ANCG approve a merger, consolidation
or other transaction involving ANCC or ANCG as a result of
which the stockholders of ANCC or ANCG immediately before the
transaction will not own at least 50% of the surviving or
resulting entity; or (c) during any period of two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constituted the Board and any new directors, whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters
(3/4) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least two-thirds thereof.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMPANY EQUITY PLAN" means any stock option, restricted
stock, stock appreciation right, phantom stock, equity
incentive or similar plan under which awards are denominated
in, or the value of which is determined by reference to,
equity securities of the Company.
(g) "CONFIDENTIAL INFORMATION" includes, without limitation, the
client lists of Pechiney and its Subsidiaries and Affiliates
(including the Company), their respective trade secrets, any
confidential information about (or provided by) any customer
or supplier, or prospective or former customer or supplier, of
Pechiney or any of its Subsidiaries or Affiliates (including
the Company), information concerning the business or financial
affairs of Pechiney or any of its Subsidiaries or Affiliates
(including the Company), including books and records,
commitments, procedures, plans and prospectuses, strategies,
or
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<PAGE> 3
current or prospective transactions or businesses, and any
other "inside information": (i) which has not been disclosed
publicly by Pechiney or one of its Subsidiaries or Affiliates
(including the Company), or with its consent, (ii) which is
otherwise not a matter of public knowledge or (iii) which is a
matter of public knowledge and the Executive has reason to
know that such information became a matter of public knowledge
through an unauthorized disclosure.
(h) "CONTINUATION PERIOD" means the period beginning on the
Termination Date and ending on the second anniversary thereof.
(i) "COVENANT PERIOD" means the period beginning on the Effective
Date and ending on the second anniversary of the Termination
Date.
(j) "GOOD REASON" means (A) a material reduction in the
Executive's status, duties or responsibilities as in effect on
the date of this Agreement, or (B) a reduction in the
Executive's annual target compensation opportunity, defined as
the sum of (I) base salary; (II) targeted annual incentive
award; and (III) subject to the next sentence, the targeted
long-term incentive award under any Company Equity Plan,
payable by either the Company or a successor company for a
calendar year, or (C) the Executive is required to relocate
outside of a fifty mile radius of his current office without
his prior written consent following a Change of Control, or
(D) the Company fails to pay Executive any amount otherwise
vested and due under the Agreement, any prior agreement, or
any plan or policy of the Company, which such failure is not
cured within thirty (30) days following written notice of
failure given to the Company, or (E) the Company fails to
obtain an agreement to expressly assume the executive
employment Agreement from any successor company to the
Company, or (F) the Company is in material breach of the
Agreement, which breach is not cured within thirty (30) days
following written notice of breach given to the Company. For
purposes of clause (B): (i) the value of an option grant shall
be determined based on the methodology utilized by the
Company, from time to time, to determine the size of awards to
employees eligible for long-term incentive compensation; (ii)
if, at the time that a long-term incentive award is made, it
is designated by the Company as being made on account of more
than one calendar year, then it shall be prorated, for
purposes of determining the amount of the targeted long-term
incentive award for any such calendar year, over the years on
account of which it is being made; and (iii) the Executive's
targeted long-term incentive award will be considered to have
been materially reduced if his targeted award is reduced at a
rate greater than, or increased at a rate lesser than the rate
that the awards of the other senior executives of the Company
are reduced or increased, respectively.
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<PAGE> 4
(k) "MIP" means the Company's Management Incentive Plan, as the
same may be amended from time to time, or any successor plan.
(1) "PECHINEY GROUP" means Pechiney and its Subsidiaries and
Affiliates (including the Company).
(m) "PENSION PLANS" means, collectively, the Company's Pension
Plan for Salaried Employees and certain other non-qualified
pension plans or arrangements that the Company maintains for
its senior executives.
(n) "SUBSIDIARY" of a person (including without limitation the
Company) means a corporation with respect to which such
person, directly or indirectly, has the power, whether through
the ownership of voting securities, by contract or otherwise,
to elect at least a majority of the members of such
corporation's board of directors.
(o) "TERMINATION DATE" means the effective date of the Executive's
termination of employment with the Company.
2. GENERAL TERMS OF EMPLOYMENT.
(a) NATURE AND TERM OF THIS AGREEMENT. The term of this Agreement
shall commence on the Effective Date. This Agreement does not
constitute a guarantee of continued employment but instead
provides for certain rights and benefits for the Executive
during his employment, and in the event his employment with
the Company terminates under the circumstances described
herein.
(b) DUTIES AND RESPONSIBILITIES. For so long as the Executive's
employment with the Company continues, the Executive will
devote his full business time, attention and best efforts to
the affairs of the Company, will faithfully serve the Company,
and in all respects conform to and comply with the lawful
directions and instructions consistent with his position as
Senior Vice President -- Corporate Services of ANCC, and
Executive Vice President -- Administration and Human Resources
of ANCG given to him by the Company's Chairman and Chief
Executive Officer, any other executive or executives to whom
he reports, or the Board.
(c) AUTHORITY. In performing his duties hereunder, the Executive
shall have the authority customarily held by others holding
similar senior executive level positions within the Company,
as defined in the authority guidelines established by the
Board of Directors or the Chairman and Chief Executive Officer
of the Company.
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<PAGE> 5
(d) OUTSIDE BOARD MEMBERSHIPS. Executive may serve on the boards
of directors of up to two (2) for-profit business corporations
which do not compete with the business of the Company, such
memberships subject to prior approval by the Chairman and
Chief Executive Officer of the Company.
(e) BASE SALARY. The Executive shall receive a salary of
$26,833.33 per month, $322,000 on an annual basis. The
Executive's base salary shall be reviewed periodically by the
Company at the times and in a manner consistent with the
review of base salaries of the Company's other senior
executives, and, based on such review, the amount of the
Executive's base salary may be adjusted upwards but not
downwards, in the discretion of the Company, taking into
account the Executive's performance and any other factors the
Company deems relevant; provided that, while the Executive is
employed hereunder, his salary shall be increased for each
calendar year by a rate that equals or exceeds the average
rate of increase of the base salaries of employees of the
Company generally.
(f) ANNUAL INCENTIVE PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company's annual incentive plan, the MIP, at a target
and maximum opportunity as established by the Compensation
Committee of the Board. The MIP may be adjusted or modified
from time to time by the Company in its discretion.
(g) COMPANY EQUITY PLAN. During the period of the Executive's
employment with the Company he will be eligible to participate
in the Company Equity Plan, at a target opportunity similar in
amount to other senior executives at his level. The Company
Equity Plan may be adjusted or modified from time to time by
the Company in its discretion.
(h) COMPANY CAR. The Executive will be eligible for a company car
in accordance with the provisions of the Company's Lease Car
Program.
(i) EMPLOYEE BENEFITS. The Executive shall be eligible to
participate in employee benefit plans sponsored or maintained
by the Company, including, without limitation, life insurance,
medical insurance, hospitalization, dental insurance, short
and long term disability insurance, pension, retirement,
401(k) and deferred compensation plans, whether now existing
or established hereafter. Nothing in this Section 2(i) shall
limit the Company's right to amend or terminate any such plan
in accordance with the procedures set forth therein.
(j) AGE 60 POST-TERMINATION BENEFITS.
(i) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, and the Executive
does not have thirty (30) years of service credit
towards the total
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<PAGE> 6
pension benefit calculation under the Pension Plans,
then the Company will pay to the Executive pursuant
to this Agreement a supplemental monthly pension
benefit equal to the excess, if any, of "A" over "B",
where:
"A" equals the aggregate monthly benefit the
Executive would have received under the
Pension Plans upon retirement assuming that
the Executive had thirty (30) years of
service credit towards the total pension
benefit calculation under the Pension Plans
based upon the highest consecutive sixty
(60) months of compensation (as defined for
purposes of the Pension Plans) the Executive
received from the Company during his
employment (including, for purposes of the
calculation, but subject to Section 3(a) and
(b)(i) if the Executive makes the lump sum
election described therein, any amount of
compensation continued during any
Continuation Period under Section 3); and
"B" equals the aggregate monthly amount
payable to the Executive under the Pension
Plans, such amount to be calculated in
accordance with the provisions of the
Pension Plans.
Amounts payable to a survivor of the Executive under
the Pension Plans shall be calculated similarly. The
Company shall determine in its discretion whether,
and to the extent that, any supplemental monthly
pension benefit required under this subsection shall
be paid through a Pension Plan that is intended to be
qualified under Section 401(a) of the Code, or any
successor provision thereto, or under a Pension Plan
or other arrangement that is not intended to be so
qualified. The amount, if any, payable under this
subsection will be determined based on the same form
of payment (e.g. single life annuity or joint and
survivor annuity) that the Executive elects under the
Pension Plans. Payment of such amount will begin at
the time the Executive (or such survivor) starts to
receive monthly benefits under the Pension Plans. If
supplemental pension payment begins before the
Executive's 62nd birthday, the benefit calculation
set forth in "A" above shall not be reduced for early
commencement, notwithstanding any reduction provided
under the Pension Plans.
(ii) Subject to Section 3(h), if the Executive retires or
otherwise resigns from employment with the Company,
after the Executive attains age 60, the Executive and
his family will remain eligible for retiree medical
and life insurance benefits under the applicable
plans of the Company, on the same terms and
conditions (including without limitation any
provisions concerning payment of premiums,
deductibles and co-payments) that apply to retirees
of the Company on the Effective Date; provided,
however, that such coverage shall be secondary to any
benefits the Executive or his family becomes eligible
to receive under a comparable program of a subsequent
employer.
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<PAGE> 7
(iii) Nothing in this Agreement shall be construed to
reduce or impair in any way the Executive's rights
and benefits under any plans of the Company,
including any rights and benefits that he may accrue
under such plans after the date hereof and prior to
his termination of employment with the Company.
(k) VACATION AND PERQUISITES.
(i) The Executive shall be entitled to a minimum of four
weeks paid vacation annually and shall also be
entitled to receive such perquisites as are generally
provided to other senior executives of the Company in
accordance with the then current policies and
practices of the Company.
(ii) The Company shall reimburse the Executive for all
business expenses incurred in the normal course of
business.
(iii) The Company shall reimburse the Executive for all
legal fees attendant to the review of this Agreement,
and shall advance and reimburse the Executive for all
legal fees attendant to the enforcement of his rights
hereunder; provided that, to the extent that the
Company is successful in its defense of a claim by
the Executive to enforce rights hereunder, the
Executive shall not be entitled to reimbursement and
shall repay any amount advanced to him, for the
Executive's legal fees attributable to the portion of
the claim with respect to which the Company is
successful.
3. SEVERANCE BENEFITS UPON TERMINATION. If the Executive's
employment with the Company: (i) is terminated by the Company for any reason
other than for Cause; or (ii) is terminated by the Executive's resignation under
circumstances constituting Good Reason, then, during the Continuation Period
(except for the benefits described in subsection (c), which shall be provided as
described in such subsection), the Executive shall be eligible to receive the
severance benefits described in this Section 3.
(a) BASE SALARY CONTINUATION. The Company will pay the Executive
his base salary equivalent, at the rate in effect immediately
prior to the Termination Date (or if the Executive has
resigned for Good Reason by virtue of the Company having
reduced his rate of base salary, at the rate of base salary in
effect prior to such reduction) consistent with normal payroll
practice The payments following the Termination Date shall be
in lieu of any and all severance pay to which the Executive
might otherwise be entitled under any plan or program of the
Company or any of its Subsidiaries or Affiliates. The
Executive may elect that, following a Change of Control, the
Executive shall receive such payments (or any remaining
payments) in a discounted lump sum (calculated using the
Federal short-term rate under Section 1274(d) of the Code
prevailing at the time that payment is to be made (as
described in the next sentence)). Such election may be made
within the first 30 days of this
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<PAGE> 8
Agreement or within the last 30 days of any calendar year
during the term of this Agreement and any payment pursuant to
such election shall be made on the later of (i) the first day
of the calendar year that is at least twelve months after such
election; (ii) the date that the Executive becomes entitled to
such payment; and (iii) the date of the Change of Control. The
Executive's election of a lump sum hereunder shall not affect
his rights to receive the other amounts described in this
Section 3 for the entire Continuation Period. If the Executive
receives such lump sum payment, then for purposes of the
pension calculations under Section 2(j) and 3(h), and for
purposes of all employee benefits provided by the Company
(hereunder or otherwise) that are affected by the compensation
or earnings of the Executive, the payments shall nonetheless
be deemed to have been received at the time they otherwise
would have been payable hereunder if the Executive had not
elected the lump sum.
(b) INCENTIVE COMPENSATION.
(i) The Executive will be eligible for an equivalent MIP
award reflecting business and personal performance at
target level; such award will be paid to the
Executive in accordance with the Company's normal
payment practices for the MIP at the time payments
under the MIP are made to other executives of the
Company. The Executive's equivalent MIP award for any
partial calendar year at the end of the Continuation
Period will be prorated based on a fraction, the
numerator of which is the number of days in such
calendar year up to and including the last day of the
Continuation Period, and the denominator of which is
365. If the Executive has elected a discounted lump
sum payment as described in subsection (a), then the
payments provided in this subsection (b)(i) shall
also be paid in a discounted lump sum, which shall be
calculated and paid as (and have the impact on
employee benefits) described in subsection (a).
(ii) The Executive will be fully vested in any awards that
were made to him under any Company Equity Plan prior
to the Termination Date to the extent that the
vesting of such awards was conditioned upon continued
service; provided that, the term of such awards shall
be determined in accordance with the provisions of
the applicable Company Equity Plan.
Except for the payments and other benefits provided in this
subsection (b), the Executive shall have no right to any other
payment or benefit under the MIP, the Company Equity Plan or
any other annual or long-term incentive plan of the Company.
Without limiting the generality of the preceding sentence,
this Agreement shall not confer any right on the Executive
following the Termination Date to be granted any further
awards under any Company Equity Plan or any subsequent
long-term incentive plan.
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<PAGE> 9
(c) HEALTH AND WELFARE BENEFIT. The Executive will be considered
to have attained the greater of his actual age or age 55 for
purposes of qualifying for retiree benefits provided by the
Company. In lieu of any benefit described under Section
2(j)(ii), until the later of the end of the Continuation
Period or the date the Executive attains age 55 (at which time
the Executive shall be eligible for retiree benefits), the
Executive and his family will remain eligible for medical,
life insurance and dental benefits under the applicable plans
of the Company, on the same terms and conditions (including
without limitation any provisions concerning payment of
premiums, deductibles and co-payments) that apply to employees
of the Company; provided, however, that such coverage shall be
secondary to any benefits the Executive or his family becomes
eligible to receive under a comparable program of a subsequent
employer. For the Continuation Period, the Executive shall be
eligible to participate (or continue to participate) in the
Company's other insurance and welfare programs which are
generally available to senior executives of the Company. If
any of the coverage described in this subsection (c) is
ordinarily provided on a self-insured basis but would be
taxable to the Executive on that basis, such coverage shall be
provided on an insured basis at the Company's expense.
(d) COMPANY CAR. Title to the automobile made available to the
Executive immediately prior to the Termination Date will be
transferred to him at no additional cost as of the Termination
Date; provided, however, that the Executive will be
responsible for all additional costs for the vehicle over and
above the Company's category cost for vehicles at his
executive level, and all income taxes, transfer taxes and
similar governmental charges regarding the transfer and new
registration of the vehicle.
(e) OUTPLACEMENT SERVICES. The Executive will be eligible for
senior executive level Outplacement counseling with an
outplacement service selected and paid for by the Company
which outplacement service is reasonably acceptable to the
Executive.
(f) CAPITAL ACCUMULATION PLAN MAKE-UP. Following the Termination
Date, the Executive will be ineligible to participate in the
Company's Capital Accumulation Plan (the "CAP"). The Company
will pay the Executive the amounts it would have contributed
on his behalf to the CAP as matching contributions and/or
discretionary Company profit-sharing contributions during the
Continuation Period, assuming the Executive had elected to
participate in the CAP at the maximum level permitted
thereunder. All such payments will be made on an after-tax
basis. Subject to the last sentence of Section 3(a), payment
of matching contribution equivalents will be paid at
approximately the same time as the base salary equivalent
payments. Discretionary profit-sharing contribution
equivalents will be made at approximately the same time as the
Company makes such contributions (if any) to the CAP.
(g) LIFE INSURANCE AND LONG-TERM DISABILITY. The Executive shall
continue to be eligible for life insurance and long-term
disability benefits equals to those applicable to him on the
Termination Date, subject to the same terms and
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<PAGE> 10
conditions (including without limitation any provisions
concerning payment of premiums) that generally apply to senior
executives of the Company.
(h) PENSION BENEFITS. In lieu of any benefit otherwise payable
under Section 2(j)(i), the Executive (and his survivor) shall
be entitled to a supplemental benefit with respect to his
benefit under the Pension Plans calculated and payable in the
same manner as the benefit provided under Section 2(j)(i)
hereof, based on the greater of thirty (30) years of service
credit towards the total pension payable under the Pension
Plans and the actual years of such service credit that the
Executive would have earned if he continued to earn such
service credit through the Continuation Period (and including
for purposes of either calculation, in the same manner as in
Section 2(j)(i), but subject to Section 3(a) and (b)(i) if the
Executive makes the lump sum election described therein, any
amount of compensation continued during the Continuation
Period under this Section), irrespective of his age at the
time of his termination of employment. If supplemental pension
payment begins before the Executive's 62nd birthday, the
benefit calculation set forth in paragraph "A" of Section
2(j)(i) will only be reduced for early commencement if payment
begins before the Executive's 60th birthday and will utilize
an early commencement reduction factor of 3% per annum, rather
than 6%, if such benefit calculation is subject to such a
reduction under the Pension Plans.
(i) TAX GROSS-UP. If any payment or benefit to or for the benefit
of the Executive in connection with a Change of Control
(whether pursuant to the terms of this Agreement, or any other
plan or arrangement or agreement) is subject to the Excise Tax
(as hereinafter defined), the Company shall pay to the
Executive a full cash gross-up in an amount equal to (i) the
Excise Tax allocable to such payment or benefit; and (ii) any
Excise Tax and any state, federal or other income taxes on the
amounts described in clause (i) and this clause. For purposes
of this Section 3(i), the term "Excise Tax" shall mean the tax
imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") and any similar tax that may hereafter be
imposed.
The amount of the gross-up payments to the Executive under
this Section 3(i) shall be estimated by a nationally
recognized firm of certified public accountants, which firm
shall not have provided services to the Company or any
Affiliate of the Company within the previous twelve months and
shall not provide services thereto in the following twelve
months, based upon the following assumptions:
(i) all payments and benefits to or for the benefit of
the Executive in connection with a Change of Control
or termination of the Executive's employment
following a Change of Control shall be deemed to be
"parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute
payments" shall be deemed to be subject to the Excise
Tax except to the extent that, in the opinion of tax
counsel
- 10 -
<PAGE> 11
selected by the firm of certified public accountants
charged with estimating the gross-up payments to the
Executive under this Section 3(i), such payments or
benefits are not subject to the Excise Tax; and
(ii) the Executive shall be deemed to pay federal, state
and other income taxes at the highest marginal rate
of taxation for the applicable calendar year.
The estimated amount of the gross-up payments due the
Executive pursuant to this Section 3(i) shall be paid to the
Executive in a lump sum not later than thirty (30) business
days following the effective date of the termination. In the
event that the amount of the estimated payment is less than
the amount actually due to the Executive under this Section
3(i), the amount of any such shortfall shall be paid to the
Executive within ten (10) days after the existence of the
shortfall is discovered.
(j) NO IMPAIRMENT OF EXISTING RIGHTS. Nothing in this Agreement
shall be construed to reduce or impair in any way the
Executive's rights and benefits under the Pension Plans,
including any rights and benefits that he may accrue under the
Pension Plans after the date hereof and prior to his
termination of employment with the Company.
4. DEATH AND DISABILITY. For the purposes of this Agreement the
Executive will be determined to be totally disabled if he is unable to perform
the major duties of his position with the Company, as a result of illness or
injury, for a period of time exceeding 26 consecutive weeks.
(a) DEATH OR DISABILITY DURING EMPLOYMENT. If the Executive dies
or becomes totally disabled during his employment with the
Company, the Executive or his estate, as the case may be, will
be entitled to receive benefits in accordance with the
policies of the Company.
(b) DEATH OR DISABILITY DURING CONTINUATION PERIOD. If the
Executive dies or becomes totally disabled during the
Continuation Period, the Executive or his estate, as the case
may be, will be entitled to the severance benefits provided
for in this Agreement (other than outplacement services), as
well as to the standard benefits and insurance payments under
the benefits plans of the Company then in effect (determined
as though his employment with the Company had terminated by
virtue of death or total disability).
5. CERTAIN COVENANTS.
(a) COVENANT NOT TO COMPETE. The Executive agrees that during the
period of his employment with the Company and continuing
through the Covenant Period:
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<PAGE> 12
(i) he will not engage in any executive-level activities,
whether as employee, agent proprietor, owner,
partner, contractor, stockholder (other than the
holder of less than 5% of the stock of a corporation
the securities of which are traded on a national
securities exchange or in the over-the-counter
market), director or otherwise, in competition with
the businesses conducted by the Company and its
Subsidiaries on the date hereof or in which they are
substantially engaged at any time during the Covenant
Period; and
(ii) he will not solicit, in competition with the Company
or any of its Subsidiaries, any person who is a
customer of the businesses conducted by the Company
or any of its Subsidiaries at the date hereof or any
businesses in which the Company or any of its
Subsidiaries are substantially engaged at any time
during the Covenant Period.
(b) TERRITORIAL REACH. The covenants contained in clauses (i) and
(ii) of subsection (a) of this Section 5 shall apply within
the territories in which the Company or any of its
Subsidiaries are actively engaged in the conduct of the
businesses described in such covenants at the relevant time,
including, without limitation, the territory in which
customers are then solicited.
(c) COVENANT NOT TO INDUCE TERMINATION OF EMPLOYMENT. The
Executive agrees that during the Covenant Period he will not,
without the prior written consent of the Company (which
consent may be withheld by the Company at its sole
discretion), induce or attempt to persuade any employee of the
Company or any of its Subsidiaries to terminate his or her
employment relationship in order to enter into any other
employment, whether or not such other employment is
competitive with the Company or any of its Subsidiaries.
(d) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The
Executive agrees that he will not, at any time during the
Covenant Period or thereafter, make use, for his own benefit
or the benefit of any other person or entity, of Confidential
Information of any kind or character, nor divulge Confidential
Information except to the extent the Chairman and Chief
Executive Officer of the Company(1) or the Board may so
authorize in writing, and that within ten days of the
Termination Date the Executive will surrender to the Company
all records, in whatever form maintained (including without
limitation records maintained as computer files) and other
documents and materials obtained by the Executive or entrusted
to him during the course of his employment by the Company or
any of its Subsidiaries or Affiliates (together with all
copies thereof) which related to any such Confidential
Information. Nothing set forth in this subsection (d),
however, shall be interpreted to prohibit the Executive from
disclosing any such information as may be required by law,
including pursuant to any court or government decree or
subpoena, or
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<PAGE> 13
from disclosing or using information generally known by people
of his expertise and position in the industry.
(e) REMEDIES. Without limiting the right of the Company to pursue
all other legal and equitable remedies available for violation
by the Executive of the covenants contained in this Section,
it is expressly agreed that if the Executive materially
breaches the covenants set forth in this Section and fails to
cure such breach to the reasonable satisfaction of the Company
within 30 days after written notice thereof, the Company will
have no further obligation to pay or provide any of the
severance benefits described in Section 3(a) or (b) above. In
addition, the Executive acknowledges that a breach of any of
the covenants set forth in this Section may result in material
irreparable injury to the Company for which there is no
adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, the Company shall be
entitled, in addition to any other rights or remedies it may
have (including without limitation the remedy provided in the
preceding sentence), to obtain a temporary restraining order
and a preliminary or permanent injunction enjoining or
restraining the Executive from engaging in activities
prohibited by this Section or requiring his compliance with
the affirmative obligations provided for herein.
(f) ENFORCEABILITY. It is the intent and understanding of each
party hereto that if in any action before any court or agency
legally empowered to enforce the covenants contained in this
Section any term, restriction, covenant or promise contained
herein is found to be unreasonable and accordingly
unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to
make it enforceable by such court or agency.
(g) APPLICATION TO PECHINEY. Notwithstanding any provision in this
Agreement to the contrary, the restrictions described in
subsections (a) - (c) of this Section shall only limit the
Executive's activities with respect to Pechiney and its
employees, if Pechiney announces, following appropriate action
of its Board of Directors, that it has abandoned plans to
dispose of the operations of the Company.
6. NO UNFAVORABLE COMMENTS. The Company agrees to refrain from
making now or any time in the future any comment reflecting unfavorably upon the
Executive to the press, any individual or entity with whom the Executive has a
business relationship or any individual or entity making an inquiry as to the
Executive's employment relationship with the Company, except to the extent that
any such comment may relate to circumstances underlying a termination of the
Executive's employment for Cause. The Executive agrees to refrain from making
now or at any time in the future any comment reflecting unfavorably upon any
member of the Pechiney Group (including the Company) or any current or former
directors, officers or employees of any member of the Pechiney Group to the
press, any employees of any member of the Pechiney
- 13 -
<PAGE> 14
Group or any individual or entity with whom any member of the Pechiney Group has
a business relationship, except to the extent that any such comment may relate
to circumstances underlying a termination of the Executive's employment for Good
Reason.
7. FULL SATISFACTION; RELEASE. The Executive agrees that the
payments and other benefits to be provided pursuant to this Agreement shall be
in full satisfaction of any and all claims for payment or any other benefits
that he may have against the Company or any of its Subsidiaries or Affiliates
arising out of (i) his employment with the Company or his status as an executive
of the Company or any of the Company's Subsidiaries, Affiliates or divisions, or
(ii) the termination of such employment and status; excluding (A) claims that
arise out of an asserted breach of this Agreement and (B) claims for
indemnification the Executive may now or in the future have under any bylaw,
agreement or otherwise. In addition, in consideration of the agreements set
forth herein, the Company, on the one hand, and the Executive, on the other
hand, release and waive all claims, causes of action or the like arising on or
before the date hereof, regardless of whether or not known at present
(including, without limitation, any claims arising under the Age Discrimination
in Employment Act of 1967, Title VII of the Civil Rights Act of 1964 as amended
by the Civil Rights Act of 1991, the Equal Pay Act of 1962, the Americans with
Disabilities Act of 1990, or any other federal, state or local statute or
ordinance; but excluding, in the case of both the Company and the Executive, any
claims that arise out of an asserted breach of the terms of this Agreement),
that either has or may have in the future against the other and, in the case of
the Company, their respective successors, shareholders, directors, officers,
agents and employees, regarding all matters relating to the Executive's service
as an employee of the Company or any of its Subsidiaries, Affiliates or
divisions, and to the termination of such relationships, including, without
limitation, all claims related to the payment of compensation and benefits and
all claims arising under any Federal or state statute or regulation. The
Executive and the Company shall execute as of the Termination Date any further
documents as may reasonably be requested by the other in order to evidence and
give effect to the provisions of this Section.
8. SOURCE OF PAYMENTS. All payments provided under this
Agreement, other than payments made pursuant to a benefit plan which may provide
otherwise, shall be paid in cash from the general funds of the Company, and no
special or separate fund shall be established, and no other segregation of
assets made, to assure payment. The Executive shall have no right, title or
interest whatever in or to any investments which the Company may make to aid the
Company in meeting its obligations hereunder. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall create or be
construed to create, a trust of any kind, or a fiduciary relationship, between
the Company and the Executive or any other person. To the extent that any person
acquires a right to receive payments from the Company hereunder, such right
shall be no greater than the right of an unsecured creditor of the Company.
9. FUTURE COOPERATION. The Executive agrees that following
termination of his employment with the Company he will make himself available to
assist with or consult in transition matters or any then pending or future
governmental or regulatory investigation, civil or administrative proceeding or
arbitration related to the Executive's duties while employed by the
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<PAGE> 15
Company, subject to the Executive's other personal and business commitments. The
Company will promptly pay the Executive, at the rate of $1,500 for each day or
portion thereof for which the Executive so assists or consults, and reimburse
the Executive for all reasonable costs and expenses, including attorneys' fees,
incurred by the Executive in connection with any such activities, proceedings or
arbitration.
10. TAX WITHHOLDING. All amounts payable to the Executive
pursuant to this Agreement shall be subject to all legal requirements with
respect to the withholding of taxes including FICA.
11. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; CONDITION; AMENDMENTS. This Agreement sets
forth the entire understanding of the parties hereto with
respect to the subject matter hereof and cannot be amended or
modified except by a writing signed by all such parties. If
Pechiney announces, following appropriate action of its Board
of Directors, that it has abandoned plans to dispose of the
operations of the Company, this Agreement shall continue to be
in force and effect and shall govern the employment
relationship between the Executive and the Company. The waiver
by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed
as a waiver of any other provision of this Agreement or of any
subsequent breach by such party of a provision of this
Agreement.
(b) ASSIGNMENT AND DELEGATION. Neither this Agreement nor any
right, duty or obligation hereunder shall be assignable or
delegable by the Executive. This Agreement and all the
Company's rights, duties and obligations hereunder may be
assigned by the Company to any person or entity that succeeds
to the interest of the Company (regardless of whether such
succession does or does not occur by operation of law) by
reason of the sale of all or a portion of the Company's stock,
a merger, consolidation or reorganization involving the
Company, or, unless the Company otherwise elects in writing, a
sale of the assets of the business of the Company (or a
portion thereof) in which the Executive performs, or will
perform, a majority of his services. Upon any such assignment,
delegation or transfer, any such business entity shall be
deemed to be substituted for all purposes as the Company
hereunder, and the Company shall cause such successor
expressly to assume such obligations. Notwithstanding the
foregoing, (i) no assignment, delegation or transfer by the
Company shall relieve the Company of its obligations under
this Agreement; and (ii) nothing in this subsection shall
affect the definition of "Change of Control," or the rights
that the Executive accrues in connection with a Change of
Control, even if the Company assigns, transfers or delegates
(or may do so) its rights, duties or obligations in connection
therewith.
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and
the same instrument.
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<PAGE> 16
(d) HEADINGS. The headings of the Sections of this Agreement are
included solely for convenience of reference and shall not be
construed or interpreted in any way as affecting the meaning
of such Sections.
(e) GOVERNING LAW. This Agreement is governed by, and construed
and interpreted in accordance with, the internal laws of the
State of Illinois without giving effect to the choice of law
provisions thereof. Any dispute under this Agreement shall be
adjudicated by a court of competent jurisdiction in the State
of Illinois.
(f) INDEMNIFICATION. The Company will indemnify the Executive to
the fullest extent permitted by the laws of the state of
incorporation in effect at that time, or certificate of
incorporation and bylaws of the Company whichever affords the
greater protection to the Executive. The foregoing
indemnification shall continue to apply following the
Termination Date for acts or omissions by the Executive while
an employee of the Company. To the extent that the Company
maintains insurance providing coverage to its officers or
former officers within the scope of the foregoing, such
insurance shall cover the Executive.
(g) SURVIVORSHIP. The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein
shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 28th day of May, 1999.
AMERICAN NATIONAL CAN COMPANY
By: /s/ JEAN-PIERRE RODIER
----------------------------------
Jean-Pierre Rodier
Chairman of the Board
AMERICAN NATIONAL CAN GROUP, INC.
By: /s/ JEAN-PIERRE RODIER
----------------------------------
Jean-Pierre Rodier
Chairman of the Board
EXECUTIVE
/s/ D.R. BANKOWSKI
----------------------------------
Dennis R. Bankowski
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<PAGE> 1
EXHIBIT 10.25
PECHINEY
STOCK OPTION PLAN
OF NOVEMBER 25, 1998
------------
SUMMARY OF PLAN TERMS
FOR PARTICIPANTS RESIDENT OUTSIDE FRANCE
---------------------
<PAGE> 2
TABLE OF CONTENTS
Exhibit 1: Request for conversion of shares into bearer form
Exhibit: Request for conversion of shares into bearer form and order to sell
Notice for exercise of options
FOR ADDITIONAL INFORMATION, CONTACT:
- -PECHINEY Monsieur Pierre MEYNARD
Directeur de la Gestion des Cadres
7, place du chancelier Adenauer
75218 PARIS CEDEX 16
FRANCE
- -BANQUE NATIONALE DE PARIS CENTRE DES EMETTEURS ET TRANSACTIONS TITRES
ACTIONNAIRES TITRES NOMINATIFS
SERVICE PLAN D'OPTIONS
75450 PARIS CEDEX 09
FRANCE
The following is a summary in English of the principal provisions of the stock
option plan of PECHINEY of November 25, 1998 (the "1998 Option Plan"). This
summary does not purport to be complete and is qualified in its entirety by
reference to minutes of the meeting of the Board of Directors of PECHINEY held
on November 25, 1998, which defines the terms and conditions applicable to the
Option Plan. An abstract of such minutes, which are in French, is available upon
request addressed to PECHINEY.
<PAGE> 3
GENERAL PRINCIPLES
A stock option plan is a mechanism for providing selected employees and
executives or managers of a company the opportunity to acquire stock in their
company at a price determined at the time the options are granted and fixed for
the term of the options.
The objective is to enable these beneficiaries (referred to in this summary as
"participants" in the 1998 Option Plan) to participate in any future
appreciation in the price of the stock.
THE OPTIONS GRANTED UNDER THE 1998 OPTION PLAN WILL BE EXERCISABLE FROM NOVEMBER
25, 2003 UNTIL NOVEMBER 24, 2008 INCLUSIVE (see "Exercise of options" in section
1 page 4 and section 0 page 8).
Each option awarded under the 1998 Option Plan gives right to purchase a newly
issued share of PECHINEY and the share capital of PECHINEY will, therefore, be
increased accordingly.
The award of options does not give rise to any obligation to exercise such
options and, therefore, the decision whether or not to exercise such options is
entirely within the control of the participant. Each participant is advised to
consult his or her own tax and professional financial advisors with respect to a
decision whether or not to exercise options awarded under the 1998 Option Plan
(see "Taxation" page 7 and "Financing for exercise of options" page 8).
LEGAL CONTEXT
The 1998 Stock Option Plan is subject to the following provisions of French law:
- - articles 208-1 to 208-8-2 of the French law no. 66-537 of July 24, 1966,
- - articles 174-8 to 174-21 of the French decree no. 67-236 of March 23, 1967,
- - the French law of December 24, 1996 relating to the financing of the French
social security,
as amended from time to time, together with any applicable French regulation
which relates to their implementation.
In accordance with these provisions, the Extraordinary General Meetings of the
shareholders of PECHINEY held on June 25, 1997 and December 16, 1997 authorized
the Board of Directors of PECHINEY to award options to selected managers and
employees of the group for subscription of ordinary shares of PECHINEY and
defined the general principles applicable thereof.
On November 25, 1998, the Board of Directors of PECHINEY decided to use a
portion of this authority in awarding options under the 1998 Option Plan which,
in aggregate, gives the right to purchase 337,500 additional shares to be issued
by PECHINEY.
<PAGE> 4
DESCRIPTION OF THE PLAN
1 PARTICIPANTS
Options under the 1998 Option Plan have been awarded to selected executives
and managers of PECHINEY, or of affiliates of PECHINEY as defined in
article 208-4 of the French law no. 66-537 of July 24, 1996, who have been
designated by the Board of Directors of PECHINEY on November 25, 1998.
2 AWARDING OF OPTIONS
Each participant has received a notice informing him/her of the grant of
options under the 1998 Option Plan and indicating:
- the number of shares he/she is entitled to purchase under options
awarded;
- the exercise price of each option awarded to the participant;
- the period during which each option may be exercised;
- the other conditions to exercise each option.
3 EXERCISE PRICE
The exercise price of each option under the 1998 Option Plan is 179.56
FRENCH FRANCS (i.e., 27.37 euros) per share, which corresponds to 95% of
the average of the closing price of PECHINEY stock on the Paris stock
exchange during the 20 trading days immediately preceding the date on which
options under the 1998 Option Plan were awarded by the Board of Directors
of PECHINEY.
This exercise price applies only to options awarded under the 1998 Option
Plan. If PECHINEY subsequently awards additional options, the exercise
price applicable to such options would be different.
This exercise price represents the price to be paid by the participant on
the date on which the participant decides to exercise his/her options in
order to subscribe for the new shares to which these options give right.
4 EXERCISE OF OPTIONS
Each participant may exercise his/her options at one or several times
FROM NOVEMBER 25, 2003 TO NOVEMBER 24, 2008 INCLUSIVE.
Nevertheless, each time the participant must exercise AT LEAST 10% of the
total number of options awarded to him/her.
In the event of certain transactions affecting the capital of PECHINEY, the
Board of
<PAGE> 5
Directors of PECHINEY reserves the possibility of temporarily suspending B
for no longer than three months B the right to exercise options.
5 CONDITIONS TO EXERCISE
Except as otherwise decided by the Board of Directors of PECHINEY, no
option granted under the 1998 Option Plan may be exercised by a participant
who ceases all his/her positions in PECHINEY and any affiliates of PECHINEY
as defined in article 208-4 of the French law of July 2, 1966, resulting
from the DISMISSAL, RESIGNATION OR LAY OFF of the participant, or SALE OF
THE EQUITY INTERESTS held in the share capital of the company in which the
participant holds his/her position.
Notwithstanding the foregoing in the event of RETIREMENT or EARLY
RETIREMENT of a participant at the request of the employer, as well as in
the event of total or partial disability following which the participant
ceases all his/her positions within the group, the participant remains
entitled to exercise his/her options for the remaining term thereof.
OPTIONS AND THE RIGHT TO EXERCISE OPTIONS MAY NOT BE SOLD OR TRANSFERRED BY
GIFT OR OTHERWISE. However, upon death of the participant, heirs are
entitled to exercise the participant's options within six months following
the date of death but, once such period is expired, are no longer entitled
to exercise these options.
7 TRANSACTIONS IN THE SHARE CAPITAL
As a general principle, the number of shares to which each option gives
right, as well as the exercise price of each option, are fixed for the
entire term of the option.
Nevertheless, article 208-5 of the French law no. 66-537 of July 24, 1966
provides for adjustment of both the exercise price and number of shares in
the event of implementation of certain transactions in the share capital of
the company before the term of the option, which may modify the share value
of the stock (e.g.
distribution of reserves in cash).
EXAMPLE (*): distribution of reserves in cash for an amount of 10
French francs per share, with a market value of each share (average of
the first daily listing price during the one-month period which
precedes the distribution date) of 240 French francs:
- before the distribution of reserves, 500 options have been awarded
to a participant (giving the right to 500 shares to be purchased
for an exercise price of 180 French francs per share;
- at the time of distribution, the exercise price is reduced on the
basis of the ratio between the amount per share to be distributed
and the market value of each share
- -----------------------
(*) The 180 French francs purchase price does not correspond to
the purchase price applicable under the 1998 Option Plan and is for
illustration purposes only.
<PAGE> 6
(i.e. 180 French francs - 180 x 10 = 172.50 French francs)(1);
--------
240
- in order to allow the participant to invest the same amount, the
adjustment of the exercise price is followed by the adjustment of
the number of shares so that the total amount of the investments
remains the same (i.e. 500 shares x 180/172.50 = 521.74 shares),
the adjusted number of shares being then rounded up to the next
whole number of shares (i.e. 522 shares to be purchased for an
exercise price of 172.50 French francs per share)(2).
- -----------------------
(1) Article 174-12 of the French decree no. 67-236 du 23 mars 1967.
(2) Article 174-13 of the French decree no. 67-236 du 23 mars 1967.
<PAGE> 7
--------------------------------------------------------------
CHARACTERISTICS OF OPTION SHARES
--------------------------------------------------------------
1 SHARES TO BE IN REGISTERED FORM
All shares issued upon exercise of options will be in registered in form
and will be registered in an individual account maintained in the name of
the participant in the books of BANQUE NATIONALE DE PARIS (CENTRE DES
EMETTEURS ET TRANSACTIONS TITRES), which is in charge of handling the 1998
Option Plan.
No account maintenance or administrative charge will be assessed against
participants for so long as shares issued upon exercise of options are kept
in registered form with the CENTRE DES EMETTEURS ET TRANSACTIONS TITRES of
BANQUE NATIONALE DE PARIS.
2 RIGHTS TO DIVIDENDS
Shares issued upon exercise of options will be entitled to certain rights
which will be retroactive to the first day of the fiscal year during in
which options are exercised. In particular, these shares will be entitled
to any dividends declared during the following fiscal year in respect of
the fiscal year during which options are exercised.
Accordingly, PECHINEY's fiscal year starts on January 1 and ends on
December 31 of each calendar year:
- each share purchased upon exercise of an option in November 2003 would
be entitled to the dividend declared by the general shareholders
meeting of PECHINEY in 2004 in respect of the fiscal year ending
December 31, 2003 and, upon admission to the Paris stock exchange, will
be listed like any other outstanding common share;
- each share purchased upon exercise of an option in January 2004 would
not be entitled to the dividend declared by the general shareholders
meeting of PECHINEY in 2004 in respect of the fiscal year ending
December 31, 2003, BUT ONLY TO THE DIVIDEND DECLARED BY THE GENERAL
SHAREHOLDERS MEETING OF PECHINEY IN 2005 IN RESPECT OF THE FISCAL YEAR
STARTING ON THE 1ST OF JANUARY 2004.
Because such a share will not be entitled to the dividend in respect of
the fiscal year ending December 31, 2003, its trading value is expected
initially to be less than that of other outstanding common shares.
Therefore, such a share will temporarily be listed separately from
other outstanding common shares. Upon payment of the dividend in
respect of the fiscal year ending December 31, 2003, such a share will
be assimilated to any other outstanding common share and will no longer
be listed separately.
<PAGE> 8
---------------------------------------------------------------
TRANSFER OF SHARES
---------------------------------------------------------------
1 GENERAL PRINCIPLES
Shares issued upon exercise of options may be freely sold upon their
listing to the Paris stock exchange.
Nevertheless, each participant is responsible for complying with the
internal procedures adopted by the Board of Directors of PECHINEY on March
29, 1996 (Prevention of the utilisation or communication of privileged
information) as updated by the service note DG 98-06 of February 9, 1998
(Prevention of insider trading) and as amended or updated from time to time
by any other internal procedures or service note which may be issued by the
corporate bodies or managers of PECHINEY.
2 COMMENTS
- Certain participants will wish to hold shares acquired upon exercise of
options in order to benefit from any future growth of PECHINEY.
Others, for various reasons, will prefer to sell these shares, taking
into account their listing price on the Paris stock exchange as well as
the tax rules applicable in their country of residence.
- Pursuant to the French tax regulations, shares issued under the 1998
Option Plan will be in registered form. THE CONVERSION OF SHARES FROM
REGISTERED TO BEARER FORM IS CONSIDERED BY THE FRENCH TAX AUTHORITIES
AS A TRANSFER OF THE SHARES.
As shares can be sold on the Paris stock exchange only in bearer form,
participants will be required to effect this conversion prior to
transfer.
- Shares that are acquired upon exercise of options between January 1st
and the date of payment of the dividend which related to the preceding
fiscal year WILL BE LISTED SEPARATELY FROM OTHER OUTSTANDING COMMON
SHARES AND ARE EXPECTED TO LISTED AT A LOWER PRICE (see section 2 page
6). Therefore, participants wishing to sell these shares during such
interim period may experience delays in effecting their transactions,
as shares temporarily listed separately from other outstanding common
shares tend to be thinly traded.
---------------------------------------------
TAXATION
---------------------------------------------
Being able to benefit from any appreciation in the price of the stock, each
participant may enjoy the difference between the selling price of shares
purchased upon exercise of options and the exercise price.
<PAGE> 9
THE TAX CONSEQUENCES OF PARTICIPATION IN THE 1998 OPTION PLAN WILL
GENERALLY DEPEND ON THE CITIZENSHIP AND/OR RESIDENCY OF THE PARTICIPANT.
Depending on the applicable tax system, a tax event may occur in connection
with the grant of options under the 1998 Option Plan, at the time of
exercise of options, and/or upon disposition of shares acquired upon
exercise of options.
EACH PARTICIPANT IS INDIVIDUALLY RESPONSIBLE FOR FAMILIARIZING HIMSELF OR
HERSELF WITH, AND FULFILLING ALL TAX OBLIGATIONS ARISING IN CONNECTION WITH
HIS OR HER PARTICIPATION IN THE 1998 OPTION PLAN.
---------------------------------------------------------------
FINANCING FOR EXERCISE OF OPTIONS
---------------------------------------------------------------
THE AMOUNT OF THE EXERCISE PRICE RELATING TO EACH OPTION BEING EXERCISED MUST BE
PAID IN FULL AT THE TIME OF EXERCISE.
Participants will be individually responsible for payment of the exercise price,
and any participant wishing to obtain financing for an option exercise should
contact his/her bank or other financial institution.
His/her bank or other financial institution may accept to arrange such a
financing upon the presentation of the participating letter (see section 2 page
4) and the notice for exercise of options. To secure indebtedness, the pledge of
the shares so purchased may be requested by this financial institution.
---------------------------------------------------------------
PRACTICAL CONSIDERATIONS
---------------------------------------------------------------
1 EXERCISE OF OPTIONS
To exercise his/her option, a participant will have to address the
following documents to PECHINEY (to the attention of Monsieur Pierre
MEYNARD B Directeur de la Gestion des Cadres) (see address page 2):
- a notice for exercise of options (attached herewith) duly completed and
signed; and
- a check or money order denominated in euros or French francs for the
full amount of the exercise price, payable to PECHINEY.
THE DATE OF RECEIPT BY PECHINEY OF THE NOTICE FOR EXERCISE OF OPTIONS WILL
CONSTITUTE THE DATE OF EXERCISE.
A confirmation of the exercise of options will be sent to the participants
within several days by the CENTRE DES EMETTEURS ET TRANSACTIONS TITRES of
BANQUE NATIONAL DE PARIS, which is in charge of performing certain
administrative duties under the 1998 Option Plan. This confirmation will
set forth the following information:
<PAGE> 10
- the date of exercise of options;
- the number of shares purchased;
- the aggregate purchase price;
- the amount of gain realised upon exercise(1); and
- the number of shares remaining subject to the participation's
options (number of options not yet exercised).
(1) This item concerns French residents
only; French tax definition of the
difference between the value of the share
on the exercise date and the purchase
price of this share under the option
exercise.
In case, the participant exercises only part of his/her options, the
participant will use, for any later exercise, a new notice for exercise of
options.
2 TRANSFER OF SHARES
In order to sell shares purchased upon exercise of options, a participant
may elect either of the two following methods:
a) the participant may transfer shares to his or financial institution,
which will then execute the sale upon his/her request.
A participant wishing to sell shares through his or her financial
institution would have to address the following documents to the CENTRE
DES EMETTEURS ET TRANSACTIONS TITRES of BANQUE NATIONALE DE PARIS (see
address page 2):
- A REQUEST FOR CONVERSION OF SHARES INTO BEARER FORM, duly
completed and signed (see EXHIBIT 1), including the address and
reference information which are necessary to identify the
financial institution (bank, brokerage firm, etc.) to which the
shares are to be transferred and the proceeds of their sale to be
then transferred; and
- a recent account information form (or cancelled check) (or other
document) showing the account number and reference numbers to
identify the financial institution.
NOTE: Transfer of shares to accounts situated outside of
France often results in significant delays regardless of the
country involved, which may be as long as several weeks depending
on the financial institution involved.
b) the participant may request BANQUE NATIONAL DE PARIS to execute the
sale of the shares. It should be noted that BANQUE NATIONAL DE PARIS
may only execute a trade "a tout prix", which means that the sale order
will be executed at the current market price at the time of the
transaction.
A participant wishing to sell shares through BANQUE NATIONALE DE PARIS
<PAGE> 11
would have to address the following documents by fax to BNP - CETT B
ATN - PLAN D'OPTIONS:
- A REQUEST FOR CONVERSION OF SHARES INTO BEARER FORM AND ORDER TO
SELL, duly completed and signed (see EXHIBIT 2), including the
address and reference information for the account to which the
proceeds of the sale will have to be transferred net of
expenses(1) and, if applicable, taxes; and
- a recent account information form (or cancelled check) (or other
document) showing the account number and reference numbers to
identify the financial institution.
(1) For transactions effected through
BANQUE NATIONALE DE PARIS, a processing
fee will be assessed in addition to
brokerage fees and fees will be deducted
from the proceeds of the sale.
In addition, the originals would have to sent by mail or courier to the
CENTRES DES EMETTEURS ET TRANSACTIONS TITRES of BANQUE NATIONALE DE
PARIS (see address page 2) FOR CONFIRMATION PURPOSES.
<PAGE> 12
EXHIBIT I
PECHINEY
REQUEST FOR CONVERSION OF SHARES INTO BEARER FORM
STOCK OPTION PLAN OF NOVEMBER 25, 1998
I, the undersigned, (1)[]Mrs (1)[]Miss (1)[]Mr
last name
first and middle name
address
date and place of birth
holder of ________ shares in PECHINEY with a par value of 15,25 euros,
issued in the context of the stock option plan of November 25, 1998,
1) hereby request the following shares to be converted into bearer form:
(number of shares spelled out) shares purchased on
(number of shares spelled out) shares purchased on
(number of shares spelled out) shares purchased on
Above-mentioned shares are converted into bearer form:
(1)[] before November 25, 2003 because of death or other event of early
exercise determined by the Board of Directors of PECHINEY
(1)[] on or after November 25, 2003
2) hereby request these shares to be transferred to my following account:
no.
BANK BRANCH
Enclosed: (1)[] account information form (1)[] cancelled check
(1)(2)[] other document
Signed in , on
(Signature)
(1) Please indicate as appropriate
(2) Showing the account number and reference numbers to identify the bank or
other financial institution
<PAGE> 13
EXHIBIT 2
- -------------------------------
To be sent by fax to
Banque Nationale de Paris
CETT - ATN - PLANS D'OPTIONS
(- 33.1.40.14.79.78)
and originals by mail or
courier for confirmation
- -------------------------------
PECHINEY
REQUEST FOR CONVERSION OF SHARES INTO BEARER FORM AND ORDER TO
SELL
STOCK OPTION PLAN OF NOVEMBER 25, 1998
I, the undersigned, (1)[]Mrs (1)[]Miss (1)[]Mr
last name
first and middle name
address
date and place of birth
holder of ________ shares in PECHINEY with a par value of 15,25 euros,
issued in the context of the stock option plan of November 25, 1998,
1) hereby request the following shares to be converted into bearer form:
(number of shares spelled out) shares purchased on
(number of shares spelled out) shares purchased on
(number of shares spelled out) shares purchased on
Above-mentioned shares are converted into bearer form:
(1)[] before November 25, 2003 because of death or other event of
early exercise determined by the Board of Directors of PECHINEY
(1)[] on or after November 25, 2003
2) hereby request the sale(2), at the current price (i.e., "a TOUT PRIX"), of:
(number of shares spelled out) shares of
PECHINEY
3) hereby request the net proceeds of the sale to be credited to my following
account: no.
BANK BRANCH
Enclosed: (1)[] account information form (1)[] cancelled check
(1)(3)[] other document
I am sending the original of this document for confirmation by mail or courier
to BNP - C.E.T.T. - A.T.N. - PLAN D'OPTIONS - 75450 PARIS CEDEX 09 - FRANCE
Signed in , on
(Signature)
<PAGE> 14
(1) Please indicate as appropriate
(2) The order to sell cannot be executed until such time as the shares have been
issued and listed if the order to sell is given at the same time as the
options are exercised
(3) Showing the account number and reference numbers to identify the bank or
other financial institution
<PAGE> 15
----------------------------
Copy no. 1 to be sent
by PECHINEY to
BANQUE NATIONALE DE PARIS
CETT - ATN - PLANS D'OPTIONS
----------------------------
PECHINEY
NOTICE FOR EXERCISE OF OPTIONS
STOCK OPTION PLAN OF NOVEMBER 25, 1998
I, the undersigned, (1)[]Mrs (1)[]Miss (1)[]Mr
Last name First name and middle name
Address
acting in my capacity as beneficiary of _______options awarded to
me by the Board of Directors of PECHINEY on November 25, 1998 in order to
purchase an equal number of new shares to be issued by PECHINEY in the
proportion of one newly issued share for one awarded option, with knowledge of
the terms and conditions of the transaction as summarised on the reverse side
and wishing to exercise the rights granted to me under said options awarded to
me, hereby declare that:
(1)[] I exercise in whole
(1)[] I exercise in part
the options awarded to me on November 25, 1998 and, therefore, hereby purchase:
newly issued shares in registered
- -------------- form
and pay, up to 179,56 FRENCH FRANCS or 27,37 euros per share,
the sum of FRF or Euros
--------------
by (1)[]check or (1)[]money order attached hereto and (Total amount)
payable to PECHINEY.
Signed in on Signature(2)
---------------- ----------------
- --------------------------------------------------------------------------------
This form, filed with the BANQUE NATIONALE DE PARIS, will serve as proof of the
power of attorney to subscribe newly issued shares (article 3-1 of the French
law no. 33-1 of January 3, 1983).
Where provisions of this article are not applicable, this form constitutes a
subscription request submitted to French stamp duties payable with the French
State. General Authorisation of July 19, 1966 no. 2409 under the specific
register maintained by B.N.P.
- --------------------------------------------------------------------------------
<PAGE> 16
- --------------------------------------------------------------------------------
RESERVED TO PECHINEY
Date of receipt of the notice for exercise of options and visa:
Comments:
- --------------------------------------------------------------------------------
COPY NO. 3 MUST BE KEPT BY THE UNDERSIGNED
- --------------------------------------------------------------------------------
(1) Please indicate as appropriate
(2) Please add in handwriting the following French wording above your signature
"Bon pour souscription de ... (number of shares spelled out) ... actions
PECHINEY".
<PAGE> 17
- ----------------------------
Copy no.2 to be kept
by PECHINEY
- ----------------------------
PECHINEY
NOTICE FOR EXERCISE OF OPTIONS
STOCK OPTION PLAN OF NOVEMBER 25, 1998
I, the undersigned, (1)[]Mrs (1)[]Miss (1)[]Mr
Last name First name and middle name
Address
acting in my capacity as beneficiary of _______options awarded
to me by the Board of Directors of PECHINEY on November 25, 1998 in order to
purchase an equal number of new shares to be issued by PECHINEY in the
proportion of one newly issued share for one awarded option, with knowledge of
the terms and conditions of the transaction as summarised on the reverse side
and wishing to exercise the rights granted to me under said options awarded to
me, hereby declare that:
(1)[] I exercise in whole
(1)[] I exercise in part
the options awarded to me on November 25, 1998 and, therefore, hereby purchase:
newly issued shares in registered
- ------------ form
and pay, up to 179,56 FRENCH FRANCS or 27,37 euros per share,
the sum of FRF _____________ or Euros
by (1)[]check or (1)[]money order attached hereto and payable (Total
amount)
to PECHINEY.
Signed in on Signature(2)
-------------- --------------
- --------------------------------------------------------------------------------
This form, filed with the BANQUE NATIONALE DE PARIS, will serve as proof of the
power of attorney to subscribe newly issued shares (article 3-1 of the French
law no. 33-1 of January 3, 1983).
Where provisions of this article are not applicable, this form constitutes a
subscription request submitted to French stamp duties payable with the French
State. General Authorisation of July 19, 1966 no. 2409 under the specific
register maintained by B.N.P.
- --------------------------------------------------------------------------------
<PAGE> 18
- --------------------------------------------------------------------------------
RESERVED TO PECHINEY
Date of receipt of the notice for exercise of options and visa:
Comments:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COPY NO. 3 MUST BE KEPT BY THE UNDERSIGNED
- --------------------------------------------------------------------------------
(1) Please indicate as appropriate
(2) Please add in handwriting the following French wording above your
signature "Bon pour souscription de ... (number of shares spelled out)
... actions PECHINEY".
<PAGE> 19
- ----------------------------
Copy no.3 to be kept
by PECHINEY
- ----------------------------
PECHINEY
NOTICE FOR EXERCISE OF OPTIONS
STOCK OPTION PLAN OF NOVEMBER 25, 1998
I, the undersigned, (1)[]Mrs (1)[]Miss (1)[]Mr
Last name First name and middle name
Address
acting in my capacity as beneficiary of ________ options awarded
to me by the Board of Directors of PECHINEY on November 25, 1998 in order to
purchase an equal number of new shares to be issued by PECHINEY in the
proportion of one newly issued share for one awarded option, with knowledge of
the terms and conditions of the transaction as summarised on the reverse side
and wishing to exercise the rights granted to me under said options awarded to
me, hereby declare that:
(1) [] I exercise in whole
(1) [] I exercise in part
the options awarded to me on November 25, 1998 and, therefore, hereby purchase:
newly issued shares in registered
- -------- form
and pay, up to 179,56 FRENCH FRANCS or 27,37 euros per share,
the sum of FRF _____________ or Euros
by (1)[]check or (1)[]money order attached hereto and payable (Total
amount)
to PECHINEY.
Signed in on Signature(2)
--------------- --------------
This form, filed with the BANQUE NATIONALE DE PARIS, will serve as proof of the
power of attorney to subscribe newly issued shares (article 3-1 of the French
law no. 33-1 of January 3, 1983).
Where provisions of this article are not applicable, this form constitutes a
subscription request submitted to French stamp duties payable with the French
State. General Authorisation of July 19, 1966 no. 2409 under the specific
register maintained by B.N.P.
- --------------------------------------------------------------------------------
<PAGE> 20
- --------------------------------------------------------------------------------
RESERVED TO PECHINEY
Date of receipt of the notice for exercise of options and visa:
Comments:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COPY NO. 3 MUST BE KEPT BY THE UNDERSIGNED
- --------------------------------------------------------------------------------
(1) Please indicate as appropriate
(2) Please add in handwriting the following French wording above your signature
"Bon pour souscription de ... (number of shares spelled out) ... actions
PECHINEY".
<PAGE> 21
PECHINEY
Societe anonyme au capital de 1.243.795.901,75 euros
Siege social: 7, place du Chancelier Adenauer - 75116 Paris
R.C.S.: 562 095 66 - PARIS
CORPORATE PURPOSE
The purpose of the company, both in France and abroad, is as follows:
- - the manufacture, processing, and sale of all chemical, metallurgical,
electrochemical and electrometallurgical products and of all packaging
products, together with their derivatives, compounds, sub-products and raw
materials;
- - the manufacture and sale of all equipment required for the manufacture and
processing of these products;
- - the prospecting, seeking out, extraction or exploitation of all deposits of
minerals or mineral substances and of all sources of energy;
- - all creations and exploitations of industrial establishments, all
industrial, commercial, securities, real estate, and financial transactions
relative to the manufacture of these products.
The company is entitled to engage in these transactions either for its personal
account, alone or through participation, in various partnerships or societies
with any other persons, or on behalf of any natural person or legal entity,
French or foreign.
The company's purpose is also to participate directly or indirectly in all
commercial, industrial, and financial transactions which are related directly or
indirectly to its purpose through the creation of new companies, contributions,
the subscription for or purchase of company rights, mergers, joint-venture
companies, or any other form whatsoever.
Generally speaking, the company is entitled to engage in all commercial,
industrial, agricultural, securities, real estate, and financial transactions
relating to the purposes specified above.
STOCK OPTION PLAN OF NOVEMBER 25, 1998
Options have been awarded by the Board of Directors of PECHINEY on November 25,
1998 to selected managers and employees of PECHINEY as defined in article 208-4
of the French law no. 66-537 of July 24, 1966, in accordance with the
authorisation and the powers granted to the Board of Directors of PECHINEY by
the Extraordinary General Meetings of the shareholders of PECHINEY held on June
25, 1997 and December 16, 1997.
These options cannot be exercised before November 25, 2003, unless death of the
participant or early exercise in one of the other events determined by the Board
of Directors of PECHINEY in accordance with the authorization granted to it in
connection therewith by the Extraordinary General Meeting of the shareholders of
PECHINEY held on June 2, 1999.
<PAGE> 22
These options can be exercised until November 24, 2004 inclusive.
Each participant is entitled, upon exercise of the options awarded to the
participant, to subscribe to the new shares of PECHINEY to be issued by PECHINEY
and to which such options give right, as mentioned in a notice remitted to the
participant in connection thereof, at a purchase price of 179.56 French francs
or 27.37 euros per share. Each of these shares must be fully paid-up in cash at
the time of the subscription and will be issued in registered form.
Each share subscribed upon exercise of an option will be submitted to any
provision of the articles of incorporation of PECHINEY and will retroactively
enjoy all rights attached to the common shares of PECHINEY as from the first day
of the fiscal year during the related option is exercised.
<PAGE> 1
Exhibit 10.26
American National Can Group, Inc.
- --------------------------------------------------------------------------------
TERM SHEET
JUNE 7, 1999
Borrowers: American National Can Group, Inc. (the "Company"), a
holding company indirectly owning American National Can
Company ("ANC") and certain subsidiaries acceptable to
the Lenders (the "Approved Subsidiary Borrowers"). The
Company and the Approved Subsidiary Borrowers are
hereinafter referred to collectively as the
"Borrowers".
Guarantee: ANC, Pechiney North America, Inc. and all hereinafter
created material domestic subsidiaries of the Company
shall unconditionally guarantee the obligations of the
Company and the Approved Subsidiary Borrowers. The
Company shall unconditionally guarantee the obligations
of the Approved Subsidiary Borrowers.
Lead Arranger and
Joint Book Manager: Chase Securities Inc. ("CSI").
Lead Arranger and
Joint Book Manager: Banc One Capital Markets, Inc. ("BOCM").
Global Administrative
Agent: The First National Bank of Chicago ("First Chicago" or
the "Global Administrative Agent").
Syndication Agent: The Chase Manhattan Bank,
CLO Administrative Agent,
Co-Documentation Agent
and Arranger: ABN AMRO Bank N.V.
Co-Documentation agent
and Arranger: Royal Bank of Canada
Arranger: Banque Nationale de Paris
Underwriting Lenders: First Chicago, The Chase Manhattan Bank, ABN AMRO Bank
N.V., Royal Bank of Canada and Banque Nationale de
Paris.
Lenders: Syndicate of lenders selected by BOCM and CSI in
consultation with the Company (collectively, the
"Lenders"); and, with respect to the "Liquidity
Facility". (as defined below) the initial lender shall
be ABN AMRO Bank N.V., which will also be sole provider
of the "Enhancer Facility" (as defined below).
- --------------------------------------------------------------------------------
June 7, 1999
Page 1
<PAGE> 2
American National Can Group, Inc.
- --------------------------------------------------------------------------------
DOCUMENTATION: The Facilities will be evidenced by one or more
credit agreements (collectively, the "Credit
Agreement"), guarantees and other loan documents
(collectively, the "Loan Documents") mutually
satisfactory to the Borrowers and the Lenders.
LENDER COMMITMENTS: Allocation of the commitments received from the
various Lenders shall be pro rata among the
5-Year Facility (as defined below) and the
364-Day Revolving Credit Facility (as defined
below).
FACILITIES:
AGGREGATE
AMOUNT: Up to $1.3 billion (the "Aggregate Commitment").
CURRENCIES: The entire Facility will be available in U.S.
Dollars, and a portion of the 5-Year Facility will
be available in eurosterling and euro.
PURPOSE: To refinance existing indebtedness, effect the
recapitalization of the Company and for general
corporate purposes, including friendly
acquisitions.
5-YEAR REVOLVING CREDIT
AMOUNT: Up to $650,000,000, comprised of a revolving
credit facility of up to $600,000,000 ("5-Year
Facility"), and a corporate loan option facility
of up to $50,000,000 as described on Annex I (the
"CLO Facility A")
MATURITY: 5-Year Facility: 5 years from the date
of execution of the
Credit Agreement (such
date of execution being
the "Closing Date").
LETTER OF CREDIT
SUBFACILITY: Up to $100 million of the 5-Year Facility shall be
available for the issuance of standby letters of
credit (the "Letters of Credit") by the Global
Administrative Agent or by any other Lender (each
such Lender an "Issuer") at the request and for
the account of the Company; provided, that the
program letters of credit issued by he "Enhancer"
under the CLO Facility shall not be a Letter of
Credit under the 5-Year Facility. No Letter of
Credit shall have an expiry date later than the
earlier of (a) one year after the date of issuance
and (b) five business days prior to final maturity
of the 5-Year Facility, provided that any Letter
of Credit with a one-year tenor may provide for
the renewal thereof for additional one-year
periods (which shall in no event extend beyond the
date referred to in clause (b) above). Immediately
upon the issuance of each Letter of Credit, each
Lender shall be deemed to have automatically and
unconditionally purchased and received from the
- --------------------------------------------------------------------------------
Page 2
<PAGE> 3
AMERICAN NATIONAL CAN GROUP, INC.
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Issuer an undivided interest and participation in
and to such Letter of Credit, the obligations of
the Company in respect thereof, and the liability
of the Issuer thereunder, in an amount equal to
the face amount of such Letter of Credit
multiplied by such Lender's commitment percentage
under the 5-Year Facility. The Letter of Credit
Fee shall be equal to the applicable LIBOR Margin
for the 5-Year Facility. A Letter of Credit
fronting fee will be negotiated with each Issuer.
MULTICURRENCY
SUBFACILITY: A portion of the 5-Year Facility not in excess of
$400 million at any one time outstanding shall be
available to the Borrowers in eurosterling or euro
("Multicurrency Loans") with up to the equivalent
of $300 million available in euro and up to the
equivalent of $100 million available in
eurosterling (if Great Britain adopts the euro,
available in euro). The structure of the
Multicurrency Subfacility (for example, as to
which Lenders shall provide the loans thereunder)
and which companies will be designated as
Borrowers thereunder) shall be determined by the
Global Administrative Agent after consultation
with the Company (and during the syndication of
the Facilities, after discussion with the
Underwriting Lenders) so as to minimize
withholding taxes, but the Borrowers will be
required to indemnify and hold the Lenders
harmless against all withholding taxes related to
the Multicurrency Loans. If the Multicurrency
Subfacility is structured with one Lender fronting
loans for the other Lenders in respect of a
Multicurrency Loan, such fronting Lender shall
receive from the Borrowers a fronting fee in
respect thereof in an amount to be determined.
364-DAY REVOLVING CREDIT
AMOUNT: Up to $650,000,000, comprised of a revolving
credit facility of up to $600,000,000 ("364-Day
Revolving Credit Facility"), and a corporate loan
option facility of up to $50,000,000 as described
on Annex I (the "CLO Facility B", and together
with the CLO Facility A, the "CLO Facility")
MATURITY: 364-Day Revolving
Credit Facility: 364 days after the
Closing Date
SWING LINE
SUBFACILITY: Up to $25 million of the 364-Day Revolving Credit
Facility will be available for swingline loans
from First Chicago as swingline lender (the
"Swingline Lender"). All swingline loans shall
bear interest as agreed. Swingline loans will
reduce availability under the applicable Facility.
All swingline loans shall be repaid with interest
on the 7th business day after the date such
swingline loan is made. Interest on the
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American National Can Group, Inc.
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swingline loans shall be payable solely to the
Swingline Lender for its account. At any time upon
request of the Swingline Lender, or, if the Swingline
Lender is not repaid by the Company on the date when
due, each Lender will make a loan the proceeds of
which will be used to repay the swingline loan or, if
any such loan may not be made, irrevocably purchase
from the Swingline Lender, without recourse or
warranty, a participation in the swingline loan as
shall be necessary to cause each such Lender to share
ratably in such swingline loan.
EXTENSION: Not more than 59 days and not less than 30 days
before the end of the applicable 364-day period, the
Company may request in writing that the maturity date
for the expiring 364-Day Revolving Credit Facility be
extended for an additional 364 days. Within 30 days
after such extension request, each Lender may in its
sole discretion agree to such extension by giving
written notice thereof to the Company and the Global
Administrative Agent (and the failure to provide such
notice shall be deemed to be a declination of such
consent). Subject to the Majority Lenders agreeing
to extend, the then applicable expiration date of the
364-Day Revolving Credit Facility shall, following an
extension request, be extended for those consenting
Lenders by 364 days. The Company reserves the right
to replace dissenting Lender(s) with existing or new
Lenders. Such new Lender(s) must necessarily be an
assenting Lender(s) and be agreeable to the extension
request. Extension mechanics for the CLO Facility B
shall be similar to those contained in the 364-Day
Revolving Credit Facility.
CONVERSION TO
TERM LOAN: At the Company's option upon written notice to the
Global Administrative Agent (who shall promptly
notify each of the Lenders), the Company may convert
the aggregate outstanding principal amount of the
364-Day Revolving Credit Facility to a term loan
having a maturity not more than 364 days after the
conversion date identified in such notice.
Conversion mechanics for the CLO Facility B shall be
similar to those contained in the 364-Day Revolving
Credit Facility.
OTHER TERMS
BORROWING OPTIONS: LIBOR for U.S. Dollar loans and loans in
eurosterling adjusted for reserves.
EURIBOR for euro loans, adjusted for reserves.
Alternative Base Rate for U.S. Dollar loans.
Competitive Bid for U.S. Dollar loans.
LIBOR loans and EURIBOR loans (collectively,
"Adjusted IBOR Loans") will be available for interest
periods of one, two, three or six months. All
interest will be calculated on a 360-day basis.
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American National Can Group, Inc.
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The "Alternate Base Rate" means the greater of (i)
the corporate base rate of interest announced by
First Chicago from time to time changing when and
as said rate changes or (ii) the federal funds rate
+1/2%.
"LIBOR" means the rate which appears on Telerate
Page 3740 or 3750, as applicable, for deposits in
the amount and currency of, and for a maturity
corresponding to, the loan; provided, further, that
if Telerate Page 3740 or 3750 is not available,
LIBOR for the relevant Interest Period shall be
the rate at which deposits in the applicable
currency approximately equal in principal amount
to the Global Administrative Agent's portion of
the proposed loan and for the maturity equal to
the applicable Interest Period are offered by the
Global Administrative Agent in immediately
available funds in the London, England interbank
market at approximately 11:00 a.m., London time,
two (2) Business Days prior to the commencement of
such Interest Period, adjusted for reserves.
"EURIBOR" means the interest rate per annum equal
to the rate determined by the Global
Administrative Agent to be the rate at which
deposits in euro appear on the Telerate Page 248
as of 11:00 a.m., Brussels time, on the date that
is two (2) TARGET Settlement Days preceding the
first day of such Interest Period; provided, that
if such rate does not appear on the Telerate Page
248, then EURIBOR shall be an interest rate per
annum equal to the arithmetic mean determined by
the Global Administrative Agent (rounded upwards to
the nearest .01%) of the rates per annum at which
deposits in euro are offered by the three (3)
leading banks in the euro-zone interbank
market at approximately 11:00 a.m., Brussels time,
on the day that is two (2) TARGET Settlement Days
preceding the first day of such Interest Period to
other leading banks in the euro-zone interbank
market rate at which deposits in euro are
offered, adjusted for reserves.
"TARGET Settlement Day" means any day on which the
Trans-European Automated Real-Time Gross
Settlement Express Transfer (TARGET) System is
open.
COMPETITIVE BID
OPTION DESCRIPTION: The Company may request the Global Administrative
Agent to solicit competitive bids from the Lenders
to make loans in U.S. Dollars (each a "Competitive
Bid Loan") under the 5-Year Facility or the 364-Day
Revolving Credit Facility at a margin over or under
LIBOR (each such Competitive Bid Loan a
"Competitive Bid LIBOR Loan") or at an absolute
rate (each such Competitive Bid Loan a "Competitive
Bid Absolute Rate Loan"), for interest periods of
30 days or more. Each Lender will bid at its own
discretion for amount up to the total amount of
commitments and the Company will be under no
obligation to accept
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American National Can Group, Inc.
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any of the bids. All such Competitive Bid Loans made
by a Lender shall be deemed usage of the applicable
Facility for the purpose of fees and availability.
However, each Lender's Competitive Bid Loans shall
not reduce such Lender's obligation to lend its pro
rata share of the remaining undrawn commitment under
the applicable Facility.
BID SELECTION MECHANISM: The Company will determine the aggregate amount of
bids, if any, it will accept. Bids will be accepted
in order of the lowest to the highest rates ("Bid
Rates"). If two or more Lenders bid at the same bid
rate and the amount of such bids accepted is less
than the aggregate amount of such bids, then the
amount to be borrowed at such Bid Rate will be
allocated among such Lenders in proportion to the
amount for which each Lenders bid at such Bid Rate.
If the bids are either unacceptably high to the
Company or are insufficient in amount, the Company
may cancel the auction.
INCREASED COSTS: The Credit Agreement will contain customary provisions
regarding availability, increased costs (including
capital cost increases imposed by regulatory
authorities), illegality and early payment of
deposit-based loans.
DEFAULT RATE: For the 5-Year Facility and the 364-Day Revolving
Credit Facility: After a Default and upon a vote of
the Majority Lenders, the interest rates and any
letter of credit fee will be equal to the then highest
rate (or fee) under the various Facilities plus 2% per
annum. For the CLO Facility: As set forth on Annex I.
FACILITY FEE: For the 5-Year Facility and the 364-Day Revolving
Credit Facility: A per annum fee calculated on a
360-day basis payable on each Lender's commitment
irrespective of usage beginning from the Closing Date,
quarterly in arrears and on termination of the
applicable Facility. (See Pricing Grid set forth
below).
For the CLO Facility: As set forth on Annex I.
INTEREST RATES: Each Borrower may request revolving credit loans
which bear interest at defined margins over such
Borrower's available and selected borrowing option.
5-YEAR FACILITY: See Pricing Grid set forth below.
364-DAY REVOLVING
CREDIT FACILITY: Same as Pricing Grid except that the Facility Fee will
be 0.05% less and the LIBOR and EURIBOR spread will be
0.05% more than indicated in the attached Pricing
Grid.
CLO FACILITY: See Annex I.
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Page 6 June 7, 1999
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American National Can Group, Inc.
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PRICING GRID:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRICING GRID (AVERAGE TOTAL NET INDEBTEDNESS/CAPITAL)
================================================================================
LEVEL I LEVEL II LEVEL III(1) LEVEL IV
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Credit Quality Based
upon Average Total
Net Indebtedness/
Capital(1),(2) <40% >40% but< >45% but< >50%
45% 50%
- --------------------------------------------------------------------------------
Facility Fee 0.20% 0.225% 0.25% 0.30%
- --------------------------------------------------------------------------------
Alternate Base Rate 0.0% 0.0% 0.0% 0.25%
Margin
- --------------------------------------------------------------------------------
LIBOR and 0.80% 0.90% 1.00% 1.20%
EURIBOR Margin
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All-in 1.00% 1.125% 1.25% 1.50%
- --------------------------------------------------------------------------------
</TABLE>
(1)The Facilities will have opening pricing at Level III. All pricing will be
fixed at no less than Level III following initial funding under the Credit
Agreement until the Global Administrative Agent receives the certified
unaudited consolidated financial statements of the Company and its consolidated
subsidiaries for the fiscal quarter ending on March 31, 2000.
(2)For pricing purposes only, the Average Total Net Indebtedness/Capital ratio
will be defined as: (i) the average of the aggregate indebtedness for borrowed
money (including guarantee obligations, but excluding certain scheduled
obligations and liabilities supported by indemnities from Pechiney Plastic
Packaging, Inc. or guarantees from Pechiney S.A. ("Pechiney") or Waste
Management, Inc. as of the Closing Date) of the Company and its subsidiaries
minus the aggregate cash equivalents of the Company and its subsidiaries, in
each case as at the end of each of the four prior fiscal quarters (the "Average
Total Net Indebtedness"), divided by (ii) the sum of (A) the Average Total Net
Indebtedness, plus (B) Consolidated Net Worth (as defined below), including
minority interests, at the date of determination; provided, that for purposes
of calculating Average Total Net Indebtedness for the three fiscal quarters
immediately following the Closing Date, Average Total Net Indebtedness shall be
calculated (x) as of the end of the first fiscal quarter immediately following
the Closing Date for such fiscal quarter, (y) as of the end of the second fiscal
quarter immediately following the Closing Date for the two fiscal quarter
immediately following the closing Date for the two fiscal quarter period
ending on such date, and (z) as of the end of the third fiscal quarter
immediately following the Closing Date for the three fiscal quarter period
ending on such date.
DRAWDOWNS: Minimum amounts of $25 million with additional increments
of $1 million (or the approximate equivalents established
by the Administrative Agent in the applicable alternate
currency.) Drawdowns are at the applicable Borrower's
option with same-day notice for Alternate Base Rate Loans,
one business day for Competitive Bid Absolute Rate Loans,
three business days for Adjusted IBOR Loans, and five
business days for Competitive Bid LIBOR Loans.
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American National Can Group, Inc.
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PREPAYMENTS: Alternate Base Rate Loans may be prepaid in whole
or in part at any time on one business day's
written notice. Adjusted IBOR Loans and
Competitive Bid Loans may not be prepaid before
the end of an Interest Period.
TERMINATION OR REDUCTION
OF COMMITMENTS: The Company may terminate the unused commitments
in amounts of at least $25 million at any time on
three business days' written notice. In addition,
in the event of a sale of assets which exceeds the
percentage of Consolidated Net Assets set forth in
paragraph 15 of the Covenants section below, a
mandatory reduction of the Aggregate Commitment
under the 5-Year Facility (and prepayment of any
outstanding borrowings thereunder in excess of
such reduced Aggregate Commitment) will be
required in the amount by which the net proceeds
from such sale exceed such percentage of
Consolidated Net Assets.
REPRESENTATIONS
AND WARRANTIES: The Company will make customary representations
and warranties, including but not limited to:
1. Corporate existence and standing
2. Authorization and validity
3. No conflict; government consent
4. Financial statements
5. Material Adverse Change (only on the date of
the initial borrowing and the date of any new
loans, and, in the case of the 364-Day
Revolving Credit Facility and the CLO
Facility B, on the date of conversion of such
Facility to a term loan)
6. Taxes
7. Litigation and contingent obligations
8. Subsidiaries
9. ERISA
10. Accuracy of information
11. Regulation U
12. Material agreements (subject to a threshold
of $15 million)
13. Compliance with laws
14. Investment Company Act
15. Public Utility Holding Company Act
16. Environmental compliance
17. Ownership of property
18. Year 2000 compliance
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American National Can Group, Inc.
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Covenants: The Credit Agreement will have customary covenants,
including, but not limited to:
1. Financial Reporting: Annual certified
unqualified audited consolidated financial
statements of the Company and its
consolidated subsidiaries due within 90 days
after each fiscal year. Quarterly certified
unaudited consolidated financial statements of
the Company and its consolidated subsidiaries
due within 45 days after each of the first three
fiscal quarters. The Company will also provide
a quarterly no default certificate signed by an
Authorized Officer. The Company will further
provide such additional information as the
Global Administrative Agent may reasonably
request.
2. Use of proceeds
3. Notice of default, notice of material
litigation and other material notices
4. Conduct of business
5. Taxes
6. Insurance
7. Compliance with laws
8. Maintenance of properties
9. Inspection
10. Consolidations, mergers and acquisitions:
Neither the Company nor any of its material
subsidiaries will consolidate or merge into any
other person other than
a. With respect to the consolidation or merger
of the Company, the Company is the survivor
thereof and the merger is with a company in
a line of business substantially similar to
that of the Company and its subsidiaries as
of the Closing Date;
b. With respect to the consolidation or merger
of any subsidiary, the Company shall own a
portion of the survivor no smaller than the
portion of the subsidiary the Company owned
before the merger; and
c. Permitted Acquisitions. "Permitted
Acquisition" shall mean any acquisition
(i) consummated pursuant to a negotiated
acquisition agreement on a non-hostile
basis, (ii) the purchase price of which
shall not exceed 15% of the Consolidated
Net Assets of the Company in the aggregate
for all acquisitions consummated since the
Closing Date, (iii) in respect of which the
business being acquired shall be
substantially similar to that of the Company
and its subsidiaries as of the Closing
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June 7, 1999
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American National Can Group, Inc.
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Date, and (iv) for each such acquisition the
purchase price of which is greater than or
equal to $50 million, in respect of which the
Company shall have delivered a certificate
from an Authorized Officer demonstrating to
the reasonable satisfaction of the Global
Administrative Agent pro forma compliance with
the financial covenants for the twelve-month
period ending on the last day of the Company's
most recently completed fiscal quarter as if
such acquisition had occurred on the first day
of such twelve-month period;
provided, such permitted consolidations, mergers and
acquisitions shall be permitted only so long as no
Default or Unmatured Default has occurred and is
continuing or would occur after giving effect to such
merger, consolidation or acquisition
11. Guaranties of non-affiliates permitted up to, in the
aggregate, 5% of Consolidated Net Worth.
12. No liens on the stock of the Company's subsidiaries
and no other lien other than (i) with respect to sales
of accounts receivables for purposes of securitization
will be permitted up to an aggregate amount of 5% of
annual Consolidated Net Sales (provided that any claims
in respect of such lien shall represent no more than
the purchaser's pro-rata interest in the pool of
eligible receivables so sold) and (ii) Permitted Liens.
"Permitted Liens" shall include:
a. Customary permitted liens;
b. Liens in the ordinary course of
business;
c. Liens in connection with sale/leaseback
transactions to the extent such
sale/leaseback transactions are
otherwise permitted under the Credit
Agreement
d. Liens existing as of the Closing Date
(as scheduled); and
e. Additional liens, provided the
indebtedness secured thereby does not
exceed $75 million in the aggregate.
13. Transactions with affiliates to be on an arm's-length
basis and no loans or advances to Pechiney or any
other direct or indirect owners of 10% or more of the
stock of the Company (other than scheduled loans and
advances as of the Closing Date and loans or advances
in the ordinary course of business).
14. Sale/Leaseback transactions will be permitted up to
$50 million on an aggregate basis over the term of the
Credit Agreement Sale/Leaseback transactions in excess
of this amount shall be permitted provided the Company
prepays indebtedness under
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American National Can Group, Inc.
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the 5-Year Facility in such like amount
15. Sale or other disposition of assets: The Company
may sell, lease, transfer, or otherwise dispose of
assets or the stock of its subsidiaries, provided
that after giving effect thereto the aggregate
amount of such dispositions (other than (a) in the
ordinary course of business or (b) in connection
with the sale of accounts receivable permitted
under paragraph 12 above) does not exceed 15% of
the Consolidated Net Assets during the term of the
Credit Agreement; provided that immediately after
the consummation of such transaction and after
giving effect thereto no Default or Unmatured
Default would exist. "Consolidated Net Assets"
shall mean total assets less goodwill for the
Company and its consolidated subsidiaries. In the
event of a sale of assets which exceeds such
percentage, a mandatory reduction of the Aggregate
Commitment under the 5-Year Facility (and
prepayment of any outstanding borrowings
thereunder in excess of such reduced Aggregate
Commitment) will be required in the amount by
which the net proceeds from such sale exceed such
percentage of Consolidated Net Assets.
16. Year 2000 issues
17. ERISA
18. Net rental obligations under operating leases will
be permitted up to $50 million on an aggregate
basis during any twelve-month period.
19. Subsidiary indebtedness to be limited to (i) loans
under the Facilities, (ii) existing indebtedness
payable to parties other than Pechiney or any of
its affiliates, (iii) indebtedness necessary to
manage the working capital needs of the currently
existing European-based subsidiaries of the
Company in an amount not to exceed $75 million in
the aggregate; and (iv) other unsecured
indebtedness in an amount not to exceed $75
million in the aggregate.
20. Compliance with environmental laws except where
the failure to comply would not have a material
adverse effect on the business, properties,
financial condition, prospects or results of
operations of the Company and its subsidiaries
taken as a whole.
21. Dividends and distributions will be permitted only
so long as no Default or Unmatured Default shall
have occurred and is continuing.
FINANCIAL COVENANTS: The following financial covenants shall be calculated on a
consolidated basis for the Company and its subsidiaries.
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June 7,1999
<PAGE> 12
American National Can Group, Inc.
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1. Total Net Indebtedness to Capital Ratio: At no time
shall the ratio of (a) Total Net Indebtedness to (b)
Capital be greater than 0.55 to 1.00. Total Net
Indebtedness will equal the aggregate indebtedness for
borrowed money (including guarantee obligations, but
excluding certain scheduled obligations and liabilities
supported by indemnities from Pechiney Plastic
Packaging, Inc. or guarantees from Pechiney or Waste
Management, Inc. as of the Closing Date) of the Company
and its subsidiaries minus the aggregate cash
equivalents of the Company and its subsidiaries.
Capital will equal Total Net Indebtedness plus
"Consolidated Net Worth" (as defined below), including
minority interests.
2. Interest Coverage Ratio: The ratio of (a) EBITDA to
(b) interest expense shall be greater than 3.5 to 1.00
as of the end of the first three fiscal quarters
following the Closing Date (calculated as of the end of
the first fiscal quarter for such first fiscal quarter,
and as of the end of the second fiscal quarter for the
two fiscal quarter period then ending, and as of the
end of the third fiscal quarter for the three fiscal
quarter period then ending); and greater than 4.00 to
1.00 as at the end of each fiscal quarter thereafter
(calculated as of the end of each such fiscal quarter
for the four-fiscal quarter period ending on such
date). For purposes of calculation of this ratio,
EBITDA will include agreed upon add-backs for
restructuring charges related to plant closings.
3. Minimum Consolidated Net Worth: The Company will
maintain a Consolidated Net Worth at all times equal to
or greater than the sum of (i) eighty percent (80%) of
the Consolidated Net Worth of the Company and its
subsidiaries as at June 30, 1999 calculated on a pro
forma basis after giving effect to the restructuring
and dividend described in the Company's S-1, as amended
as of the date hereof, plus (ii) 50% of net income for
the Company and its consolidated subsidiaries
calculated separately (x) on December 31, 1999 for the
two fiscal quarter period ending on December 31, 1999
and (y) for each fiscal year thereafter commencing with
the fiscal year ending on December 31, 2000.
"Consolidated Net Worth" means total consolidated
shareholders' equity, excluding cumulative foreign
currency translation adjustment and minimum pension
liability adjustment.
The Financial Covenants shall be calculated exclusive
of the impact of payments by or liabilities of the
Company on certain scheduled obligations and
liabilities supported by indemnities form Pechiney
Plastic Packaging, Inc. or guarantees from Pechiney or
Waste Management, Inc. as of the Closing Date to
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<PAGE> 13
American National Can Group, Inc.
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the extent that the Company shall receive prompt
reimbursement for such payments under such
indemnities or support guarantees.
CONDITIONS
OF BORROWING: The obligations of the Lenders to make the initial
loan under the Facilities are subject to customary
conditions precedent, including but not limited to
the following:
1. Satisfactory Lenders' due diligence (including
review of environmental issues),
2. Payment of substantially all debt due to
Pechiney or any of its affiliates,
3. Payment of all debt and cancellation of the
commitments under ANC's existing bank credit
agreement (the "Existing Credit Agreement") and
all other bank lines of credit over $5 million
except for those that are scheduled in the
Credit Agreement,
4. Satisfactory completion of IPO,
5. Capital structure and corporate structure
consistent in all material respects with the
Company's S-1,
6. Delivery of Loan Documents satisfactory to the
Global Administrative Agent, including, without
limitation, legal opinions requested by the
Lenders and corporate resolutions,
7. The initial loans under the Credit Agreement
shall be made on or before August 16, 1999.
In addition, each loan (and each continuation or
conversion thereof) under the Facilities will be
subject to customary conditions precedent (borrowing
certificates, accuracy of all representations and
warranties (other than material adverse change which
shall be made only on the date of any new loan, and,
in the case of the 364-Day Revolving Credit Facility
and the CLO Facility B, as of the date such Facility
is converted to a term loan), no default certificate,
etc.).
DEFAULTS: The Agreement will have customary defaults
("Defaults"), as well as remedies in the event of a
default, including, but not limited to:
1. Any representation or warranty shall be false
as to a material fact or matter on the date as
of which made or deemed made
2. Non-payment of principal when due, or of
interest or fees or any other amounts payable
under the applicable Facility within 5 business
days of becoming due
3. Breach of any negative covenant or financial
covenant
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American National Can Group, Inc.
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4. Uncured breaches of any other terms or conditions
in the Credit Agreement for 30 days
5. Cross-acceleration to other Company or subsidiary
indebtedness greater than $15 million, with
cross-default to Company or subsidiary
indebtedness greater than $40 million, which
default would permit the holders of such
indebtedness to cause such indebtedness to become
due prior to its stated maturity
6. Voluntary or involuntary bankruptcy of the
Company, or any other Borrower or any material
subsidiaries
7. Unstayed judgments in excess of $15 million
8. Unfunded liabilities under pension plans in excess
of $300 million
9. ERISA events
10. Any person or group (excluding Pechiney) shall
acquire beneficial ownership of 30% or more of the
voting common stock of the Company or Continuing
Directors no longer constitute a majority of
Company's board of directors. "Continuing
Directors" means, as of any date of determination,
any member of the Board of Directors of the
Company who (i) was a member of such Board of
Directors on the Closing Date or (ii) was
nominated for election or elected to such Board of
Directors with the approval of a majority of the
Continuing Directors who were members of such
Board at the time of such nomination or election.
ASSIGNMENTS/
PARTICIPATIONS: The Lenders may sell assignments under the 5-Year Facility
and 364-Day Revolving Credit Facility with the consent of
the Company and the Global Administrative Agent (such
consents not to be unreasonably withheld, and which
consent of the Company shall not be required (i) so long
as a Default or Unmatured Default shall have occurred and
is continuing and (ii) for any assignment to another
Lender or to an affiliate of a Lender) or participations
in their commitments under the Facilities. Assignments
shall be in minimum amounts of $5,000,000 or such lesser
amount as may be acceptable to the Global Administrative
Agent and the Company (provided the consent of the Company
shall not be required to any reduction of such minimum
amount so long as a Default or Unmatured Default shall
have occurred and be continuing). Dissemination of
information to potential assignees or participants shall
be subject to execution of confidentiality agreements
reasonably satisfactory to the Company. The assignor
shall pay an assignment fee of $3,500 to Global
Administrative Agent upon any assignment by a Lender of
its rights and obligations under the Facilities
(including, but not limited to, an assignment by a Lender
to another Lender, but
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<PAGE> 15
American National Can Group, Inc.
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excluding any assignment by a Lender to an
affiliate of such Lender) or such lesser amount
as may be acceptable to the Global
Administrative Agent.
MAJORITY LENDERS: "Majority Lenders" means Lenders (including the
Providers and Enhancer for the CLO Facility)
holding at least 51% of the commitments or, if
the commitments thereunder have been terminated,
of the outstanding loans. Majority Lenders
shall be calculated on an aggregated basis, as
applicable, for (i) the 5-Year Facility and the
5-year portion of the CLO Facility and (ii) the
364-Day Revolving Credit Facility and the
364-day portion of the CLO Facility
GOVERNING LAW: Illinois.
MISCELLANEOUS: This Term Sheet is intended as an outline and
does not purport to summarize all the terms,
conditions, representations, warranties and
other provisions which will be contained in
definitive legal documentation for this
transaction.
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Page 15 June 7, 1999
<PAGE> 16
American National Can Group, Inc.
- --------------------------------------------------------------------------------
ANNEX I
TO TERM SHEET FOR
AMERICAN NATIONAL CAN GROUP, INC.
JUNE 7, 1999
CORPORATE LOAN OPTION FACILITY (THE "CLO FACILITY")
THE PROGRAM: A $100 million Corporate Loan Option program, provided
by either Windmill Funding Corporation ("Windmill") or
Amsterdam Funding Corporation ("Amsterdam").
PROGRAM LIMIT: $100 million
PARTIES INVOLVED
OBLIGOR: American National Can Group, Inc.
CLO ADMINISTRATIVE
AGENT: ABN AMRO Bank N.V. ("CLO ADMINISTRATIVE AGENT")
PURCHASERS: 1. Windmill and/or Amsterdam (also referred to as
the "Conduits"); and/or
2. ABN AMRO Bank N.V. and certain other lenders (the
"Liquidity Providers"); and
3. ABN AMRO Bank N.V., as the program letter of
credit provider (the "Enhancer").
GUARANTORS: ANC, Pechiney North America, Inc. and all hereinafter
created material domestic subsidiaries of the Company
shall unconditionally guarantee the obligations of
the Obligor under the Liquidity Facility and the
Enhancer Facility.
STRUCTURE
FACILITIES: The Obligor may elect to use the following facilities
(the Conduits and/or, on a pro rata basis, the
Liquidity Facility and the Enhancer Facility) and the
Conduit may use the Liquidity Facility and the
Enhancer Facility.
1. "Conduit Facility" means the $98,000,000
uncommitted facility to be
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Page 16 JUNE 7, 1999
<PAGE> 17
American National Can Group, Inc.
- --------------------------------------------------------------------------------
provided by the Conduits to purchase loans from the
Obligor.
2. "Liquidity Facility" means the $90,000,000 commitment
(90% of the Program Limit) to be provided by the
Liquidity Providers to purchase loans from the
Conduits or the Obligor. Liquidity Providers in
addition to ABN AMRO Bank N.V. will be limited to
financial institutions with a short-term CP rating of
at least A+/P-1 or A-1/P-1. The Liquidity Facility will
include a $45 million 364-day committed facility (the
"364-Day Liquidity Facility") and a $45 million 5-year
committed facility (the "5-Year Liquidity Facility").
3. "Enhancer Facility" means the $10,000,000 commitment
(10% of the Program Limit) to be provided by the
Enhancer (ABN AMRO Bank N.V.) to issue the program
letter of credit and to purchase loans from the
Conduits or the Obligor. The Enhancer Facility is
fully subordinated to the Liquidity Facility
throughout the life of the CLO Facility. The Enhancer
Facility will include a $5 million 364-day committed
facility (the "364-Day Enhancer Facility", and,
together with the 364-Day Liquidity Facility, the
"364-Day CLO Back-up Facility") and a $5 million
5-year committed facility (the "5-Year Enhancer
Facility", and together with the 5-Year Liquidity
Facility, the "5-Year CLO Back-up Facility").
The Liquidity Facility and Enhancer Facility
(collectively, the "CLO Back-up Facilities") provide
the back-stop to the Conduits' respective CP notes.
The CLO Back-up Facilities shall equal 102% of the
Windmill and/or Amsterdam Facilities or $100,000,000.
THE MAXIMUM PROCEEDS TO THE COMPANY WILL EQUAL $98,000,000
CLO FACILITY.
TERMINATION DATE: The Conduit Facility will terminate upon the earlier of
(a) 364 days from the Closing Date (subject to annual
renewal provisions) and (b) occurrence of a Conduit Event.
The CLO Back-up Facilities will terminate (i) 364 days
from the Closing Date (subject to annual renewal
provisions) in the case of the 364-Day CLO Back-up
Facility and (ii) 5 years from the Closing Date in the
case of the 5-Year CLO Back-up Facility.
TERMINATION EVENTS: Include but are not limited to:
1. A Default which is not waived or cured within any
applicable cure period under the Credit Agreement;
2. The Obligor fails to maintain the following financial
ratios:
- Total Net Indebtedness/Capital not more than 53%
- Interest Coverage Ratio not less than 3.75 to
1.00 as of the end of the first three fiscal
quarters following the Closing
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Page 17 June 7, 1999
<PAGE> 18
American National Can Group, Inc.
- --------------------------------------------------------------------------------
Date (calculated as of the end of the first fiscal
quarter for such first fiscal quarter, and as of the
end of the second fiscal quarter for the two fiscal
quarter period then ending, and as of the end of the
third fiscal quarter for the three fiscal quarter
period then ending); and greater than 4.25 to 1.00 as
at the end of each fiscal quarter thereafter
(calculated as of the end of each such fiscal quarter
for the four-fiscal quarter period ending on such
date). For purposes of calculation of this ratio,
EBITDA will include agreed upon add-backs for
restructuring charges related to plant closings; or
3. The CLO Administrative Agent shall no longer deem the
Obligor to be an investment grade equivalent.
CONDUIT EVENT: Upon the occurrence of any of the following, the note
representing the underlying loan to the Obligor, held by the
Conduits, will be transferred to the Liquidity Providers and
Enhancer:
1. The date on which a Termination Event occurs; or
2. Conduits, for any reason, no longer provide funding.
PRICING:
CONDUIT FACILITY
RATE: Shall equal the sum of the following:
1. CP RATE: The A-1+/P-1 or A-1/P-1 CP equal to the actual
trade rate the Conduit achieves on tranches associated
with the Issuer (limited to not longer than 30 days). The
Conduit Facility Rates are quoted on a discount basis and
include dealer fees.
2. LIQUIDITY FACILITY FEE: A per annum fee calculated on a
360-day basis equal to (x) with respect to the 364-Day
Liquidity Facility, the Facility Fee applicable to the
364-Day Revolving Credit Facility, and (y) with respect
to the 5-Year Liquidity Facility, the Facility Fee
applicable to the 5-Year Facility, and payable on the
Liquidity Providers' commitment under the applicable
Liquidity Facility irrespective of usage, quarterly in
arrears and on termination of the applicable Liquidity
Facility.
3. ENHANCER FACILITY FEE: A per annum fee calculated on a
360-day basis equal to (x) with respect to the 364-Day
Enhancer Facility, the Facility Fee applicable to the
364-Day Revolving Credit Facility, and (y) with respect
to the 5-Year Enhancer Facility, the Facility Fee
applicable to the 5-Year Facility, and payable on the
Enhancer's
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Page 18 June 7, 1999
<PAGE> 19
AMERICAN NATIONAL CAN GROUP, INC.
- --------------------------------------------------------------------------------
commitment under the applicable Enhancer
Facility, quarterly in arrears and on termination
of the applicable Enhancer Liquidity Facility.
CLO BACK-UP FACILITIES
FUNDING RATES: The purpose of the CLO Facility is to provide
funding via issuance of the CP Notes under the
Conduit Facility. However, if funding is not
available under the Conduit Facility, the CLO
Back-up Facilities shall be drawn upon to retire
the maturing CP, and the Obligor shall pay
interest under the CLO Back-up Facilities as
follows:
1. Liquidity Providers' Funding Rates:
For the 364-day Liquidity Facility:
i) Pricing for the 364-Day Revolving
Credit Facility per the Pricing Grid;
or
ii) after a Default: the Alternate Base
Rate plus the highest applicable margin
per the Pricing Grid plus 2.00% per
annum
For the 5-Year Liquidity Facility:
i) Pricing for the 5-Year Facility per the
Pricing Grid; or
ii) after a Default: the Alternate Base
Right Rate plus the highest applicable
margin per the Pricing Grid plus 2.00%
per annum
2. Enhancer Funding Rates:
For the 364-Day Enhancer Facility:
i) Pricing for the 364-Day Revolving
Credit Facility per the Pricing Grid
plus 0.50% per annum; or
ii) after a Default: the Alternate Base
Rate plus the highest applicable margin
per the Pricing Grid plus 3.00% per
annum
For the 5-Year Enhance Facility:
i) Pricing for the 5-Year Facility per the
Pricing Grid plus 0.50% per annum; or
ii) after a Default: the Alternate Base
Rate plus the highest applicable margin
per the Pricing Grid plus 3.00% per
annum
COST AND YIELD
PROTECTION: Usual and customary for transactions and
facilities of this type, including without
limitation, with respect to prepayments, changes
in the Global Administrative Agent's or CLO
Administrative Agent's interpretation of capital
adequacy and capital requirements, illegality,
and other similar
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Page 19 June 7, 1999
<PAGE> 20
American National Can Group, Inc.
- --------------------------------------------------------------------------------
provisions typically found in credit facilities
of this type.
ASSIGNMENTS/
PARTICIPATIONS: The Liquidity Providers may sell assignments
under the 364-Day Liquidity Facility and 5-Year
Liquidity Facility with the consent of the
Company and the CLO Administrative Agent (such
consents not to be unreasonably withheld, and
which consent of the Company shall not be
required (i) so long as a Default or Unmatured
Default shall have occurred and is continuing
and (ii) for any assignment to another Liquidity
Provider or Lender or to an affiliate of a
Liquidity Provider or Lender) or participations
in their commitments under the Liquidity
Facilities. Dissemination of information to
potential assignees or participants shall be
subject to execution of confidentiality
agreements reasonably satisfactory to the
Company. The assignor shall pay an assignment
fee of $3,500 to the CLO Administrative Agent
upon any assignment by a Liquidity Provider of
its rights and obligations under the Liquidity
Facilities (including, but not limited to, an
assignment by a Liquidity Provider to another
Liquidity Provider or Lender, but excluding any
assignment by a Liquidity Provider to an
affiliate of such Liquidity Provider) or such
lesser amount as may be acceptable to the CLO
Administrative Agent.
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Page 20 June 7, 1999
<PAGE> 1
EXHIBIT 10.27
TRANSLATION
AGREEMENT
Between:
Groupement pour la Gestion de Pensions Complementaires, or
GPC, a "Groupement d'Interet Economique" established under the "Ordonnance" no.
67-821 of September 23, 1967, whose principal office is at Immeuble Balzac, 10
Place des Vosges, 92048 Courbevoie, registered at the Nanterre commercial
register under no. C 313 467 350, represented by Mr. Henri Boutin, a director,
duly authorized by the shareholders at a meeting held on June 28, 1991
(hereinafter "GPC")
and
Nacanco France S.A., whose principal office is at 64300 Mont,
registered at the Paris commercial register under no. RCS B 377 517 842,
represented by its chief executive officer Mr. Brosseau (hereinafter "Nacanco
France").
WHEREAS
1. Nacanco France is a member of GPC.
2. GPC was formed by the principal companies which, as at the
date of its constitution, employed previous employees of Pechiney, Ugine
Kuhlmann and their subsidiaries who have individual retirement and employee
benefit rights, particularly under the plans known
as "IPC - ACR - MSA and SAD".
---- ----
4000 4000
3. Nacanco France is liable for the supplementary pension
benefits under the terminated plans due to those employees (or the dependents or
assignees thereof) that are currently or have been employed in the Nacanco
France activities that previously belonged to Pechiney Ugine Kuhlmann, or its
subsidiaries or successors. Such benefits are owed pro rata with respect to such
employees' periods of employment with Nacanco France and such predecessors.
4. The purpose of GPC is to fulfill the pension obligations
owed to the employees at the relevant time on behalf of the GPC members.
GPC and Nacanco France have agreed as follows:
1. GPC agrees to pay, on behalf of Nacanco France, any
supplementary pension benefits due to currently employed employees (or their
dependents or assignees) at the
<PAGE> 2
2
relevant time under the "IPC - ACR - MSA/4000 - SAD/4000" plans, pursuant to the
individual pension rights granted to such employees by the employing
companies. At January 1, 1992, Nacanco France is not liable for any pension
liability.
2. Nacanco France has provided to GPC as Annex I a list of the
currently employed employees who have such rights, and will provide to GPC
details of the employees who claim pension rights as and when such claims are
made.
3. GPC agrees to fulfill the supplementary pension rights that
may be claimed by the employees included on the lists supplied to it in
accordance with the plans applicable to such employees.
The rules of such pension plans may only be amended in
accordance with the by-laws and regulations of such plans or in accordance with
any requirements of law.
GPC will notify to each retiring employee the details of any
supplementary pension rights to which they are entitled, and will pay such
supplementary pension rights in accordance with such notification.
4. GPC will keep updated records of supplementary pension
benefits due in accordance with the applicable rules.
5. Nacanco France will provide GPC with all information held
by it which GPC may need in order to pay and update the pension amounts referred
to in Articles 3 and 4 above, as well as any information in its possession
relating to career recommencement by retired employees.
6. GPC will apportion the cost of the supplementary pension
benefits paid by it pursuant to Articles 2 and 3 between the member companies
with which the retirees were employed during their careers. This apportionment
will be effected in accordance with the provisions of Article 9 of GPC's
constitutive GIE agreement.
Nacanco France will pay to GPC quarterly cash amounts as
requested by GPC and on the dates indicated by GPC in order that GPC shall not
be overdrawn and thereby unable to make payment of sums owed to retirees. If an
adjustment for any quarter is necessary, such adjustment shall be made before
the end of the following quarter.
In accordance with Article 10 of the Contract, GPC's
functional expenses shall be apportioned annually among its members in
proportion to the number of retirees under management.
<PAGE> 3
3
Nacanco France shall be obligated to provide GPC with cash
advances necessary to cover its functional expenses in the proportions
established by the members' meeting.
7. If a branch of Nacanco France's business is transferred to
a company that is not a member of GPC, Nacanco France shall remain liable to GPC
for supplementary pension benefits owed by it with respect to the beneficiaries
relating to such branch.
Nacanco France shall be responsible for obtaining any
reimbursement of such amounts from the transferee company or for requesting such
company to become a member of GPC.
If any employee of Nacanco France that is a beneficiary of
individual pension rights is transferred to a company that is not a member of
GPC, GPC shall charge Nacanco France for any supplementary pension amounts paid
to such employee or the dependents thereof.
Nacanco France shall be responsible for obtaining any
reimbursement of such amounts from the transferee company.
8. Nacanco France shall notify GPC at least once per year of
any changes in status of its employees that are beneficiaries of individual
pension rights.
9. Any dispute arising out of the interpretation or
application of this agreement shall be submitted to the Managing Committee of
GPC at the request of any party so to request. If the dispute cannot be
resolved, the Managing Committee shall refer the matter to an extraordinary
general meeting of the members for decision.
Signed in two original copies
in Paris, September 14, 1992
GPC Nacanco France
/s/ H. Boutin /s/ M. Brosseau
- ------------- ----------------
H. Boutin M. Brosseau
Director
<PAGE> 4
Annex I
Employees assumed by Nacanco France from
Aluminum Pechiney with ex-IPC rights
LAST NAME FIRST NAME COMMENCEMENT DATE
--------- ---------- -----------------
ESTELLE Christian 25.10.72
LADAURADE Jean-Pierre 1.06.71
HITTE Jean 1.09.70
LABASTIE Marcel 19.10.70
LAMAGNERE Michel 16.06.64
MARTINS Dionisio 12.10.70
NOEL Gilles 24.11.71
POUSSIER Daniel 1.07.71
<PAGE> 1
EXHIBIT 10.28
PECHINEY
LIMITED LICENCE OF TRADE
NAME AND LOGO TO ANC GROUP, INC.
<PAGE> 2
This Agreement is made the day of July 1999
BETWEEN
PECHINEY - 7, Place du Chancelier Adenauer - 75218 Paris cedex 16 - ("PECHINEY")
AND
AMERICAN NATIONAL CAN GROUP, INC. 8770 West Bryn Mawr Avenue - Chicago -
Illinois 60631-3542 - U.S.A.("the COMPANY").
WHEREAS
A. Pursuant to an Initial Public Offering ("IPO") of the shares of the
Company, Pechiney will no longer hold the majority of the voting stock of
the Company.
B. The Company wishes to use the name and logo of Pechiney for a limited
period after the IPO.
THE PARTIES HEREBY AGREE AS FOLLOWS :
1. As soon as practicable and in any event within three months of the closing
of the IPO the Company will cease to use the TRADE NAMES (meaning, any name
incorporating the word "Pechiney" or any derivation or contraction thereof
or any associated or similar name) or logos of Pechiney.
2. Subject to the above, the Company will acquire no rights under this
Agreement.
3. This agreement is subject to the laws of France and the parties hereby
submit to the exclusive jurisdiction of the courts of France.
Signed by
For and on behalf of Pechiney
Signed by
For and on behalf of ANC Group; Inc.
<PAGE> 1
EXHIBIT 10.29
NETTING AGREEMENT
<PAGE> 2
BETWEEN:
PECHINEY SERVICES, a Belgian limited company (societe anonyme) with head offices
in Brussels at 14, place Saint-Lambert - 1200 BRUXELLES and with administrative
offices in Brussels at 24, rue de la Loi - 1000 BRUXELLES, registered with the
Belgian Commercial Registrar (registre du commerce), under No. 559568 by Mr.
Francois NEWEY, Administrator-Delegate
Nacanco Paketleme Sanayi Ve Ticaret A.S., a company with administrative offices
in Manisa, Turkey.
National Can Puerto Rico, Incorporated, a company with administrative offices in
Catano, Puerto Rico.
American National Can Company, a company with administrative offices in Chicago,
Illinois (U.S.A.).
American National Can Overseas Corp., a company with administrative offices in
Chicago, Illinois (U.S.A.).
Pechiney World Trade (USA), Incorporated, a company with administrative offices
in Greenwich, Connecticut (U.S.A.).
American National Can Canada Inc., a company with administrative offices in
Brampton, Ontario (Canada).
Nacanco Deutschland GmbH, a company with administrative offices in
Gelsenkirchen, Germany.
Nacanco Limited, a company with administrative offices in Luton, England.
Pechiney Packaging Food & General Line Limited, a company with administrative
offices in Luton, England.
Nacanco Service Europe Limited, a company with administrative offices in Luton,
England.
Pechiney UK Limited, a company with administrative offices in Berkshire,
England.
Nacanco France, a company with administrative offices in Mont, France.
Nacanco SA, a company with administrative offices in Gravelines, France.
American National Can Asia Pacific Limited, a company with administrative
offices in Cause Bay, Hong Kong.
Nacanco Ireland Limited, a company with administrative offices in Waterford,
Eire.
Nacanco Spa, a company with administrative offices in Nogara, Italy.
Nacanco Can Italia Spa, a company with administrative offices in Castel San
Giorgio (Salerno), Italy.
National Can Iberia, a company with administrative offices in Valdemorillo,
Spain.
American National Can Holdings (Europe) BV, a company with administrative
offices in Luton, England.
Pechiney, a company with administrative offices in Courbevoie, France.
the aforementioned companies being represented by PECHINEY SERVICES, a Belgian
limited company (societe anonyme) with head offices in Brussels at 14, place
Saint-Lambert - 1200 BRUXELLES and with administrative offices in Brussels at
24, rue de la Loi - 1000 BRUXELLES, registered with the Belgian Commercial
Registrar (registre du commerce), under No. 559568 by Mr. Francois NEWEY,
Administrator-Delegate
both on behalf of the latter and of the other aforementioned companies, pursuant
to the mandates annexed to the present Agreement
<PAGE> 3
hereinafter named
collectively the "Companies"
individually the "Company"
and
BANQUE DE NEUFLIZE SCHLUMBERGER MAILLET, an Executive Committee-Supervisory
Board company (societe anononyme a Directoire et Conseil de surveillance) with
share capital of 672 000 000 Francs and with head offices at 3 avenue Hoche,
75410 Paris Cedex, registered with the "registre du commerce et des societes de
Paris" (the Paris Registrar of Trade and Companies) under No. B 552 003 261
represented by Mr. Jan Willem den BOSCH, Attorney and Mr. Claude BLANDIN,
Associate Director, both of whom are duly authorized by Mr. Henri MOULARD,
Banker, residing at 3 Avenue Hoche, 75410 PARIS Cedex 08 (France), pursuant to
the powers conferred on him under the original act delivered by Maitre
Jean-Marie PLESSY, Notary, Partner of "Jean-Marie PLESSY, Gerard SCHMITT, Robert
THERET et Philippe LEROY", Notaires Associes, a Professional Civil Partnership
(Societe Civile Professionelle), member of a Notarial Office (Office Notarial)
in Paris (France), 28 rue Chateaudun, dated February 11, 1993, a power of
attorney by which the aforementioned Mr. Henri Moulard acted in the name and on
behalf and in the capacity of Chairman of the Executive Committee (President du
Directoire) of the Bank,
named to that position as of January 1, 1993, pursuant to a resolution taken by
the Supervisory Board (Conseil de Surveillance) of the Company on September 30,
1992, of which the certified copy of an excerpt was deposited in the minutes of
the aforementioned Notarial Office on January 15, 1993, and having all powers
hereunder pursuant to articles 124 and 126 of Law 66-537 of July 24, 1966, (the
"Company Act"),
hereinafter the "Bank"
RECITALS:
- the Companies as a result of their relationship and their
wish to alleviate their administrative tasks and to reduce
operating costs have agreed to simplify the settling of their
reciprocal commercial claims by off-setting them in accordance
with the terms and conditions set forth hereunder;
- the Bank, due to its international network and a
computerized system ensuring the adequate functioning of such
off-setting, has declared itself prepared to allow access to
such System by the Companies and simultaneously to handle the
execution of the transactions called for by the Companies
subject to the conditions set forth below:
<PAGE> 4
ARTICLE I - DEFINITIONS
"CLEARING MEMBER"
PECHINEY SERVICES, a Belgian limited company (societe anonyme) with head offices
in Brussels at 14, place Saint-Lambert - 1200 BRUXELLES and with administrative
offices in Brussels at 24, rue de la Loi - 1000 BRUXELLES, registered with the
Belgian Commercial Registrar (registre du commerce), under # 559568 by Mr.
Francois NEWEY acting as Administrator-Delegate or any person whom it appoints
within the scope of its legal powers, provided however that this delegation of
powers was duly communicated beforehand to the other parties to the present
Agreement by registered letter with proof of receipt.
"SUBSIDIARY"
Any Company controlled by PECHINEY in the sense of article 355.1 of Law 66-537
of July 24, 1966.
"ABN AMRO"
The group of ABN AMRO subsidiaries and banks, of which a portion of capital is
held directly or indirectly by ABN AMRO Holding N.V, a Dutch company.
"NETTING ACCOUNT"
An account named "Netting Account" shall be opened in the books of ABN AMRO in
the name of the Clearing Member. It shall consist of an account that centralizes
all payments made in the course of a netting. Such account shall be opened
exclusively for the purposes of recording the netting transactions; under no
circumstance may it be mingled with other accounts of the Clearing Member and it
shall not give rise to delivery of checks.
"COMPANIES"
All subsidiaries, notably the Clearing member, as well as PECHINEY,
participating in the netting transactions and signatories of the Agreement.
"CALENDAR"
The Bank shall maintain the netting calendar and offer its cooperation to the
Clearing Member for the purposes of defining such calendar, while ensuring that
the netting and settlement dates proposed by the Clearing Member are working
days in the countries in which the Companies are located. The 1995 Calendar
appears in Annex 1.
"NETTING DATE"
Working Day on which the Clearing member determines the final amount to be paid
or received for each Company participating in the Netting.
Such date shall come no later than two (2) days prior to the Settlement Date.
"SETTLEMENT DATE"
Working day on which the net position of each Company shall be credited or
debited. In the absence of another arrangement, such date shall be two (2)
Working days after the Netting date.
"WORKING DAY"
<PAGE> 5
Working day refers to a day on which the Banks of all of the countries, in which
the settling by the Companies of payment orders required for the netting to
occur, are open.
"NETTING CURRENCY"
Common unit of currency used by the Clearing Member to off-set among the
Companies debts and claims denominated in different currencies listed on
currency markets. By common agreement with the Bank, the Companies and the
Clearing Member choose for the execution of the present Agreement the following
currency: French Francs (FRF).
"NETTING"
Transaction consisting of the centralization on a given date:
- - of payments between companies of the same group and to ensure their
off-setting;
- - of payments to third parties.
"SETTLEMENT CURRENCY"
Unit of Currency established for each Company for the purposes of satisfying the
payment orders proposed by the System and determined as indicated in Annex 5,
except for orders pertaining to currency transactions, for which the settlement
currency is that of the transaction.
"TRANSACTION CURRENCY"
Unit of currency in which a claim or debt is denominated in the System.
"SYSTEM"
The System is composed of:
- - the NettingStation software, which is to be installed on the personal
computers of the Companies and which is used for the periodic settling
of debts and claims;
- - a central server, set up in Amstelveen, the Netherlands, which is the
property of, and is maintained by ABN AMRO, and which handles and
distributed information regarding the transactions of the relevant
Companies;
- - a telecommunication network to which the Clearing Member and the
Companies have access in order to transmit information using
NettingStation from personal computers to the ABN AMRO server;
- - a security code, which allows for the control of access to the network
and to the central server.
This System presents the following characteristics:
- - the off-setting transaction shall be executed on behalf of all of the
Companies by the Clearing Member, who shall coordinate and centralize
all Netting payments;
- - debts of each Company owed through the System to each of the other
Companies are to be converted into the Netting Currency. The net
positions which arise after off-setting shall then be reconverted on
the Netting Date into the Settlement Currency of each of the Companies;
- - in order to allow each Company to asses its net position in its own
Settlement Currency, rates shall be entered into the System on a daily
basis by ABN AMRO. These rates shall be those provided by the Reuter
AABC page. The rates used for the calculation of the final off-set
shall be proposed by the System (AABC Reuters page rates of ABN AMRO)
or provided by the Clearing Member;
- - the System allows each Company to enter transactions of cash sales or
purchases of currencies;
<PAGE> 6
- - the System allows the inclusion of debts to third parties, provided
that the regulations applicable to such transactions are complied with
by the Companies. Such third parties shall receive those sums owed to
them in the Transaction Currency;
- - the System allows the entry of foreign exchange SWAP agreements, which
shall be settled in the currency of such agreements. They may only be
entered into by one Company in accordance with the particular terms and
conditions to be determined elsewhere by the Clearing Member and the
Bank.
The Bank and Companies agree that the Companies shall be provided every
new version of the NettingStation software free of charge.
"SYSTEM PARAMETERS"
The information provided by the Clearing Member and the Companies to the Bank
pertaining to, among other things, the address, contact persons, banking
references of the Companies.
<PAGE> 7
ARTICLE II - SYSTEM ACCESS
The Bank shall offer the Companies a non-exclusive right of use of the system
subject to the conditions of the present Agreement. Access to the System's
central server is limited to those periods set forth in Annex 2 of the present
Agreement.
The bank guaranties that it holds the necessary rights to provide the Companies
the right of use. The fact that the Bank shall provide such a right of use in no
way gives rise to a transfer of relevant property rights, notably as regards the
software and the information framework.
The Companies renounce any cession to third parties or any copy, under any
circumstances, of software, documentation, security codes, instruction manuals,
and other information pertaining to the System that they receive from the Bank,
except for backup copies, which may be saved at another location than the
Companies' offices, provided the Bank has consented thereto beforehand. The
Companies must in that case take all necessary precautions to prevent access to
these copies by unauthorized third parties.
The Companies shall keep confidential such software, documentation, security
codes, instruction manual, and any other information provided by the Bank and
shall take all necessary precautions to ensure such confidentiality.
For security purposes, the Companies must act in strict accordance with the
security procedures agreed upon with the Bank, in particular authentification
procedures. The Companies are responsible for maintaining in a secure place the
authentification codes and other security measures communicated to them by the
bank, as well as for the consequences of their possession by unauthorized
persons.
Where authentification measures are used, the Companies shall be made
unconditionally liable both to the Bank and to any third party as a result of
orders or instructions that they have communicated to the Bank, even if such
orders or instructions were given by an unauthorized person.
Neither the Companies nor the Bank shall question the validity of messages
transmitted and maintained by computer. Messages transmitted in accordance with
the authentification procedures agreed upon shall the same evidentiary value as
a validly written and signed document.
ARTICLE III - SCOPE OF THE AGREEMENT
The Companies shall be responsible for the information provided to the System
and for the System Parameters that they communicate to the bank.
The bank must ensure the accurate maintenance of the Clearing Member's Account
as regards the execution of the present Agreement (in particular, but without
being limited to the following, the execution of wire and transfer orders,
compliance with effective dates for payment and cashing in, etc.) and the
execution of currency transactions requested by the Clearing Member.
It is expressly agreed that the off-setting, having been decided as falling
within the responsibility of the Clearing Member and of the Companies, and
executed by means of the System, shall liberate each Company with respect to
each of the others up to a maximum of the amounts entered into the System as
final and net.
Each Company undertakes to execute payment orders that are necessary for the
automatic settlement by setting-off the amount that one Company would owe the
other on the Netting Date as calculated in the Netting currency and under the
supervision of the Clearing Member, by means of the System. The following shall
hold true regardless of the currency in which the relevant reciprocal claims and
debts are denominated.
The Companies retain the right to execute separately the settlement of any debt
that they wish to exclude from the netting arrangement. The relevant Companies
would then have to exclude from the System all entries of information pertaining
to such debt.
<PAGE> 8
ARTICLE IV - OPERATION
The Companies shall be required to enter into the System the amount of their
debts (or claims) due for repayment to each of the other Companies.
All reciprocal debts and claims, denominated in the various currencies shall be
converted into the Netting Currency.
On the Netting date, and for each Company, two amounts expressed in the Netting
Currency shall be calculated:
- the total of claims owed by the remaining Companies
- the total of debts owed to the remaining Companies.
The balance of the amounts, to be paid or received, depending on the case, shall
constitute the net position of each Company.
The System shall provide on the netting date a statement of payment orders to
the credit of the bank account or accounts of those Companies whose net position
is a credit balance. Such payment shall be the value in exchange for their net
credit balance positions in the Settlement Currency. The Companies shall
instruct their banks to make the necessary transfers in order to settle on the
Settlement Date their net debit balances on the Netting Account (as specified in
their respective netting reports).
On the order and subject to the liability of the Clearing Member, the different
positions that result from the netting shall be satisfied by the execution of
the payment orders.
The conditions that apply to payment orders pertaining to Netting are set forth
in Annex 3.
The Clearing Member undertakes to take all steps in order to ensure the netting
transactions are executed in accordance with the regulations pertaining to
netting in the country of residence of each Company. ABN AMRO reserves the right
to modify or not to execute any instruction that would be contrary to such
regulations.
As regards third parties, the System shall provide a statement of payment orders
that reflects the amount and currency of the transactions entered into by the
Companies, third parties having no participation whatsoever in the netting.
Under no circumstances shall the payment orders cause the Netting Account to
have a debit balance.
ARTICLE V - BANK LIABILITY
The Bank undertakes to ensure the adequate functioning of the System. However,
its liability hereunder is strictly limited to the tasks allocated to it and
listed below:
- the follow up of payment orders on their effective date,
- the follow up of the execution and presentation of the
administrative documents showing the set off of operations to
financial authorities, in accordance with their
specifications,
- the execution of potential Netting exchange transactions,
i.e. the execution of currency purchase or sale orders
according to orders given by the Clearing Member following the
regular rules of the currency exchange market.
The Bank shall consider information received from the Companies and its
knowledge relating to the Companies' contemplated operations as confidential
unless otherwise specified by law or statutes applicable to the Bank.
<PAGE> 9
Under no circumstances shall the Bank be liable for a technical failure, and in
particular for the defective functioning of the connection equipment to the
automated trading system installed on the Companies' premises which could affect
the execution of the Clearing Member's instructions, and in general in the event
of lateness in the trading or execution of such instructions due to a case of
force majeure or to an event beyond its control or the control of ABN AMRO, or
an event caused by a Company or a third party. ABN AMRO is not considered to be
a third party in the sense of the present provision in Sections II, III, IV.
Except for the cases enumerated above, the Bank undertakes to intervene at its
own cost (directly or indirectly) to remedy the potential failures of the System
that have been discovered.
The Bank is bound in any case to inform the Clearing Member of all problems or
failures of the System as soon it is has become aware of them and shall do its
best to remedy the situation, or at least, to provide the Companies with
alternatives in due course.
In addition, the Bank shall do its best to keep the Clearing Member informed of
any evolution of local legislation on Netting in the countries in which the
Companies are located and which could affect the Netting's operation as
described in the present Agreement.
If the Bank's liability is engaged due to the execution of this Agreement, the
Companies would only be entitled to request as indemnification and damages for
their actual loss the lesser of the two following amounts:
- FRF 200,000
- the actual amount of remuneration paid by the Clearing Member over
the course of the twelve months preceding the event having given rise to the
loss.
The parties expressly agree that the limits upon the liability of the Bank set
forth in the present section shall not be applicable in the event of gross fault
or gross negligence on the part of the bank or in the event of the
non-application by ABN AMRO of the correct effective date to the payment orders,
subject only to the reservations provided for in Section IV above.
ARTICLE VI - PAYMENT
All expenses, commissions and fees due to the Bank pursuant the execution of the
present Agreement are set forth in Schedules 3 and 4. They shall be included in
a monthly statement made out to the Clearing Member after each Netting Date, and
shall be sent to the Clearing Member. The Clearing Member shall effect payment
by direct transfer upon receipt.
The Clearing Member shall re-bill each Company for the commissions and fees of
the Bank attributable to each Company.
The Bank reserves the right to modify the rates of its services listed in
Schedules 3 and 4. In this case, it shall alert the Clearing Member by
registered mail with acknowledgment of receipt two months before the expected
date of application of the new rates. The new rates cannot take effect without
agreement of the Clearing Member.
The rates shall be increased by the amount of the TVA at the rates in effect at
the date of billing.
ARTICLE VII - DURATION OF THE AGREEMENT
The present Agreement is concluded for a duration of one year from its taking
effect, renewable by tacit agreement for an unlimited period. The Agreement
shall take effect at the time that the Bank, the Clearing Member and at least
two companies have signed it.
1. Each party may terminate the present Agreement by registered mail with
acknowledgment of receipt:
- to the Bank, if the termination is requested by the Clearing Member;
<PAGE> 10
- to the Clearing Member, if the termination is requested by the Bank;
- to the Bank and the Clearing Member, if the termination is requested
by another party.
Aside from the specific exceptions outlined below, this termination shall take
effect on the date of receipt by the addressee of the letter of termination
except in the case where termination is requested by a Company other than the
Clearing Member, in which case the termination shall take effect on receipt of
the termination letter by the Bank.
2. The termination of the present Agreement may be executed and may take
effect in spite of the above provisions under the following conditions:
2.1 before the end of the first year of execution of the present
Agreement with one months' notice. This termination shall take
effect on the first Settlement Date following the end of the
first year;
2.2 after the first year of execution of the present Agreement, at
any time, subject to three months' notice. This termination
shall take effect on the first Settlement Date following the
expiration of the notice.
3. It is expressly agreed that this Agreement shall be terminated as of
right without notice and without any other formality other than that
provided for in paragraph VII 1 above.
3.1 If it appears necessary to the Bank or to any of the
Companies, including the Clearing Member, in any of the
following cases:
- non-execution by one of the Companies of its
obligations under this Agreement;
- failure to pay caused by one of the Companies and
declared to the central bank of its country of
residence;
- seizure, blockage or any opposition imposed on one
of the accounts opened on the books of the Bank or
of ABN AMRO in the name of one of the Companies;
- suspension of activity or payment or any out of
court or judicial bankruptcy procedure or
liquidation of one of the Companies;
- loss of Subsidiary status by one of the Companies;
- non-respect by one of the Companies of any of its
commitments under this Agreement;
- in case of the occurrence of new circumstances,
especially the changing of applicable legal,
regulatory or fiscal provisions that affect the
validity or the conditions of execution of this
Agreement and whose existence would be justified by
the party requesting the termination.
3.2 If it appears necessary to the Clearing Member in the event of
non-execution by the Bank of any of its obligations under this
Agreement;
3.3 If it appears necessary to the Bank:
- in the event of non-execution by the Clearing
Member of any of its obligations under this
Agreement;
- there is a lack of agreement on the modification by
the Bank of the pricing of its services appearing
in Schedules 3 and 4.
However, except for the provisions in Article VII-1 above, the
Agreement shall be terminated under law upon the occurrence of the
event independent of the date of receipt of the letter of termination
above in one of the following cases:
- seizure blockage or any opposition affecting one of the
Clearing Member's accounts,
- suspension of payment or any out of court or judicial
bankruptcy procedure or liquidation of the Clearing Member.
<PAGE> 11
4. The termination of this Agreement shall only apply to the Company to
which one or the other of the cases of termination mentioned above
occurs, except if it concerns the Clearing Member or the Bank, in which
case this Agreement shall be terminated in its entirety and shall cease
to apply to all of the Companies.
In all cases of termination, the payment anticipated in Article VI
shall remain due to the bank until the date of the termination; those
relating to the maintenance of the accounts shall be due for all months
that have begun.
<PAGE> 12
ARTICLE VIII - DECLARATIONS AND PRIOR CONDITIONS
The Clearing Member declares that:
- netting transactions between the Companies are executed under its
sole supervision;
- the person signing this Agreement on behalf of the Companies has been
duly authorized for this purpose by the appropriate authorities of
the Clearing Member.
Each Company declares that concerning the requirements for the signature and
execution of this Agreement:
- that this Agreement and its application are in accordance with the
Company's bylaws.
- that at the date of signature of this Agreement, it conforms to
the legislation and regulations applicable to the Company and that
all the authorizations required have been obtained from the
appropriate authorities of the Company or from any third parties.
Each Company agrees to conform to all applicable regulations concerning the
execution of this Agreement; the Bank cannot be held liable on this account.
ARTICLE IX - AMENDMENT
Any modification to this Agreement shall be made in the form of a supplemental
agreement signed by the Clearing Member, on behalf of and with the authorization
of the Companies, and by the Bank.
Any Subsidiary may request to be made a party to this Agreement, either directly
with the express consent of the Clearing Member, or through its intermediary. If
the Bank agrees to this request, the Subsidiary concerned shall sign a
supplemental agreement with the Bank and the Clearing Member, under the terms of
which the subsidiary shall be considered to be a party to this Agreement; this
shall be applicable as soon as the Subsidiary satisfies the conditions provided
under Article VIII, without it being necessary to obtain the agreement of the
other Companies.
<PAGE> 13
ARTICLE X - APPLICABLE LAW AND JURISDICTION
This Agreement is subject to French law.
Only the French version of this Agreement shall be valid and binding, to the
exclusion of any translation in another language.
Failing out of court settlement by the parties, any dispute relating to the
validity, interpretation or execution of any provision of this Agreement shall
be ruled upon by the competent courts within the jurisdiction of the Court of
Appeal of Paris.
Done in duplicate in
Brussels
July 21, 1995
For the Companies For the Bank
(seal and signature) (seal and signature)
F. NEWEY Mr. Jan Shallem den BOSCH
President of PECHINEY SERVICES Mr. Claude
24 rue de la Loi - Bte 5 BANQUE
1000 Brussels MAILLET
Tel. (02) 509.09.44 3 Avenue
Fax (02) 509.09.96 75410 Pari
<PAGE> 14
<TABLE>
<CAPTION>
SCHEDULE 1
NETTING CALENDAR 1995
- ----------------------------------------------------------------------------------------------------------------
Month Netting Code Reporting Control Compensation Value
X-6 X-4 X-2
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
August 0895 7/24 7/25 7/31 8/2
- ----------------------------------------------------------------------------------------------------------------
September 0995 8/23 8/28 8/30 9/1
- ----------------------------------------------------------------------------------------------------------------
October 1095 9/21 9/26 9/28 10/2
- ----------------------------------------------------------------------------------------------------------------
November 1195 10/25 10/30 11/2 11/6
- ----------------------------------------------------------------------------------------------------------------
December 1295 11/21 11/28 11/30 12/04
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
ACCESS SCHEDULE
Access to the System's central server is limited to the following schedule:
from 2:00 a.m. to 12:00 a.m. seven days a week.
<PAGE> 16
<TABLE>
<CAPTION>
SCHEDULE 3
Financial Conditions of International Transfers and Accounts
- ----------------------------------------------------------------------------------------------------------------
Opening Account Monthly maintenance of International transfers International transfers
account received issued
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0 150 150 150
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Prices are indicated in French francs excluding tax.
<PAGE> 17
SCHEDULE 4
Financial Conditions of Nettingstation
INSTALLATION:
Installation includes providing software, manuals, Digipass (security
equipment), as well as installing the System's parameters on the ABN AMRO
server.
TRAINING:
This includes a one-day user training session in Paris and in the United States.
Supplementary training can be organized on location at the Bank at the request
of the Clearing Member for a maximum of ten participants. Training costs charged
by the Bank are fixed at French francs 6,000 (excluding tax) per day.
MAINTENANCE:
This includes telephone assistance to the Companies and the supply of new
versions of the Nettingstation software package.
INSTALLATION COSTS:
<TABLE>
<S> <C>
Installing parameters, training, evaluation, maintenance: FF 40,000 (excluding tax)
Digipass (2 cards recommended per station): FF 250/card (excluding tax)
PERIODIC COSTS:
Monthly fixed costs: FF 150/subsidiary (excluding tax)
FF 50/other participant (excluding tax)
Processing costs: FF 6,000/Netting (excluding tax)
FF 1.50/transaction (excluding tax)
</TABLE>
<PAGE> 18
SCHEDULE 5
Currency of payments by participants
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Company Currency of payment
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Nacanco Paketleme Sanayi Ve Ticaret A.S. Transaction
- ----------------------------------------------------------------------------------------------------------------
National Can Puerto Rico, Incorporated USD
- ----------------------------------------------------------------------------------------------------------------
American National Can Company USD
- ----------------------------------------------------------------------------------------------------------------
American National Can Company ITO Transaction
- ----------------------------------------------------------------------------------------------------------------
American National Can Overseas Corp. USD
- ----------------------------------------------------------------------------------------------------------------
Pechiney World Trade (USA) USD
- ----------------------------------------------------------------------------------------------------------------
American National Can Canada Inc. CAD
- ----------------------------------------------------------------------------------------------------------------
Nacanco Deutschland GmbH DEM
- ----------------------------------------------------------------------------------------------------------------
Nacanco Limited GBP
- ----------------------------------------------------------------------------------------------------------------
Pechiney Packaging Food & General Line Limited GBP
- ----------------------------------------------------------------------------------------------------------------
Nacanco Service Europe Limited GBP
- ----------------------------------------------------------------------------------------------------------------
Pechiney UK Limited GBP
- ----------------------------------------------------------------------------------------------------------------
Nacanco France FRF
- ----------------------------------------------------------------------------------------------------------------
Nacanco SA FRF
- ----------------------------------------------------------------------------------------------------------------
American National Can Asia Pacific Limited HKD
- ----------------------------------------------------------------------------------------------------------------
Nacanco Ireland Limited IEP
- ----------------------------------------------------------------------------------------------------------------
Nacanco Spa ITL
- ----------------------------------------------------------------------------------------------------------------
National Can Italia Spa ITL
- ----------------------------------------------------------------------------------------------------------------
National Can Iberian SA ESP
- ----------------------------------------------------------------------------------------------------------------
American National Can Holdings (Europe) BV NLG
- ----------------------------------------------------------------------------------------------------------------
Pechiney Transaction
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 19
AMENDMENT
OF [ ] 1999
TO THE NETTING AGREEMENT
<PAGE> 20
BETWEEN:
Pechiney, a company (societe anonyme) with head offices at 7 place du
Chancelier Adenauer 75116 Paris, registered with the "registre du commerce et
des societes de Paris" (the Paris Registrar of Trade and Companies) under No. [
], represented by Mr. [ ] who is duly authorized,
acting on behalf of both Pechiney and those companies included in the list found
in Annex 1, under the powers hereinafter annexed,
Hereinafter referred to individually as the "Company" and collectively
as the "Companies",
On the one part,
AND
Banque Neuflize Schlumberger Mallet, an Executive Committee-Supervisory
Board company (societe anononyme a Directoire et Conseil de surveillance) with
head offices at 3 avenue Hoche, 75410 Paris Cedex, registered with the "registre
du commerce et des societes de Paris" (the Paris Registrar of Trade and
Companies) under No. 552 003 261, represented by Mr. [ ] who is duly authorized,
Hereinafter the "Bank",
On the other part,
Hereinafter referred to individually as the "Party" and collectively as
the "parties".
RECITALS:
A netting agreement (hereinafter the "Agreement") was entered into on
July 21, 1995 between the Bank, on the one part, and Pechiney Services, on the
other part, acting on behalf of the "COMPANIES", as this expression is defined
in the Agreement.
By letters exchanged between the Bank, Pechiney Services and the
COMPANIES, on December 12, 1997, Pechiney Services assigned to Pechiney the
entirety of its rights and obligations pursuant to the Agreement in its capacity
as "CLEARING MEMBER" as this expression is defined in the Agreement.
The Parties wish to modify the Agreement so that the Companies, in
which AMERICAN NATIONAL CAN GROUP Incorporated shall hold, directly or
indirectly, more than one half of the voting rights and whose list appears
hereinafter in Annex 2, remain parties to the Agreement, whereas they would no
longer constitute "SUBSIDIARIES" in the sense of the Agreement, in accordance
with the terms and conditions of the present amendment (hereinafter the
"Amendment").
<PAGE> 21
THE PARTIES NOW AGREE AS FOLLOWS:
ARTICLE 1. The Parties have decided that the Companies, in which
AMERICAN NATIONAL CAN GROUP Incorporated shall hold, directly
or indirectly, more than one half of the voting rights and
whose list appears in Annex 2 (hereinafter the
"Beneficiaries"), are to remain parties to the Agreement,
whereas the Beneficiaries would no longer constitute
SUBSIDIARIES in the sense of the Agreement. Consequently, the
Parties are modifying the definition of the expression
"COMPANIES" of article 1 of the Agreement to include the
expression the "Beneficiaries", as defined above.
For purposes of clarity, it is specified that the
provisions of article 3.1 of the Agreement, relating to the
option to terminate the Agreement in the event of the loss of
the status of AFFILIATE by a COMPANY shall not be applicable
to the Beneficiaries.
ARTICLE 2. The Amendment shall take effect from the day of the
official listing on the New York Stock Exchange of the
majority of the shares issued by [AMERICAN NATIONAL CAN GROUP
Incorporated]. The Amendment shall remain in effect until
August 30, 1999, the date of expiration of the Agreement.
ARTICLE 3. The provisions of the Amendment are incorporated into the
Agreement, the entirety of the provisions of the latter being
applicable to the former, subject to those express
modifications set forth above.
Made at Paris, on this day of
In two (2) copies
For Pechiney For the Bank
Mr. [ ] Mr. [ ]
<PAGE> 22
ANNEX 1
LIST OF BENEFICIARIES
Nacanco Paketleme Sanayi Ve Ticaret A.S., a company with administrative offices
in Manisa, Turkey
ADDRESS: Organize San Bolgesi, Manisa, TURKEY
American National Can Company, a company with administrative offices in Chicago,
Illinois (United States of America)
ADDRESS: 8770 West Bryn Mawr Ave., Chicago, IL 60631-3542 USA.
American National Overseas Corp., a company with administrative offices in
Chicago, Illinois (United States of America)
ADDRESS: 8770 West Bryn Mawr Ave., Chicago, IL 60631-3542 USA.
American National Can Canada Inc., a company with administrative offices in
Brampton, Ontario (Canada)
ADDRESS: 180, Walker Drive, Brampton, Ontario, L6T IV8, Canada.
Nacanco Deutschland GmbH, a company with administrative offices in Gelsenkichen,
Germany
ADDRESS: Emscherstrasse 46, 4650 Gelsenkirschen-Buer, Germany.
Nacanco Limited, a company with administrative offices in Luton, England
ADDRESS: 100 Capability Green, Luton, Bedfordshire LU1 3LG, UK.
Nacanco Service Europe Limited, a company with administrative offices in Luton,
England
ADDRESS: 100 Capability Green, Luton, Bedfordshire LU1 3LG, UK.
Nacanco France, a company (societe anonyme) with administrative offices in Mont,
France
ADDRESS: Usine de Mont, 64300, Mont, France.
Nacanco SA, a company (societe anonyme) with administrative offices in
Gravelines, France
ADDRESS: Usine de Gravelines, route des Vignots, ZIP des Huttes, 59820
Gravelines, France.
American National Can Asia Pacific Limited, a company with administrative
offices in Cause Bay, Hong Kong
ADDRESS: 311 Gloucester Road, 2506 Windsor House, Causeway BAY, Hong Kong.
Nacanco Ireland Limited, a company with administrative offices in Waterford,
Eire
ADDRESS: Waterford Industrial Estate, Cork Road, Waterford, Ireland.
Nacanco Spa, a company with administrative offices in Nogara, Italy
ADDRESS: Via Molina di Sopra 64, Zone Industriale di Nogara, 37054 Nogara
(Verona), Italy.
National Italiana Srl, a company with administrative offices in Pianella
(Salerno), Italy
ADDRESS: Contrada Conoscopane, 65019 Pianella, Italy.
National Can Iberica SA, a company with administrative offices in Valdemorillo,
Spain
ADDRESS: Cira Comarcal-600 KM 35, 28210 Valdemorillo (Madrid), Spain.
American National Can Holdings (Europe) BV, a company with administrative
offices in Luton, England
ADDRESS: 100 Capability Green, Luton, Bedfordshire LU1 3LG, UK.
<PAGE> 23
Avenant-netting-2-25/6/99
Projet aux fins de discussion uniquement
ANNEXE 2
GUARANTEE
Reference is made to the agreement dated [ ] 1999 (the "Amendment") entered
into between Pechiney a company incorporated under the laws of France and
having its registered office at 7 place du Chancelier Adenauer, 75116 Paris
(France) ("Pechiney"), Banque de Neuflize Schlumberger Mallet a company
incorporated under the laws of France and having its registered office at 3
avenue Hoche, 75008 Paris (France) (the "Bank") and AMERICAN NATIONAL CAN GROUP
Incorporated a company incorporated under the laws of the State of Illinois and
having its registered office at [ ] (United States of America) ("ANC GROUP
Inc."), pursuant to which the netting agreement dated July 21, 1995 (the
"Netting Agreement") has been amended, in order to maintain as Parties to the
Netting Agreement, until September 3, 1999 the "Beneficiares" as defined in the
Netting Agreement, even though the "Beneficiares" are not anymore "FILIALES" as
defined in the Netting Agreement.
In accordance with the Amendment, ANC GROUP Inc. hereby unconditionally and
irrevocably undertakes, without any right to raise any exceptions whatsoever,
to:
(i) pay on first demand of the Bank and without delay, all the sums which are
due by the "Beneficiares" to the Bank pursuant to the Netting Agreement as
amended by the Amendment;
(ii) guarantee vis-a-vis the Bank all the obligations of the "Beneficiares"
under the Netting Agreement as amended by the Amendment.
This guarantee will come into force on the date of effect of the Amendment and
will remain fully valid and in full force until the complete fulfilment of the
"Beneficiares" obligations under the Netting Agreement as amended by the
Amendment.
ANC GROUP Inc. represents and warrants that it has full authority, power and
capacity to enter into and carry out its obligations under this guarantee.
Terms used in this guarantee which are defined in the Netting Agreement and the
Amendment shall have the meaning given to them in the Netting Agreement and the
Amendment.
This guarantee shall be governed by French Law regardless conflict of law
rules. Any dispute arising out of or in connection with shall be exclusively
submitted to the competent courts in the jurisdiction of the Cour d'appel of
Paris
In [ ], on [ ] 1999
ANC GROUP Inc.
- -----------------------------------
By:
Title:
<PAGE> 24
Avenant-netting-2-25/6/99
Projet aux fins de discussion uniquement
ANNEXE 3
GUARANTEE
Reference is made to the agreement dated [ ] 1999 (the "Amendment") entered into
between Pechiney a company incorporated under the laws of France and having its
registered office at 7 place du Chancelier Adenauer, 75116 Paris (France)
("Pechiney"), Banque de Neuflize Schlumberger Mallat a company incorporated
under the laws of France and having its registered office at 3 avenue Hoche,
75008 Paris Paris (France) (the "Bank") and AMERICAN NATIONAL CAN GROUP
Incorporated a company incorporated under the laws of the State of Illinois and
having its registered office at [ ] (United States of America) ("ANC GROUP
Inc."), pursuant to which the netting agreement dated July 21, 1995 (the
"Netting Agreement") has been amended, in order to maintain as Parties to the
Netting Agreement, until September 3, 1999 the "Beneficiaires" as defined in the
Netting Agreement, even though the "Beneficiaires" are not anymore "FILIALES"
as defined in the Netting Agreement.
In accordance with the Amendment, ANC GROUP Inc. hereby unconditionally and
irrevocably undertakes, without any right to raise any exceptions whatsoever,
to:
(i) pay on first demand of Pechiney and without delay, all the sums which
are due by the "Beneficiaires" to the Pechiney and/or the "SOCIETES" as
defined in the Netting Agreement pursuant to this Netting Agreement as
amended by the Amendment;
(ii) guarantee vis-a-vis Pechiney all the obligations of the "Beneficiaires"
under the Netting Agreement as amended by the Amendment;
(iii) guarantee vis-a-vis Pechiney the obligations of the "Beneficiaires"
under the installation and implementation proceeding of the software to
be used in order to carry out the netting operations after September 3,
1999.
This guarantee will come into force on the date of effect of the Amendment and
will remain fully valid and in full force until the complete fulfilment of the
"Beneficiaires" obligations under the Netting Agreement as amended by the
Amendment.
ANC GROUP Inc. represents and warrants that it has full authority, power and
capacity to enter into and carry out its obligations under this guarantee.
Terms used in this guarantee which are defined in the Netting Agreement and the
Amendment shall have the meaning given to them in the Netting Agreement and the
Amendment.
This guarantee shall be governed by French Law regardless conflict of law
rules. Any dispute arising out of or in connection with shall be exclusively
submitted to the competent courts in the jurisdiction of the Cour d'appel of
Paris
In [ ], on [ ] 1999
ANC Group Inc.
- -----------------------------
By:
Title:
<PAGE> 1
EXHIBIT 10.30
SUBLEASE
THIS SUBLEASE is made and entered into this _______ day of
June, 1999, by and between AMERICAN NATIONAL CAN COMPANY, a Delaware corporation
("LANDLORD"), and PECHINEY PLASTIC PACKAGING, INC., a Delaware corporation
("TENANT").
1. BASIC LEASE PROVISIONS.
A. Building Address:
Triangle Plaza
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
B. Tenant's Address (for notices):
Pechiney Plastic Packaging, Inc.
Triangle Plaza
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Corporate Secretary
C. Landlord's Address (for notices):
American National Can Company
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Corporate Secretary
D. Prime Landlord: Triangle Plaza Venture L.L.C.
E. Prime Landlord's Address (for notices):
Triangle Plaza Venture L.L.C.
c/o The Buck
Management Group Incorporated
Office of the Building
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
F. Identification of Prime Lease and all amendments thereto:
Lease dated July 15, 1987, First Amendment to Lease dated as of October 31,
1988, and Storage Space Amendment dated August 1, 1991.
G. Sublease Term: See Sections 1(H) and 1(I) below.
<PAGE> 2
H. Commencement Date: June __, 1999
I. Expiration Date: March 31, 2008
J. Base Rent: $29.00 per rentable square foot of the Premises.
K. Payee of Rent: American National Can Company
L. Address for Payment of Rent:
American National Can Company
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631
Attention: Chief Accounting Officer
M. Sublease Share: 20.54 percent (subject to adjustment in
accordance with Sections 1(N) and 8(B) below).
N. Description of Premises: Approximately 56,870 rentable
square feet in the Building (as defined in Section 3 hereof) consisting of the
entire fifth and sixth floors (each consisting of 22,748 rentable
square feet) and approximately one-half (the west half) of the ninth floor (such
half consisting of 11,374 square feet). Within ninety (90) days after the
Commencement Date, Tenant shall notify Landlord of the exact dimensions of the
space it desires to sublease on the ninth floor (which may be more or less than
one-half of the floor). Upon such determination of the space desired by Tenant
on the ninth floor (and approval thereof by Landlord, which approval shall not
be unreasonably withheld), the rentable square footage of the Premises shall be
recalculated, and the Sublease Share and Base Rent shall be adjusted
accordingly. Landlord and Tenant agree to execute a memorandum confirming the
rentable square footage of the Premises, the Sublease Share and the Base Rent
schedule, once Tenant determines the dimensions of its space on the ninth floor.
O. Security Deposit: None
P. Tenant's Use: General, executive, administrative and
clerical offices, meeting rooms, workrooms for duplicating and similar purposes,
libraries, showrooms, storerooms and record keeping facilities and computer
installations and for no other purposes.
Q. Brokers: None.
<PAGE> 3
2. PRIME LEASE. Landlord is the tenant under a Prime Lease
(the "PRIME LEASE") with the Prime Landlord identified in Section 1(D), bearing
the date specified in Section 1(F). Landlord represents and warrants to Tenant
that (a) Landlord has delivered to Tenant a full and complete copy of the Prime
Lease and all other agreements between Prime Landlord and Landlord governing the
use and occupancy of the Premises, (b) the Prime Lease is, as of the date
hereof, in full force and effect, and (c) no event of default has occurred under
the Prime Lease and, to Landlord's knowledge, no event has occurred and is
continuing which would constitute an event of default but for the requirement of
the giving of notice and/or the expiration of the period of time to cure.
3. SUBLEASE. Landlord, for and in consideration of the rents
herein reserved and of the covenants and agreements herein contained on the part
of the Tenant to be performed, hereby subleases to the Tenant, and the Tenant
accepts from the Landlord, certain space described in Section 1(N) (the
"PREMISES") and located in the west tower office building (the "BUILDING")
situated on and a part of the real estate (the "PROPERTY") commonly known as
8770 West Bryn Mawr, Chicago, Illinois.
4. TERM. The term of this Sublease (hereinafter "TERM") shall
commence on the date specified in Section 1(H) (hereinafter "COMMENCEMENT
DATE"): The Term shall expire on the date ("EXPIRATION DATE") specified in
Section 1(I), unless sooner terminated as otherwise provided elsewhere in this
Sublease. Each period beginning on the Commencement Date or anniversary thereof
and ending one calendar year from such date shall be known as a "SUBLEASE YEAR".
5. POSSESSION. Landlord agrees to deliver possession of the
<PAGE> 4
Premises on or before the date specified in Section 1(H) in their condition as
of the execution and delivery hereof, reasonable wear and tear excepted; that is
to say, AS IS. Landlord makes no representations or warranties regarding the
condition of the Premises.
6. TENANT'S USE. The Premises shall be used and occupied only
for the Tenant's Use set forth in Section 1(P).
7. RENT. Beginning on the Commencement Date, Tenant agrees to
pay the Base Rent set forth in Section 1(J) to the Payee specified in Section
1(K), at the address specified in Section 1(L), or to such other payee or at
such other address as may be designated by notice in writing from Landlord to
Tenant, without prior demand therefor and without any deduction whatsoever. Base
Rent shall be paid in equal monthly installments in advance on the first day of
each month of the Term, except that the first full installment of Base Rent
shall be paid by Tenant to Landlord upon the full execution of this Sublease by
Tenant and Landlord. Base Rent shall be pro-rated for partial months at the
beginning and end of the Term. All charges, costs and sums required to be paid
by Tenant to Landlord under this Sublease in addition to Base Rent shall be
deemed "ADDITIONAL RENT", and Base Rent and Additional Rent shall hereinafter
collectively be referred to as "RENT". Tenant's covenant to pay Rent shall be
independent of every other covenant in this Sublease. If Rent is not paid within
three (3) days after when due, Tenant shall pay, relative to the delinquent
payment, interest thereon at the Default Rate (as defined in the Prime Lease).
8. ADDITIONAL RENT.
A. If and to the extent that Landlord is obligated to pay
additional rent under the Prime Lease, whether such additional rent is to
reimburse Prime Landlord for
<PAGE> 5
operating expenses, common area maintenance charges, taxes or other expenses
incurred by the Prime Landlord in connection with the Building, Tenant shall pay
to Landlord, the percentage of such additional rent (to the extent such
additional rent is attributable to events occurring during the term of this
Sublease) which is set forth in Section 1(M) as the Sublease Share, but only to
the extent that such additional rent exceeds the actual additional rent charged
to Landlord for the 1998 calendar year (including, without limitation,
additional rent attributable to 1997 real estate taxes payable in 1998). Such
payment shall be due from Tenant to Landlord no fewer than five (5) days prior
to the date upon which Landlord's payment of such additional rent is due to the
Prime Landlord, provided that Tenant shall have been billed therefor at least
fifteen (15) days prior to such due date (which bill shall be accompanied by a
copy of Prime Landlord's bill and other material furnished to Landlord in
connection therewith), except that if such payment relates to real estate taxes
and the statement is not furnished to Tenant at least fifteen (15) days prior to
the date such taxes are due (due to a delay in Landlord's receipt of such
statement from Prime Landlord), Tenant shall pay to Landlord its share of such
taxes within five (5) days after receipt of such statement. Notwithstanding the
foregoing, Landlord may make reasonable estimates, forecasts or projections
("PROJECTION") of the amount of additional rent which will be owed by Tenant in
any Sublease Year. Landlord may deliver to Tenant a written statement setting
forth a Projection and a calculation of a monthly amount of additional rent
payable by Tenant by reason thereof, to become effective as of delivery of the
Projection. Tenant shall pay to Landlord (together with its payment of Base
Rent) the monthly amount of such additional rent determined pursuant to the
Projection; provided, however, that the additional rent shall be adjusted when
the actual amount of additional rent can be determined.
<PAGE> 6
B. The Sublease Share provided for in Section 1(M) is
calculated by dividing the rentable area of the Premises (56,870 square feet) by
the rentable area of the premises leased by Prime Landlord to Landlord pursuant
to the Prime Lease (276,913 square feet). In the event the rentable area of the
Premises or the area of the premises leased pursuant to the Prime Lease shall be
changed during the Term, then the Sublease Share shall be recalculated.
9. TENANT'S OBLIGATIONS. Tenant shall be responsible for, and
shall pay the following:
A. All utility consumption costs, including without
limitation, electric and other charges incurred in connection with lighting and
providing electrical power to the Premises. In the event the Premises is not
separately metered from the remainder of Landlord's space within the Building,
Tenant shall pay within ten (10) days of being billed therefor its proportionate
share of the utility bills received by Landlord for the entire space that is
metered together with the Premises (which proportionate share shall be based on
the rentable square footage of the Premises as compared to the rentable square
footage of the area that is metered with the Premises). Tenant, at its cost, may
cause, if possible, the Premises to be separately metered. Tenant shall pay to
Landlord the cost of any after hours heating and air conditioning usage within
the Premises at the rate billed by Prime Landlord within ten (10) business days
after Tenant's receipt of a bill therefor. Tenant shall hold Landlord harmless
from all costs or expenses Landlord may incur from Tenant's failure to pay
utility bills or to perform any of its obligations with respect to the purchase
of utilities.
B. All costs incurred in connection with the installation and
usage of telephone services within the Premises.
<PAGE> 7
C. All maintenance, repairs and replacements as to the
Premises and its equipment, to the extent Landlord is obligated to perform the
same under the Prime Lease.
10. QUIET ENJOYMENT. So long as Tenant is not in default in
the performance of its covenants and agreements in this Sublease, Tenant's quiet
and peaceable enjoyment of the Premises shall not be disturbed or interfered
with by Landlord, or by any person claiming by, through, or under Landlord.
11. TENANT'S INSURANCE. Tenant shall procure and maintain, at
its own cost and expense, such liability insurance as is required to be carried
by Landlord under the Prime Lease, and such property insurance as is required to
be carried by Landlord under the Prime Lease to the extent such property
insurance pertains to the Premises. A certificate of Tenant's insurance required
hereunder shall be furnished to Landlord no later than ten (10) days prior to
Tenant's taking possession of the Premises. Tenant's liability insurance shall
name Landlord and Prime Landlord (if required under the Prime Lease) and any
other parties required under the Prime Lease as "named insureds". Each party
hereby waives claims against the other for property damage provided such waiver
shall not invalidate the waiving party's property insurance; each party shall
attempt to obtain from its insurance carrier a waiver of its right of
subrogation. Tenant hereby waives claims against Prime Landlord and Landlord for
property damage to the Premises or its contents if and to the extent that
Landlord waives such claims against Prime Landlord under the Prime Lease. Tenant
agrees to obtain, for the benefit of Prime Landlord and Landlord, such waivers
of subrogation rights from its insurer as are required of Landlord under the
Prime Lease. Landlord agrees to use reasonable efforts in good faith to obtain
from Prime Landlord a
<PAGE> 8
waiver of claims for insurable property damage losses and an agreement from
Prime Landlord to obtain a waiver of subrogation rights in Prime Landlord's
property insurance, if and to the extent that Prime Landlord waives such claims
against Landlord under the Prime Lease or is required under the Prime Lease to
obtain such waiver of subrogation rights.
12. ASSIGNMENT OR SUBLETTING.
A. Tenant shall not (i) assign, convey or mortgage this
Sublease or any interest under it; (ii) allow any transfer thereof or any lien
upon Tenant's interest by operation of law; (iii) further sublet the Premises or
any part thereof; or (iv) permit the occupancy of the Premises or any part
thereof by anyone other than Tenant, without Landlord's prior written consent.
Landlord's consent to an assignment of this Sublease or a further sublease of
the Premises shall not be unreasonably withheld, and if Landlord consents
thereto, Landlord shall use reasonable efforts to obtain the consent of Prime
Landlord if such consent is required to be obtained under the Prime Lease. Prime
Landlord's refusal to consent to such an assignment or sublease shall not be
deemed to be an unreasonable withholding of consent by Landlord hereunder. Any
cost of obtaining Prime Landlord's consent shall be borne by Tenant.
B. No permitted assignment shall be effective and no permitted
sublease shall commence unless and until any default by Tenant hereunder shall
have been cured. No permitted assignment or subletting shall relieve Tenant from
Tenant's obligations and agreements hereunder and Tenant shall continue to be
liable as a principal and not as a guarantor or surety to the same extent as
though no assignment or subletting had been made.
13. RULES. Tenant agrees to comply with all rules and
regulations that
<PAGE> 9
Prime Landlord has made or may hereafter from time to time make for the
Building. Landlord shall not be liable in any way for damage caused by the
non-observance by any of the other tenants of such similar covenants in their
leases or of such rules and regulations.
14. REPAIRS AND COMPLIANCE. Tenant shall promptly pay for the
repairs set forth in Section 9(C) hereof and Tenant shall, at Tenant's own
expense, comply with all laws and ordinances, and all orders, rules and
regulations of all governmental authorities and of all insurance bodies and
their fire prevention engineers during the term of this Sublease, applicable to
the Premises or to Tenant's particular use or manner of use thereof.
15. FIRE OR CASUALTY OR EMINENT DOMAIN. In the event Landlord
is entitled, under the Prime Lease, to a rent abatement as a result of a fire or
other casualty or as a result of a taking under the power of eminent domain,
then Tenant shall be entitled to the Sublease Share of such rent abatement
unless the effect on the Premises of such fire or other casualty or such taking
shall be substantially disproportionate to the amount of the abatement, in which
event the parties shall equitably adjust the abatement as between themselves,
based on the relative impact of the fire or other casualty, or the taking, as
the case may be.
16. ALTERATIONS. Tenant shall not make any alterations in or
additions to the Premises ("ALTERATIONS") without the prior written consent of
Landlord. Landlord's consent to any Alterations shall not be unreasonably
withheld or delayed unless such Alteration would constitute a default under the
Prime Lease. If Landlord consents to an Alteration, Landlord shall use
reasonable efforts to obtain the consent of Prime
<PAGE> 10
Landlord, if such consent is required under the Prime Lease. Prime Landlord's
refusal to consent to an Alteration shall not be deemed to be an unreasonable
withholding of consent by Landlord hereunder. If Alterations by Tenant are
permitted or consented to as aforesaid, Tenant shall comply with all of the
covenants of Landlord contained in the Prime Lease pertaining to the performance
of such Alterations, including, without limitation, paying any supervision fee
or other fee imposed by Prime Landlord in connection with such Alterations.
Tenant shall indemnify, protect and hold Landlord harmless from all costs,
claims, damages, liens and expenses which arise out of any Alterations performed
by Tenant.
17. SURRENDER. Upon the expiration of this Sublease, or upon
the termination of the Sublease or of the Tenant's right to possession of the
Premises, Tenant will at once surrender and deliver up the Premises, together
with all improvements thereon, to Landlord in good condition and repair,
reasonable wear and tear excepted; conditions existing because of Tenant's
failure to perform maintenance, repairs or replacements as required of Tenant
under this Sublease shall not be deemed "reasonable wear and tear". Said
improvements shall include all plumbing, lighting, electrical, heating, cooling
and ventilating fixtures and equipment and other articles of personal property
used in the operation of the Premises (as distinguished from operations incident
to the business of Tenant). Tenant shall surrender to Landlord all keys to the
Premises and make known to Landlord the explanation of all combination locks
which Tenant is permitted to leave on the Premises. All Alterations in or upon
the Premises made by Tenant shall become a part of and shall remain upon the
Premises upon such termination without compensation, allowance or credit to
Tenant provided, however, that Landlord shall have the right to require Tenant
to remove any Alterations made by Tenant, or portion thereof. Said right shall
be
<PAGE> 11
exercisable by Landlord giving written notice thereof to Tenant on or before
thirty (30) days prior to the expiration of this Sublease or on or before twenty
(20) days after the termination of this Sublease; provided, however, that if
Tenant shall have requested in writing at the time it requests Landlord's
consent to any Alterations, that Landlord determine whether such Alterations
must be removed by Tenant at the expiration or termination of this Sublease,
Landlord shall make such determination at the time it consents to such
Alterations. Tenant shall also remove any Alterations made by Tenant, or portion
thereof, which Prime Landlord may require Landlord to remove, pursuant to the
terms of the Prime Lease. In any such event, Tenant shall restore the Premises
to their condition prior to the making of such Alteration, repairing any damage
occasioned by such removal or restoration. If Landlord or Prime Landlord
requires removal of any Alteration made by Tenant, or a portion thereof, and
Tenant does not make such removal in accordance with this Section, Landlord may
remove the same (and repair any damage occasioned thereby), and dispose thereof,
or at its election, deliver the same to any other place of business of Tenant,
or warehouse the same. Tenant shall pay the costs of such removal, repair,
delivery and warehousing on demand.
As between Landlord and Tenant, Tenant shall not be required
to remove any Alterations performed by Landlord prior to the Commencement Date
or to restore the Premises to their condition prior to the making of such
Alterations. If, however, the term of the Sublease expires at or about the date
of the expiration of the Prime Lease, and if Landlord is required under or
pursuant to the terms of the Prime Lease to remove any Alterations performed
prior to the Commencement Date, Tenant shall permit Landlord to enter the
Premises for a reasonable period of time prior to the expiration of the Sublease
for the purpose of removing its Alterations and restoring the Premises as
required.
<PAGE> 12
18. REMOVAL OF TENANT'S PROPERTY. Upon the expiration of this
Sublease, Tenant shall remove Tenant's articles of personal property incident to
Tenant's business ("TRADE FIXTURES"); provided, however, that Tenant shall
repair any injury or damage to the Premises which may result from such removal,
and shall restore the Premises to the same condition as prior to the
installation thereof. If Tenant does not remove Tenant's Trade Fixtures from the
Premises prior to the expiration or earlier termination of the Term, Landlord
may, at its option, remove the same (and repair any damage occasioned thereby
and restore the Premises as aforesaid) and dispose thereof or deliver the same
to any other place of business of Tenant, or warehouse the same, and Tenant
shall pay the cost of such removal, repair, restoration, delivery or warehousing
to Landlord on demand, or Landlord may treat said Trade Fixtures as having been
conveyed to Landlord with this Sublease as a Bill of Sale, without further
payment or credit by Landlord to Tenant.
19. HOLDING OVER. Tenant shall have no right to occupy the
Premises or any portion thereof after the expiration of this Sublease or after
termination of this Sublease or of Tenant's right to possession in consequence
of an Event of Default hereunder, unless Landlord consents in writing to such
continuation of occupancy. In the event Tenant or any party claiming by, through
or under Tenant holds over, Landlord may exercise any and all remedies available
to it at law or in equity to recover possession of the Premises, and to recover
damages, including without limitation, damages payable by Landlord to Prime
Landlord by reason of such holdover. In addition, for each and every month or
partial month that Tenant or any party claiming by, through or under Tenant
remains in occupancy of all or any portion of the Premises after the expiration
of this Sublease or after termination of this Sublease or Tenant's right to
possession (unless
<PAGE> 13
Landlord has consented in writing to such continuation of occupancy at a
specified rent), Tenant shall pay, as minimum damages and not as a penalty,
monthly rental at a rate equal to double the rate of Base Rent and Additional
Rent payable by Tenant hereunder immediately prior to the expiration or other
termination of this Sublease or of Tenant's right to possession. The acceptance
by Landlord of any lesser sum shall be construed as payment on account and not
in satisfaction of damages for such holding over.
20. ENCUMBERING TITLE. Tenant shall not do any act which shall
in any way encumber the title of Prime Landlord in and to the Building or the
Property, nor shall the interest or estate of Prime Landlord or Landlord be in
any way subject to any claim by way of lien or encumbrance, whether by operation
of law by virtue of any express or implied contract by Tenant, or by reason of
any other act or omission of Tenant. Any claim to, or lien upon, the Premises,
the Building or the Property arising from any act or omission of Tenant shall
accrue only against the subleasehold estate of Tenant and shall be subject and
subordinate to the paramount title and rights of Prime Landlord in and to the
Building and the Property and the interest of Landlord in the premises leased
pursuant to the Prime Lease. Without limiting the generality of the foregoing,
Tenant shall not permit the Premises, the Building or the Property to become
subject to any mechanics', laborers' or materialmen's lien on account of labor
or material furnished to Tenant or claimed to have been furnished to Tenant in
connection with work of any character performed or claimed to have been
performed on the Premises by, or at the direction or sufferance of, Tenant,
provided, however, that if so permitted under the Prime Lease, Tenant shall have
the right to contest in good faith and with reasonable diligence, the validity
of any such lien or claimed lien if Tenant shall give to Prime Landlord and
Landlord such security as may be deemed satisfactory to them to assure payment
thereof and to prevent any sale, foreclosure,
<PAGE> 14
or forfeiture of the Premises, the Building or the Property by reason of
non-payment thereof, provided further, however, that on final determination of
the lien or claim of lien, Tenant shall immediately pay any judgment rendered,
with all proper costs and charges, and shall have the lien released and any
judgment satisfied.
21. DEFAULTS. Tenant further agrees that any one or more of
the following events shall be considered Events of Default as said term is used
herein, that is to say, if:
A. Tenant shall be adjudged an involuntary bankrupt, or a
decree or order approving, as properly filed, a petition or answer filed against
Tenant asking reorganization of Tenant under the Federal bankruptcy laws as now
or hereafter amended, or under the laws of any State, shall be entered, and any
such decree or judgment or order shall not have been vacated or stayed or set
aside within sixty (60) days from the date of the entry or granting thereof; or
B. Tenant shall file, or admit the jurisdiction of the court
and the material allegations contained in, any petition in bankruptcy, or any
petition pursuant or purporting to be pursuant to the Federal bankruptcy laws
now or hereafter amended, or Tenant shall institute any proceedings for relief
of Tenant under any bankruptcy or insolvency laws or any laws relating to the
relief of debtors, readjustment of indebtedness, reorganization, arrangements,
composition or extension; or
C. Tenant shall make any assignment for the benefit of
creditors or shall apply for or consent to the appointment of a receiver for
Tenant or any of the property of Tenant; or
D. Tenant shall admit in writing its inability to pay its
debts as they become due; or
<PAGE> 15
E. The Premises are levied on by any revenue officer or
similar officer; or
F. A decree or order appointing a receiver of the property of
Tenant shall be made and such decree or order shall not have been vacated,
stayed or set aside within sixty (60) days from the date of entry or granting
thereof; or
G. Tenant shall default in any payment of Rent required to be
made by Tenant hereunder when due as herein provided and such default shall
continue for five (5) days after notice thereof in writing to Tenant; or
H. Tenant shall default in securing insurance or in providing
evidence of insurance as set forth in Section 11 of this Sublease or shall
default with respect to lien claims as set forth in Section 20 of this Sublease
and either such default shall continue for five (5) business days after notice
thereof in writing to Tenant; or
I. Tenant shall, by its act or omission to act, cause a
default under the Prime Lease and such default shall not be cured within the
time, if any permitted for such cure under the Prime Lease; or
J. Tenant shall default in any of the other covenants and
agreements herein contained to be kept, observed and performed by Tenant, and
such default shall continue for thirty (30) days after notice thereof in writing
to Tenant; or
K. Tenant shall repeatedly be late in the payment of Rent or
other charges required to be paid hereunder or shall repeatedly default in the
keeping, observing, or performing of any other covenants or agreements herein
contained to be kept, observed or performed by Tenant (provided notice of such
payment or other defaults shall have been given to Tenant, but whether or not
Tenant shall have timely cured any such payment or other defaults of which
notice was given).
<PAGE> 16
22. REMEDIES. Upon the occurrence of any one or more Events of
Default, Landlord may exercise any remedy against Tenant which Prime Landlord
may exercise for default by Landlord under the Prime Lease.
23. SECURITY DEPOSIT. [Intentionally Deleted]
24. NOTICES AND CONSENTS. All notices, demands, requests,
consents or approvals which may or are required to be given by either party to
the other shall be in writing and shall be deemed given when received or refused
if sent by United States registered or certified mail, postage prepaid, return
receipt requested or if sent by overnight commercial courier service (a) if to
Tenant, addressed to Tenant at the address specified in Section 1(B) or at such
other place as Tenant may from time to time designate by notice in writing to
Landlord or (b) if for Landlord, addressed to Landlord at the address specified
in Section 1(C) or at such other place as Landlord may from time to time
designate by notice in writing to Tenant. Tenant agrees promptly to deliver a
copy of each notice, demand, request, consent or approval from Tenant to Prime
Landlord and promptly to deliver to Landlord a copy of any notice, demand,
request, consent or approval received from Prime Landlord. Such copies shall be
delivered by overnight commercial courier.
25. PROVISIONS REGARDING SUBLEASE. This Sublease and all the
rights of parties hereunder are subject and subordinate to the Prime Lease. Each
party agrees that it will not, by its act or omission to act, cause a default
under the Prime Lease. In furtherance of the foregoing, the parties hereby
confirm, each to the other, that it is not practical in this Sublease agreement
to enumerate all of the rights and obligations of the various parties under the
Prime Lease and specifically to allocate those rights and
<PAGE> 17
obligations in this Sublease agreement. Accordingly, in order to afford to
Tenant the benefits of this Sublease and of those provisions of the Prime Lease
which by their nature are intended to benefit the party in possession of the
Premises, and in order to protect Landlord against a default by Tenant which
might cause a default or event of default by Landlord under the Prime Lease:
A. Provided Tenant shall timely pay all Rent when and as due
under this Sublease, Landlord shall pay, when and as due, all base rent,
additional rent and other charges payable by Landlord to Prime Landlord under
the Prime Lease;
B. Landlord shall perform its covenants and obligations under
the Prime Lease which do not require for their performance possession of the
Premises and which are not otherwise to be performed hereunder by Tenant on
behalf of Landlord. For example, Landlord shall at all times keep in full force
and effect all insurance required of Landlord as tenant under the Prime Lease.
C. Tenant shall perform all affirmative covenants and shall
refrain from performing any act which is prohibited by the negative covenants of
the Prime Lease, where the obligation to perform or refrain from performing is
by its nature imposed upon the party in possession of the Premises. If
practicable, Tenant shall perform affirmative covenants which are also covenants
of Landlord under the Prime Lease at least five (5) days prior to the date when
Landlord's performance is required under the Prime Lease. Landlord shall have
the right to enter the Premises (upon reasonable prior oral or written notice
except in case of an emergency) to cure any default by Tenant under this
Section. Landlord shall also have the right to inspect the Premises upon
reasonable prior notice to Tenant (unless an emergency exists), without being
deemed guilty of any eviction or disturbance of Tenant's use or possession of
the Premises, and without being liable in any manner to Tenant.
<PAGE> 18
D. Landlord hereby grants to Tenant the right to receive all
of the services and benefits with respect to the Premises which are to be
provided by Prime Landlord under the Prime Lease (except that Tenant shall not
have any option to extend the term hereof or to exercise any expansion options
set forth in the Prime Lease). Landlord shall have no duty to perform any
obligations of Prime Landlord which are, by their nature, the obligation of an
owner or manager of real property. For example, Landlord shall not be required
to provide the services or repairs which the Prime Landlord is required to
provide under the Prime Lease. Landlord shall have no responsibility for or be
liable to Tenant for any default, failure or delay on the part of Prime Landlord
in the performance or observance by Prime Landlord of any of its obligations
under the Prime Lease, nor shall such default by Prime Landlord affect this
Sublease or waive or defer the performance of any of Tenant's obligations
hereunder except to the extent that such default by Prime Landlord excuses
performance by Landlord under the Prime Lease. Notwithstanding the foregoing,
the parties contemplate that Prime Landlord shall, in fact, perform its
obligations under the Prime Lease and in the event of any default or failure of
such performance by Prime Landlord, Landlord agrees that it will, upon notice
from Tenant, make demand upon Prime Landlord to perform its obligations under
the Prime Lease and, provided that Tenant specifically agrees to pay all
reasonable costs and expenses of Landlord, Landlord will take appropriate legal
action to enforce the Prime Lease.
26. ADDITIONAL SERVICES. Landlord shall cooperate with Tenant
(at no cost or expense to Landlord) to cause Prime Landlord to provide services
required by Tenant in addition to those otherwise required to be provided by
Prime Landlord under the Prime Lease. Tenant shall pay Prime Landlord's charge
for such services promptly after
<PAGE> 19
having been billed therefor by Prime Landlord or by Landlord. If at any time a
charge for such additional services is attributable to the use of such services
both by Landlord and by Tenant, the cost thereof shall be equitably divided
between Landlord and Tenant.
27. PRIME LANDLORD'S CONSENT. This Sublease and the
obligations of the parties hereunder are expressly conditioned upon Landlord's
obtaining prior consent hereto by Prime Landlord and a waiver of Landlord's
right to recapture the Premises. Tenant shall promptly deliver to Landlord any
information reasonably requested by Prime Landlord (in connection with Prime
Landlord's approval of this Sublease) with respect to the nature and operation
of Tenant's business and/or the financial condition of Tenant. Landlord and
Tenant hereby agree, for the benefit of Prime Landlord, that this Sublease and
Prime Landlord's consent hereto shall not (a) create privity of contract between
Prime Landlord and Tenant; (b) be deemed to have amended the Prime Lease in any
regard (unless Prime Landlord shall have expressly agreed in writing to such
amendment); or (c) be construed as a waiver of Prime Landlord's right to consent
to any assignment of the Prime Lease by Landlord or any further subletting of
premises leased pursuant to the Prime Lease, or as a waiver of Prime Landlord's
right to consent to any assignment by Tenant of this Sublease or any sub-letting
of the Premises or any part thereof. Prime Landlord's consent shall, however, be
deemed to evidence Prime Landlord's agreement that Tenant may use the Premises
for the purpose set forth in Section 1(P) and that Tenant shall be entitled to
any waiver of claims and of the right of subrogation for damage to Prime
Landlord's property if and to the extent that the Prime Lease provides such
waivers for the benefit of Landlord. If Prime Landlord fails to consent to this
Sublease or fails to waive its right to recapture the Premises within thirty
(30) days after the execution and delivery of this Sublease (unless such a
failure to act by Prime Landlord is
<PAGE> 20
deemed under the Prime Lease to be a consent by Prime Landlord), either party
shall have the right to terminate this Sublease by giving written notice thereof
to the other at any time thereafter, but before Prime Landlord grants such
consent and waives such right to recapture.
28. BROKERAGE. Each party warrants to the other that it has
had no dealings with any broker or agent in connection with this Sublease. Each
party covenants to pay, hold harmless and indemnify the other party from and
against any and all costs (including reasonable attorneys fees), expense or
liability for any compensation, commissions and charges claimed by any broker or
agent with respect to this Sublease or the negotiation thereof on behalf of such
party.
29. ADDITIONAL PROVISIONS.
A. LANDLORD'S EXPENSES. Tenant agrees to pay on demand
Landlord's expenses, including reasonable attorneys' fees, expenses and
administrative hearing and court costs incurred either directly or indirectly in
enforcing any obligation of Tenant under this Sublease, in curing any default by
Tenant hereunder, in connection with appearing, defending or otherwise
participating in any action or proceeding arising from the filing, imposition,
contesting, discharging or satisfaction of any lien or claim for lien, in
defending or otherwise participating in any legal proceedings initiated by or on
behalf of Tenant wherein Landlord is not adjudicated to be in default under this
Sublease, or in connection with any investigation or review of any conditions or
documents in the event Tenant requests Landlord's agreement, approval or consent
to any action of Tenant which may be desired by Tenant or required of Tenant
hereunder.
B. INDEMNITY. Tenant will protect, indemnify and hold harmless
<PAGE> 21
Landlord, and Landlord's agents, directors, officers and employees
(collectively, "LANDLORD PROTECTED PARTIES") from and against any and all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expenses (including, without limitation, reasonable attorneys' fees and
expenses) imposed upon or incurred by or asserted against the Landlord Protected
Parties or any of them by reason of (i) any failure on the part of Tenant to
perform or comply with the terms of this Sublease, including, without
limitation, any act or omission of Tenant which causes a default by Landlord
under the Prime Lease, or (ii) the acts or omissions of Tenant which are the
subject matter of any indemnity or hold harmless of Landlord to Prime Landlord
under the Prime Lease. In case any action, suit or proceeding is brought against
the Landlord Protected Parties or any of them by reason of any occurrence
described in this Section 29(B), Tenant will, at Tenant's expense, by counsel
reasonably approved by Landlord, resist and defend such action, suit or
proceeding or cause the same to be resisted and defended. The obligations of
Tenant under this Section 29(B) shall survive the expiration or earlier
termination of this Sublease.
C. TENANT'S RIGHT TO USE CERTAIN COMMON AREAS WITHIN
LANDLORD'S LEASED PREMISES. Tenant and its employees shall have the right to use
the lobby on the first floor of the Building and Landlord's cafeteria on the
second floor of the Building, to the extent the same are open and available for
use by Landlord and its employees.
D. PARKING. During the term hereof, Tenant shall have the
right to the exclusive use of thirty (30) of Landlord's designated parking
spaces located in the underground parking garage of the Building, which
particular parking spaces shall be designated by Landlord from time to time.
Tenant shall pay to Landlord on or before the first day of each month during the
Term as additional Rent hereunder a monthly fee per
<PAGE> 22
parking space for ten (10) of the parking spaces (the other 20 spaces shall be
at no charge to Tenant) at the current rate charged by Prime Landlord from time
to time to tenants in the Building and in the east tower office building.
E. PERSONAL PROPERTY. Tenant hereby acknowledges that the
personal property (including, without limitation, employee workstations)
currently located in the Premises on the fifth floor of the Building and
currently utilized by the engineering group, belongs to Landlord but shall
remain in the Premises for Tenant's use during the term hereof.
F. SERVICES TO BE PROVIDED BY LANDLORD'S BUILDING SERVICE
DEPARTMENT. During the term of this Sublease, Landlord hereby agrees to perform
for Tenant certain services currently provided to Landlord's premises in the
Building by its Building Services Department, which services are outlined on
Exhibit A attached hereto. Such services shall be provided to Tenant in
substantially the same manner and frequency as provided for Landlord's premises
in the Building. Landlord reserves the right, at any time, to add, terminate or
modify the type of services to be provided by the Building Service Department
for Landlord's premises and the Premises. Furthermore, in the event Landlord no
longer provides any or all of the services of the Building Service Department
for its own premises, Landlord shall no longer be required to provide such
services to Tenant. Tenant shall pay to Landlord its pro-rata share of the
expenses of the Building Service Department (the "BSD EXPENSES") incurred during
the term of this Sublease, which pro-rata share shall be based on the rentable
square footage of the Premises as compared to the rentable square footage of
Landlord's premises as to which such services are being provided (including the
Premises). As of the execution of this Lease, Tenant's pro-rata share of such
costs is _____%. Tenant
<PAGE> 23
shall pay to Landlord its share of such BSD Expenses within ten (10) days after
receipt of an invoice therefore.
Notwithstanding the foregoing, Landlord may make reasonable estimates,
forecasts or projections ("BSD PROJECTION") of the amount of Tenant's share of
BSD Expenses which will be owed by Tenant in any Sublease Year (which BSD
Projection may be revised by Landlord at any time based on Landlord's estimate
of actual BSD Expenses). Landlord may deliver to Tenant a written statement
setting forth a BSD Projection and a calculation of a monthly amount of such BSD
Expenses payable by Tenant by reason thereof, to become effective as of delivery
of the BSD Projection. Tenant shall pay to Landlord (together with its payment
of Base Rent) the monthly amount of such estimated BSD Expenses determined
pursuant to the BSD Projection. Within ninety (90) days after the end of each
calendar year during the Sublease term, Landlord shall provide to Tenant an
expense statement setting forth the actual BSD Expenses for the prior calendar
year. In the event Tenant's pro-rata share of such actual BSD Expenses exceeds
the estimated BSD Expense payments made by Tenant during such prior calendar
year, Tenant shall pay the difference to Landlord within ten (10) days after its
receipt of such expense statement. In the event Tenant's estimated BSD Expense
payments during such prior calendar year exceeded Tenant's pro-rata share of the
actual BSD Expenses, Tenant shall receive a credit against its next estimated
payment(s) of BSD Expenses.
The parties have executed this Sublease as of the day and year first above
written.
LANDLORD: TENANT:
<PAGE> 24
AMERICAN NATIONAL CAN COMPANY, PECHINEY PLASTIC PACKAGING, INC.,
a Delaware corporation a Delaware corporation
By: _________________________ By: _________________________
Its:____________________ Its:____________________
<PAGE> 25
EXHIBIT "A"
LIST OF SERVICES PROVIDED BY BUILDING SERVICE DEPARTMENT
<PAGE> 1
EXHIBIT 10.31
PENSION BENEFITS AGREEMENT
American National Can Company ("ANC") and Pechiney Plastic Packaging,
Inc. ("Pechiney Plastics") hereby agree to the terms and conditions hereof
regarding certain benefit matters in accordance with Section 8.01(d) of the
Contribution, Assignment and Assumption Agreement dated as of May 31, 1999 by
and between ANC and Pechiney Plastics ("Contribution, Assignment and Assumption
Agreement").
ARTICLE I
DEFINITIONS
Section 1.01 Certain Defined Terms. The following terms shall
have the meanings defined for such terms in the Sections of this Agreement set
forth below. Terms not defined herein shall have the meanings set forth in the
applicable ANC pension plan.
"ANC Hourly Pension Plans" means the defined benefit plans
identified on Exhibit A.
"ANC Pension Plans" means the ANC Hourly Pension Plans and the
ANC Salaried Pension Plan.
"ANC Salaried Pension Plan" means the defined benefit plan
identified on Exhibit B.
"Benefit Accrual Service" means the service used to compute
the amount of a Transferred Employee's pension benefit.
"Benefit Formula" means the formula, including the Primary
Social Security Benefit, used to compute benefits under the terms of the ANC
Salaried Pension Plan as of the Separation Date.
"Benefit Level" means the dollar amount used to compute
benefits under the terms of the ANC Hourly Pension Plans as of the Separation
Date, or in the case of an ANC Hourly Pension Plan that is the subject of
collective bargaining, the amounts currently in effect and/or the amount
scheduled to become effective as specified in the collective bargaining
agreement agreed to prior to and in effect on the Separation Date.
"Business" means the certain plastic packaging operations
engaged in by ANC, including without limitation flexible packaging, plastic
bottles and plastic and laminated tubes.
"Code" means the Internal Revenue Code of 1986, as amended.
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"ERISA Affiliate" means, with respect to any person, another
person who is treated as a single employer with such person within the meaning
of Section 414 of the Code, without giving effect to Section 1563(b)(3) of the
Code.
"Highest Average Salary" means highest average salary as
defined in the ANC Salaried Pension Plan as it was in effect immediately before
the Separation Date.
"Pay Used For The ANC Benefit" means that ANC's benefit
obligation shall be based on a Transferred Salaried Employee's actual pay (for
the calculation of pension benefits) not to exceed a compounded average annual
increase of 5% in Highest Average Salary measured from the Separation Date, and
in no event shall ANC's benefit obligation exceed any limits imposed by law,
including that which is set forth in Section 415 of the Code. Therefore, Pay
Used For The ANC Benefit shall be computed using the following methodology:
First, determine the Highest Average Salary for a Transferred
Salaried Employee as of the date on which the Transferred Salaried Employee
ceases to be employed by Pechiney Plastics using only that compensation which
would be recognized under the ANC Salaried Pension Plan as it was in effect
immediately before the Separation Date. For this purpose, Highest Average Salary
shall be based on that compensation received by the Transferred Salaried
Employee while employed by ANC and/or Pechiney Plastics which would be
recognized under the ANC Salaried Pension Plan as it was in effect immediately
before the Separation Date, but using the applicable limitation under 401(a)(17)
of the Code which is in effect and applicable during the period in which the
compensation is actually earned ("Pechiney Plastics Highest Average Salary").
Second, compute Maximum Allowable Highest Average Salary For
The ANC Benefit.
Third, compute the Pay Used For The ANC Benefit by using the
smaller of Pechiney Plastics Highest Average Salary or Maximum Allowable Highest
Average Salary For The ANC Benefit.
Maximum Allowable Highest Average Salary For The ANC Benefit
as used above shall be computed using the following methodology:
First, determine Highest Average Salary for a Transferred
Salaried Employee that would be recognized under the ANC Salaried Pension Plan
as it was in effect immediately before the Separation Date based on Compensation
received while employed by ANC ("Highest Average Salary At The Separation
Date").
Second, increase Highest Average Salary At The Separation Date
by 5% for each twelve (12) month period (or pro rata fraction thereof) from the
Separation Date to the end of the sixty consecutive month period used to
determine Pechiney Plastics Highest Average Salary.
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For further detail, see the example attached hereto as Exhibit
C which illustrates the principles set forth above.
"Pechiney Plastics Hourly Pension Plans" means the defined
benefit pension plans established by Pechiney Plastics for Transferred Hourly
Employees in accordance with Section 3.01.
"Pechiney Plastics Pension Plans" means the Pechiney Plastics
Hourly Pension Plans and the Pechiney Plastics Salaried Pension Plan.
"Pechiney Plastics Salaried Pension Plan" means the defined
benefit pension plan established by Pechiney Plastics for Transferred Salaried
Employees in accordance with Section 4.01.
"Primary Social Security Benefit" means the "Primary Social
Security Benefit as defined in the ANC Salaried Pension Plan as it was in effect
immediately before the Separation Date determined on the date the Transferred
Salaried Employee terminates employment with Pechiney Plastics (or if earlier,
the Transferred Salaried Employee's sixty-fifth (65th) birthday), provided that
compensation received by the Transferred Salaried Employee while employed by ANC
and/or Pechiney Plastics shall be taken into account in determining the
Transferred Salaried Employee's Primary Social Security Benefit.
"Separation Date" means the date as of which ANC and Pechiney
Plastics cease to be treated as ERISA Affiliates or, in the case of any action
provided for in this Agreement to be taken with respect to any ANC Pension Plan
or any pension to be established by Pechiney Plastics, such other date as may be
mutually agreed by ANC and Pechiney Plastics.
"Transfer Date" means June 30, 1999 (or such other date as may
be mutually agreed upon by ANC and Pechiney Plastics), but not later than the
Separation Date.
"Transferred Employees" means all (a) employees of the
Business who become employees of Pechiney Plastics as of the Transfer Date and
(b) other employees of ANC who become employees of Pechiney Plastics as of the
Transfer Date pursuant to the mutual agreement of ANC and Pechiney Plastics.
"Transferred Hourly Employees" means the Transferred Employees
who are classified by ANC as of the Separation Date as hourly paid employees.
"Transferred Salaried Employees" means the Transferred
Employees who are classified by ANC as of the Separation Date as salaried
employees.
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<PAGE> 4
ARTICLE II
GENERAL PRINCIPLES
Section 2.01 Pension Liabilities. Liability for benefits under
the ANC Pension Plans for the Transferred Employees, which is attributable to
service before the Separation Date, shall be retained by ANC, and liability for
benefits for the Transferred Employees participating in the Pechiney Plastics
Pension Plans, which is attributable to service after the Separation Date, shall
be the liability of Pechiney Plastics.
Section 2.02 Future Pay Increases. ANC's obligation under the
ANC Salaried Pension Plan shall be limited to actual pay (for the calculation of
pension benefits) not to exceed a compounded average annual increase of 5% in
Highest Average Salary from the Separation Date.
Section 2.03 Disability Benefits. ANC's obligation under the
ANC Pension Plans with respect to a Transferred Employee shall be fixed and
shall not be increased for any reason following the later of the Separation
Date or the date on which a Transferred Employee becomes disabled. ANC's
liability for former salaried employees of the Business who became eligible for
long-term disability benefits on and after January 1, 1989 shall be fixed and
shall not be increased after the Separation Date. The Pechiney Plastics Pension
Plans shall have the entire obligation for benefits accruals after the
Separation Date for former salaried employees of the Business who became
eligible for long-term disability benefits on and after January 1, 1989.
Section 2.04 Special Non-Statutory Death Benefits. ANC shall
have no obligation under the ANC Salaried Pension Plan to pay benefits such as
the ten (10) and twenty-five (25) year survivorship death benefits as a result
of the occurrence of death after the Separation Date in respect of the
Transferred Employees and former salaried employees of the Business who became
eligible for long-term disability benefits on and after January 1, 1989.
Pechiney Plastics shall have the entire obligation under the Pechiney Plastics
Salaried Pension Plan to pay benefits such as the ten (10) and twenty-five (25)
year survivorship death benefits as a result of the occurrence of death after
the Separation Date.
Section 2.05 Workforce Reduction Benefits. ANC shall have no
obligation under the ANC Salaried Pension Plan to pay any "enhancement" in a
pension benefit due to the occurrence of any changes in the Pechiney Plastics
workforce which triggers workforce reduction benefits such as the Project
Challenge or ACPI Covered Workforce Realignment benefits. Pechiney Plastics
shall have the entire obligation under the Pechiney Plastics Salaried Pension
Plan to pay any such "enhancement" in a pension benefit due to the occurrence of
any change in the Pechiney Plastics workforce which triggers workforce reduction
benefits such as the Project Challenge or ACPI Covered Workforce Realignment
benefits.
Section 2.06 Commencement of Benefits. Transferred Employees
may not elect to receive their benefits under the ANC Pension Plans until they
have terminated employment with Pechiney Plastics. A Transferred Employee may,
but shall not be required to, commence receipt of
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<PAGE> 5
his or her benefits under an ANC Pension Plan and a Pechiney Plastics Pension
Plan at the same time. Further, a Transferred Employee may, but shall not be
required to, receive his benefits under an ANC Pension Plan by electing the same
form of benefit payment option as is available under a Pechiney Plastics Pension
Plan.
ARTICLE III
HOURLY DEFINED BENEFIT PLANS
Section 3.01 Mirror Image Plans. Effective as of the
Separation Date, Pechiney Plastics shall establish one or more Pechiney Plastics
Hourly Pension Plans for the Hourly Transferred Employees covered by the ANC
Hourly Pension Plans, containing terms which mirror and are identical to the
terms of the corresponding ANC Hourly Pension Plan (or Plans) as in effect
immediately prior to the Separation Date.
Section 3.02 Service Credits. (a) Pechiney Plastics shall
grant a past-service credit to Hourly Transferred Employees for all service
which is recognized under the ANC Pension Plans, including that service which is
recognized under the ANC Pension Plans for purposes of (i) eligibility, (ii)
vesting, (iii) the computation of benefits, (iv) eligibility for an early
retirement benefit, if any, (v) eligibility for a deferred vested benefit, (vi)
eligibility for a disability retirement benefit, if any, (vii) eligibility for a
normal retirement benefit, (viii) eligibility for a 30-year benefit, if any, and
(ix) eligibility for a survivor benefit under the Pechiney Plastics Hourly
Pension Plans.
(b) ANC shall grant a future service credit to Hourly
Transferred Employees for periods of employment with Pechiney Plastics to the
same extent as though such periods were periods of employment with ANC for the
purpose of (i) eligibility, (ii) vesting, (iii) eligibility for an early
retirement benefit, if any, (iv) eligibility for a deferred vested benefit, (v)
eligibility for a disability retirement benefit, if any, (vi) eligibility for a
normal retirement benefit, (vii) eligibility for a 30-year benefit, if any, and
(viii) eligibility for a survivor benefit under the applicable ANC Hourly
Pension Plan(s). Notwithstanding the above or any other provision herein, ANC
shall not compute the amount of benefits payable under any ANC Pension Plan
based on service with Pechiney Plastics after the Separation Date as such
service shall not be treated as Benefit Accrual Service under any ANC Pension
Plan.
(c) Service with ANC outside a bargaining unit or with an
affiliate of ANC prior to the Separation Date shall be determined in accordance
with the applicable provisions, if any, of the ANC Pension Plan under which a
Transferred Employee accrued a benefit.
Section 3.03 Age Credits. ANC shall compute the benefit
payable under the ANC Hourly Pension Plans based on the age of the Hourly
Transferred Employee when he terminates employment with Pechiney Plastics.
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<PAGE> 6
Section 3.04 Adoption of Plan Provisions. (a) Pechiney
Plastics agrees to incorporate provisions into the Pechiney Plastics Hourly
Pension Plans that shall comply with this Agreement.
(b) ANC agrees to incorporate provisions into the ANC Hourly
Pension Plans that shall comply with this Agreement.
Section 3.05 Allocation of Liability for Hourly Pension
Benefits. ANC and Pechiney Plastics agree that responsibility to provide pension
benefits for Hourly Transferred Employees shall be as follows:
(a) The benefit payable to an Transferred Hourly Employee
under an ANC Hourly Pension Plan shall be computed on the basis of the
Transferred Hourly Employee's (i) Benefit Accrual Service as of the Separation
Date, (ii) the Benefit Level, (iii) age at termination of employment with
Pechiney Plastics and (iv) service for eligibility to commence benefit at
termination of employment with Pechiney Plastics, expressed as a life annuity
payable as a normal retirement benefit (at the Transferred Hourly Employee's
normal retirement date).
(b) The benefit payable to an Transferred Hourly Employee
under a Pechiney Plastics Hourly Pension Plan shall be expressed as a life
annuity payable as a normal retirement benefit (at the Transferred Hourly
Employee's normal retirement date) and shall be reduced by the benefit payable
to the Transferred Hourly Employee under the applicable ANC Hourly Pension Plan.
(c) The examples attached hereto as Exhibit D illustrate the
above-described computations.
Section 3.06 Vesting. A Transferred Hourly Employee who, as of
the Separation Date, had not completed five years of service with ANC shall have
any years of service with Pechiney Plastics counted as vesting service for
purposes of the ANC Hourly Pension Plan.
Section 3.07 Commencement of Benefits. Transferred Hourly
Employees may not elect to receive their benefits under the ANC Hourly Pension
Plans until they have terminated employment with Pechiney Plastics. A
Transferred Employee may, but shall not be required to, commence receipt of his
or her benefits under an ANC Hourly Pension Plan and a Pechiney Plastics Hourly
Pension Plan at the same time. Further, a Transferred Employee may, but shall
not be required to, receive his benefits under an ANC Hourly Pension Plan by
electing the same form of benefit payment option as is available under a
Pechiney Plastics Hourly Pension Plan.
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<PAGE> 7
ARTICLE IV
SALARIED DEFINED BENEFIT PLAN
Section 4.01 Mirror Image Plans. Effective as of the
Separation Date, Pechiney Plastics shall establish the Pechiney Plastics
Salaried Pension Plan for the Salaried Transferred Employees covered by the ANC
Salaried Pension Plan, containing terms which mirror and are identical to the
terms of the ANC Salaried Pension Plan as in effect immediately before the
Separation Date.
Section 4.02 Service Credits. (a) Pechiney Plastics agrees to
grant past service credit to such Salaried Transferred Employees for their ANC
service as recognized under the applicable ANC Pension Plan for purposes of (i)
eligibility, (ii) vesting, (iii) the computation of benefits, (iv) eligibility
for an early retirement benefit, (v) eligibility for a deferred vested benefit,
(vi) eligibility for a disability retirement benefit, (vii) eligibility for a
normal retirement benefit, (viii) eligibility for a 30-year benefit, (ix)
eligibility for a non-statutory survivor benefit, (x) eligibility for statutory
survivor benefits and (xi) eligibility for workforce reduction benefits under
the Pechiney Plastics Salaried Pension Plan.
(b) ANC agrees to grant a future service credit to Salaried
Transferred Employees for periods of employment with Pechiney Plastics to the
same extent as though such periods were periods of employment with ANC for the
purposes of (i) eligibility, (ii) vesting, (iii) eligibility for an early
retirement benefit, (iv) eligibility for a deferred vested benefit, (v)
eligibility for a disability retirement benefit, (vi) eligibility for a normal
retirement benefit, (vii) eligibility for a 30-year benefit and (viii)
eligibility for a statutory survivor benefit under the applicable ANC Salaried
Pension Plan. Notwithstanding the above or any other provision herein, ANC shall
not compute the amount of benefits payable under any ANC Pension Plan based on
service with Pechiney Plastics after the Separation Date as such service shall
not be treated as Benefit Accrual Service under any ANC Pension Plan.
Section 4.03 Age Credits. ANC shall compute the benefit
payable under the ANC Salaried Pension Plans based on the age of the Transferred
Salaried Employee when he terminates employment with Pechiney Plastics.
Section 4.04 Compensation Credits. (a) Compensation received
by a Transferred Salaried Employee while he or she is employed by ANC which is
recognized under the ANC Salaried Pension Plan as it was in effect immediately
before the Separation Date shall be taken into account in determining the
Highest Average Salary used to compute the benefit payable to such Transferred
Salaried Employee under the Pechiney Plastics Salaried Pension Plan.
(b) Pay Used For The ANC Benefit shall be the amount of
compensation used to compute the benefit payable to a Transferred Salaried
Employee under the ANC Salaried Plan.
Section 4.05 Adoption of Plan Provisions. (a) Pechiney
Plastics agrees to incorporate provisions into the Pechiney Plastics Salaried
Pension Plan that shall comply with this Agreement.
(b) ANC agrees to incorporate provisions into the ANC Salaried
Pension Plan that shall comply with this Agreement.
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<PAGE> 8
Section 4.06 Allocation of Liability for Salaried Pension
Benefits. ANC and Pechiney Plastics agree that responsibility to provide pension
benefits for Salaried Transferred Employees shall be as follows:
(a) The benefit payable to a Transferred Salaried Employee
under the ANC Salaried Pension Plan shall be computed on the basis of the
Benefit Formula as of the Separation Date and the Transferred Salaried
Employee's (i) Benefit Accrual Service as of the Separation Date, (ii) the
Benefit Formula, (iii) age at termination of employment with Pechiney Plastics,
(iv) service for eligibility to commence benefits at termination of employment
with Pechiney Plastics and (v) Pay Used For The ANC Benefit at termination of
employment with Pechiney Plastics, expressed as a life annuity payable as a
normal retirement benefit (at the Transferred Salaried Employee's normal
retirement date).
(b) The benefit payable to a Transferred Salaried Employee
under a Pechiney Plastics Salaried Pension Plan shall be expressed as a life
annuity payable as a normal retirement benefit (at the Transferred Salaried
Employee's normal retirement date) and shall be reduced by the benefit payable
to the Transferred Salaried Employee under the ANC Salaried Pension Plan.
(c) The examples attached hereto as Exhibit E illustrate the
above-described computations.
Section 4.06 Vesting. A Transferred Salaried Employee who, as
of the Separation Date, had not completed five years of service with ANC shall
have any years of service with Pechiney Plastics counted as vesting service for
purposes of the ANC Salaried Pension Plan.
Section 4.07 Commencement of Benefits. Transferred Employees
may not elect to receive their benefits under the ANC Salaried Pension Plan
until they have terminated employment with Pechiney Plastics. A Transferred
Salaried Employee may, but shall not be required to, commence receipt of his or
her benefits under an ANC Salaried Pension Plan and the Pechiney Plastics
Salaried Pension Plan at the same time. Further, a Transferred Salaried Employee
may, but shall not be required to, receive his benefits under an ANC Pension
Plan by electing the same form of benefit payment option as is available under
the Pechiney Plastics Salaried Pension Plan.
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ARTICLE V
POST-CLOSING BENEFIT CHANGES
Section 5.01 Plan Changes Made by Pechiney Plastics. (a)
Pechiney Plastics will be solely liable for any change made to the Pechiney
Plastics Pension Plans after the Separation Date which affects the benefit
payable to a Transferred Employee under the Pechiney Plastics Pension Plans. Any
such change shall not affect the benefit payable by any ANC Pension Plan.
(b) No change to the Pechiney Plastics Pension Plans shall
cause the benefit payable to a Transferred Employee to be less than what the
accrued benefit payable by the relevant Pechiney Plastics Pension Plan would
have been if the Transferred Employee had terminated employment from Pechiney
Plastics immediately prior to any such change.
ARTICLE VI
EXCHANGE OF INFORMATION
Section 6.01 Exchange of Information. In order for ANC and
Pechiney Plastics to properly determine their liability under this Agreement,
ANC and Pechiney Plastics agree to provide each other with such employee-related
information as the other party may require in the future.
ARTICLE VII
PLAN INTERPRETATION
Section 7.01 Plan Interpretation. ANC shall have the sole and
exclusive discretion to interpret this Agreement with respect to the computation
of any benefits payable under any ANC Pension Plan and/or with respect to any
term or provision as it may relate to ANC or to any ANC Pension Plan. Pechiney
Plastics shall accept, without question or comment, the interpretations and
benefit computations made by ANC (or its designated agents) with respect to
benefits payable under the ANC Pension Plans, unless Pechiney Plastics
determines that the information provided by Pechiney Plastics as specified in
Article VI was incorrect.
ARTICLE VIII
PLAN AMENDMENTS
Section 8.01 Plan Amendments. In addition to the obligations
of the parties set forth in this Agreement, ANC and Pechiney Plastics agree that
each will make any amendments from time to time to their pension plans as may be
necessary or appropriate to accomplish the intent of this Agreement.
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ARTICLE IX
COOPERATION
Section 9.01 Cooperation. ANC and Pechiney Plastics agree
that, at any time and from time to time following the date hereof, they each
will promptly execute and deliver, or cause to be executed or delivered, all
such further instruments and take all such further action as may be necessary or
appropriate to more effectively assume such liabilities or otherwise to confirm
or carry out the provisions and intent of this Agreement.
ARTICLE X
AMENDMENT, MODIFICATION OR TERMINATION
Section 10.01 Amendment, Modification or Termination. (a)
Notwithstanding any provision contained herein or in the Contribution,
Assignment and Assumption Agreement to the contrary, this Agreement may be
amended, modified or terminated at any time by mutual consent of the parties,
provided that any such amendment, modification or termination of this Agreement
shall be set forth in writing. ANC and Pechiney Plastics agree that each will
amend, modify, or terminate one or more of their pension plans as may be
necessary or appropriate to effectuate the intent of any amendment, modification
or termination of this Agreement.
(b) Notwithstanding the above paragraph (a) or any provision
contained herein or in the Contribution, Assignment and Assumption Agreement to
the contrary, if as of the date hereof or at any time hereafter, any term(s)
and/or provision(s) of this Agreement, shall cause any term or provision of an
ANC Pension Plan to violate any provision of the law, then ANC shall have the
sole and exclusive discretion to amend such pension plan to conform the pension
plan to such provision of the law.
-10-
<PAGE> 11
IN WITNESS WHEREOF, ANC and Pechiney Plastics have caused this
Agreement to be executed as of the date given below by their respective officers
thereunder duly authorized.
Dated this ____ day of _______________, 1999.
AMERICAN NATIONAL CAN COMPANY
By:____________________________________
Its:____________________________________
PECHINEY PLASTIC PACKAGING, INC.
By:_____________________________________
Its:_____________________________________
-11-
<PAGE> 12
EXHIBIT A
ANC HOURLY PENSION PLANS
The following portions of the American National Can Company Combined Pension
Plan, Plan No. 034, formerly known as the
American National Can Company Pension Plan for Shelbyville Hourly
Employees, Plan 051
American National Can Company Pension Plan for GCIU Hourly Employees at
the Des Moines, Neenah, River and Graphic Arts Operations, Plan 067
American National Can Company Pension Plan for Joint UPIU Hourly
Employees at the Neenah, River, Graphic Arts, Neenah Pilot and
Menominee Operations and Former Joint UPIU Hourly Employees, Plan 068
American National Can Company Pension Agreement on Pension Plan for
Menasha Hourly Employees, Plan 069
American National Can Company Lincoln Park Hourly Employees' Pension,
Plan 110
American National Can Company Pension Plan for Washington, New Jersey
Hourly Employees, Plan 111
American National Can Company Pension Plan for Neenah Graphics
Communications Int'l Union Hourly Employees, Plan 139
American National Can Company American National Can Company Pension
Plan for St. Louis Park Hourly Employees, Plan 163
American National Can Company Pension Plan for Minneapolis GCIU
Employees, Plan 174
American National Can Company Pension Plan for Bellevue, Ohio
Unorganized Hourly Employees, Plan 177
1 of 1
<PAGE> 13
EXHIBIT B
ANC SALARIED PENSION PLAN
The portion of the American National Can Company Combined Pension
Plan, Plan No. 034, formerly known as the "American National Can Company Pension
Plan for Salaried Employees, Plan 020"
1 of 1
<PAGE> 14
EXHIBIT C
EXAMPLE FOR DETERMINING PAY USED FOR THE ANC BENEFIT
<TABLE>
<CAPTION>
PAST PAY HISTORY UNTIL THE SEPARATION DATE
Service Start Date 8/1/88 Highest Average
Separation Date 8/1/99 Salary (HAS)
Past Pay Salary Scale 6.00% at Separation Date
------------------
<S> <C> <C>
For 08/01/1998 to 07/31/1999 $ 50,000 * $ 44,651
For 08/01/1997 to 07/31/1998 $ 47,170 * $ 42,124
For 08/01/1996 to 07/31/1997 $ 44,500 * $ 39,739
For 08/01/1995 to 07/31/1996 $ 41,981 * $ 37,490
For 08/01/1994 to 07/31/1995 $ 39,605 * $ 35,368
For 08/01/1993 to 07/31/1994 $ 37,363
For 08/01/1992 to 07/31/1993 $ 35,248
For 08/01/1991 to 07/31/1992 $ 33,253
For 08/01/1990 to 07/31/1991 $ 31,371
For 08/01/1989 to 07/31/1990 $ 29,595
For 08/01/1988 to 07/31/1989 $ 27,920
</TABLE>
Notes:
1. Highest Average Salary (HAS) is compared.
2. A prorata portion of 5% is used for partial 12 month periods.
3. The years used for the Pechiney Plastics HAS determines
which 5 years to use for the ANC (5% limited) HAS.
4. The asterisk(*) represents the 60 consecutive month period used
for Highest Average Salary.
CALCULATION OF FUTURE ALLOWABLE PAY FOR THE ANC PORTION OF THE BENEFIT
<TABLE>
<CAPTION>
Date Employment with
Pechiney Plastics Terminated 2/28/10 Actual
Pechiney Plastics Highest Average Years of
Highest Average Salary (HAS) Service After the
Actual Pay Salary (HAS) at Separation Date Separation Date
------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
For 03/01/2009 to 02/28/2010 $ 83,378 * $ 75,602 $ 44,651 10.5833
For 03/01/2008 to 02/28/2009 $ 80,948 * $ 72,066 $ 44,651 9.5833
For 03/01/2007 to 02/28/2008 $ 74,961 * $ 68,633 $ 44,651 8.5833
For 03/01/2006 to 02/28/2007 $ 71,053 * $ 65,563 $ 44,651 7.5833
For 03/01/2005 to 02/28/2006 $ 67,669 * $ 62,708 $ 44,651 6.5833
For 03/01/2004 to 02/28/2005 $ 65,698 $ 59,886 $ 44,651 5.5833
For 03/01/2003 to 02/28/2004 $ 63,785 $ 57,046 $ 44,651 4.5833
For 03/01/2002 to 02/28/2003 $ 59,612 $ 44,651 3.5833
For 03/01/2001 to 02/28/2002 $ 56,774 $ 44,651 2.5833
For 03/01/2000 to 02/28/2001 $ 53,560 $ 44,651 1.5833
For 03/01/1999 to 02/28/2000 $ 51,500 $ 44,651 0.5833
</TABLE>
<TABLE>
<CAPTION>
Maximum
Allowable
HAS For Pay Used For
5% Factor ANC Benefit The ANC Benefit
--------- ----------- ---------------
<S> <C> <C> <C>
For 03/01/2009 to 02/28/2010 1.6759 $ 74,831 $ 74,831
For 03/01/2008 to 02/28/2009 1.5961 $ 71,268 $ 71,268
For 03/01/2007 to 02/28/2008 1.5201 $ 67,874 $ 67,874
For 03/01/2006 to 02/28/2007 1.4477 $ 64,642 $ 64,642
For 03/01/2005 to 02/28/2006 1.3788 $ 61,565 $ 61,565
For 03/01/2004 to 02/28/2005 1.3131 $ 58,631 $ 58,631
For 03/01/2003 to 02/28/2004 1.2506 $ 55,841 $ 55,841
For 03/01/2002 to 02/28/2003 1.1910 $ 53,180
For 03/01/2001 to 02/28/2002 1.1343 $ 50,648
For 03/01/2000 to 02/28/2001 1.0803 $ 48,237
For 03/01/1999 to 02/28/2000 1.0289 $ 45,942
<CAPTION>
Highest
SUMMARY Average Salary
--------------
Highest Average Salary (HAS) at Separation Date $ 44,651
Pay Used For The ANC Benefit $ 74,831
Actual Pechiney Plastics Highest Average Salary (HAS) $ 75,602
</TABLE>
1 of 1
<PAGE> 15
EXHIBIT D-1
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED HOURLY EMPLOYEES
EXAMPLE FOR SHELBYVILLE UNORGANIZED (FORMER PLAN #051)
EXAMPLE 1 - TRANSFERRED HOURLY EMPLOYEE BECOMES ELIGIBLE FOR EARLY RETIREMENT
AFTER THE SEPARATION DATE
<TABLE>
<CAPTION>
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER 15 YEARS LATER
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99 (Assumed) 8/1/04 8/1/09 8/1/14
Age 50 55 60 65
Total Combined Service 10 15 20 25
Benefit Level** $ 19.25 $ 21.75 $ 24.25 $ 26.75
All Service Benefit Eligibility Term Vested Early Early Normal
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 192.50 $ 326.25 $ 485.00 $ 668.75
Less ANC Age 65 Benefit (192.50) (192.50) (192.50) (192.50)
--------------- ------------- -------------- --------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 133.75 $ 292.50 $ 476.25
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 326.25 $ 485.00 $ 668.75
Early Retirement Reduction Factor* x 0.70 x 0.85 x 1.00
------------- -------------- --------------
Total All Service Early Retirement Benefit N/A $ 228.38 $ 412.25 $ 668.75
ANC Age 65 Benefit $ 192.50 $ 192.50 $ 192.50
Early Retirement Reduction Factor* x 0.70 x 0.85 x 1.00
------------- -------------- --------------
ANC's Portion of Early Retirement Benefit N/A $ 134.75 $ 163.63 $ 192.50
Pechiney Plastics' Portion of Early Retirement Benefit N/A $ 93.63 $ 248.62 $ 476.25
</TABLE>
* 3% early retirement reduction from age 62 if 30 years of service; otherwise,
3% reduction from age 65
** Benefit Level at Separation Date is highest negotiated Benefit Level at
Separation Date; assumed $0.50 increase in the Benefit Level per year thereafter
1 of 5
<PAGE> 16
EXHIBIT D-2
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED HOURLY EMPLOYEES
EXAMPLE FOR SHELBYVILLE UNORGANIZED (FORMER PLAN #051)
EXAMPLE 2 - TRANSFERRED HOURLY EMPLOYEE CURRENTLY ELIGIBLE FOR EARLY RETIREMENT
<TABLE>
<CAPTION>
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER
--------------- ------------- --------------
<S> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09
Age 55 60 65
Total Combined Service 15 20 25
Benefit Level** $ 19.25 $ 21.75 $ 24.25
All Service Benefit Eligibility Early Early Normal
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 288.75 $ 435.00 $ 606.25
Less ANC Age 65 Benefit (288.75) (288.75) (288.75)
--------------- --------------- ---------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 146.25 $ 317.50
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 288.75 $ 435.00 $ 606.25
Early Retirement Reduction Factor* x 0.70 x 0.85 x 1.00
--------------- --------------- ---------------
Total All Service Early Retirement Benefit $ 202.13 $ 369.75 $ 606.25
ANC Age 65 Benefit $ 288.75 $ 288.75 $ 288.75
Early Retirement Reduction Factor* x 0.70 x 0.85 x 1.00
---------------- --------------- ---------------
ANC's Portion of Early Retirement Benefit $ 202.13 $ 245.44 $ 288.75
Pechiney Plastics' Portion of Early Retirement Benefit N/A $ 124.31 $ 317.50
</TABLE>
* 3% early retirement reduction from age 62 if 30 years of service; otherwise,
3% reduction from age 65
** Benefit Level at Separation Date is highest negotiated Benefit Level at
Separation Date; assumed $0.50 increase in the Benefit Level per year
thereafter
2 of 5
<PAGE> 17
EXHIBIT D-3
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED HOURLY EMPLOYEES
EXAMPLE FOR SHELBYVILLE UNORGANIZED (FORMER PLAN #051)
EXAMPLE 3 - TRANSFERRED HOURLY EMPLOYEE BECOMES ELIGIBLE FOR UNREDUCED
RETIREMENT AFTER THE SEPARATION DATE
<TABLE>
<CAPTION>
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER 13 YEARS LATER
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09 8/1/12
Age 52 57 62 65
Total Combined Service 20 25 30 33
Benefit Level** $ 19.25 $ 21.75 $ 24.25 $ 25.75
All Service Benefit Eligibility Term Vested Early Unreduced Normal
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 385.00 $ 543.75 $ 727.50 $ 849.75
Less ANC Age 65 Benefit (385.00) (385.00) (385.00) (385.00)
--------------- ------------- -------------- --------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 158.75 $ 342.50 $ 464.75
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 543.75 $ 727.50 $ 849.75
Early Retirement Reduction Factor* x 0.76 x 1.00 x 1.00
------------- -------------- --------------
Total All Service Early Retirement Benefit N/A $ 413.25 $ 727.50 $ 849.75
ANC Age 65 Benefit $ 385.00 $ 385.00 $ 385.00
Early Retirement Reduction Factor* x 0.76 x 1.00 x 1.00
------------- -------------- --------------
ANC's Portion of Early Retirement Benefit N/A $ 292.60 $ 385.00 $ 385.00
Pechiney Plastics' Portion of Early Retirement Benefit N/A $ 120.65 $ 342.50 $ 464.75
</TABLE>
* 3% early retirement reduction from age 62 if 30 years of service; otherwise,
3% reduction from age 65
** Benefit Level at Separation Date is highest negotiated Benefit Level at
Separation Date; assumed $0.50 increase in the Benefit Level per year thereafter
3 of 5
<PAGE> 18
EXHIBIT D-4
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED HOURLY EMPLOYEES
EXAMPLE FOR SHELBYVILLE UNORGANIZED (FORMER PLAN #051)
EXAMPLE 4 - TRANSFERRED HOURLY EMPLOYEE BECOMES VESTED AFTER THE SEPARATION DATE
<TABLE>
<CAPTION>
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER 15 YEARS LATER
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09 8/1/14
Age 45 50 55 60
Total Combined Service 4 9 14 19
Benefit Level** $ 19.25 $ 21.75 $ 24.25 $ 26.75
All Service Benefit Eligibility Nonvested Term Vested Term Vested Early
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 0.00 $ 195.75 $ 339.50 $ 508.25
Less ANC Age 65 Benefit 0.00 (77.00) (77.00) (77.00)
--------------- ------------- -------------- --------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 118.75 $ 262.50 $ 431.25
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 508.25
Early Retirement Reduction Factor* x 0.85
-------------
Total All Service Early Retirement Benefit N/A N/A N/A $ 432.01
ANC Age 65 Benefit $ 77.00
Early Retirement Reduction Factor* x 0.85
-------------
ANC's Portion of Early Retirement Benefit N/A N/A N/A $ 65.45
Pechiney Plastics' Portion of Early Retirement Benefit N/A N/A N/A $ 366.56
</TABLE>
* 3% early retirement reduction from age 62 if 30 years of service; otherwise,
3% reduction from age 65
** Benefit Level at Separation Date is highest negotiated Benefit Level at
Separation Date; assumed $0.50 increase in the Benefit Level per year
thereafter
4 of 5
<PAGE> 19
EXHIBIT D-5
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED HOURLY EMPLOYEES
EXAMPLE FOR JOINT GCIU PLAN 067 AND JOINT UPIU PLAN 068
EXAMPLE 5 - TRANSFERRED HOURLY EMPLOYEE WHO TRANSFERS BETWEEN BENEFIT STRUCTURES
BEFORE THE SEPARATION DATE
FACTS
A Transferred Hourly Employee works at a facility and accrues a $50
monthly pension benefit under Plan I (which may be the ANC Salaried
Pension Plan or one of the ANC Hourly Pension Plans but for purposes of
this example is the Joint GCIU Plan 067). Before the Separation Date, the
Transferred Hourly Employee transfers to a different facility and accrues
an additional $100 monthly pension benefit in one of the ANC Hourly
Pension Plans, i.e., the Joint UPIU Plan 068, and the Transferred Hourly
Employee is not eligible for an early retirement benefit on the
Separation Date.
Assume that after the Separation Date the Transferred Hourly Employee
accrues an additional monthly pension benefit under the Pechiney Plastics
mirror-offset plan (for the Joint UPIU benefit structure) of $200 and
retires at age 55 with 15 years of combined ANC and Pechiney Plastics
service. (He has "grown in" to an early retirement benefit).
The Pechiney Plastics mirror-offset benefit is ONLY based on the $100
"ANC" accrued monthly pension benefit under the Joint UPIU Plan 068.
NOTE: the $50 accrued monthly pension benefit under the Plan I - ANC
Joint GCIU Plan 067 is ignored for mirror-offset purposes.
The Transferred Hourly Employee is also eligible for a terminated vested
benefit with respect to the $50 accrued monthly pension benefit (under
the Plan I - ANC GCIU Plan 067). Therefore, the Plan I - ANC Joint GCIU
Plan 067 will be amended to recognize service with Pechiney Plastics
after the Separation Date (for vesting and benefit eligibility purposes)
so that in the example the Transferred Hourly Employee is eligible for an
early retirement benefit with respect to the $50 accrued monthly pension
benefit under the Plan I - ANC Joint GCIU Plan 067.
The salaried benefit structure and the Plastics and Tubes hourly benefit
structures in the ANC Combined Plan will be amended to address this issue
where appropriate.
5 of 5
<PAGE> 20
EXHIBIT E-1
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED SALARIED EMPLOYEES
EXAMPLE FOR SALARIED (FORMER PLAN #020)
EXAMPLE 1 - TRANSFERRED SALARIED EMPLOYEE BECOMES ELIGIBLE FOR EARLY RETIREMENT
AFTER THE SEPARATION DATE
<TABLE>
<CAPTION>
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER 15 YEARS LATER
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09 8/1/14
Age 50 55 60 65
Total Combined Service 10 15 20 25
Pay Used For The ANC Benefit** $ 50,000 $ 63,814 $ 81,445 $ 103,947
All Service Benefit Eligibility Term Vested Early Early Normal
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 625.00 $ 1,196.51 $ 2,036.13 $ 3,248.34
Less ANC Age 65 Benefit (625.00) (797.68) (1,018.06) (1,299.34)
--------------- ------------- -------------- --------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 398.83 $ 1,018.07 $ 1,949.00
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 1,196.51 $ 2,036.13 $ 3,248.34
Early Retirement Reduction Factor* x 0.79 x 0.94 x 1.00
------------- -------------- --------------
Total All Service Early Retirement Benefit N/A $ 945.24 $ 1,913.96 $ 3,248.34
ANC Age 65 Benefit $ 797.68 $ 1,018.06 $ 1,299.34
Early Retirement Reduction Factor* x 0.79 x 0.94 x 1.00
------------- -------------- --------------
ANC's Portion of Early Retirement Benefit N/A $ 630.17 $ 956.98 $ 1,299.34
Pechiney Plastics' Portion of Early Retirement Benefit N/A $ 315.07 $ 956.98 $ 1,949.00
</TABLE>
* 3% early retirement reduction from age 62
** Assumes 5% salary increases
1 of 4
<PAGE> 21
EXHIBIT E-2
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED SALARIED EMPLOYEES
EXAMPLE FOR SALARIED (FORMER PLAN #020)
EXAMPLE 2 - TRANSFERRED SALARIED EMPLOYEE CURRENTLY ELIGIBLE FOR EARLY
RETIREMENT
<TABLE>
<CAPTION>
Separation Date 5 Years Later 10 Years Later
--------------- --------------- --------------
<S> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09
Age 55 ------- 60 ------- 65
Total Combined Service 15 20 25
Pay Used For The ANC Benefit** $ 50,000 $ 63,814 $ 81,445
All Service Benefit Eligibility Early Early Normal
NORMAL RETIREMENT BENEFIT
All Service Age 65 Benefit $ 937.50 $ 1,595.35 $ 2,545.16
Less ANC Age 65 Benefit (937.50) (1,196.51) (1,527.09)
--------------- --------------- --------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 398.84 $ 1,018.07
EARLY RETIREMENT BENEFIT
Total All Service Age 65 Benefit $ 937.50 $ 1,595.35 $ 2,545.16
Early Retirement Reduction Factor* x 0.79 x 0.94 x 1.00
--------------- --------------- --------------
Total All Service Early Retirement Benefit $ 740.63 $ 1,499.63 $ 2,545.16
ANC Age 65 Benefit $ 937.50 $ 1,196.51 $ 1,527.09
Early Retirement Reduction Factor* x 0.79 x 0.94 x 1.00
--------------- --------------- --------------
ANC's Portion of Early Retirement Benefit $ 740.63 $ 1,124.72 $ 1,527.09
Pechiney Plastics' Portion of Early Retirement Benefit N/A $ 374.91 $ 1,018.07
</TABLE>
* 3% early retirement reduction from age 62
** Assumes 5% salary increases
2 of 4
<PAGE> 22
EXHIBIT E-3
AMERICAN NATIONAL CAN COMPANY
BENEFIT ILLUSTRATIONS FOR TRANSFERRED SALARIED EMPLOYEES
EXAMPLE FOR SALARIED (FORMER PLAN #020)
<TABLE>
<CAPTION>
EXAMPLE 3 - TRANSFERRED SALARIED EMPLOYEE BECOMES ELIGIBLE FOR UNREDUCED RETIREMENT AFTER THE SEPARATION DATE
SEPARATION DATE 5 YEARS LATER 10 YEARS LATER 13 YEARS LATER
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09 8/1/12
Age 52 57 62 65
Total Combined Service 20 25 30 33
Pay Used For The ANC Benefit** $ 50,000 $ 63,814 $ 81,445 $ 94,283
All Service Benefit Eligibility Term Vested Early Unreduced Normal
Normal Retirement Benefit
All Service Age 65 Benefit $ 1,250.00 $ 1,994.19 $ 3,054.19 $ 3,889.17
Less ANC Age 65 Benefit (1,250.00) (1,595.35) (2,036.13) (2,357.08)
-------------- ---------------- --------------- ---------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 398.84 $ 1,018.06 $ 1,532.09
Early Retirement Benefit
Total All Service Age 65 Benefit $ 1,994.19 $ 3,054.19 $ 3,889.17
Early Retirement Reduction Factor* x 0.85 x 1.00 x 1.00
---------------- --------------- ---------------
Total All Service Early Retirement Benefit N/A $ 1,695.06 $ 3,054.19 $ 3,889.17
ANC Age 65 Benefit $ 1,595.35 $ 2,036.13 $ 2,357.08
Early Retirement Reduction Factor* x 0.85 x 1.00 x 1.00
---------------- --------------- ---------------
ANC's Portion of Early Retirement Benefit N/A $ 1,356.05 $ 2,036.13 $ 2,357.08
Pechiney Plastics' Portion of Early
Retirement Benefit N/A $ 339.01 $ 1,018.06 $ 1,532.09
</TABLE>
* 3% early retirement reduction from age 62
** Assumes 5% salary increases
3 of 4
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT E-4
American National Can Company
Benefit Illustrations For Transferred Salaried Employees
Example for Salaried (Former Plan #020)
Example 4 - Transferred Salaried Employee Becomes Vested
After the Separation Date
Separation Date 5 Years Later 10 Years Later 15 Years Later
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Date of Termination of Employment 8/1/99(Assumed) 8/1/04 8/1/09 8/1/14
Age 45--------- 50--------- 55----- 60
Total Combined Service 4 9 14 19
Pay Used For The ANC Benefit** 50,000 63,814 81,445 103,947
All Service Benefit Eligibility Nonvested Term Vested Early Early
Normal Retirement Benefit
All Service Age 65 Benefit $ 0.00 $ 717.91 $ 1,425.29 $ 2,468.74
Less ANC Age 65 Benefit 0.00 (319.07) (407.23) (519.74)
----------------- -------------- --------------- ----------------
Pechiney Plastics Age 65 Benefit $ 0.00 $ 398.84 $ 1,018.06 $ 1,949.00
Early Retirement Benefit
Total All Service Age 65 Benefit $ 1,425.29 $ 2,468.74
Early Retirement Reduction Factor* x 0.79 x 0.94
--------------- ----------------
Total All Service Early Retirement Benefit N/A N/A $ 1,125.98 $ 2,320.62
ANC Age 65 Benefit $ 407.23 $ 519.74
Early Retirement Reduction Factor* x 0.79 x 0.94
--------------- ----------------
ANC's Portion of Early Retirement Benefit N/A N/A $ 321.71 $ 488.56
Pechiney Plastics' Portion of Early
Retirement Benefit N/A N/A $ 804.27 $ 1,832.06
* 3% early retirement reduction from age 62
** Assumes 5% salary increases
</TABLE>
4 of 4
<PAGE> 1
EXHIBIT 21
American National Can Group, Inc. Subsidiaries
Name Jurisdiction
- ---- ------------
American National Can Overseas Corporation Delaware
American National Can Company Delaware
American National Can Company of Delaware Delaware
ANC Holdings, Inc. Delaware
ANC Container Company Delaware
ANC Receivables Corporation Delaware
ANC Recycling, Inc. Delaware
ANC Services Corporation Delaware
GC North Bergen Corporation Delaware
Nacanco Finance Corporation Delaware
Nacanco Service Corporation Delaware
Natadco, Ltd. Delaware
National Trading Corporation Delaware
Pechiney North America, Inc. Delaware
The Renaissance Insurance Company Vermont
The Magic Can Company Delaware
American Can (U.K.) Ltd. United Kingdom
American Can Holdings (U.K.) Ltd. United Kingdom
American National Can Holdings (Europe) B.V. Netherlands
American National Can Zhaoqing Co. Ltd. (60%) China
American National Can Asia Pacific Ltd. China
American National Can do Brasil, Ltda. Brazil
American National Can de Argentina, S.A. Argentina
Assetsteady Ltd. United Kingdom
Nacanco Atlantic France
Nacanco Deutschland GmbH Germany
Nacanco France S.A. France
Nacanco GmbH & Co. KG Germany
Nacanco Holding Europe France
Nacanco Holding France France
Nacanco Holdings (Italy) Srl. Italy
Nacanco Holdings (U.K.) Ltd. United Kingdom
Nacanco Ireland Ltd. Ireland
Nacanco Italia Srl. Italy
Nacanco Ltd. United Kingdom
Nacanco Netherlands B.V. Netherlands
Nacanco Paketleme Sanayl ve Ticaret A.S. (65%) Turkey
Nacanco 1988 Pensions Ltd. United Kingdom
Nacanco (45) Pensions Ltd. United Kingdom
Nacanco Pension Trust Ltd. United Kingdom
Nacanco S.A. France
Nacanco Services (Europe) Ltd. United Kingdom
Nacanco SpA Italy
Nacanco Verwalts GmbH Germany
Nacanco Can Iberica, S.A. Spain
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated April 19, 1999, relating
to the combined financial statements of American National Can Group, Inc., which
appears in the Prospectus. We also consent to the references to us under the
headings "Experts" and "Summary Selected Combined Financial Information" in such
Prospectus. However, it should be noted that PricewaterhouseCoopers LLP has not
prepared or certified such "Summary Selected Combined Financial Information."
PricewaterhouseCoopers LLP
Chicago, Illinois
June 25, 1999
<PAGE> 1
EXHIBIT 23.4
[CAN MANUFACTURERS INSTITUTE LETTERHEAD]
June 22, 1999
Mr. Hugh Baxter, Jr.
American National Can Company
8770 W. Bryn Mawr Avenue
Mail Suite 13-T
Chicago, IL 60631.3542
Dear Hugh:
The Can Manufacturers Institute, Inc. (CMI) is the national trade association of
the can manufacturing industry and its suppliers. American National Can Group,
Inc. is a CMI member in good standing. CMI hereby consents to the use of its
name in American National Can Group, Inc.'s registration statement on Form S-1.
Sincerely,
Robert R. Budway
Robert R. Budway
President
<PAGE> 1
EXHIBIT 23.6
[BEVERAGE MARKETING CORP. OF NEW YORK LETTERHEAD]
22 June 1999
Ms. Polly Moles
Corporate Communications
American National Can Group, Inc.
8770 West Bryn Mawr Avenue
Chicago, Illinois 60631-3542
Dear Ms. Moles:
American National Can Group, Inc. has permission to reprint certain data
related to the U.S. beverage industry that Beverage Marketing has compiled.
This data should be credited to Beverage Marketing Corporation, and we hereby
consent to the use of our name in American National Can Group, Inc.'s
registration statement on Form S-1.
Sincerely,
Gary A. Hemphill
Gary A. Hemphill
Vice President
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EXHIBIT 23.7
[CONTAINER CONSULTING, INC. LETTERHEAD]
Date: June 22, 1999
To: Mr. Bill Smith
Company: AMERICAN NATIONAL CAN
Bill,
It is a pleasure to continue working with American National Can to provide
consulting for the beverage packaging industry.
American National Can has permission to use, quote, and list Container
Consulting, Inc. as a source for your data related to the beverage industry.
We hereby consent to the use of our name in American National Can Group, Inc's
registration statement on form S-1.
If you need any additional or specific data, please give me a call.
John C. Maddox
John C. Maddox
Vice President
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EXHIBIT 23.10
We hereby consent to the inclusion of (1) our opinion dated April 14, 1999
regarding certain federal income tax consequences of the proposed stock offering
by Pechiney of shares of American National Can Group, Inc. and (2) our opinion
dated April 14, 1999 regarding certain federal income tax consequences of the
proposed split-off of the assets of American National Can Company not associated
with the beverage can business to Pechiney Plastic Packaging as Exhibit 8.2,
respectively, to this Registration Statement on Form S-1 of American National
Can Group, Inc. and to the reference to these opinions under the heading
"Reorganization of ANC - Tax Treatment" in such Registration Statement.
PricewaterhouseCoopers LLP
Chicago, Illinois
June 25, 1999
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EXHIBIT 23.11
[KRONISH LIEB WEINER & HELLMAN LLP LETTERHEAD]
We hereby consent to the inclusion of our opinion dated April 14, 1999,
regarding certain federal income tax consequences of the proposed stock offering
by Pechiney S.A. of shares of "New ANC" (American National Can Group, Inc.), the
proposed contribution of the assets of American National Can Company not
associated with the beverage can business to "Newco" (Pechiney Plastic
Packaging), and the proposed split-off of Pechiney Plastic Packaging to Pechiney
S.A. as an exhibit to this Registration Statement on Form S-1 of American
National Can Group, Inc., and to the reference to us under the heading
"Reorganization of ANC - Tax Treatment" in such Registration Statement.
Kronish Lieb Weiner & Hellman LLP
New York, New York
June 25, 1999
