U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 25, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission file number 0-8251
ADOLPH COORS COMPANY
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(Exact name of registrant as specified in its charter)
Colorado 84-0178360
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(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
Golden, Colorado 80401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 279-6565
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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None None
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Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock (non-voting), no par value
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(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)
State the aggregate market value of the voting stock held by
non-affiliates of the registrant: All voting shares are held by
Adolph Coors, Jr. Trust.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of March 15, 1995:
Class A Common Stock - 1,260,000 shares
Class B Common Stock - 37,070,178 shares
PART I
ITEM 1. Business.
(a) General Development of Business
Founded in 1873, Adolph Coors Company ("ACC" or the "Company"),
through its subsidiary, Coors Brewing Company ("CBC"), produces and markets
beer and other malt-based beverages. The Company's business was conducted as a
partnership or sole proprietorship until 1913, when it incorporated under the
laws of the State of Colorado. During the 1980s, the Company developed a
number of technology-based businesses. At the end of 1992, ACC spun off its
aluminum, packaging, ceramics and other technology businesses in a tax-free
distribution to shareholders. The spin-off was accomplished through a dividend
of the shares of common stock in a new public company, ACX Technologies, Inc.
(ACXT)(NASDAQ:ACXT).
CBC remains as the single direct subsidiary of ACC. CBC owns Coors
Distributing Company, and a number of smaller subsidiaries, including Coors
Transportation Company; Coors Energy Company; The Wannamaker Ditch Company; The
Rocky Mountain Water Company; CBC International, Inc.; Coors Global, Inc.; and
Coors Intercontinental, Inc. CBC indirectly owns, through its
subsidiaries, Coors Brewing International C.V. and Coors Brewing Iberica, S.A.
In 1992, substantially all of the assets of Coors Energy Company and Coors
Transportation Company were sold.
(b) Financial Information About Industry Segments
The Company has continuing operations in a single industry segment,
the production and marketing of beer and other malt-based beverages.
(c) Narrative Description of Business
Coors Brewing Company - General
-------------------------------
CBC is engaged in the production and marketing of high quality
malt-based beverage products. CBC places a priority on higher-margin products
in the premium and above-premium categories and has a number of
distinctive brands that satisfy consumer demands and taste trends. The
majority of CBC's sales come from U.S. markets; however, CBC is also
committed to building profitable sales in international markets. Sales of
malt beverage products totaled 20.4 million barrels in 1994, a 2.7% increase
compared to 19.8 million barrels in 1993.
Marketing
---------
Principal products and services: There are currently 22 products in
the CBC brand portfolio. CBC produces 7 premium products in the Coors
family of brands, including Coors Light, Original Coors, Coors Artic Ice, Coors
Artic Ice Light, Coors Extra Gold, Coors Dry and Coors Cutter, a
non-alcoholic brew.
CBC produces and markets Zima Clearmalt, an innovative malt-based
beverage in the above-premium category. CBC also offers beers in the specialty,
above-premium category, including the Coors seasonal beers -- which
in 1994 were Winterfest, Eisbock, Weizenbier and Oktoberfest Marzen -- and a
number of import or licensed products, including George Killian's Irish Red,
Castlemaine XXXX and Steinlager.
CBC also offers products in the popular-priced category: Keystone,
Keystone Light, Keystone Dry, Keystone Ice and Keystone Amber Light. In
target markets with a high demand for economy beers, CBC offers two
value-added beers, Shulers Lager and Shulers Light. With the exception of
Shulers and Shulers Light, which are in limited distribution, other Coors
malt beverage products are sold in most states. A number of Coors products are
exported or produced and sold in overseas markets. International sales are
described in greater detail below.
New products/opportunities: CBC completed the national expansion of
Zima Clearmalt in the first half of 1994. In addition, Coors Artic Ice
and Coors Artic Ice Light were rolled out into 54% of the U.S. by September
1994. Both ice brands were sold nationally by January 1995. These products are
brewed using patented ice brewing technology licensed from Labatt Breweries of
Canada.
In order to tap into the fast-growing popularity of
special-occasion brews, UniBev Limited (Unibev), a unit of CBC that focuses on
the import and specialty beer market, introduced three new seasonal beers to
complement the well-established Coors Winterfest brand. Each of these
beers -- Eisbock, a springtime bock; Weizenbier, a summertime wheat beer; and
Oktoberfest Marzen beer -- was available in limited quantities for their
respective seasons in 1994. UniBev also distributes Steinlager in the U.S.
Steinlager is the number-one premium beer in New Zealand, and is distributed
by Coors under license from Lion Nathan International of New Zealand.
Early in 1995, CBC announced the introduction of a new product,
Zima Gold. Zima Gold features a distinctive taste that is full-flavored. The
product is being tested with select retailers in Nebraska and Arizona, and
will be rolled out nationally in time for the peak summer selling season.
Also in the first quarter of 1995, CBC announced a distribution arrangement
between UniBev and F.X. Matt Company of Utica, New York. UniBev will
initiate a distribution test of a number of F.X. Matt's Saranac brands --
including Saranac Adirondack Amber, Saranac Golden Pilsner, Saranac Black
and Tan, Saranac Black Forest and Saranac Pale Ale -- in limited markets.
In 1994, CBC also introduced two new Keystone line brands: Keystone
Ice and Keystone Amber Light.
Brand names, trademarks, patents and licenses: Trademarks of CBC
include: Original Coors, Coors Light, Coors Artic Ice, Coors Artic Ice
Light, Coors Extra Gold, Coors Dry, Coors Cutter, Zima Clearmalt, Winterfest,
Eisbock, Weizenbier, Oktoberfest Marzen, Keystone, Keystone Light, Keystone
Dry, Keystone Ice, Keystone Amber Light, Shulers Lager, and Shulers Light.
CBC regards consumer recognition of and loyalty to its brand names and
trademarks as being extremely important to the long-term success of its
business. CBC also holds a number of patents on innovative processes related
to can-making and can-decorating and other technical operations and derives
incremental revenues from related royalties and licenses. Although CBC owns a
number of patents, it does not consider its business to be dependent upon any
one or related group of such patents.
Brand performance: Coors Light is the largest selling brand in
CBC's product portfolio. For the past few years, Coors Light has accounted for
approximately two-thirds of CBC's total sales volume. Despite a competitive
assault in 1994 on the light beer category from the proliferation of ice
beers in U.S. markets, Coors Light posted another volume gain in 1994. CBC's
next strongest volume growth came from its above-premium beverages, including
Zima and George Killian's Irish Red. CBC also gained volume in 1994 from the
introduction of Coors Artic Ice and Coors Artic Ice Light, as well as CBC's
seasonal and import beers. Products in the premium and above-premium
categories make up more than 87% of CBC's volume.
Domestic sales operations: CBC's highest volume sales are in the
states of California, Texas, Pennsylvania, New York and New Jersey.
In August 1994, CBC completed the restructuring of its field sales
operations into eight field business areas (FBAs) strategically located
throughout the United States and managed by newly appointed area vice
presidents. The goal of each new FBA is to align CBC resources more effectively
and improve CBC's competitiveness and responsiveness at retail, distributor
and field marketing levels. The new structure focuses increased autonomy and
bottom-line accountability in the field sales organization.
CBC also continued its emphasis on specialty, import and licensed
beer brands through UniBev, an import and specialty unit of CBC. Organized in
1993, UniBev provides CBC with a separate marketing organization dedicated to
specialty brands in the U.S.
International marketing/partnerships: International markets provide
significant opportunities for profitable growth, and CBC is committed to
increasing its international presence. This will be accomplished through a
number of alternatives, including export products, licensing agreements and
joint ventures. CBC's goal in seeking international opportunities is
superior financial returns to those found in the U.S. beer market. CBC's
first priority is to seek on-site profitable production capability in strategic
international markets.
CBC exports its products to a number of markets outside of the
United States, including American Samoa, the Bahamas, Bahrain, Bermuda, Cayman
Islands, France, Greece, Guam, Ireland, Italy, Panama, Puerto Rico, St.
Maarten, Singapore and the U.S. and British Virgin Islands. In addition, CBC
exports its products to U.S. military bases worldwide. While export volumes
do not account for a significant portion of CBC's sales, they are
significantly more profitable, on a per barrel basis, than sales in U.S.
markets.
CBC has existing licensing agreements with a number of
international brewers. CBC licenses Molson Breweries of Canada Limited (Molson)
to brew and distribute Original Coors and Coors Light in Canada, where Coors
Light is the best selling light beer. In 1992, Miller Brewing Company (Miller)
increased its ownership in Molson to 20%. As a result, CBC initiated two legal
actions related to its licensing agreement with Molson -- seeking to allow CBC
to terminate the agreement or, alternatively, asking that Miller Brewing Company
be removed as a partner in Molson. These legal actions are ongoing and have not
impacted the success of CBC's brands in Canada. In Japan, Original Coors has
been produced under license by Asahi Breweries Ltd. for seven years and remains
one of the top foreign brands in that country.
In early 1994, CBC announced that it had licensed proprietary ice
brewing technology from Labatt Breweries of Canada.
In September 1992, a joint venture between CBC and Scottish &
Newcastle Breweries of Scotland began to brew and distribute Coors Extra Gold
in the United Kingdom. Coors Extra Gold was introduced in Scotland and
northwest England in August 1992, and in 1993 distribution was expanded into
the remainder of Great Britain. In June of 1993, CBC announced the launch of
Coors Extra Gold into Ireland; the brand is brewed by Scottish & Newcastle in
the U.K. and distributed under license by Murphy Brewery Ireland Ltd., Dublin,
a subsidiary of Heineken, N.V. Coors Extra Gold was rated best for overall Best
Draught Lager at the 1994 Brewing Industry International Awards in England.
In 1993, CBC announced that it would produce and market Castlemaine
XXXX (an Australian lager) in the U.S. through a joint venture with Lion
Nathan International of New Zealand. In 1994, CBC expanded its relationship
with Lion Nathan to include exclusive U.S. distribution of Steinlager, the
best-selling premium beer in New Zealand.
Beginning in 1991, CBC made an investment in a joint venture with
Jinro Limited of the Republic of Korea. Jinro-Coors Brewing Company is one-
third owned by CBC and two-thirds owned by Jinro Limited. In the second quarter
of 1994, Jinro-Coors completed construction of a 1.8-million-barrel brewery
in South Korea and launched its first product, Cass Fresh. In its first few
months in the market, Cass Fresh captured a 10% share of the South Korean beer
market. In October of 1994, Jinro-Coors launched Coors Extra Gold in the South
Korean market. In the first quarter of 1995, the joint venture will complete
improvements and additions to double the brewery's capacity. Volumes from
Jinro-Coors Brewing Company are not included in CBC's financial results.
In March 1994, CBC completed the purchase of a 500,000-hectoliter
brewery in Zaragoza, Spain. The brewery was purchased from El Aguila S.A.,
based in Madrid, Spain, which is 51% owned by Amsterdam-based Heineken, N.V.,
the world's second-largest brewer. The total investment by CBC in Spain over the
next few years is expected to exceed $50 million, including purchase price and
future spending on operations and product marketing. Under terms of an
agreement, CBC will contract brew El Aguila products through 1998. In 1994, CBC
also brewed Coors Extra Gold in Zaragoza for export to France, Greece and
Italy. Sales and distribution in Spain will be handled by El Aguila. This
arrangement will provide significant cost and other advantages over exporting
beer from U.S. facilities. Volumes from the Zaragoza brewery are included in
CBC's sales results. Product distribution: Delivery to retail markets in the
United States is accomplished through a national network of 587 independent
distributors and five distributors owned and operated by CBC's subsidiary, Coors
Distributing Company. Some distributors have multiple branches. The total
number of distributor locations in the U.S., including branch operations, is
645. Delivery to export/international markets is accomplished via licensing and
distribution agreements with independent distributors.
In order to ensure the highest product quality, CBC has one of the
industry's most extensive distributor monitoring programs. This program is
designed to ensure that guidelines for proper refrigeration and rotation of
CBC's malt beverage products at both the wholesale and retail levels are
followed. Distributors are responsible for maintaining proper rotation of the
products at retail accounts and are required to replace CBC's malt beverage
products at their own expense if sales to consumers have not occurred within
the prescribed time period.
No single distributor accounted for more than 5% of 1994 barrel
sales.
Transportation
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The number and geographic location of CBC's brewing operations
require its malt beverage products to be shipped farther than competitors'
products. Major competitors have multiple breweries and, therefore, incur lower
transportation costs than CBC incurs to deliver its products to their
respective distributors. By packaging some of its products in Memphis,
Tennessee and Elkton, Virginia (Shenandoah), CBC is able to achieve more
efficient product distribution and a reduction of freight costs for certain
markets. During 1994, 27% of total CBC products sold were first shipped in
CBC's insulated rail tank cars from Golden and then blended, finished and
packaged at the Memphis and Shenandoah plants.
CBC's Golden facilities are served by Burlington Northern, Inc.,
which transports approximately 74% of CBC products packaged at the Golden
facility 14 miles from Golden to Denver. From Denver the products are shipped
by various railroad lines to satellite distribution centers and distributors
throughout the country. CBC is able to maintain the high rail volume through
the use of 24 satellite distribution centers strategically located throughout
the country. These centers, operated by public warehouse companies and CBC,
transfer CBC's malt beverage products from railcars for shipment to distributors
by truck. In 1994, approximately 82% of total railcar volume from Golden moved
through the satellite distribution centers. The railcars assigned to CBC by the
shipping railroads are specially built and insulated to maintain temperature
control en route. A national rail strike of any duration could substantially
impair CBC's ability to transport their products to its markets and cause a
shortage of CBC's malt beverage products to a greater degree than might be
experienced by competitors with multiple breweries. Although an extended
shutdown of the Burlington Northern, Inc. rail spur at Golden could adversely
affect CBC's business, CBC believes that such an interruption of service is
unlikely. In addition, the satellite distribution system would mitigate the
potential impact of interrupted rail service.
The remaining 26% of CBC volume packaged in Golden is shipped by
truck and intermodal (piggyback) directly to distributors. Transportation
vehicles are refrigerated or insulated to keep CBC's malt beverage products at
proper temperatures while in transit to distributor locations.
Operations
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Production/packaging capacity: CBC currently has three domestic
production facilities. It owns and operates the world's largest single-site
brewery in Golden, Colorado; a packaging and brewing facility in Memphis,
Tennessee; and a packaging plant and distribution facility near Elkton,
Virginia (referred to as the Shenandoah facility).
The Golden brewery is the source for all brands with the Coors
name, except for Coors Cutter. The majority of CBC's beer is packaged in Golden.
The remainder is shipped in bulk from the Colorado brewery to the Shenandoah
and Memphis facilities for blending, finishing and packaging. To support the
development of new products, CBC maintains a fully-equipped pilot brewery
within the Golden facility, with a 6,500-barrel annual capacity. This on-site
resource enables CBC to brew small batches of innovative products without
interrupting ongoing production and operations.
The Memphis facility is currently packaging all domestic CBC
products for export outside of the United States and producing Zima
Clearmalt, Zima Gold, Castlemaine XXXX and Coors Cutter. Depending on product
mix and market opportunities, the full utilization of brewing capacity in
Memphis may require incremental expansion in plant and equipment.
The Shenandoah facility, which currently packages certain CBC
products for distribution into eastern markets, was designed so that it could be
expanded to include brewing capability if volumes and economics warrant
additional brewing capacity.
At the end of 1994, CBC had approximately 25 million barrels of
annual brewing capacity and 28 million barrels of annual packaging capacity.
Current capacity figures are dependent on product mix and can change with
shifting consumer preferences for specific brands and/or packages. The
increasing proliferation of products and packages creates logistical
challenges for CBC as well as for all brewers. Together, the three facilities
provide sufficient brewing and packaging capacity to meet consumer demand for
CBC's products into the foreseeable future.
Significant portions of CBC's aluminum can, end, glass bottle and
malt requirements are also produced in its own facilities. CBC has
sufficient capacity in container and malting operations to fulfill its current
and projected requirements.
Container manufacturing facilities: CBC owns a can manufacturing
facility, which produces approximately 3.5 billion aluminum cans per year. In
addition, CBC owns an end manufacturing facility, which provides aluminum
ends and tabs to CBC. Together, container assets comprise approximately 15%
of CBC's property assets. In May of 1994, CBC and American National Can
Company entered into a joint venture to produce reduced-diameter 202
beverage can ends at the CBC end manufacturing facility for sale to CBC and
to outside customers. This innovative joint venture was expanded in the
third quarter to include can manufacturing. Over time, this joint venture is
intended to improve utilization of both facilities and improve the return on
this investment. In 1994, substantially all of the cans, ends and tabs
produced were purchased by CBC.
In 1994, the CBC bottle manufacturing plant produced approximately
790 million bottles for consumption by CBC. There were no sales to outside
customers. Bottles manufactured by CBC are made with an average total recycled
content of 35%. To assist in its goal of manufacturing bottles with 50%
recycled content, in 1992 CBC announced its intent to build a glass recycling
facility in Wheat Ridge, Colorado. Construction of the facility was completed
mid-year in 1994 and doubled the amount of glass CBC can recycle annually.
CBC is currently completing negotiations with Anchor Glass
Container Corporation to form a partnership to produce glass bottles. When
negotiations arescompleted in the near future, an announcement of the
partnership will be released.
Other facilities: CBC owns waste treatment facilities which process
waste from CBC's manufacturing operations as well as municipal waste from the
nearby City of Golden. CBC owns and operates its own power plant. In 1994, a
proposed divestiture of its electric-generating assets to Public Service
Company of Colorado was terminated when the parties could not agree on an
acceptable financial package. CBC is currently evaluating other options for
improving utilization and/or divesting the electric-generating assets.
CBC continues to explore opportunities to improve asset
utilization, including the divestiture of non-core assets and continuing
improvement in capacity utilization through innovative joint ventures and
alliances.
Capital expansion: In 1994, the Company spent approximately $160.3
million to provide additional new product capacity. While management plans to
invest appropriately in order to ensure the ongoing productivity and
efficiency of CBC assets, a priority will be placed on those projects that
offer returns on investment spending that are well in excess of CBC's cost of
capital. CBC expects its capital expenditures for 1995 to be approximately $167
million.
Raw Materials/Sources and Availability
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CBC uses all-natural ingredients in the production of its malt
beverages. In addition, CBC has one of the longest beer brewing cycles in the
industry. CBC adheres to strict formulation and quality standards in selecting
its raw materials. CBC believes it has sufficient access to raw materials
and packaging materials to meet its production requirements in the foreseeable
future.
Barley, barley malt, starch and hops: CBC uses a proprietary strain
of barley, developed by CBC's agronomists, in most of its malt beverage
products. Virtually all of this barley is grown on irrigated farmland in the
western United States under contractual agreements with area farmers. CBC's
malting facility located in Golden, Colorado, produces malt for all of
CBC's products with the exception of Zima Clearmalt. CBC maintains inventory
levels in several locations owned by CBC which it believes are sufficient to
supply the business in the event of any natural disaster or contingency.
Rice and refined cereal starch, which are considered to be interchangeable in
CBC's brewing process, are purchased from several suppliers. Both foreign and
domestic hops are purchased from various suppliers.
Water: CBC utilizes naturally filtered water from underground
aquifers to brew malt beverages at its Golden, Colorado facility. Water from
private deep wells is used for final blending and packaging operations for
malt beverages packaged at plants located outside Colorado. Water quality and
composition were primary factors in all facility site selections. Water from
CBC's sources in Golden, Memphis and Shenandoah is soft, with the required
balance of minerals and dissolved solids to brew high-quality malt beverages.
CBC continually monitors the quality of all the water used in its brewing and
packaging processes for compliance with CBC's own stringent quality standards
as well as applicable federal and state water standards. CBC owns water rights
believed to be adequate to meet all of CBC's present requirements for both
brewing and industrial uses; however, it continues to acquire water rights and
add water reservoir capacity, as appropriate, to provide for long-term
strategic growth plans and to sustain brewing operations in the event of a
prolonged drought.
Packaging materials: During 1994, approximately 57% of CBC's malt
beverage products were packaged in aluminum cans. This is a slight reduction
from 1993, when 60% of CBC's malt beverages were packaged in aluminum cans.
Aluminum cans for CBC's malt beverage products packaged at the Memphis plant
were purchased from an outside supplier.
Approximately 25% of the cost of malt beverage products packaged in
cans represents the cost of aluminum. CBC's aluminum requirements for
can-and-end-making are purchased through CBC's joint venture agreement with
American National Can Company (ANC), including the portion purchased from
Golden Aluminum Company, a subsidiary of ACXT.
Glass bottles were used to package approximately 31% of CBC's malt
beverage products in 1994. Approximately half of all bottle requirements
were produced in CBC's bottle manufacturing plant. In addition, CBC has
two other qualified suppliers under contract to supply glass bottles.
The remainder of the malt beverages sold during 1994 was packaged
in quarter-and half-barrel stainless steel kegs and two different sizes of a
plastic sphere called "The Party Ball," an innovative package introduced by
CBC in 1988.
Most of the secondary packaging for CBC's products, including bottle labels
and paperboard products, is supplied by Graphic Packaging Corporation,
an ACXT subsidiary.
The cost of packaging materials is expected to increase
significantly in 1995. See Management's Discussion and Analysis for further
discussion.
Supply contracts with ACXT companies: At the time of the spin-off
of ACXT, at the end of 1992, CBC negotiated long-term supply contracts with
operating subsidiaries of ACXT for aluminum and packaging materials. These
contracts are in effect through 1997 and were negotiated at market prices.
Energy: CBC uses both coal and natural gas as primary sources of
energy. Coal is used as the primary fuel in CBC's steam generation system and is
supplied from outside sources. Natural gas was supplied by public utilities
and various natural gas purchase contracts during the year. CBC also has,
through Coors Energy Company, access to fuel oil and propane as alternate
sources of energy. CBC does not anticipate future supply problems for these
natural resources.
Seasonality of the Business
---------------------------
Due to the seasonality of the beer industry, CBC's sales volumes
are normally at their lowest in the first and fourth quarters and highest in the
second and third quarters. The fiscal year of the Company is a 52- or 53-week
period ending on the last Sunday in December. The 1995 fiscal year is 53-weeks
and ends on December 31, 1995.
Competitive conditions
----------------------
Known trends and competitive conditions: Industry and competitive
information was compiled from the following industry sources: Beer Marketer's
Insights, The Maxwell Consumer Report and various securities analyst reports.
While management believes these sources are reliable, CBC cannot guarantee the
absolute accuracy of these numbers and estimates.
1994 Industry overview: The beer industry in the United States is
highly competitive. Industry volume growth in domestic markets has been
below 1% a year for the past several years and per capita consumption fell
in 1994, down to 22.7 gallons per person, compared with 22.9 gallons in 1993.
For the past several years, brewers have attempted to gain share through
competitive pricing. In 1994, price promotions and price discounting
continued to erode net price realizations for brewers. While projected
increases in raw materials costs throughout the industry could result in
modest price increases and some relief from price discounting in the near
term, it is anticipated that competitors will continue to concentrate on
market share gains vs. profitability, which will place continued downward
pressure on pricing. Industry growth is increasingly dependent on
introductions of new, higher-margin products -- including imports,
specialty brews and other innovative brands -- and expansion into
international markets.
A number of important trends emerged in the U.S. beer market in
1994. The first was a trend toward "trading up." Consumers moved away from
lower-priced brands to higher-priced brands, including specialty products and
imports in the above-premium category. This caused a related shift in packaging
preferences, toward glass bottles and away from aluminum cans. Concurrent
with the shift in consumer preference is a recent proliferation of
microbreweries.
To capitalize on the trend toward specialty products and
craft-brewed beers, brewers are introducing new products at an accelerating
rate. It is estimated that the top six brewers introduced or expanded more
than 60 new brands in 1994. G. Heileman Brewing announced in 1994 that it
expects to introduce a total of 150 new products and/or line extensions by
mid-1995. This proliferation of products creates unique challenges in
operations, logistics and marketing for all brewers, distributors and
retailers.
CBC competitive position: CBC's malt beverage products compete with
numerous above-premium, premium, low-calorie, popular-priced, non-alcohol
and imported brands produced by national, regional, local and international
brewers. More than 90% of domestic volume is attributable to the top six
domestic brewers, Anheuser-Busch Companies, Inc. (AB), Philip Morris, Inc.
through its subsidiary Miller Brewing Company (Miller), Coors Brewing
Company, The Stroh Brewery Company, G. Heileman Brewing, and S & P Company.
CBC competes most directly with AB and Miller, the dominant players in the
industry. CBC is the nation's third-largest brewer and, according to Beer
Marketer's Insights (BMI) estimates, CBC accounted for approximately 10.2% of
the total 1994 U.S. brewing industry shipments of malt beverages (including
exports and U.S. shipments of imports). This compares to Miller's 22.6%
share and AB's 44.1% share.
CBC is well-positioned in the malt beverage industry, with strong,
quality brands in the fastest-growing categories. Compared to AB (77%) and
Miller (80%), CBC's premium and above-premium categories make up more than
87% of total volume. Given its position in the industry, CBC continues to face
significant competitive disadvantages related to economies of scale. In
addition to lower transportation costs achieved by major competitors with
multiple breweries, these larger brewers also recognize economies of scale in
advertising expenditures. CBC, in an effort to achieve and maintain national
advertising exposure, must spend substantially more per barrel of beer sold
than its major competitors. On a per barrel basis, it is estimated that CBC
pays nearly twice as much for its advertising as AB; however, the gap between
CBC's and Miller's costs (on a per barrel basis) appears to be narrowing. A
significant level of advertising expenditures is necessary for CBC to hold
and increase its share of the U.S. beer market. This, coupled with ongoing
price competition, puts more pressure on CBC's margins in comparison to CBC's
principal competitors.
Research and Development
------------------------
CBC's research and development expenditures are primarily devoted
to new product and package development, its brewing process and ingredients,
brewing equipment, improved manufacturing techniques for packaging supplies
and environmental improvements in CBC's processes and packaging materials.
The focus of these programs is to improve the quality and value of its malt
beverage products while reducing costs through more efficient processing and
packaging techniques, equipment design and improved varieties of raw materials.
CBC's research and development dollars are strategically applied to
short-term as well as long-term opportunities. Approximately $13.3 million
was spent on research and development in 1994.
Regulations
-----------
Federal laws and regulations govern the operations of breweries;
the federal government and all states regulate trade practices, advertising and
marketing practices, relationships with distributors and related matters.
Governmental entities also levy various taxes, license fees and other similar
charges and may require bonds to ensure compliance with applicable laws and
regulations.
There are a number of emerging regulatory issues that could impact
business operations over the next few years, including potential increases
in state and federal excise taxes, restrictions on the advertising and sale of
alcohol beverages, new packaging regulations and others.
Federal excise taxes on malt beverages are presently $18.00 per
barrel. State excise taxes are also levied at rates that ranged in 1994 from a
high of $32.65 per barrel in Alabama to a low of $0.62 per barrel in Wyoming,
with an average of $7.81 per barrel. In 1994, CBC paid more than $377 million in
federal and state excise taxes. A substantial increase in federal excise taxes
would have a negative impact on the entire industry and could have a material
effect on CBC sales and profitability. CBC is vigorously opposed to any
additional increases in federal and/or state excise taxes and will work
diligently to ensure that its view is adequately represented in the ongoing
debate.
Environmental
-------------
A top priority of the Company is to ensure compliance with all
federal, state and local environmental protection laws and regulations.
Compliance with the provisions of federal, state and local environmental
laws and regulations did not have a material effect on the capital
expenditures, earnings or competitive position of the Company during 1994.
The Company also continues its commitment to programs directed
toward efficient use of resources, waste reduction and pollution prevention.
Programs currently underway include recycling initiatives, down-weighting of
product packages, and, where practicable, increasing the recycled content of
product packaging materials, paper and other supplies. A new recycled glass
processing facility at Coors Glass Manufacturing in Wheat Ridge, Colorado,
opened in May of 1994, resulting in the capability to increase the recycled
content in CBC beer bottles. A number of employee task forces throughout CBC
continually seek effective alternatives for hazardous materials and work to
develop innovative technologies to reduce emissions and waste.
Employees
---------
The Company has approximately 6,300 full-time employees.
Approximately 1,600 employees are salaried. Over the past few years, CBC has
worked diligently to reduce overhead and general and administrative expense.
Foreign Operations
------------------
The Company's foreign operations and export sales are not a
material part of its business. The Company is committed to expanding its
foreign operations throughexport sales, licensing agreements and joint
ventures.
Brewing Company Subsidiaries
----------------------------
Coors Distributing Company (CDC) is CBC's largest subsidiary. CDC
owns and operates distributorships in five markets across the United States.
Together, CDC operations in 1994 accounted for approximately 5% of CBC's
total beer sales.
In late 1992, Coors Energy Company (CEC) became a subsidiary of
CBC. During 1992, CEC sold substantially all of its oil and gas exploration
and production assets. CEC retained a transmission pipeline to bring natural
gas to various CBC facilities in Colorado and, through a subsidiary,
continues to operate a gas transmission pipeline to provide for the energy
needs of CBC's Shenandoah facility. In early 1995, CEC divested a portion of
its Colorado coal reserves on terms favorable to CBC.
In 1992, CBC sold substantially all of the assets and operations of
Coors Transportation Company.
Other subsidiary operations of CBC include The Wannamaker Ditch
Company and The Rocky Mountain Water Company (both carry process water from
Clear Creek to various CBC reservoirs).
CBC and three of its subsidiaries are partners in a partnership
that owns Coors Brewing Iberica S.A. Coors Brewing Iberica S.A. manufactures and
markets beer for sale in Spain and for export to other European countries.
<PAGE>
ITEM 2. Properties
<TABLE>
<CAPTION>
The Company's major facilities are set out below:
Facility Location
Product
<S> <C> <C>
Brewery/Packaging Golden, Colorado MaltBeverages/Packaged
MaltBeverages
Packaging Elkton, Virginia Packaged MaltBeverages
Brewery/Packaging Memphis, Tennessee Malt Beverages/Packaged
Malt Beverages
Brewery/Packaging Zaragoza, Spain Malt Beverages/Packaged
MaltBeverages
Can and End Plants Golden, Colorado Aluminum Cans and Ends
Bottle Plant Wheat Ridge, Colorado Glass Bottles
Distribution Warehouse Anaheim, California Wholesale Beer Distribution
Distribution Warehouse Boise, Idaho Wholesale Beer Distribution
Distribution Warehouse Denver, Colorado Wholesale Beer Distribution
Distribution Warehouse* Glendale Heights, Illinois Wholesale Beer Distribution
Distribution Warehouse Oklahoma City, Oklahoma Wholesale Beer Distribution
Distribution Warehouse* San Bernardino, California Wholesale Beer Distribution
</TABLE>
* Leased
The original brewery site at Golden, which is approximately 2,400
acres, contains brewing, packaging and can manufacturing facilities, as
well as gravel deposits and water-storage facilities. CBC also owns and
operates a glass-bottle making facility in Wheat Ridge, Colorado, just east
of Golden.
CBC's can and end plants are operated by a joint venture between
CBC and American National Can Company.
The Company owns 2,600 acres of land in Rockingham County,
Virginia, where the Shenandoah facility is located, and 131 acres in Shelby
County, Tennessee, where the Memphis plant is located.
All of the Company's facilities are well maintained and suitable
for their respective operations. In 1994, CBC estimates the brewing
facilities operated at approximately 83% of the 1995 brewing capacity and the
packaging facilities operated at approximately 73% of the 1995 packaging
capacity. Annual production capacity can vary due to product mix, packaging mix
and seasonality.
CEC has retained a transmission pipeline to bring natural gas from
certain wells for use at various CBC facilities in Colorado, and through a
subsidiary, will continue to operate a gas transmission pipeline to provide for
the energy needs of the Shenandoah facility.
<PAGE>
ITEM 3. Legal Proceedings
In January 1992, ACC and CBC (as well as two former affiliates that
are now subsidiaries of ACXT) were sued by TransRim Enterprises (USA) Ltd.
in Federal District Court for the District of Colorado. TransRim alleged that
the defendants misused confidential information and breached an implied
contract to proceed with a joint venture project to build and operate a paper
board mill. TransRim initially claimed damages totaling $159 million based on
a number of theories, some of which were dismissed from the case by the judge
granting the defendants' motion for the partial summary judgement. Trial by a
jury was held in April 1994, and the jury returned a verdict in favor of all
defendants on all claims. TransRim filed an appeal to the U.S. Court of Appeals,
10th Judicial Circuit. Oral arguments were heard March 7, 1995. Management
believes that ACC and CBC have meritorious defenses and that the ultimate
outcome will not have a material impact on the Company's financial position
and results of operations.
See the Environmental section of Management's Discussion and
Analysis for a discussion of the Company's obligation for potential
remediation costs at the Lowry Landfill Superfund site and related legal
proceedings.
The Company is party to numerous other legal proceedings arising
from its business operations. In each proceeding, the Company is vigorously
defending the allegations. Although the eventual outcome of the various
proceedings cannot be predicted, no single such proceeding, and no group of
such similar matters, is expected to result in liability that would be
material to the Company's financial position.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the fourth quarter ended December 25, 1994.
<PAGE>
PART II
ITEM 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
Adolph Coors Company Class B common stock is traded on the
over-the-counter market and is included in the NASDAQ Stock Market National
Market (NNM) listings, under the symbol "ACCOB." Daily stock prices are listed
in major newspapers, generally alphabetically under "CoorsB."
The approximate number of record security holders by class of stock
at March 15, 1995, is listed below:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
<S> <C>
Class A Common Stock, voting, All shares of this class are
$1 par value held by the Adolph Coors,
Jr. Trust
Class B Common Stock, non-voting,
no par value 5,541
Preferred Stock, non-voting, None issued
$1 par value
</TABLE>
The range of the high and low quotations and the dividends paid per
share on the Class B Common Stock for each quarter of the past two years are
shown below:
<TABLE>
<CAPTION>
1994
Market Price
High Low Dividends
<S> <C> <C> <C>
First Quarter 19 1/4 14 7/8 $ 0.125
Second Quarter 20 1/4 17 1/2 $ 0.125
Third Quarter 20 7/8 16 7/8 $ 0.125
Fourth Quarter 19 14 3/4 $ 0.125
</TABLE>
<TABLE>
<CAPTION>
1993
Market Price
High Low Dividends
<S> <C> <C> <C>
First Quarter 17 1/8 15 1/2 $ 0.125
Second Quarter 18 5/8 16 $ 0.125
Third Quarter 21 3/4 17 7/8 $ 0.125
Fourth Quarter 23 1/8 15 $ 0.125
</TABLE>
<PAGE>
ITEM 6. Selected Financial Data
Following is selected financial data for ACC for the eight years
ended December 25, 1994: (In thousands, except per share data)
<TABLE>
<CAPTION>
1994 1993 1992 1991
<S> <C> <C> <C> <C>
----------------------------------------------------------------------
Barrels
of Malt Beverages Sold 20,363 19,828 19,569 19,521
----------------------------------------------------------------------
Summary of Operations
Net sales $1,662,671 $1,581,811 $1,550,788 $1,529,986
----------------------------------------------------------------------
Cost of goods sold 1,062,789 1,036,864 1,035,544 1,039,207
Marketing, general
and administrative 492,403 454,130 429,573 434,141
Research and project
development 13,265 13,008 12,370 14,252
Special (credit) charges (13,949) 122,540 -- 29,599
----------------------------------------------------------------------
Total operating expenses 1,554,508 1,626,542 1,477,487 1,517,199
----------------------------------------------------------------------
Operating income (loss) 108,163 (44,731) 73,301 12,787
Other (income) expense
-net 3,943 12,099 14,672 4,403
----------------------------------------------------------------------
Income (loss) before
income taxes 104,220 (56,830) 58,629 8,384
Income tax expense
(benefit) 46,100 (14,900) 22,900 (8,700)
----------------------------------------------------------------------
Income (loss) from
continuing operations $ 58,120 $ (41,930) $ 35,729 $ 17,084
----------------------------------------------------------------------
Per share of common $ 1.52 $ (1.10) $ 0.95 $ 0.46
stock
Income (loss) from
continuing operations as a
percentage of net sales 3.5% (2.6%) 2.3% 1.1%
======================================================================
Financial Position
Working capital $ (25,048) $ 7,197 $ 112,302 $ 110,443
Properties - net $ 922,208 $ 884,102 $ 904,915 $ 933,692
Total assets** $1,371,576 $1,350,944 $1,373,371 $1,844,811
Long-term debt $ 131,000 $ 175,000 $ 220,000 $ 220,000
Other long-term
liabilities $ 30,884 $ 34,843 $ 52,291 $ 53,321
Shareholders' equity** $ 674,201 $ 631,927 $ 685,445 $1,099,420
Net book value per share
of common stock** $ 17.59 $ 16.54 $ 18.17 $ 29.33
Total debt to total
capitalization 20.6% 26.3% 24.3% 19.5%
Return on average
shareholders' equity 8.9% (6.4%) (0.2%) 2.3%
======================================================================
Other Information
Dividends $ 19,146 $ 19,003 $ 18,801 $ 18,718
Per share of common
stock $ 0.50 $ 0.50 $ 0.50 $ 0.50
Average number of
common shares
outstanding 38,283 37,989 37,561 37,413
Gross profit $ 599,882 $ 544,947 $ 515,244 $ 490,779
Capital expenditures $ 160,314 $ 120,354 $ 115,450 $ 241,512
Depreciation, depletion
and amortization $ 120,793 $ 118,955 $ 114,780 $ 108,367
Full-time employees 6,300 6,200 7,100 7,700
Total taxes $ 472,854 $ 401,667 $ 437,089 $ 405,789
Market price range of
common stock:
High $ 20 7/8 $ 23 1/8 $ 22 7/8 $ 24 1/4
Low $ 14 3/4 $ 15 $ 15 1/2 $ 17 3/8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1990 1989 1988 1987
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------
Barrels
of Malt Beverages Sold 19,297 17,698 16,534 15,658
-----------------------------------------------------------------------
Summary of Operations
Net sales $1,478,287 $1,367,718 $1,273,745 $1,169,983
-----------------------------------------------------------------------
Cost of goods sold 980,766 909,339 825,071 750,941
Marketing, general
and administrative 398,889 386,991 369,006 329,313
Research and project
development 10,196 10,853 11,125 11,105
Special (credit) charges 30,000 41,670 -- --
-----------------------------------------------------------------------
Total operating expenses 1,419,851 1,348,853 1,205,202 1,091,359
-----------------------------------------------------------------------
Operating income (loss) 58,436 18,865 68,543 78,624
Other (income) expense
- net 5,903 2,546 (6,471) (6,022)
-----------------------------------------------------------------------
Income (loss) before
income taxes 52,533 16,319 75,014 84,646
Income tax expense
(benefit) 20,300 9,100 28,700 33,500
-----------------------------------------------------------------------
Income (loss) from
continuing operations $ 32,233 $ 7,219 $ 46,314 $ 51,146
-----------------------------------------------------------------------
Per share of common
stock $ 0.87 $ 0.20 $ 1.26 $ 1.40
Income (loss) from
continuing operations as a
percentage of net sales 2.2% 0.5% 3.6% 4.4%
=======================================================================
Financial Position
Working capital $ 201,043 $ 193,590 $ 196,687 $ 242,406
Properties - net $1,171,800 $1,012,940 $1,033,012 $ 975,781
Total assets** $1,761,664 $1,530,783 $1,570,765 $1,456,493
Long-term debt $ 110,000 -- -- --
Other long-term
liabilities $ 58,011 $ 16,138 $ 19,367 $ 26,376
Shareholders' equity** $1,091,547 $1,060,900 $1,062,064 $1,031,811
Net book value per share
of common stock** $ 29.20 $ 28.75 $ 29.00 $ 28.19
Total debt to total
capitalization 9.2% 2.0% 1.7% 0.4%
Return on average
shareholders' equity 3.6% 1.2% 4.5% 4.8%
=======================================================================
Other Information
Dividends $ 18,591 $ 18,397 $ 18,311 $ 18,226
Per share of common
stock $ 0.50 $ 0.50 $ 0.50 $ 0.50
Average number of
common shares
outstanding 37,148 36,781 36,621 36,497
Gross profit $ 497,521 $ 458,379 $ 448,674 $ 419,042
Capital expenditures $ 183,368 $ 149,616 $ 157,995 $ 199,541
Depreciation, depletion
and amortization $ 98,081 $ 122,439 $ 111,432 $ 99,422
Full-time employees 7,000 6,800 6,900 6,800
Total taxes $ 251,606 $ 236,740 $ 236,683 $ 234,352
Market price range of
common stock:
High $ 27 3/8 $ 24 3/8 $ 21 $ 30
Low $ 17 1/8 $ 17 3/8 $ 16 1/2 $ 16 1/4
</TABLE>
*Numbers in italics include results of discontinued operations.
**Reflects the dividend of ACX Technologies, Inc. to shareholders
during 1992.
See Note 2 to Consolidated financial statements.
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results
of Operations
INTRODUCTION Adolph Coors Company ("ACC" or the "Company") is the
holding company for a single subsidiary, Coors Brewing Company ("CBC").
CBC produces and markets quality malt-based beverages.
The following discussion summarizes the significant factors
affecting the consolidated results of operations and liquidity and capital
resources of ACC during the three year period ended December 25, 1994.
Unusual or nonrecurring items make it difficult to evaluate the Company's
ongoing operations. Consequently, consolidated financial results for each year
are first reviewed separately including the effects of special and
nonrecurring items. Then consolidated financial results are reviewed
excluding these special and nonrecurring items. This analysis should be read in
conjunction with the financial statements and notes to the financial statements
included in this annual report.
CONSOLIDATED RESULTS OF OPERATIONS FOR FISCAL YEARS 1994, 1993 AND
1992
1994 Consolidated Results of Operations: For the 52-week fiscal
year ended December 25, 1994, ACC reported net income of $58.1 million, or
$1.52 per share.
Two nonrecurring items in 1994 resulted in a net special credit to
ACC. First, the Company reached a settlement with a number of its insurance
carriers which enabled it to recover a portion of the costs associated with
the Lowry Landfill Superfund site. This was partially offset by a writedown
of distributor assets.
The net effect of these two items was a net special credit of
approximately $13.9 million pretax, or $0.22 per share after tax. Without
the net special credit, ACC would have reported 1994 net income of $49.7
million, or $1.30 per share.
1993 Consolidated Results of Operations: For the 52-week fiscal
year ended December 26, 1993, the Company reported a net loss of $41.9
million, or $1.10 per share. The Company recorded restructuring and other
special charges of $122.5 million in the fourth quarter primarily related
to the costs of a significant restructuring intended to reduce costs and
improve performance. The net loss was also the result of an after-tax charge of
$3.2 million, or $0.08 per share, related to the 1993 retroactive increase of 1%
in the federal corporate income tax rate, and the related revaluation of
deferred income tax liability. Excluding these special charges, the
Company's net income would have been $33.6 million, or $0.88 per share.
The 1993 restructuring charge, which totaled $109.5 million pretax,
included $70.2 million for voluntary separation and enhanced early
retirement packages designed to reduce CBC's white collar work force. Of the
remaining $39.3 million, approximately $22.0 million related to workplace
redesign and other profit improvement initiatives, and approximately $17.3
million related to asset writedowns. Substantially all of the charges related to
voluntary separation and enhanced early retirement packages were paid in 1993;
other costs related to workplace redesign and other profit improvement
initiatives were accrued in 1993 and substantially all were paid in 1994.
Special charges related to the writedown of certain distributor assets and a
provision for environmental enhancements totaled $13.0 million. Together the
aggregate impact of the special charges was $1.98 per share.
1992 Consolidated Results of Operations: At the end of 1992, ACC
significantly restructured its operations by spinning off its diversified
technology business into a new, public company, ACX Technologies, Inc.
(NASDAQ:ACXT). The results of ACXT are reported as discontinued operations in
the consolidated financial statements for all periods presented, except as
noted.
In 1992, ACC reported a net loss of $2.0 million. The loss was a
result of a loss from discontinued operations of $29.4 million related to the
spin-off of ACXT, as well as the net after-tax expense of $8.3 million for the
adoption of new financial accounting standards for employee postretirement
benefits (FAS 106) and income taxes (FAS 109). Income from continuing operations
totaled $35.7 million, or $0.95 per share.
Trend summary: percentage increase/(decrease) 1994, 1993 and 1992.
The table below reflects trends in operating results, excluding the
1994 special credit, the 1993 restructuring and other special charges and the
1992 impact of discontinued operations and adoption of new accounting standards.
Earnings per share are shown both as reported and excluding a special credit
and/or charges, the impact of discontinued operations and adoption of new
accounting standards.
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------
Volume 2.7% 1.3% 0.2%
------------------------------------------------------------------
Net sales 5.1% 2.0% 1.4%
------------------------------------------------------------------
Avg. net price increase 0.3% 1.1% 1.7%
------------------------------------------------------------------
Gross profit 10.1% 5.8% 5.0%
------------------------------------------------------------------
Operating income
(excluding special credits/charges) 21.1% 6.1% 72.9%
------------------------------------------------------------------
Advertising expense 20.1% 8.8% (6.1%)
------------------------------------------------------------------
General and Administrative (9.7%) 2.2% 3.9%
------------------------------------------------------------------
EPS (as reported) $1.52 ($1.10) ($0.05)
------------------------------------------------------------------
EPS (excluding all special items) $1.30 $0.88 $0.95
------------------------------------------------------------------
</TABLE>
CONSOLIDATED RESULTS OF CONTINUING OPERATIONS: 1994 VS. 1993, 1993
VS. 1992
Excludes the 1994 special credit, the 1993 restructuring and other
special charges and the 1992 impact of discontinued operations and adoption
of new accounting standards.
1994 vs. 1993
-------------
Net sales increased by 5.1% in 1994 from 1993. This increase was
due to a 2.7% increase in volume and a shift in product mix to products in the
premium and above-premium price categories. Gross profit improved to 36.1% of
net sales as compared to 34.5% in 1993. This improvement was primarily the
result of increased volume, improved brand mix profitability, operational
efficiencies and lower aluminum costs.
Operating income improved 21.1% in 1994 over 1993. Although
marketing expense (including advertising) grew substantially in 1994, general
and administrative (G&A) expense declined by 9.7%. The increase in marketing
expense was primarily due to the national rollout of Zima Clearmalt and the
introduction and expansion of Coors Artic Ice and Coors Artic Ice Light. The
decline in G&A expense resulted from the restructuring effort that began in 1993
to reduce overhead costs. Research and development expense was essentially
unchanged in 1994 as compared to 1993.
Net non-operating expenses decreased to $3.9 million in 1994
compared to $12.1 million in 1993. Income from miscellaneous items increased by
$4.9 million due to a gain on the sale of investments and higher royalty income
related to licensed can-making and can-decorating technology. Net interest
expense decreased $3.3 million because of the $50 million principal payment
in June 1994 on ACC's medium-term notes.
The Company's effective tax rate declined in 1994 to 45.0% from 48.9% in 1993.
The decline was largely attributable to the revaluation of ACC's deferred tax
liability in 1993 related to the 1993 1% increase in the federal corporate
income tax rate. The 1994 effective tax rate was higher than the statutory tax
rate because of non-deductible expenses (meals and entertainment expenses and
lobbying costs) and a valuation allowance for a tax loss carryforward.
Net income was $49.7 million, or $1.30 per share, in 1994 compared
to $33.6 million, or $0.88 per share, representing a 47.7% improvement in
earnings per share.
1993 vs. 1992
-------------
Net sales increased by 2.0% in 1993 from 1992. This increase was
due to a 1.3% increase in volume, a shift in product mix to products in the
premium and above-premium price categories and modest price increases in 1993.
Gross profit improved to 34.5% of net sales vs. 33.2% in 1992. The improvement
was primarily the result of increased volume, improved brand mix profitability,
operational efficiencies and lower aluminum costs. The 1993 increase also
reflected the divestiture of lower margin activities associated with CBC's
transportation and energy businesses.
Operating income improved 6.1% in 1993 over 1992 due to the $29.7
million, or 5.8%, improvement in gross profit. The increase in gross profit
more than offset increases in marketing, general and administrative (MG&A)
expense of $24.6 million and research and project development expense of $0.6
million.
Net non-operating expenses decreased to $12.1 million in 1993 compared to $14.7
million in 1992. Net interest expense decreased $2.6 million because of an
increase in investable cash and higher interest income.
The effective tax rate increased in 1993 to 48.9% from 39.1% in
1992. The increase was largely attributable to the 1993 1% increase in the
federal corporate income tax rate, the related revaluation of ACC's
deferred tax liability and non-deductible foreign losses.
Net income in 1993 was $33.6 million, or $0.88 per share, compared
to $35.7 million, or $0.95 per share in 1992.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's primary sources of liquidity are cash provided from
operating activities and external borrowing. The Company continues to be in
a strong position to generate cash internally. The Company's 1994 net cash
position was $27.2 million, a significant decrease compared to $82.2 million in
1993. The Company's 1993 net cash position increased 107% from $39.7 million
in 1992.
The Company believes that cash flows from operations and short-term
borrowings are adequate to meet its ongoing operating requirements, scheduled
principal debt repayments and debt service costs, anticipated capital
expenditures and dividend payments.
Operating Activities
Including net special credits/charges, net cash provided by
operations was $186.4 million in 1994, $168.5 million in 1993 and $155.8 million
in 1992. The 1994 increase in cash from operations was primarily due to higher
net income, higher accumulated deferred income taxes, and higher depreciation
offset in part by an increase in accounts and notes receivable, a decrease in
accrued expenses and other liabilities (primarily due to the payment of
obligations related to the 1993 restructuring) and an increase in accounts
payable. The increase in accounts and notes receivable reflects higher 1994
sales and amounts owed to CBC by the new joint venture between CBC and American
National Can formed to manufacture cans and ends. Higher accounts payable are
due primarily to amounts owed to the new can and end joint venture for purchases
by CBC.
The 1993 increase in cash from operations was due primarily to
higher depreciation, lower accounts and notes receivable, higher accounts
payable and higher accrued expenses (primarily related to restructuring and
special charges). Lower accounts receivable were primarily related to a
change in credit terms from 1992.
Investing Activities (including capital expenditures)
The Company is shifting its strategic emphasis toward projects that
offer returns on investments (ROI) that are equal to or greater than
ACC's weighted average cost of capital. The Company's anticipated capital
expenditures for 1995 are $167 million relating primarily to capacity expansion,
repair and upkeep, return on investment projects and environmental compliance.
In 1994, the Company spent $174.7 million on investment activities, compared
with $119.3 million in 1993 and $140.4 million in 1992. Capital expenditures
were $160.3 million in 1994, $120.4 million in 1993 and $115.5 million in 1992.
In 1994, capital expenditures focused on expansion of facilities (primarily to
expand bottling capacity) and the purchase of a brewery in Zaragoza, Spain. In
1993, capital expenditures were made for expansion of capacity in Memphis for
Zima Clearmalt, routine maintenance and incremental upgrades to all production
facilities.
Net Cash Used/Provided by Financing Activities
The Company used $67.0 million of cash in financing activities in 1994. At the
beginning of the third quarter, the Company made its first principal payment on
its medium-term notes, in the amount of $50 million. In addition,
the Company paid dividends of $19.1 million. Offsetting this was approximately
$2.1 million provided by the exercise of stock options.
In 1993, the Company used $6.6 million in cash in financing activities. The
Company paid $19 million in dividends. The Company received cash through the
exercise of stock options and the proceeds from industrial revenue bonds for an
expansion project. Net cash provided by financing activities in 1992 resulted
from the assumption of additional debt related to the spin-off of ACXT, offset
by the payment of short-term borrowings and the payment of dividends.
Debt Securities
A shelf registration was filed with the Securities and Exchange Commission for
$300 million of debt securities in 1990. As of December 25, 1994, the Company
had $170.0 million outstanding in medium-term notes, having made the first
scheduled principal payment of $50 million on the notes in June 1994. That
payment was funded by a combination of cash on hand and borrowings under the
Company's bank revolving credit facility. Fixed interest rates on the
Company's medium-term notes range between 8.3% and 9.15%. The repayment
schedule for the remaining outstanding notes is $44 million in 1995, $36
million in 1996, $19 million in 1997, $31 million in 1998 and $40 million in
1999. The Company's debt-to-total capitalization ratios were 20.6% at the end of
1994, 26.3% at the end of 1993 and 24.3% at the end of 1992.
Revolving Line of Credit
In addition to the medium-term notes, the Company has an unsecured, committed
revolving line of credit totaling $144 million. From time to time this line of
credit is used for working capital requirements and general corporate purposes.
In an effort to increase its financial flexibility, the Company increased the
available credit under the facility to $144 million in 1994 from $100 million
in 1993. As of December 25, 1994, the full $144 million was available. For
1994, the Company met its two financial covenants under the committed
revolving line of credit: a minimum tangible net worth test and a
debt-to-total capitalization test.
Hedging Activities
As of December 25, 1994, hedging activities consisted exclusively of hard
currency forward contracts to directly offset hard currency exposures. These
irrevocable contracts eliminated the risk to financial position and results of
operations of changes in foreign exchange rates. Any variation in the exchange
rate that would accrue to the contract would be directly offset by an equal
change in the related obligation. Therefore, after the contract
entrance date, variation in the exchange rate would have no additional impact on
the Company's financial statements. ACC's hedging activities are minimal and
hard currency exposures are not material.
OUTLOOK 1995:
The Company will report 1995 results based on a 53-week fiscal calendar because
the Company's accounting calendar is based on 13 periods rather than a 12-month
calendar year.
The Company expects a significant increase in cost of goods sold in
1995 over 1994 based on projections for volume growth and increased costs of
aluminum and other packaging materials. The Company also anticipates that MG&A
expense will increase in the aggregate. Other overhead costs should remain
basically unchanged, except for increases associated with hiring to fill
positions that were vacant in 1994. Most of the anticipated 1995 increase in
MG&A is related to increased advertising support for the Company's best-selling
brands, including Coors Light, George Killian's Irish Red and other specialty
brands.
The Company anticipates that the increased costs will be offset in part through
volume gains, modest price increases, productivity gains arising from
restructuring and benefits from the American National Can joint venture
including incremental income and minimizing increased aluminum costs. The
Company's effective tax rate will remain higher than the statutory rate due
primarily to non-deductible expenses, such as meals, entertainment and lobbying
expenses.
The Company anticipates that the effect of raw material cost increases will
occur early in 1995, while the expected offsets from cost savings will occur
primarily in the second half of 1995.
ENVIRONMENTAL:
The Company was one of numerous parties named by the Environmental
Protection Agency (EPA) as a "potentially responsible party" (PRP) for the
Lowry Landfill Superfund site, a legally permitted landfill owned by the
City and County of Denver. In 1990, the Company recorded a special pretax
charge of $30 million for potential clean-up costs of the site.
The City and County of Denver, Waste Management of Colorado, Inc.
and Chemical Waste Management, Inc. brought litigation in 1991 in U.S. District
Court against the Company and 37 other PRP's to determine the allocation of
costs of Lowry site remediation. In 1993, the Court approved a settlement
agreement between the Company and the plaintiffs, resolving the Company's
liabilities for the site. The Company agreed to initial payments based on an
assumed present value of $120 million in total site remediation costs. In
addition, the Company agreed to pay a specified share of costs if total
remediation costs are in excess of this amount. Payments representing the
Company's agreed share based on the $120 million assumption were made into a
trust to be applied to costs of site remediation and operating and maintenance
costs.
The EPA recently announced remediation objectives and requirements for the site
and projected costs of its remediation plan. The EPA's projected costs are
below the $120 million total assumed as a basis for the Company's settlement.
The City and County of Denver, Waste Management of Colorado and Chemical Waste
Management, Inc. are expected to implement remediation of the site.
The Company has no reason to believe that total remediation costs will result
in additional liability to the Company.
In 1991, the Company filed suit against certain of its former and current
insurance carriers, seeking recovery of past defense costs and investigation,
study and remediation costs. Settlements were reached during 1993 and 1994 with
all defendants. As a result, in the fourth quarter of 1994, the Company
recognized a special pretax credit of $18.9 million.
The Company has also been notified that it is or may be a PRP under
Comprehensive Environmental Response, Compensation and Liability
(CERCLA) or similar state laws with respect to the cleanup of other sites
where hazardous substances have allegedly been released into the environment.
The Company cannot predict with certainty the total costs of cleanup, its share
of the total cost or the extent to which contributions will be available from
other parties, the amount of time necessary to complete the cleanups, or
insurance coverage. However, based on investigations to date, the Company
believes that any liability would not be material to the financial condition
of the Company with respect to these sites. There can be no certainty,
however, that the Company will not be named as a PRP at additional Superfund
sites in the future, or that the costs associated with those additional sites
will not be material.
While it is impossible to predict the eventual aggregate cost to the Company
for environmental and related matters, management believes that any payments,
if required, for these matters would be made over a period of years in
amounts that would not be material in any one year to the consolidated results
of operations or to the financial or competitive position of the Company. The
Company believes adequate disclosures have been provided for losses that are
reasonably possible. Furthermore, as the Company continues to focus attention on
resource conservation, waste reduction and pollution prevention, it is the
Company's belief that potential future liabilities will be reduced.
ACCOUNTING CHANGES:
The results of operations for 1992 include the adoption of certain
accounting rule changes. In 1992, the Company adopted FAS 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions," and the financial
results for 1992 reflect the adoption. The transition effect of adopting
FAS 106 on the immediate recognition basis resulted in a charge of $38.8
million to 1992 earnings, net of approximately $23.4 million of income tax
effects. The ongoing cost of adopting the new standard increased 1992 net
periodic postretirement benefit cost by $5.2 million.
Also in 1992, the Company adopted FAS 109, "Accounting for Income
Taxes," retroactive to the first quarter, and the financial results for
1992 reflect that adoption as well. The adoption increased 1992 earnings by
$30.5 million because of the reversal of excess deferred income tax liability
balances.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Page(s)
Consolidated Financial Statements:
Report of Independent Accountants
Consolidated Statement of Income for each of
the three years ended December 25, 1994
Consolidated Balance Sheet at December 25, 1994
and December 26, 1993
Consolidated Statement of Cash Flows for each of
the three years ended December 25, 1994
Consolidated Statement of Shareholders' Equity
for each of the three years ended December 25, 1994
Notes to Consolidated Financial Statements
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Adolph Coors Company
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14 (a)(1) and (2) on page present fairly, in
all material respects, the financial position of Adolph Coors Company and its
subsidiaries at December 25, 1994, and December 26, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 25, 1994, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, 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 Notes 5 and 8 to the consolidated
financial statements, the Company adopted Statements of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," and No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," in 1992.
PRICE WATERHOUSE LLP
Denver, Colorado
February 28, 1995
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENT
OF INCOME
For the
years ended
December 25, December 26, December 27,
1994 1993 1992
----------- ----------- -----------
(In thousands, except per share data)
<S> <C> <C> <C>
Sales $2,040,330 $1,946,592 $1,911,775
Less - federal and state
excise tax 377,659 364,781 360,987
--------- --------- ---------
Net sales 1,662,671 1,581,811 1,550,788
--------- --------- ---------
Costs and expenses:
Cost of goods sold 1,062,789 1,036,864 1,035,544
Marketing, general
and administrative 492,403 454,130 429,573
Research and project
development 13,265 13,008 12,370
Special (credit) charges
(Note 9) (13,949) 122,540 --
--------- --------- ---------
Total 1,554,508 1,626,542 1,477,487
--------- --------- ---------
Operating income (loss) 108,163 (44,731) 73,301
Other income (expense):
Interest income 1,546 2,580 255
Interest expense (11,461) (15,780) (16,014)
Miscellaneous-net 5,972 1,101 1,087
-------- --------- ---------
Total (3,943) (12,099) (14,672)
Income (loss) before income
taxes 104,220 (56,830) 58,629
Income tax expense (benefit)
(Note 5) 46,100 (14,900) 22,900
--------- --------- ---------
Income (loss) from continuing
operations 58,120 (41,930) 35,729
Net (loss) from discontinued
operations (Note 2) -- -- (29,415)
Income (loss) before cumulative
effect of change in
accounting principles 58,120 (41,930) 6,314
Cumulative effect of change in
accounting for postretirement
benefits (net of tax) -- -- (38,800)
Cumulative effect of change in
accounting for income taxes -- -- 30,500
--------- --------- ---------
Net income (loss) $ 58,120 $ (41,930) $ (1,986)
========= ========= ========
Per share of common stock:
Income (loss) from continuing
operations $ 1.52 $ (1.10) $ 0.95
Net (loss) from discontinued
operations -- -- (0.78)
Income (loss) before cumulative
effect of change in accounting
principles 1.52 (1.10) 0.17
Cumulative effect of change in
accounting for postretirement
benefits -- -- (1.03)
Cumulative effect of change in
accounting for income taxes -- -- 0.81
--------- --------- ---------
Net income (loss) per share of
common stock $ 1.52 $ (1.10) $ (0.05)
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 27,168 $ 82,211
Accounts and notes receivable,
less allowance for doubtful accounts
of $24 in 1994 and $409 in 1993 106,327 75,967
Inventories:
Finished 67,500 56,878
In process 22,918 24,402
Raw materials 38,108 56,370
Packaging materials 13,078 9,581
--------- ---------
141,604 147,231
Other supplies 38,340 35,213
Prepaid expenses and other assets 13,638 14,975
Prepaid income taxes (Note 5) 1,779 --
Deferred tax asset (Note 5) 26,310 28,151
--------- --------
Total current assets 355,166 383,748
Properties, at cost, less accumulated
depreciation, depletion and amortiza-
tion of $1,220,836 in 1994
and $1,118,292 in 1993 (Note 3) 922,208 884,102
Excess of cost over net assets of businesses
acquired, less accumulated amortization
of $3,307 in 1994 and $2,768 in 1993 20,509 12,826
Other assets 73,693 70,268
--------- ---------
Total assets $1,371,576 $1,350,944
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
December 25, December 26,
Liabilities and Shareholders' Equity 1994 1993
(In thousands)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 44,000 $ 50,000
Accounts payable 164,430 121,376
Accrued salaries and vacations 41,567 41,798
Taxes, other than income taxes 47,060 43,928
Federal and state income taxes (Note 5) -- 4,157
Accrued expenses and other liabilities 83,157 115,292
--------- ---------
Total current liabilities 380,214 376,551
Long-term debt (Note 4) 131,000 175,000
Deferred tax liability (Note 5) 71,660 53,430
Postretirement benefits (Note 8) 83,617 79,193
Other long-term liabilities 30,884 34,843
--------- --------
Total liabilities 697,375 719,017
Commitments and contingencies
(Notes 6,7,8,9 and 10)
Shareholders' equity (Note 6):
Capital stock:
Preferred stock, non-voting, $1 par
value, 25,000,000 shares authorized
and no shares issued -- --
Class A common stock, voting, $1
par value, authorized and issued
1,260,000 shares 1,260 1,260
Class B common stock, non-voting,
no par value, 100,000,000 shares
authorized and 46,200,000
shares issued 11,000 11,000
--------- ---------
Total capital stock 12,260 12,260
Paid-in capital 56,758 54,928
Retained earnings 623,418 584,444
Other 1,238 40
--------- ---------
693,674 651,672
Less - treasury stock, at cost,
Class B shares, 9,133,060 in
1994 and 9,260,779 in 1993 19,473 19,745
--------- ---------
Total shareholders' equity 674,201 631,927
Total liabilities and shareholders'
equity $1,371,576 $1,350,944
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended
December 25, December 26, December 27,
1994 1993 1992
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 58,120 $ (41,930) $ (1,986)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation, depletion and
amortization 120,793 118,955 114,780
Change in accumulated deferred
income taxes 18,230 (26,297) (49,010)
Loss on sale or abandonment of
properties 808 20,387 3,736
Change in current assets and
current liabilities:
Accounts and notes receivable (30,264) 32,632 7,101
Inventories 5,627 5,101 (5,806)
Prepaid expenses and other
assets 50 2,784 818
Accounts payable 43,054 13,950 (13,972)
Federal and state income taxes (5,936) 3 387
Accrued expenses and other
liabilities (28,711) 42,390 (12,368)
Change in deferred items 5,122 812 (2,550)
Postretirement benefits (Note 8) 4,424 12,714 66,479
Other (4,891) (13,008) (5,243)
Other - discontinued operations -- -- 53,410
-------- --------- --------
Net cash provided by operating
activities 186,426 168,493 155,776
Cash flows from investing activities:
Additions to properties (160,314) (120,354) (115,450)
Proceeds from sale of properties 4,382 2,268 26,091
Change in other intangible assets (16,876) -- (2,413)
Other (1,863) (1,238) 6,404
Other - discontinued operations -- -- (55,035)
--------- --------- ---------
Net cash used by investing
activities (174,671) (119,324) (140,403)
Cash flows from financing activities:
Net change in short-term borrowings -- 12 (46,300)
Proceeds from long-term debt -- 5,000 --
Payment of debt (50,000) -- --
Exercise of stock options, net of
related notes receivable 2,102 7,375 4,960
Dividends paid (19,146) (19,003) (18,801)
Other 24 (11) 14
Other - discontinued operations -- -- 69,708
-------- -------- --------
Net cash (used) provided by
financing activities (67,020) (6,627) 9,581
Cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents (55,265) 42,542 24,954
Effect of exchange rate changes on
cash and cash equivalents 222 -- --
Balance at beginning of year 82,211 39,669 14,715
-------- -------- ---------
Balance at end of year $ 27,168 $ 82,211 $ 39,669
======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Common stock
issued Paid-in Retained Treasury
Class A Class B capital earnings stock Other Total
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 29,
1991 $ 1,260 $11,000 $44,100 $1,064,272 $(21,252)$ 40 $1,099,420
Exercise of
stock options,
including $384
income tax
benefit and
increased by
$805 of payments
on related
loans outstanding
to employees
(Note 6) 4,457 503 4,960
Deferred
compensation
and other (321) (321)
Net loss (1,986) (1,986)
Cash dividends-
$0.50 per share (18,801) (18,801)
Distribution to
shareholders of
ACX Technologies,
Inc. (Note 2) (398,108) 281 (397,827)
------ ------- ------- -------- ------- ------ --------
Balance at
December 27,
1992 1,260 11,000 48,557 645,377 (20,749) 0 685,445
Exercise of
stock options,
including $895
income tax
benefit and
increased by
$132 of
payments on
related
loans
outstanding to
employees (Note 6) 6,371 1,004 7,375
Other 40 40
Net loss (41,930) (41,930)
Cash dividends-
$0.50 per share (19,003) (19,003)
----- ------- ------- -------- ------- ------ --------
Balance at
December 26,
1993 1,260 11,000 54,928 584,444 (19,745) 40 631,927
Exercise of
stock options,
including $159
income tax
benefit (Note 6) 1,830 272 2,102
Other 1,198 1,198
Net income 58,120 58,120
Cash dividends-
$0.50 per share (19,146) (19,146)
------ ------- ------- ---------- -------- ------ ----------
Balance at
December 25,
1994 $1,260 $11,000 $56,758 $623,418 $(19,473) $1,238 $ 674,201
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ADOLPH COORS
COMPANY AND SUBSIDIARIES
NOTES TO
CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1:
Summary of Accounting Policies
Fiscal year: The fiscal year of the Company is a 52- or 53-week
period ending on the last Sunday in December. Fiscal years for the financial
statements included herein ended December 25, 1994, December 26, 1993, and
December 27, 1992, and were 52-week periods.
Principles of consolidation: The consolidated financial statements
include the accounts of Adolph Coors Company, its only direct subsidiary,
Coors Brewing Company (CBC), and all subsidiaries of CBC (collectively referred
to as "the Company"). All significant intercompany accounts and transactions
have been eliminated.
Inventories: Inventories are stated at the lower of cost or market.
Cost is determined by the last-in, first-out (LIFO) method for
substantially all inventories.
Current cost, as determined principally on the first-in, first-out
method, exceeded LIFO cost by $41,655,000 and $46,705,000 at December 25,
1994 and December 26, 1993, respectively. During 1994 and 1993, total
inventory costs and quantities were reduced, resulting in a LIFO liquidation,
the effect of which was not material.
Properties: Land, buildings and equipment are capitalized at cost.
For financial reporting purposes, depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets. Accelerated
depreciation methods are generally used for income tax purposes. Expenditures
for new facilities and improvements that substantially extend the capacity
or useful life of an asset are capitalized. Start-up costs associated with
manufacturing facilities, but not related to construction, are expensed as
incurred. Ordinary repairs and maintenance are expensed as incurred (Note 3).
Excess of cost over net assets of businesses acquired: The excess
of cost over the net assets of businesses acquired in transactions accounted
for as purchases is being amortized on a straight-line basis, generally over a
40-year period.
Hedging transactions: The Company periodically enters into forward, future and
option contracts for foreign currency and commodities to hedge its exposure to
exchange rates and price fluctuations for raw materials and fixed assets used
in the production of beer. The gains and losses on these contracts are deferred
and recognized in cost of sales as part of the product cost.
As of December 25, 1994, hedging activities consisted exclusively of hard
currency forward contracts to directly offset hard currency exposures. These
irrevocable contracts eliminated the risk to financial position and results of
operations from changes in the underlying foreign exchange rate.
Any variation in the exchange rate that would accrue to the contract would be
directly offset by an equal change in the related obligation. Therefore, after
the contract entrance date, variation in the exchange rate would have had no
additional impact on the Company. The Company's hedging activities are
minimal and hard currency exposures are not material.
Concentration of credit risk: The majority of the accounts
receivable balances as of December 25, 1994, and December 26, 1993, were from
malt beverage distributors. The Company secures substantially all of this
credit risk with purchase money security interests in inventory and proceeds,
personal guarantees and/or letters of credit. Statement of Cash Flows: The
Company defines cash equivalents as highly liquid investments with original
maturities of 90 days or less. Income taxes paid were $30,995,000 in 1994,
$15,367,000 in 1993 and $26,167,000 in 1992.
Net income per common share: Net income per common share is based on the
weighted average number of shares of common stock outstanding during each year.
Except for voting, both classes of common stock have the same rights and
privileges.
Environmental expenditures: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, which do not contribute to
current or future revenue generation, are expensed. Liabilities are recorded
when environmental assessments and/or remedial efforts are probable and the
costs can be reasonably estimated.
NOTE 2:
Discontinued Operations
In May 1992, the board of directors of the Company authorized development of a
plan to distribute to its shareholders its ceramics, aluminum, packaging and
technology-based developmental businesses (the "Technology Businesses"). On
August 12, 1992, the Company formed ACX Technologies, Inc. ("ACXT"
or "ACX Technologies") to own the Technology Businesses. On December 27,
1992, the Company distributed to its shareholders the common stock of ACXT.
Accordingly, the results of ACXT and the Technology Businesses are reported as
discontinued operations in these consolidated financial statements for all
periods presented except as noted. Each holder of record of the Company's common
stock on December 16, 1992, received one share of ACXT common stock for
every three shares of Adolph Coors Company common stock held as of such date.
ACXT stock is publicly traded on the over-the-counter market under the symbol
"ACXT."
The loss from discontinued operations for the year ended December 27, 1992, was
$29,415,000, or $0.78 per share. The 1992 results included approximately
$7,200,000, or $0.19 per share, for transaction costs associated with the
spin-off and a fourth quarter pretax charge of $13,700,000, or $0.36 per share,
related to restructuring of operations primarily at Coors Ceramics Company and
Golden Technologies Company, Inc. Discontinued operations for 1992 also
included the operating results of the Technology Businesses and ACXT's
adoption of the new accounting standards for postretirement benefits and
income taxes. Net income from discontinued operations for the year ended
December 29, 1991, was $8,433,000, or $0.22 per share.
Historical marketing, general and administrative expenses for the Technology
Businesses, which included costs incurred directly by and for the Technology
Businesses, plus a reasonable portion of other shared historical corporate
expenses, were allocated to discontinued operations. Interest expense in 1992
was allocated based on short-term borrowings up to $75,000,000, which is
approximately the amount of outside debt owed by ACXT immediately after the
distribution. Interest expense on the short-term borrowings was based on
interest rates ranging from 3.1% to 6.9% resulting in interest costs of
$6,044,000 for the year ended December 27, 1992. Interest expense was
capitalized based on construction in progress balances rather than on actual
interest expense allocated.
The following summarizes the results of operations for discontinued operations:
<TABLE>
For the yearended
December 27,
1992
--------------
(In thousands)
<S> <C>
Outside sales $413,969
--------------
Loss before income taxes $(24,215)
Income tax benefit (7,200)
--------------
Loss before cumulative effect
of change in accounting principles (17,015)
Cumulative effect of change in accounting
for postretirement benefits (net of tax) (13,200)
Cumulative effect of change in accounting
for income taxes 800
--------------
Net loss from discontinued
operations $(29,415)
==============
</TABLE>
NOTE 3:
Properties
The cost of properties and related accumulated depreciation,
depletion and amortization consists of the following:
<TABLE>
<CAPTION>
For the years ended
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
<S> <C> <C>
Land and improvements $ 96,995 $ 93,436
Buildings 454,679 427,111
Machinery and equipment 1,488,060 1,394,156
Natural resource properties 16,125 22,386
Construction in progress 87,185 65,305
--------- ---------
2,143,044 2,002,394
Less accumulated depreciation, depletion
and amortization 1,220,836 1,118,292
--------- ---------
Net Properties $ 922,208 $ 884,102
========= =========
</TABLE>
Interest capitalized, expensed and paid was as follows:
<TABLE>
<CAPTION>
For the years ended
December 25, December 26, December 27,
1994 1993 1992
(In thousands)
<S> <C> <C> <C>
Interest costs
Continuing operations $17,761 $20,580 $21,631
Discontinued operations -- -- $ 6,044
Interest capitalized
Continuing operations $(6,300) $(4,800) $(5,617)
Discontinued operations -- -- $(1,456)
Interest expensed
Continuing operations $11,461 $15,780 $16,014
Discontinued operations -- -- $ 4,588
Interest paid $21,169 $20,172 $23,339
</TABLE>
NOTE 4:
Debt
The Company is obligated to pay the principal, interest and premium, if any,
on the $5 million, City of Wheat Ridge, Colorado Industrial Development Bonds
(Adolph Coors Company Project) Series 1993. The bonds mature in 2013. They are
currently variable rate securities with interest payable on the first of March,
June, September and December. The weighted average interest rate during 1994
was 3.0%.
As of December 25, 1994, the Company had outstanding $170 million of unsecured
medium-term notes. All notes have interest due semi-annually in April and
October at fixed interest rates ranging from 8.30% to 9.15% per annum. The
repayment schedule for the notes issued is $44 million in 1995, $36
million in 1996, $19 million in 1997, $31 million in 1998 and $40 million in
1999.
The Company has an unsecured committed credit arrangement totaling
$144 million, and as of December 25, 1994, all $144 million was available. This
line of credit has a four-year term through December 12, 1998, and is subject to
the Company maintaining certain financial ratios. The only restriction for
withdrawal is that the Company meet specific covenant criteria. As of December
25, 1994, the Company also had approximately $100 million of uncommitted credit
arrangements available, of which nothing was outstanding. The Company pays no
commitment fees for these uncommitted arrangements, which are on a funds-
available basis. Interest rates are negotiated at the time of borrowing.
NOTE 5:
Income Taxes
In 1992, the Company and its subsidiaries adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes." The
transition effect of adopting FAS 109 resulted in a $30.5 million
increase in net income reflected as the cumulative effect of a change in
accounting principle in 1992.
The provision for income taxes charged to continuing operations was
as follows:
<TABLE>
<CAPTION>
For the years ended
December 25, December 26, December 27,
1994 1993 1992
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Current provision:
Federal $ 19,875 $ 14,479 $ 20,193
State 6,154 2,471 3,827
-------- -------- --------
Total current tax expense 26,029 16,950 24,020
-------- -------- --------
Deferred:
Federal 16,804 (27,890) ( 1,025)
State 3,267 (3,960) ( 95)
-------- -------- --------
Total deferred tax expense
(benefit) 20,071 (31,850) ( 1,120)
-------- -------- --------
Total income tax expense
(benefit) $ 46,100 $ (14,900) $ 22,900
======== ======== ========
</TABLE>
<PAGE>
The deferred tax assets (liabilities) are composed of the tax
effect of the following:
<TABLE>
<CAPTION>
As of
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
<S> <C> <C>
Tax in excess of book
depreciation and
amortization $(126,090) $(125,157)
(Gain) loss on sale or writedown of (2,954) (3,032)
assets
Deferred compensation and other
employee related 12,614 12,192
Change in balance sheet reserves
and accruals 27,528 37,356
Environmental accruals 6,823 11,606
Alternative minimum tax 3,164 9,155
Capitalized interest (2,516) (2,155)
Other employee postretirement
benefits (Note 8) 34,054 31,065
State deferred taxes, net of federal
income tax benefit 651 648
Other - net 1,376 3,043
-------- -------
Net deferred tax liability $ (45,350) $ (25,279)
======== ========
</TABLE>
In 1992, the Company's income tax expense for discontinued
operations differed from the federal statutory rate of 34% because of
non-deductible expenses of 8.8% and other items (similar to those below) of
4.5%. The effective rate was 29.7%.
Income taxes as reflected in the Consolidated Statement of Income differ from
the amounts computed by applying the statutory federal corporate tax rate to
income as follows:
<TABLE>
<CAPTION>
For the years ended
December 25, December 26, December 27,
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Expected tax rate 35.0% (35.0%) 34.0%
State income taxes
(net of federal income
tax benefit) 5.1 (1.7) 3.7
Revaluation of deferred income tax
liability 0.8 4.4 --
Unremitted earnings (losses) of
foreign joint venture (0.2) 2.6 --
Non-deductible expenses and losses 1.3 2.7 --
Other - net 2.2 0.8 1.4
----- ----- -----
Effective tax rate 44.2% (26.2%) 39.1%
===== ===== =====
</TABLE>
The Internal Revenue Service (IRS) has completed its examination of
the Company's federal income tax returns through 1990. The IRS is
currently examining the fiscal years 1991 and 1992. In the opinion of
management, adequate accruals have been provided for all income tax
matters and related interest.
The Company and ACXT are parties to a tax sharing agreement that
provides for, among other things, the treatment of tax matters for periods
prior to the distribution of ACXT stock and responsibility for adjustments as a
result of audits by taxing authorities and is designed to preserve the status
of the distribution as tax-free.
NOTE 6:
Stock Option and Restricted Stock Award Plans
Under the Company's stock option plans, officers and other key employees may be
granted options which allow for the purchase of shares of the Company's common
stock. The option price on outstanding options is equal to the fair market value
of the stock at the date of grant. The 1983 non-qualified Adolph Coors Company
Stock Option Plan, as amended, provides for options to be granted at the
discretion of the board of directors. These options expire 10 years from date
of grant. No options have been granted under this plan since 1989. At this
time, the board of directors has decided not to grant additional options
under this plan. The 1990 Equity Incentive Plan (1990 EI Plan) that became
effective January 1, 1990, as amended, provides for two types of grants:
restricted stock awards and stock options. The stock options have a term of
10 years with exercise prices equal to market on the day of the grant. Prior to
1994, one-third of the stock option grant was vested in each of the three
successive years after the date of grant. Effective January 1, 1994, stock
options vest at 10% for each one dollar increase in fair market value of
ACC stock from date of grant, or vest 100% after nine years. Vesting in the
restricted stock awards is over a three-year period from the date of grant.
All restricted shares outstanding as of December 27, 1992, became fully
vested because of the spin-off. The compensation cost associated with these
awards is amortized to expense over the vesting period. In 1991, the Company
adopted an Equity Compensation Plan for Non-Employee Directors (EC Plan).
The EC Plan provides for two grants of the Company's stock; the first grant
is automatic and equals 20% of the Director's annual retainer and the second
grant is elective and covers all or any portion of the balance of the
retainer. The compensation cost associated with the EC Plan is amortized
over the Director's term. In 1992, all then outstanding grants under the
restricted stock plan were accelerated to fully vest because of the spin-off.
Changes in stock options are as follows:
<TABLE>
<CAPTION>
Price range
Shares per share
-----------------------------------------------------------------------------
<S> <C> <C>
Outstanding at December 29, 1991 1,804,500 $14.50-$30.50
Adjustment due to ACX Technologies, Inc.
spin-off (147,400) --
Granted -- --
Canceled (90,600) $14.50-$30.50
Exercised (276,100) $13.00-$24.63
-----------------------------------------------------------------------------
Outstanding at December 27, 1992 1,290,400 $13.00-$30.50
Granted 83,000 $16.44-$16.50
Canceled (60,100) $13.24-$21.35
Exercised (465,000) $10.82-$18.36
-----------------------------------------------------------------------------
Outstanding at December 26, 1993 848,300 $10.82-$22.75
Granted 530,700 $16.25-$16.25
Canceled (65,700) $14.45-$18.36
Exercised (126,900) $13.24-$18.36
-----------------------------------------------------------------------------
Outstanding at December 25, 1994 1,186,400 $13.24-$22.75
=============================================================================
Options exercisable at:
December 26, 1993 841,300
December 25, 1994 643,700
=============================================================================
</TABLE>
Common stock reserved for options, and restricted stock awards totaled
1,866,800 shares as of December 25, 1994, and 2,331,800 shares as of
December 26, 1993.
In January 1993, the number and exercise price of all options outstanding at
the time of the ACX Technologies spin-off were adjusted to compensate
for the economic value of the options as a result of the distribution to
shareholders. The options of officers who transferred to ACX Technologies
were canceled. The net effect of these adjustments decreased the number of
options outstanding by 147,400.
NOTE 7:
Employee Retirement Plans
The Company maintains several defined benefit pension plans for the
majority of its employees. Benefits are based on years of service and average
base compensation levels over a period of years. Plan assets consist
primarily of equity, real estate and interest-bearing investments. The
Company's funding policy is to contribute annually not less than the ERISA
minimum funding standards, nor more than the maximum amount which can be
deducted for federal income tax purposes. Total expense for these plans,
as well as a savings and investment (thrift) plan, was $29,485,000 in 1994,
$39,873,000 in 1993 and $20,282,000 in 1992. The 1993 increase in plan
expense resulted primarily from the offering of the early retirement program
and plan changes. Included in the 1993 service cost is $16.5 million which
was the result of the early retirement program. The 1993 expense has been
included in restructuring costs (Note 9).
<TABLE>
<CAPTION>
For the years ended
December 25, December 26, December 27,
1994 1993 1992
----------- ----------- -----------
(In thousands)
<S> <C> <C> <C>
Service cost-benefits earned during
the year $ 12,517 $ 27,089 $ 10,873
Interest cost on projected benefit
obligations 28,377 24,332 20,818
Actual (gain) on plan assets (872) (35,329) (9,748)
Net amortization and deferral (16,351) 16,929 (7,639)
------- ------- -------
Net pension expense $ 23,671 $ 33,021 $ 14,304
======= ======= =======
</TABLE>
The funded status of the pension plans and amounts recognized in the
Consolidated Balance Sheet are as follows:
<TABLE>
<CAPTION>
As of
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
<S> <C> <C>
Actuarial present value of accumulated
plan benefits, including vested
benefits of $264,319 in 1994 and
$273,589 in 1993 $278,489 $290,318
------- -------
Projected benefit obligations for
service rendered to date $343,628 $380,594
Plan assets available for benefit 261,982 253,526
------- -------
Plan assets less than projected benefit
obligations 81,646 127,068
Unrecognized net loss (50,211) (94,416)
Prior service cost not yet recognized (23,062) (25,402)
Unrecognized net asset being recognized
over 15 years 9,181 10,872
------- -------
Net accrued pension liability $ 17,554 $ 18,122
======= =======
</TABLE>
Significant assumptions used in determining the valuation of the projected
benefit obligations as of the end of 1994, 1993 and 1992 were:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Settlement rate 8.50% 7.25% 8.75%
Increase in compensation levels 5.00% 5.00% 5.75%
Rate of return on plan assets 9.50% 9.50% 10.50%
</TABLE>
NOTE 8:
Non-Pension Postretirement Benefits
The Company has postretirement plans that provide medical benefits
and life insurance for retirees and eligible dependents. The plans are not
funded.
This obligation was determined by the application of the terms of
medical and life insurance plans, together with relevant actuarial
assumptions and health care cost trend rates ranging ratably from 11.0% in
1994 to 6.5% in the year 2006. The effect of an annual 1% increase in
trend rates would increase the accumulated postretirement benefit
obligation by approximately $8.5 million and $10.5 million in 1994 and
1993, respectively. The effect of a 1% increase in trend rates also would
have increased the ongoing annual cost by $1.2 million and $1.0 million in
1994 and 1993, respectively. The discount rate used in determining
the accumulated postretirement benefit obligation was 8.50% and
7.25% at December 25, 1994, and December 26, 1993, respectively.
Net periodic postretirement benefit cost included the following:
<TABLE>
<CAPTION>
For the years ended
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
<S> <C> <C>
Service cost-benefits attributed to service
during the period $ 3,097 $ 10,163
Interest cost on accumulated postretirement
benefit obligation 6,698 5,311
Amortization of net loss (gain) 78 (239)
Return on plan assets -- --
------- -------
Net periodic postretirement benefit cost $ 9,873 $ 15,235
======= =======
</TABLE>
The 1994 decrease in plan expense resulted principally from the
1993 early retirement program. Included in the 1993 service cost is $7.7
million which was the result of the early retirement program. That 1993
expense has been included in restructuring costs (Note 9).
The status of the plan was as follows:
<TABLE>
<CAPTION>
As of
December 25, December 26,
1994 1993
----------- -----------
(In thousands)
Accumulated postretirement benefit obligation:
<S> <C> <C>
Retirees $ 32,989 $ 43,254
Fully eligible active plan participants 11,508 16,737
Other active plan participants 32,221 35,008
------- -------
Accumulated postretirement obligation in
excess of plan assets 76,718 94,999
Unrecognized net gain (loss) 2,999 (18,273)
Unrecognized prior service cost 7,680 4,578
------- -------
Accrued postretirement benefit obligation
in the Consolidated Balance Sheet $ 87,397 $ 81,304
======= =======
</TABLE>
NOTE 9:
Special (Credit) Charges
Fourth quarter results for 1994 include a net special credit of $13.9 million
which is shown as a separate item in the accompanying Consolidated
Statement of Income and resulted in $0.22 per share after tax. Two
nonrecurring items contributed to the net special credit. First, the
Company reached a settlement with a number of its insurance carriers which
enabled it to recover a portion of the costs associated with the Lowry Landfill
Superfund site. Secondly, CBC recorded an impairment reserve for the
writedown of distributor assets.
Fourth quarter results for 1993 include several special charges. These special
charges resulted in a pretax charge of $122.5 million, or $1.98 per share after
tax. A restructuring charge, which totaled $109.5 million, or $1.77
per share after tax, resulted from the Company's announcement in July 1993 of
a restructuring program designed to reduce costs, improve operating
efficiencies and increase shareholder value. The restructuring charge includes
$70.2 million for voluntary severance and enhanced early retirement incentives
designed to reduce the Company's white-collar work force, as well as $39.3
million for workplace redesign, asset writedowns and other expenses related to
profit improvement initiatives. Substantially all of the payments for
voluntary severance and enhanced early retirement incentives occurred in
1993. Of the $39.3 million, approximately $22 million related to workplace
redesign and other expenses related to profit improvement initiatives, and
approximately $17.3 million related to asset writedowns. Substantially all
costs related to workplace redesign and other profitability improvement
initiatives, which were accrued in 1993, were paid in 1994. Other
special charges unrelated to the profit improvement initiatives totaled
$13.0 million for the writedown of certain distributor assets and a
provision for environmental enhancements.
The 1993 restructuring charge and subsequent activity are
summarized as follows:
<TABLE>
<CAPTION>
Workplace Asset
Personnel Redesign Writedowns Total
--------- --------- ---------- --------
<S> <C> <C> <C> <C>
1993 Charges $ 70,240 $ 22,000 $ 17,300 $109,540
1993 Payments and writedowns 57,924 3,600 17,300 78,824
------- ------- ------- -------
Balance as of December 26, 1993 12,316 18,400 -- 30,716
1994 Payments 3,045 16,480 -- 19,525
------- ------- ------- -------
Balance as of December 25, 1994 $ 9,271 $ 1,920 $ -- $ 11,191
======= ======= ======= =======
</TABLE>
The majority of the remaining accruals relate to obligations under
deferred compensation arrangements and postretirement benefits other than
pensions.
NOTE 10:
Commitments and Contingencies
It is the policy of the Company to act as a self-insurer for
certain insurable risks consisting primarily of employee
health insurance programs, workers'compensation and general
liability contract deductibles. In 1994, a subsidiary of CBC continued
to perform under an agreement to purchase coal for CBC's steam generation
facility. The agreement runs for a five-year period beginning in 1990
and requires the purchase of a minimum of 330,000 tons of coal per
contract year.
In 1992, CBC entered into a five-year supply contract to purchase substantial
amounts of packaging raw materials from two subsidiaries of ACX Technologies.
These contracts are for pre-determined quantities and based on market pricing.
In 1992, ACC and CBC (as well as two former affiliates that are now
subsidiaries of ACXT) were sued by TransRim Enterprises (USA) Ltd. in Federal
District Court for the District of Colorado. TransRim alleged that the
defendants misused confidential information and breached an implied contract to
proceed with a joint venture project to build and operate a paper board mill.
TransRim initially claimed damages totaling $159 million based on a number
of theories, some of which were removed from the case by the judge granting the
defendants' motion for the partial summary judgement. Trial by a jury was held
in April 1994, and the jury returned a verdict in favor of all defendants to
all claims. TransRim filed an appeal to the U.S. Court of Appeals, 10th
Judicial Circuit. Oral arguments were heard March 7, 1995. Management believes
that ACC and CBC have meritorious defenses and that the ultimate outcome
will not have a material impact on the Company's financial position and
results of operations.
In 1992, CBC appealed to the U.S. Circuit Court of Appeals for the First
Circuit seeking a review of a ruling of the U.S. District Court for the
State of New Hampshire. The District Court had upheld a 1991 U.S. Bankruptcy
Court order awarding damages of $10 million, plus interest and attorneys'
fees, to a former beer distributor. In the fourth quarter of 1993, CBC entered
into a settlement of this matter and a related case. The settlement was
within the amount of reserves previously established for the matter.
In 1991, the Company became aware that Mutual Benefit Life Insurance Company
(MBLIC) had been placed under the control of the State of New Jersey. The
Company is a holder of several life insurance policies and annuities through
MBLIC. The cash surrender value under these policies, net of outstanding loans,
approximates $7,621,000. Policyholders have been notified that all
claims, benefits and annuity payments will continue to be paid in full;
however, at this time policyholders are able to only partially redeem their
policies for cash.
In 1991, CBC entered into an agreement with Colorado Baseball Partnership 1993,
Ltd. for an equity investment and multi-year signage and advertising package.
This commitment, totaling approximately $30 million was finalized
upon the awarding of a National League baseball franchise to Colorado in
1991. The initial investment as a limited partner has been paid. The
multi-year signage and advertising package will commence in 1995.
In 1991, the City and County of Denver, Waste Management of Colorado, Inc. and
Chemical Waste Management, Inc. brought litigation in U.S. District Court
against the Company and 37 other PRP's to determine the allocation
of costs of Lowry site remediation. In 1993, the Court approved a settlement
agreement between the Company and the plaintiffs, resolving the Company's
liabilities for the site. The Company agreed to initial payments based on an
assumed present value of $120 million in total site remediation costs. In
addition, the Company agreed to pay a specified share of costs if total
remediation costs are in excess of this amount. Payments representing the
Company's agreed share based on the $120 million assumption were made
into a trust to be applied to costs of site remediation and operating and
maintenance costs. None of these payments were material to the Company's
cash flow or financial position. The terms did not result in any adjustment
to the $30 million reserve established in 1990.
The Environmental Protection Agency (EPA) recently announced remediation
objectives and requirements for the site and projected costs of its
remediation plan. The EPA's projected costs are below the $120 million total
assumed as a basis for the Company's settlement. The City and County of
Denver, Waste Management of Colorado, Inc. and Chemical Waste Management are
expected to implement remediation of the site. The Company has no reason to
believe that total remediation costs will result in additional liability to
the Company.
In 1991, the Company filed suit against certain of its former and current
insurance carriers, seeking recovery of past defense costs and investigation,
study and remediation costs. Settlements were reached during 1993
and 1994 with all defendants. As a result, in the fourth quarter of 1994, the
Company recognized a special pretax credit of $18.9 million (Note 9).
The Company also is named as defendant in various actions and proceedings
arising in the normal course of business. In all of these cases,
the Company is denying the allegations and is vigorously defending against
them and, in some instances, has filed counterclaims. Although the eventual
outcome of the various lawsuits cannot be predicted, it is management's
opinion these suits will not result in liabilities to such extent that
they would materially affect the Company's financial position or results of
operations.
NOTE 11:
Quarterly Financial Information (Unaudited)
The following summarizes selected quarterly financial information for each of
the two years in the period ended December 25, 1994. The third
quarter is a 16-week period; all other fiscal quarters are 12 weeks.
As described in Note 9, income in the fourth quarter of 1994 was
increased by a special pretax credit of $13,949,000 or $.22 per share, and
income from continuing operations in the fourth quarter of 1993 was reduced by
special pretax charges of $122,540,000, or $1.98 per share.
<TABLE>
<CAPTION>
ADOLPH COORS COMPANY AND SUBSIDIARIES
QUARTERLY FINANCIAL STATEMENT (UNAUDITED)
First Second Third Fourth Year
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1994
Net sales $318,453 $432,216 $555,581 $ 356,421 $1,662,671
Cost of goods sold 211,252 254,637 358,679 238,221 1,062,789
Marketing, general
and administrative 92,926 127,693 159,979 111,805 492,403
Research and project
development 2,197 3,313 4,217 3,538 13,265
Special (credit) -- -- -- (13,949) (13,949)
Other (income)
expense-net (156) 2,567 1,266 266 3,943
------- ------- -------- ------- ---------
Total costs and
expenses 306,219 388,210 524,141 339,881 1,558,451
Income before
income taxes 12,234 44,006 31,440 16,540 104,220
Income tax expense 5,300 20,100 14,100 6,600 46,100
------- ------- ------- -------- ---------
Net income $ 6,934 $ 23,906 $ 17,340 $ 9,940 $ 58,120
======= ======= ======= ======== =========
Net income per share of
common stock $ 0.18 $ 0.63 $ 0.45 $ 0.26 $ 1.52
======= ======= ======= ======== =========
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth Year
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
1993
Net sales $295,983 $412,868 $535,627 $337,333 $1,581,811
------- ------- ------- ------- ---------
Cost of goods sold 198,905 257,539 349,149 231,271 1,036,864
Marketing, general
and administrative 82,747 115,803 158,288 97,292 454,130
Research and project
development 2,602 2,833 4,506 3,067 13,008
Special charges
including
restructuring charge -- -- -- 122,540 122,540
Other (income)
expense-net 3,374 2,904 3,696 2,125 12,099
------- ------- ------- ------- ---------
Total costs
and expenses 287,628 379,079 515,639 456,295 1,638,641
Income (loss)
before income taxes 8,355 33,789 19,988 (118,962) (56,830)
Income tax expense
(benefit) 3,700 14,900 10,400 (43,900) (14,900)
------ ------- ------- -------- ---------
Net income (loss) $ 4,655 $ 18,889 $ 9,588 $(75,062) $ (41,930)
======= ======= ======= ======== =========
Net income (loss)
per share of
common stock $ 0.12 $ 0.50 $ 0.25 $ (1.97) $ (1.10)
======= ======= ======= ======== =========
</TABLE>
<PAGE>
ITEM 9. Disagreements on Accounting and Financial Disclosure
Within the last two fiscal years there have been no changes in the
Company's independent accounting firm or disagreements on material accounting
and financial statement disclosure matters.
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Registrant
(a) Directors.
JOSEPH COORS (Age 77) is Vice Chairman of Adolph Coors Company and
has served in that capacity since 1975. He has served as a Director since
1942. He retired from day-to-day operations in December 1987. He serves as a
member of the Executive Committee, the Debt Pricing Committee, the Compensation
Committee and the Audit Committee. He is also a Director of Coors Brewing
Company and ACX Technologies, Inc.
PETER H. COORS (Age 48) has served as a Director of Adolph Coors
Company since 1973. Prior to 1993, he served as Executive Vice President of
Adolph Coors Company and Chairman of the Brewing Group. Also in 1993, he
became Vice President and Secretary of Adolph Coors Company and was
elected CEO and Vice Chairman of Coors Brewing Company. In December 1993, he
was named interim treasurer. He is also a member of the Board of Directors
of Coors Brewing Company. He serves as a member of the Debt Pricing Committee
and the Executive Committee. In his career at Coors Brewing Company, he
has served in a number of different positions, including Divisional
President of Sales Marketing and Administration and Secretary (1982-1985),
Senior Vice President, Sales and Marketing (1978-1982), Vice President
(1976-1978), and Assistant Secretary and Assistant Treasurer (1974-1976).
WILLIAM K. COORS (Age 78) is Chairman of the Board and President of
Adolph Coors Company and has served in such capacities since 1970 and 1989,
respectively. He has served as a Director since 1940. He serves as Chairman of
the Debt Pricing Committee and the Executive Committee. He is also a
director and Chairman of the Board of Coors Brewing Company and ACX
Technologies, Inc.
J. BRUCE LLEWELLYN (Age 67) has served as a Director and member of
the Audit Committee since 1989. In 1993, he was named chairman of the Audit
Committee. He also serves on the Compensation Committee and the Special
Performance-Based Compensation Committee. He is a member of the Board of
Directors of Coors Brewing Company. He is an attorney and involved
in the management of several businesses in which he is an investor. He
is presently the Chairman of the Board and Chief Executive Officer of
Philadelphia Coca Cola Bottling, Inc. and Queen City Broadcasting, Inc. He
is also a Director of Manufacturers Hanover Trust/Chemical Bank and QVC, Inc.
LUIS G. NOGALES (Age 51) has served as a Director since 1989. He became a
member of the Audit Committee in 1992. He has served as a member
of the Compensation Committee since 1989 and was named chairman in May
1994. He is also a member of the Special Performance-Based Compensation
Committee. He is a member of the Board of Directors of Coors Brewing Company.
He is chairman and chief executive officer of Embarcadero Media, Inc., a
media (radio) acquisition company in Los Angeles. In the past he was
president of Nogales Partners (1990 to present), a media acquisition firm,
general partner of Nogales Castro Partners (1989-1990), President of
Univision, the nation's largest Spanish language television network
(1986-1988), and Chairman and Chief Executive Officer of United Press
International (1983-1986). From 1981-1983 he served as Senior Vice
President of Fleishman-Hillard, Inc. He is also a Director
of Southern California Edison Company and SCEcorp.
WAYNE R. SANDERS (Age 47) joined the Company as a Director in February of 1995.
He is chairman of the board and chief executive officer of Kimberly
Clark (K-C) Corporation in Dallas. Sanders joined Kimberly Clark in 1975 as
Senior Financial Analyst. For the past 20 years, he has served in a number of
positions with K-C. He was named to his current position in 1992. Prior to
that, he served as president and chief executive officer (1991); president,
World Consumer, Nonwovens and Service and Industrial Operations (1990). He
was elected to K-C's board of directors in August 1989.
(b) Executive Officers.
Of the above directors, Peter H. Coors and William K. Coors are executive
officers of the Adolph Coors Company. The following also were executive
officers of Adolph Coors Company (as defined by SEC rules) at March 1, 1995:
ALVIN C. BABB (Age 62) is Senior Vice President of Operations and Technology
for CBC and has served in that capacity since 1983. Prior to that, he
served as Group Vice President of Brewery Operations (1982-1983), Senior Vice
President of Brewery Operations (1981-1982) and Senior Vice President of
Plant Operations (1978-1981). He has been with CBC for more than 40 years.
He is a member of the Master Brewing Association of America.
CARL L. BARNHILL (Age 46) joined CBC in May of 1994 as Senior Vice President
of Sales. Barnhill brings more than 20 years of marketing experience
with consumer goods companies. Most recently, he was Vice President of Selling
Systems Development for the European and Middle East division of Pepsi
Foods International. Prior to joining Pepsi in 1993, he spent 16 years
with Frito-Lay in various upper-level sales and marketing positions.
ROBERT W. EHRET (Age 50) joined CBC in May of 1994 as Senior Vice
President, Human Resources. Prior to joining CBC, Ehret served as Senior Vice
President of Human Resources for A.C. Nielsen. From 1983 to 1989, Ehret worked
for PepsiCo Inc., as Director of Employee Relations and Personnel Director for
two of PepsiCo's international divisions based in Tokyo and London. He also
worked in various Human Resource capacities at Celanese Corporation.
W. LEO KIELY, III (Age 48) became President and Chief Operating
Officer of CBC as of March 1, 1993. Prior to joining CBC, he served as
division vice president and then division president of the Frito-Lay, Inc.
subsidiary of PepsiCo in Plano, Texas. From 1989-1991, he served as senior
vice president of field operations, overseeing the operations of
Frito-Lay's four regional business teams. From 1984-1989, he was the
vice president of sales and marketing for Frito-Lay.
ROBERT D. KLUGMAN (Age 47) was named Senior Vice President of Corporate
Development in May 1994, and Vice President of Corporate Development in July
1993. Prior to that, he vas Vice President of Brand Marketing, a
position he held from 1981 - 1987, and again from 1990 - 1993. From 1987 to
1990 he was Vice President of International, Development and Marketing
Services. Before joining CBC, Klugman was a Vice President of Client Services
at Leo Burnett USA, a Chicago-based advertising agency.
MICHAEL A. MARRANZINO (Age 47) has served as CBC's Senior Vice
President and Chief International Officer since 1994. Prior to that,
he served as Vice President and Director of International Marketing. He
has been with CBC since 1976, and has held positions in the sales and
marketing area, including director of development, director for Coors
and Coors Extra Gold brands, director of sales and marketing operations,
director of field sales and director of sales operations.
M. CAROLINE TURNER (Age 45) was named Vice President and Assistant Secretary
of ACC and Vice President, Chief Legal Officer and Assistant Secretary
of CBC in 1993. In the past she served as Vice President, Chief Legal Officer
(1991-1992) and Director, Legal Affairs (1986-1991) of ACC. Prior to joining
the Company, she was a partner with the law firm of Holme Roberts & Owen
(1983-1986), an associate for Holme Roberts and Owen (1977-1982) and a
clerk in the U.S. 10th Circuit Court of Appeals (1976-1977).
WILLIAM H. WEINTRAUB (Age 52) was named Senior Vice President of
Marketing in 1994. He joined CBC as Vice President of Marketing in
July, 1993. Prior to joining CBC, he directed all marketing and
advertising for Tropicana Products as Senior Vice President. From
1982 - 1991, Weintraub was with the Kellogg Company, with responsibility
for marketing and sales. He also held a number of positions at Procter &
Gamble from 1967 - 1982.
TIMOTHY V. WOLF (Age 41) was named Vice President, Treasurer and
Chief Financial Officer of ACC and Senior Vice President and Chief Financial
Officer of CBC in February, 1995. Wolf came to CBC from Hyatt Hotels
Corporation, where he served as Senior Vice President of Planning and
Human Resources from 1993 to 1994. From 1989 to 1993 he served in
several executive positions for The Walt Disney Company including Vice
President, Controller and Chief Accounting Officer.
ACC and CBC employ a number of other officers who are not
considered executive officers of the Registrant as defined under SEC
regulations. Terms for all officers and directors are for a period of one year,
except that vacancies may be filled and additional officers elected at any
regular or special meeting. Directors are elected at the Annual Shareholders'
Meeting held in May. There are no arrangements or understandings between any
officer or director pursuant to which any officer or director was elected as
such.
(d) Family Relationships.
William K. Coors and Joseph Coors are brothers. Peter H. Coors is
a son of Joseph Coors.
(e) Section 16 Disclosures.
All filing and disclosure requirements were met in 1994.
<PAGE>
ITEM 11. Executive Compensation
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
NAME & PRINCIPAL
POSITION YEAR SALARY BONUS OTHER RESTRICTED SECURITIES LTIP ALL
($) ($)(a) ANNUAL STOCK UNDERLYING PAYOUTS OTHER
COMP ($)(b) OPTIONS ($)(C) COMP
($)(d) (#)(e) ($)(e)(f)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William K. Coors, Chairman 1994 275,020 2,714 0 0 0 0 86,219
of the Board, CEO of Adolph 1993 256,000 1,938 0 0 0 0 65,539
Coors Company 1992 256,000 0 27,288 0 0 0 58,153
----------------------------------------------------------------------------------------------------------------------
Peter H. Coors, Vice Chairman 1994 483,328 281,262 0 0 28,820 0 9,102
& CEO of Coors Brewing 1993 465,688 44,185 13,041 49,312 30,000 0 8,622
Company 1992 465,061 0 18,593 0 0 491,302 7,257
----------------------------------------------------------------------------------------------------------------------
W. Leo Kiely III, President 1994 384,400 230,858 0 0 23,655 0 5,151
& COO of Coors Brewing 1993 310,000 187,251 309,121 16,500 10,000 0 6,198
Company 1992
----------------------------------------------------------------------------------------------------------------------
Alvin C. Babb, Senior VP, 1994 289,552 133,214 0 0 13,364 0 13,451
Operations & Technology 1993 278,800 27,333 11,538 4,931 3,000 0 15,239
1992
----------------------------------------------------------------------------------------------------------------------
William H. Weintraub, Senior 1994 274,168 126,136 0 0 12,654 0 7,785
VP Marketing 1993 120,271 106,397 33,084 0 0 0 5,733
1992
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Amounts awarded under the Management Incentive Compensation
Program.
(b) No restricted stock grants were made in 1994.
In 1993, restricted stock was granted to three of the named officers. The
number of grants and their values at December 25, 1994 are as follows: Peter
H. Coors - 3,000 shares valued at $47,625; W. Leo Kiely III - 1,000
shares valued at $15,875; and Alvin C. Babb - 300 shares valued at $4,763.
Restricted stock awards granted in 1993 have a three-year
vesting period based on year of grant and expire with termination of
employment. Dividends are paid to the holders of the grants during the
vesting period.
No restricted stock grants were made in 1992. In 1992,
restricted stock grants existing as of December 27, 1992 became vested due
to the spin-off. No restricted stock grants were outstanding as of
December 27, 1992.
(c) In 1992, cash was paid under CBC's 1990 Long-Term Incentive
Plan for the three-year performance period ended December 27, 1992.
(d) Under the 1983 Non-Qualified Stock Option Plan, the Company
reimburses a portion of the taxes the executive will incur. In 1994, none of
the named executives received perquisites in excess of the lesser of $50,000
or 10% of salary plus bonus. In 1993, W. Leo Kiely III and William H.
Weintraub received perquisites including moving expenses of $299,639 for W.
Leo Kiely III and $28,320 for William H. Weintraub. In 1992, William K. Coors
had perquisites including personal use of the Company's Lear jet - $13,118
and auto allowance- $8,694. The Company no longer owns the Lear jet.
(e) No stock option grants were made in 1992.
(f) The amounts shown in this column are attributable to the
officer life insurance and 401(k) plans. The named executives receive officer
life insurance provided by the Company until retirement. At the time of
retirement, the officer's life insurance program terminates and for some of
the officers, the salary continuation agreement becomes effective. The
officer life insurance provides six times the executive base salary until
retirement, at which time the Company becomes the beneficiary. The 1994
annual benefit for each executive: William K. Coors - $79,354;
Peter H. Coors - $4,969; W. Leo Kiely III - $3,423;
Alvin C. Babb - $9,062; William H. Weintraub - $3,284. The
Company's 50% match on the first 6% of salary contributed by the officer to
ACC's qualified 401(k) plan was $4,133 for Peter H. Coors; $1,728 for W. Leo
Kiely III; $4,389 for Alvin C. Babb; $4,501 for William H. Weintraub.
In response to Code Section 162 of the Revenue Reconciliation Act
of 1993, the Company appointed a special compensation committee to approve
and monitor performance criteria in certain performance based executive
compensation plans for 1994.
<PAGE>
II. OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
----------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
----------------------------------------------------------------------------------------------------------
NUMBER OF % TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
(#)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter H. Coors 28,820 (a) 5% $16.25 01/03/04 $276,923 $718,358
W. Leo Kiely III 23,655 (a) 4% $16.25 01/03/04 $227,294 $589,617
Alvin C. Babb 13,364 (a) 3% $16.25 01/03/04 $128,411 $333,107
William H. Weintraub 12,654 (a) 2% $16.25 01/03/04 $121,589 $315,409
</TABLE>
(a) From the date of grant, one-tenth of the grant vests for each
one dollar increment in fair market value (FMV) of the stock over
the exercise price. For example, when the FMV reaches $17.25, 10% of
the grant is vested; when it reaches $18.25, 20% is vested; etc.
FMV is calculated by averaging the high and low stock price for each
day. Once a portion has vested, it is not reversed even if the FMV
drops. If not sooner, the grant is 100% vested after 9 years. At
December 25, 1994, the grants were 40% vested.
<PAGE>
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY
ACQUIRED AT FY-END(#) (b) OPTIONS AT FY-END ($) (b)
ON VALUE
NAME EXERCISE (#) REALIZED Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pete H. Coors 0 0 164,208 37,292 169,962 0
W. Leo Kiely III 0 0 12,794 20,860 0 0
Alvin C. Babb 5,632 20,576 26,325 10,018 25,872 0
William H. Weintraub 0 0 5,061 7,592 0 0
</TABLE>
(a) Values stated are the bargain element received in 1994, which
is the difference between the option price and the market price at
the time of exercise.
(b) No grants were made in 1992. In 1992, ACC approved the
adjustment of all options outstanding as of December 27, 1992, for
both the amount and exercise price pursuant to a formula which retained the
same option spread for the employee after the spin-off as had existed
immediately prior to the spin-off.
<PAGE>
IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE
<TABLE>
<CAPTION>
POTENTIAL FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS
NAME NUMBER OF PERFORMANCE THRESHOLD TARGET MAXIMUM
SHARES, UNITS OR OTHER ($ OR #) ($ OR #) ($ OR #)
OR OTHER PERIOD UNTIL
RIGHTS MATURATION OR
(#) PAYOUT
<S> <C> <C> <C> <C> <C>
Peter H. Coors 150% of 1-1-94 1994 - 1996 8,646* 129,691* 259,382*
salary at target
W. Leo Kiely III 140% of 1-1-94 1994 - 1996 7,097* 99,353* 198,706*
salary at target
Alvin C. Babb 100% of 1-1-94 1994 - 1996 $28,956** $289,552** $579,104**
salary at target
William H. Weintraub 100% of 1-1-94 1994 - 1996 $ 8,226** $ 82,250** $165,500**
salary at target 3,543* 35,431* 70,862*
</TABLE>
* Number of options to be granted.
** Award of 1/2 restricted shares and 1/2 cash.
Under the Long-Term Incentive Plan (LTIP), payout targets are
dependent on cumulative Return on Invested Capital (ROIC) which is defined as
earnings before interest expense and after tax, divided by debt plus equity. The
LTIP cycle is three years, with any payout at the beginning of the fourth year.
Under the first cycle, the earliest potential payout is for 1994-1996.
Participants elect the form of payout from several options. The first option
is to receive one-half of the payout in cash, one-half in shares of restricted
stock. Restricted shares will be fully vested, but will be restricted from
sale for a period of five years. The second option allows the participant to
use the cash portion of payout to purchase discounted shares of stock (based
on 75% of the fair market value of the stock at the time of payout.) Shares
purchased under this option are fully vested, but cannot be sold for a period
of three years.The third option allows the participant to elect a percentage
(a multiple of10, but not more than 100) of the total award amount to be
received in the form of stock options; the number of options to be three times
the total award amount divided by the fair market value of the stock at the
time the participant enters the LTIP. The options will be fully vested and
have a ten-year term. The remainder of the award, if the percentage elected
is less than 100%, will be awarded one-half in cash, one-half in restricted
shares of stock. All shares will receive dividends during the restriction
period.
V. PENSION PLAN TABLE
The following table sets forth annual retirement benefits for
representative years of service and average annual earnings.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION YEARS OF SERVICE
10 20 30 40
<S> <C> <C> <C> <C>
$ 125,000 $ 21,875 $ 43,750 $ 65,625 $ 71,875
150,000 26,250 52,500 78,750 86,250
175,000 30,625 61,250 91,875 100,625
200,000 35,000 70,000 105,000 115,000*
225,000 39,375* 78,750* 118,125* 129,375*
250,000 43,750* 87,500* 131,250* 143,750*
275,000 48,125* 96,250* 144,375* 158,125*
300,000 52,500* 105,000* 157,500* 172,500*
325,000 56,875* 113,750* 170,625* 186,875*
350,000 61,250* 122,500* 183,750* 201,250*
375,000 65,625* 131,250* 196,875* 215,625*
400,000 70,000* 140,000* 210,000* 230,000*
425,000 74,375* 148,750* 223,125* 244,375*
450,000 78,750* 157,500* 236,250* 258,750*
475,000 83,125* 166,250* 249,375* 273,125*
500,000 87,500* 175,000* 262,500* 287,500*
</TABLE>
*Maximum permissible benefit under ERISA from the qualified
retirement income plan for 1994 was $118,800 and annual compensation
in excess of $150,000 is not considered for benefits under the qualified plan.
The Company has a non-qualified supplemental retirement plan to provide
full accrued benefits to all employees in excess of IRS maximums.
Annual average compensation covered by the retirement plan and
credited years of service for individuals named in Item 11(a) are as follows:
William K. Coors - $247,340 and 55 years; Peter H. Coors - $456,339 and
23 years; and Alvin C. Babb - $280,224 and 41 years; W. Leo Kiely III -
$379,454 and 1 year; William H. Weintraub - $270,479 and 1 year.
The Company's principal retirement income plan is a defined benefit
plan. The amount of contribution for officers is not included in the above
table since total plan contributions cannot be readily allocated to individual
employees. The Company's most recent actuarial valuation was as of January 1,
1994, in which the ratio of plan contributions to total compensation covered
by the plan was approximately 9.2%. Covered compensation is defined as the
total base salary (average of three highest consecutive years out of the
last ten) of employees participating in the plan, including commissions
but excluding bonuses and overtime pay. Compensation also includes amounts
deferred by the individual under Internal Revenue Code Section 401(k) and
any amounts deferred into a plan under Internal Revenue Code Section 125.
Normal retirement age under the plan is 65. An employee with at least 5 years
of vesting service may retire as early as age 55. Benefits are reduced for
early retirement based on an employee's age and years of service at
retirement; however, benefits are not reduced if (1) the employee is at
least age 62 when payments commence or (2) the employee's age
plus years of service equal at least 85 and the employee has worked
for CBC at least 25 years. The amount of pension actually accrued under the
pension formula is in the form of a straight line annuity.
In addition to the annual benefit from the qualified Retirement
Plan, two of the named executives are covered by salary continuation agreements.
These agreements provide for a lump sum cash payment to the officer upon
normal retirement in an amount actuarially equivalent in value to 30% of the
officer's last annual base salary, payable for the remainder of the officer's
life, but not less than 10 years. If the officer should die after age 55, the
surviving spouse receives the lump sum. The interest rate used in calculating
the lump sum is determined using 80% of the annual average yield of the 10-year
Treasury constant maturities for the month preceding the month of retirement.
Using 1994 eligible salary amounts as representative of the last annual
base salary, the estimated annual benefit upon normal retirement for
these officers would be: Peter H. Coors- $140,500
and Alvin C. Babb - $86,900.
Compensation of Directors
The Company adopted the Equity Compensation Plan for Non-Employee
Directors (EC Plan) effective May 16, 1991. The EC Plan provides for two grants
of Adolph Coors Company's Class B (non-voting) common stock to non-employee
(NE) directors. The first grant is automatic and equals 20% of the
annual retainer. The second grant is elective and allows the NE directors
to take a portion, or all, of the remaining annual retainer in stock.
Amounts of both grants are determined by the market value of the shares on
the date of grant. Shares received under either grant may not be sold or
disposed of before completion of the annual term. The Company reserved
50,000 shares of stock to be issued under the EC Plan. The retainer for the
1992-1993 term was $25,000 plus $1,500 per meeting. Beginning with the
1993-1994 annual term the Company increased the NE directors' annual
retainer to $32,000 and eliminated the per meeting fee.
The NE members of the Board of Directors in 1993 were paid 50% of
the $25,000 annual retainer for the 1992-1993 term plus $1,500 per meeting and
50% of the $32,000 annual retainer for the 1993-1994 term and reimbursement of
expenses incurred to perform their duties as directors. Directors who are
full-time employees of the Company receive $15,000 annually. All directors
are reimbursed for any expenses incurred while attending Board of Directors or
committee meetings and in connection with any other CBC business. In
addition, Joseph Coors, as a director and retired executive officer, is
provided an office, transportation and secretarial support from CBC.
Employment Contracts and Termination of Employment Arrangements
CBC has no agreements with executives or employees providing
employment for a set period. W. Leo Kiely III, President and COO, has an
agreement with CBC that provided for a guaranteed bonus equal to 50% of
base salary for the first and second year of his employment (1993 and 1994).
In the event of termination without cause prior to June 1, 1995, CBC would
pay his base monthly salary plus the guaranteed bonus for 30 months. If
Mr. Kiely were terminated without cause on or after June 1, 1995, he would
receive his then current salary for 18 months plus 1 1/2 times his last
bonus amount. In either case, health benefits would
continue through the payout period or when he commenced other employment if
earlier.
William H. Weintraub, Senior Vice President, Marketing, has an
agreement which provided for a guaranteed bonus equal to 40% of base salary
for 1993 and 1994. It provides that, if Mr. Weintraub were terminated without
cause prior to July 1, 1995, he would receive 15 months of salary plus the 40%
bonus for that period.
In 1993, Alvin C. Babb, Senior Vice President, Operations & Technology, and
CBC entered into an agreement providing for certain payments to Mr. Babb if
his employment terminates on or before December 31, 1996. CBC would pay Mr.
Babb an amount equal to two times his salary plus a lump-sum payment under
his salary continuation agreement using a 5% discount factor and would pay any
differential between medical benefits then provided and medical benefits
provided under CBC's 1993 medical program.
The standard severance program for officers is one year of base salary plus a
prorated portion of any earned bonus for the year of severance.
Comparison of 5-year Cumulative Total Return*
<TABLE>
<CAPTION>
Indexed/Cumulative Returns
1989 1990 1991 1992** 1993
1994
<S> <C> <C> <C> <C> <C>
<C>
S & P 500 Index 100.00 96.90 126.42 136.06 149.76
151.74
S & P Bev-Alcoholic 100.00 106.26 111.49 132.94 134.64
142.58
Coors 100.00 104.57 143.53 136.86 129.56
142.43
</TABLE>
*Assumes that the value of the investment in ACC Common Stock and
each index was $100 on December 25, 1989, and that all dividends were
reinvested.
**Results for 1992 includes $7.92 for the spin-off occurring in
December 1992.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished
the following report on executive compensation for Adolph Coors Company's
operating subsidiary, Coors Brewing Company (CBC). This report represents
Adolph Coors Company's compensation philosophy for fiscal year 1994.
Overview of Compensation Strategy for Executives
Under the supervision of the three member 1994 Compensation Committee of the
Board of Directors, the Company continued to support the philosophy
that compensation policies, plans and programs must enhance the
profitability of the Company by linking financial incentives of senior
CBC management with the Company's financial performance. While the base
salary philosophy remained the same, all incentive programs were changed
to drive shareholder value and increase profitability.
Annual base salaries were set at median levels found in the
external market. A more aggressive posture was adopted for base salaries
for senior officers who have accountability for major functions. Incentive
compensation strategies were tied to Company performance and shareholder
return to encourage a greater return on invested capital and to increase
share price.
The Compensation Committee's compensation strategy for CBC's CEO
and other executive officers consisted of:
-targeting base salary to the 50th percentile of relevant,
broadly-defined external markets;
-a Company-wide annual profit sharing program under which all eligible
employees share profits based on an equal percentage of payout;
-providing an annual cash incentive award targeted at the 75th
percentile of the same external markets;
-providing annual stock grants designed to increase shareholder
return;
-developing a long-term incentive plan designed to increase return on
invested capital.
Relationship of Performance to Specific Elements of the
Compensation Strategy
Following are brief descriptions that outline details and performance measures
of each component of the 1994 executive compensation strategy.
Base Salary
The Company used compensation survey data to determine salaries
competitive at the 50th percentile for like positions in similar sized
manufacturing companies. Company size was determined by total net sales.
Salary ranges were established for executives by using the 50th percentile
market data as the mid-point, with a 50% spread between minimum and
maximum. Where the executive was paid within the range was determined by
individual performance.
Annual Profit Sharing Program
All full time and part time employees of the Company are eligible for a payout
based on annual pre-tax profit goals being met. Payouts to all
employees are based on an equal percentage of their 1994 eligible earnings.
Management Incentive Compensation Program
In 1994, the annual Management Incentive Compensation Program was changed to
drive both Company profitability and individual performance. Executive officers
and other key management personnel were measured based on pre-tax
profit and written individual performance plans tied to Company objectives.
Payout may only occur after profit objectives are realized. The Compensation
Committee approved annual pre-tax profit objectives as well as minimum and
maximum payout levels within the program. Annual targets were met and payouts
to all eligible employees were based on those profit and individual
performance results as a percentage of their beginning 1994 salary.
In 1994, the Chief Operating Officer and Senior Vice President of
Marketing, as part of their agreements with CBC, earned a cash incentive
award based on a percentage of their 1994 base salary.
Annual Stock Option Grants
In 1994, the Committee approved granting of stock options to the executive
officers and to other key management personnel. Options were granted as a
percentage of base salary and based on the individual's level in
the organization. Options were granted with a ten year term. Option
vesting is based on a one year holding period and an increase in share value.
Options vest 10% for each one dollar increase in fair market value. All
options vest after nine years regardless of share value increase. Options
were granted through the 1990 Equity Incentive Plan (1990 EI Plan).
The 1990 EI Plan was administered by the Compensation Committee.
That committee was composed of non-employee, independent directors. The 1990
EI Plan provided that options be granted at exercise prices equal to the fair
market value on the date the option was granted.
Long Term Incentive Plan
In 1994, the Committee established a Long Term Incentive Plan (LTIP).
Participants are all officers and selected key personnel. The plan
is on a biannual basis. Each plan has a three year measurement cycle (first
plan cycle is for years 1994 through 1996). The plan measures cumulative
return on invested capital. The Committee established both minimum and
maximum payout levels for participants as a percentage of 1994 salary and
level within the organization. The plan provides for three different options
regarding payout, which must be elected before the start of the plan cycle.
The first option of payout is to receive one-half of the payout in
restricted shares, one-half in cash. The restricted shares have a five year
restriction. The second option is to take the cash portion of the first option
to purchase shares of Company stock at a 25% discount, with a three year
restriction on the purchased shares. The third option is to take stock options
in lieu of both restricted shares and cash in 10% increments at a three to one
ratio. These options have a ten year term with no further restrictions.
CEO Compensation for 1994
The CEO's compensation for 1994 did not reflect any of the incentive elements
of the Company's compensation strategy. While fully supportive of
the executive compensation strategy and fully committed to the Company goal
of improved profitability and an increase in shareholder value, CEO William K.
Coors has elected not to participate in the incentive programs. It is Mr.
Coors' belief that his compensation, although low relative to market and
industry standards, is adequate to support his needs and that, given his
strong commitment to corporate goals and objectives, financial incentives
would not enhance his motivation to achieve superior performance. Mr. Coors
did however, receive a 8.0% increase in base salary, which was his first
increase in salary over the past twelve years.
Luis G. Nogales, Chairman
Joseph Coors
J. Bruce Llewellyn
Compensation Committee Interlocks and Insider Participation
Joseph Coors, J. Bruce Llewellyn and Luis G. Nogales served on the
Compensation Committee during the past fiscal year. Joseph Coors, retired as
the President and Chief Operating Officer of the Company in December 1987.
Joe Coors sold a Coors beer distributorship in Cincinnati, Ohio on
December 31, 1993.
Joseph Coors is a director of both ACC and ACXT. He, along with
William K. Coors, a Director of both ACC and ACXT, and Peter H. Coors, a
Director and an executive officer of ACC, are trustees of several family trusts
that collectively own a majority of the common stock of ACXT. ACC and
ACXT, or their subsidiaries, have certain business relationships and have
engaged in certain transactions with one another, as described below.
In connection with the spin-off of ACXT in December 1992, CBC
entered into market-based, long-term supply contracts with certain ACXT
subsidiaries to provide packaging, aluminum and starch products to CBC. Under
the packaging supply agreement, CBC agreed to purchase from an ACXT subsidiary
substantially all of CBC's paperboard and label requirements through 1997.
Under the aluminum supply agreement, CBC agreed to purchase from another ACXT
subsidiary all of CBC's requirements for aluminum can end stock and a
substantial amount of CBC's tab stock needs, as well as substantial
quantities of body stock through 1994. In addition, CBC agreed to purchase
substantial volumes ofaluminum stock to meet CBC's requirements, based on
absolute pounds or percentages of CBC needs through 1997. ANC is acting as a
purchasing agent under the agreement for the CBC/ANC end and can joint
venture. These supply contracts are a material source of revenue for ACXT
and provide CBC a stable source for a significant portion of its raw
materials and packaging materials. In addition, CBC sells brewery by-
products to an ACXT subsidiary and sells aluminum scrap from CBC's
can making operations to another ACXT subsidiary.
Also in connection with the spin-off, ACC and ACXT and their
subsidiaries negotiated several other agreements, including employee matters,
environmental management, tax sharing, trademark licensing agreements. In
addition, there were numerous one-year transitional agreements for various
services and materials. A few continuing service agreements between ACC and
ACXT subsidiaries include agreements under which Coors Energy Company supplies
natural gas to certain Colorado facilities of ACXT and an agreement by CBC to
provide water and waste water treatment services for an ACXT ceramics facility.
A joint defense agreement that commenced at the time of the spin-off is in
effect with respect to the TransRim litigation described in Item 3, Legal
Proceedings. A description of the foregoing agreements was included in the
Company's report on Form 8-K dated December 27, 1992, in Exhibit B,
"Information Statement," dated December 9, 1992, mailed by the Company to its
shareholders.
CBC is a limited partner in a limited partnership, formed in
connection with the spin-off, with an ACXT subsidiary as general partner. The
partnership owns, develops, operates and sells certain real estate previously
owned directly by CBC or ACC. Each partner is obligated to make additional cash
contributions of up to $500,000 upon call of the general partner. Distributions
of $1,000,000 were made to both partners in 1994. Distributions are allocated
equally between the partners until CBC recovers its investment, and thereafter
80% to the general partner and 20% to CBC.
In 1993, CBC sold certain laboratory facilities and technology to
an ACXT subsidiary for approximately $350,000, the estimated fair value of
the assets. In addition, certain subsidiaries of ACC and ACXT are parties to
miscellaneous market-based transactions. For instance, CBC buys ceramic can
tooling from an ACXT subsidiary to test on CBC can lines and CBC serves as
aggregator for long distance telephone services for itself and certain ACXT
companies. During 1994, a lease of office space from CBC to the limited
partnership, mentioned above, terminated.
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth stock ownership of persons holding
in excess of five percent of any class of voting securities, as of
March 15, 1995:
<TABLE>
<CAPTION>
Name and
Address of Amount and Nature
Title of Beneficial of Beneficial Percent
Class Owner Ownership of Class
-------- ----------------- -------------------- ----------
<S> <C> <C> <C>
Class A Adolph Coors, Jr. 1,260,000 shares for 100%
Common Trust, Golden benefit of William K.
Stock Colorado, William K. Coors, Joseph Coors
(voting) Coors, Joseph Coors, and May Coors Tooker
Joseph Coors, Jr., and their lineal
Jeffrey H. Coors and descendants living
Peter H. Coors, Trustees at distribution
</TABLE>
In addition, certain officers and directors hold interests in other
family trusts, as indicated in Item 12, Section (b) (1) following.
(b) Security Ownership of Management
The following table sets forth stock ownership of the Company's
directors, and all executive officers and directors as a group, as of
March 15, 1995:
<TABLE>
<CAPTION>
Exercisable
Options/
Restricted
Shares Stocks
Title of Name of Beneficially Awards Percent
Class Beneficial Owner Owned (2) Total of Class
-------- ----------------- ------------- --------------------- ----------
<S> <C> <C> <C> <C> <C>
Class B Joseph Coors 1,149 (1) 323 1,472(1) (1)
Common Peter H. Coors 36,451 (1) 177,208 213,659(1) (1)
Stock William K. Coors (1) (1) (1)
(non- J. Bruce Llewellyn 3,066 1,129 4,195
voting) Luis G. Nogales 816 323 1,139
Wayne R. Sanders 2,000 2,000
Alvin C. Babb 100 27,625 27,725
W. Leo Kiely III 10,000 17,126 27,126
All Executive
Officers and
Directors as a
Group (15 persons) 19,312,727 301,060 19,613,787 53%
</TABLE>
(1) William K. Coors and Peter H. Coors are two of the trustees of
the Adolph Coors Foundation, which owns 732,413 shares of Class B Common
Stock. William K. Coors, Joseph Coors and Peter H. Coors are trustees, in
addition to other trustees, and beneficiaries or contingent beneficiaries in
certain cases, of various trusts that own an aggregate of 16,762,111 shares.
These individuals, and others, are trustees of five other trusts owning
1,762,921 shares. In certain of these trusts, they act solely as trustees and
have novested or contingent benefits. The total of these trust shares, together
with other management shares shown above, represents 53% of the total number
of shares ofsuch class outstanding.
(2) This represents exercisable options to purchase shares under
the Company's 1983 Non-Qualified Stock Option Plan and 1990 Equity Incentive
Plan (as amended in 1994) that could be exercised as of March 15, 1995. In
addition,it reflects restricted stock awards granted under the 1990 Equity
Incentive Plan. Vesting in the restricted stock is over a three year period
from date of grant. All restricted stock awards became fully vested at the time
of the ACXTspin-off. In the event of a change in control of the Company, all
vesting restrictions on the restricted stock awards would be lifted.
(c) Changes in Control.
There are no arrangements that would at some subsequent date result
in a change of control of the Company.
ITEM 13. Certain Relationships and Related Transactions
(a) & (b) For a description of certain business relationships and
related transactions see the discussion under the caption "Compensation
Committee Interlock and Insider Participation" contained in Item 11 of this
report.
(c) Indebtedness of Management
Loans are made available to employees in connection with the
exercise of stock options. No such loans were made or outstanding in 1994.
There was no other indebtedness in excess of $60,000 between the
Company and any member of management or others that have a direct or indirect
interest in the Company.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements: See index of financial statements
in Item 8.
(2) Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Certain financial schedules that were presented in previous years'
reports are no longer required by Regulation S-X. These schedules have been
omitted from this report.
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
ADOLPH COORS COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING
ACCOUNTS
Additions
Balance at charged to Balance
beginning costs and Other at end
of year expenses additions Deductions of year
(In thousands)
Allowance for doubtful
receivables (deducted
from accounts receivable)
Year Ended
<S> <C> <C> <C>
December 27, 1992 (c) $ 46 $ 23 $ --(a) ($ 57) (b) $ 12
December 26, 1993 $ 12 $ 493 $ --(a) ($ 96) (b) $ 409
December 25, 1994 $ 409 $ -- $ --(a) ($ 385) (b) $ 24
(a) Collections of accounts previously written off and additions
through acquisition of businesses.
(b) Write-off of uncollectible accounts.
(c) Restated for discontinued operations.
</TABLE>
<PAGE>
(3) Exhibits:
Exhibit 3.1 - Amended Articles of Incorporation.
(Incorporated by reference to Exhibit 3.1 to Form 10-K for
the fiscal year ended December 30, 1990)
Exhibit 3.2 - Amended By-laws. (Incorporated by reference to Exhibit 3.2
to Form 10-Q for the fiscal quarter ended June 13, 1993)
Exhibit 4.1 - Form of Indenture for Adolph Coors Company Senior Debt
Securities. (Incorporated by reference to Exhibit 4 to
Registration Statement on Form S-3 filed March 14, 1990
and amended on March 26, 1990, file No.33-33831). Upon
request, the Company agrees to provide a copy of any debt
instrument as applicable under Regulation S-K, Item 601,
(b)(4)(iii).
Exhibit 10.1 - Officers' Life Insurance Program. (Incorporated by
reference to Exhibit 10 to Form 10-K for the fiscal year
ended December 28, 1980)
Exhibit 10.2* - Officers and Directors Salary Continuation Agreement.
(Incorporated by reference to Exhibit 10 to Form 10-K for
the fiscal year ended December 26, 1982)
Exhibit 10.3* - Adolph Coors Company 1983 Non-Qualified Stock Option Plan,
as amended effective February 13, 1992 (Incorporated by
reference to Exhibit 10.3 to Form 10-K for the fiscal year
ended December 29, 1991)
Exhibit 10.4* - Model of Coors Brewing Company Annual Incentive Plan
Exhibit 10.5* - Coors Brewing Company Long-Term Incentive Plan, 1994-1996
Plan Cycle.
Exhibit 10.6* - Adolph Coors Company Equity Incentive Plan. Amended as of
May 12, 1994.
Exhibit 10.7* - Coors Brewing Company Employee Profit Sharing Program.
(Incorporated by reference to Exhibit 10.8 to Form 10-K
for the fiscal year ended December 31, 1989)
Exhibit 10.8 - Adolph Coors Company Non-Employee Director Compensation
Deferral Plan. (Incorporated by reference to Exhibit 10.9
to Form 10-K for the fiscal year ended December 31, 1989)
Exhibit 10.9 - Agreement between Adolph Coors Company and a former
Executive Officer and current Director. (Incorporated by
reference to Exhibit 10.10 to Form 10-K for the fiscal
year ended December 31, 1989)
Exhibit 10.10 - Form of Coors Brewing Company Distributorship Agreement.
(Introduced 1989) (Incorporated by reference to Exhibit
10.11 to Form 10-K for the fiscal year ended December 31,
1989)
Exhibit 10.11 - Adolph Coors Company Water Augmentation Plan.
(Incorporated by reference to Exhibit 10.12 to Form 10-K
for the fiscal year ended December 31, 1989)
Exhibit 10.12 - Adolph Coors Company Equity Compensation Plan for Non-
Employee Directors (Incorporated by reference to Exhibit
4.1 to registration Statement on Form S-8 filed on
May 21, 1991, file No. 33-40730)
Exhibit 10.13 - Distribution Agreement dated as of October 5, 1992,
between the Company and ACX Technologies, Inc.
(Incorporated herein by reference to the Distribution
Agreement included as Exhibits 2, 19.1 and 19.1A to the
Registration Statement on Form 10 filed by ACX
Technologies, Inc. (file No. 0-20704) with the Commission
on October 6, 1992, as amended.)
Exhibit 10.14* - Employment Contracts and Termination of Employment
Agreements for W. Leo Kiely III, Alvin C. Babb and William
H. Weintraub. (Incorporated by reference to Exhibit 10.17
to Form 10-K for the fiscal year ended December 26, 1993)
Exhibit 10.15 - Revolving Credit Agreement, dated as of
December 12, 1994.
Exhibit 21 - Subsidiaries.
Exhibit 23 - Consent of Independent Accountants.
*Represents a management contract.
<PAGE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter ended
December 25, 1994.
(c) Other Exhibits
No exhibits in addition to those previously filed and listed in
Item 14 (a) (2) are filed herein.
(d) Other Financial Statement Schedules
No additional financial statement schedules are required.
Other Matters
For the purpose of complying with the amendments to the rules
governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933,
the undersigned registrant hereby undertakes as follows, which undertaking shall
be incorporated by reference into registrant's Registration Statements on
Form S-8No. 33-2761 (filed January 17, 1986), 33-35035 (filed May 24, 1990) and
33-40730 (filed May 21, 1991) and on Form S-3 No. 33-33831 (filed
March 14, 1990):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 Act and will be governed by the final adjudication of such
issue.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 21
ADOLPH COORS COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
The following table lists subsidiaries of the Registrant and the
respective jurisdictions of their organization or incorporation as of
December 25, 1994. All subsidiaries are included in Registrant's consolidated
financial statements.
State/Country of
Organization or
Name Incorporation
------------------------------- ------------------------------
<S> <C>
Coors Brewing Company Colorado
CBC International, Inc. Colorado
Coors Brewing International C.V.* The Netherlands
Coors Brewing Iberica, S.A. Spain
Coors Distributing Company Colorado
Coors Energy Company Colorado
Gap Run Pipeline Company Colorado
Coors Global, Inc. Colorado
Coors Intercontinental, Inc. Colorado
Coors International, Inc. Delaware
Coors Transportation Company Colorado
The Rocky Mountain Water Company Colorado
The Wannamaker Ditch Company Colorado
* Organized as a partnership.<PAGE>
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statement on Form S-3
(No.33-33831) and in the Registration Statements on Form S-8 (No. 33-2761),
(No.33-35035) and (No. 33-40730) of Adolph Coors Company of our report dated
February 28, 1995 appearing on page of this Form 10-K.
PRICE WATERHOUSE LLP
Denver, Colorado
March 24, 1995
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
ADOLPH COORS COMPANY
By /s/ William K. Coors
--------------------
William K. Coors
Chairman and President
(Chief Executive Officer)
By /s/ Timothy V. Wolf
--------------------
Timothy V. Wolf
Vice President, Treasurer,
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following directors on behalf of
the Registrant and in the capacities and on the date indicated.
By /s/ Joseph Coors By /s/ J.Bruce Llewellyn
------------------ ----------------------
Joseph Coors J.Bruce Llewellyn
Vice Chairman
By /s/ Peter H. Coors By /s/ LuisG. Nogales
------------------ -------------------
Peter H. Coors Luis G.Nogales
Chief Executive Officer
Coors Brewing Company
By /s/ Wayne R. Sanders
--------------------
Wayne R. Sanders
March 24, 1995
</TABLE>
ADOLPH COORS COMPANY EQUITY INCENTIVE PLAN
Amended and restated effective May 12, 1994
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Section 1 - Introduction 1
1.1 Establishment and Amendment 1
1.2 Purposes 1
1.3 Effective Date 1
Section 2 - Definitions 1
2.1 Definitions 1
2.2 Gender and Number 3
Section 3 - Plan Administration 3
Section 4 - Stock Subject to the Plan 4
4.1 Number of Shares 4
4.2 Other Shares of Stock 4
4.3 Adjustments for Stock Split, Stock Dividend, Etc 4
4.4 Other Distributions and Changes in the Stock 4
4.5 General Adjustment Rules 5
4.6 Determination by the Committee, Etc 5
Section 5 - Reorganization or Liquidation 5
Section 6 - Participation 6
6.1 In General 6
6.2 Restriction on Award Grants to Certain Individuals 6
Section 7 - Stock Options 7
7.1 Grant of Stock Options 7
7.2 Stock Option Certificates 7
7.3 Shareholder Privileges 10
Section 8 - Restricted Stock Awards 10
8.1 Grant of Restricted Stock Awards 10
8.2 Restrictions 10
8.3 Privileges of a Stockholder, Transferability 11
8.4 Enforcement of Restrictions 11
Section 9 - Purchase of Stock 11
9.1 General 11
9.2 Other Terms 11
Section 10 - Other Common Stock Grants 11
Section 11 - Company Right to Purchase Stock 12
11.1 Right of First Refusal 12
11.2 Marking of Certificates 13
Section 12 - Change in Control 13
12.1 In General 13
12.2 Limitation on Payments 13
12.3 Definition 13
Section 13 - Rights of Employees; Participants 14
13.1 Employment 14
13.2 Nontransferability 14
Section 14 - General Restrictions 15
14.1 Investment Representations 15
14.2 Compliance With Securities Laws 15
14.3 Changes in Accounting Rules 15
Section 15 - Other Employee Benefits 15
Section 16 - Plan Amendment, Modification and Termination 16
Section 17 - Withholding 16
17.1 Withholding Requirement 16
17.2 Withholding With Stock 16
Section 18 - Requirements of Law 16
18.1 Requirements of Law 16
18.2 Federal Securities Law Requirements 16
18.3 Governing Law 17
Section 19 - Duration of the Plan 17
/TABLE
<PAGE>
ADOLPH COORS COMPANY EQUITY INCENTIVE PLAN
Amended and restated, effective May 12, 1994
Section 1
Introduction
1.1 Establishment and Amendment. Adolph Coors Company, a Colorado
corporation (hereinafter referred to, together with its Affiliated
Corporations (as defined in subsection 2.1(a)) as the "Company"
except where the context otherwise requires), established the
Adolph Coors Company Equity Incentive Plan (the "Plan") for certain
key employees of the Company. The Plan, which permits the grant of
stock options and restricted stock awards to certain key employees
of the Company, was originally effective January 1, 1990. Pursuant
to the power granted in Section 16 (Section 14 prior to the Plan's
amendment and restatement), the Company hereby amends and restates
the Plan in its entirety, effective May 12, 1994.
1.2 Purposes. The purposes of the Plan are to provide the key
management employees selected for participation in the Plan with
added incentives to continue in the service of the Company and to
create in such employees a more direct interest in the future
success of the operations of the Company by relating incentive
compensation to the achievement of long-term corporate economic
objectives, so that the income of the key management employees is
more closely aligned with the income of the Company's shareholders.
The Plan is also designed to attract key employees and to retain
and motivate participating employees by providing an opportunity
for investment in the Company.
1.3 Effective Date. The original effective date of the Plan (the
"Effective Date") was January 1, 1990. The Plan, each amendment to
the Plan, and each option or other award granted hereunder is
conditioned on and shall be of no force or effect until approval of
the Plan by the holders of the shares of voting stock of the
Company unless the Company, on the advice of counsel, determines
that shareholder approval is not necessary.
Section 2
Definitions
2.1 Definitions. The following terms shall have the meanings set
forth below:
(a) "Affiliated Corporation" means any corporation or other
entity (including but not limited to a partnership) which is
affiliated with Adolph Coors Company through stock ownership or
otherwise and is treated as a common employer under the provisions
of Sections 414(b) and (c) of the Internal Revenue Code.
(b) "Award" means an Option or a Restricted Stock Award
issued hereunder, an offer to purchase Stock made hereunder, or a
grant of Stock made hereunder.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means a committee consisting of members of
the Board who are empowered hereunder to take actions in the
administration of the Plan. The Committee shall be so constituted
at all times as to permit the Plan to comply with Rule 16b-3 or any
successor rule promulgated under the Securities Exchange Act of
1934 (the "1934 Act"). Members of the Committee shall be appointed
from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board.
(e) "Effective Date" means the original effective date of the
Plan, January 1, 1990.
(f) "Eligible Employees" means those key management employees
(including without limitation, officers and directors who are also
employees) of the Company or any division thereof, upon whose
judgement, initiative and efforts the Company is, or will become,
largely dependent for the successful conduct of their business.
(g) "Fair Market Value" means the average of the highest and
lowest prices of the Stock as reported on the National Association
of Securities Dealers Automated Quotation System("NASDAQ") on a
particular date. If there are no Stock transactions on such date,
the Fair Market Value shall be determined as of the immediately
preceding date on which there were Stock transactions. If the
price of the Stock is not reported on NASDAQ, the Fair Market Value
of the Stock on the particular date shall be as determined by the
Committee using a reference comparable to the NASDAQ system. If,
upon exercise of an Option, the exercise price is paid by a
broker's transaction as provided in section 7.2(g)(ii)(D), Fair
Market Value, for purposes of the exercise, shall be the price at
which the Stock is sold by the broker.
(h) "Internal Revenue Code" means the Internal Revenue Code
of 1986, as it may be amended from time to time.
(i) "Option" means a right to purchase Stock at a stated
price for a specified period of time. All Options granted under
the Plan shall be "non-qualified stock options" whose grant is not
intended to fall under the provisions of Section 422A of the
Internal Revenue Code.
(j) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance
with subsection 7.2(b).
(k) "Participant" means an Eligible Employee designated by
the Committee from time to time during the term of the Plan to
receive one or more of the Awards provided under the Plan.
(l) "Restricted Stock Award" means an award of Stock granted
to a Participant pursuant to Section 8 that is subject to certain
restrictions imposed in accordance with the provisions of such
Section.
(m) "Stock" means the no par value Class B (non-voting)
Common Stock of the Company.
(n) "Voting Stock" means the $1.00 par value Class A Common
Stock of the Company.
2.2 Gender and Number. Except when otherwise indicated by the
context, the masculine gender shall also include the feminine
gender, and the definition of any term herein in the singular shall
also include the plural.
Section 3
Plan Administration
The Plan shall be administered by the Committee. In accordance
with the provisions of the Plan, the Committee shall, in its sole
discretion, select the Participants from among the Eligible
Employees, determine the Options, Restricted Stock Awards and other
Awards to be granted pursuant to the Plan, the number of shares of
Stock to be issued thereunder and the time at which such Options
and Restricted Stock Awards are to be granted, fix the Option
Price, period and manner in which an Option becomes exercisable,
establish the duration and nature of Restricted Stock Award
restrictions establish the terms and conditions on which an offer
to purchase Stock will be made, and establish such other terms and
requirements of the various compensation incentives under the Plan
as the Committee may deem necessary or desirable and consistent
with the terms of the Plan. The Committee shall determine the form
or forms of the agreements with Participants which shall evidence
the particular provisions, terms, conditions, rights and duties of
the Company and the Participants with respect to Awards granted
pursuant to the Plan, which provisions need not be identical except
as may be provided herein. The Committee may from time to time
adopt such rules and regulations for carrying out the purposes of
the Plan as it may deem proper and in the best interests of the
Company. The Committee may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or in any agreement
entered into hereunder in the manner and to the extent it shall
deem expedient and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any
action or determination made in good faith. The determinations,
interpretations and other actions of the Committee pursuant to the
provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.
Section 4
Stock Subject to the Plan
4.1 Number of Shares. Two Million (2,000,000) shares of Stock are
authorized for issuance under the Plan in accordance with the
provisions of the Plan and subject to such restrictions or other
provisions as the Committee may from time to time deem necessary.
This authorization may be increased from time to time by approval
of the Board and by the shareholders of the Company if, in the
opinion of counsel for the Company, such shareholder approval is
required. Shares of Stock that may be issued upon exercise of
Options, that are issued as Restricted Stock Awards, that are
purchased under the Plan, and that are used as incentive compensa-
tion under the Plan shall be applied to reduce the maximum number
of shares of Stock remaining available for use under the Plan. The
Company shall at all times during the term of the Plan and while
any Options are outstanding retain as authorized and unissued Stock
at least the number of shares from time to time required under the
provisions of the Plan, or otherwise assure itself of its ability
to perform its obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject
to an Option that expires or for any reason is terminated unexer-
cised, any shares of Stock that are subject to an Award (other than
an Option) and that are forfeited, any shares of Stock withheld for
the payment of taxes or received by the Company as payment of the
exercise price of an Option and any shares of Stock that for any
other reason are not issued to an Eligible Employee or are
forfeited shall automatically become available for use under the
Plan. However, any shares of Stock that are subject to an Award
(other than an Option) and that are forfeited and any shares of
Stock that are withheld for the payment of taxes or received by the
Company as payment of the exercise price of an Option shall be
available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the
Company shall at any time increase or decrease the number of its
outstanding shares of Stock or change in any way the rights and
privileges of such shares by means of the payment of a stock
dividend or any other distribution upon such shares payable in
Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the
Stock, then in relation to the Stock that is affected by one or
more of the above events, the numbers, rights and privileges of the
following shall be increased, decreased or changed in like manner
as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of
Stock as to which Awards may be granted under the Plan; and (ii)
the shares of the Stock then included in each outstanding Award
granted hereunder.
4.4 Other Distributions and Changes in the Stock. If
(a) the Company shall at any time distribute with respect to
the Stock assets or securities of persons other than the Company
(excluding cash or distributions referred to in Section 4.3),
(b) the Company shall at any time grant to the holders of its
Stock rights to subscribe pro rata for additional shares thereof or
for any other securities of the Company, or
(c) there shall be any other change (except as described in
Section 4.3), in the number or kind of outstanding shares of Stock
or of any stock or other securities into which the Stock shall be
changed or for which it shall have been exchanged,
and if the Committee shall in its discretion determine that the
event described in subsection (a), (b), or (c) above equitably
requires an adjustment in the number or kind of shares subject to
an Option or other Award, an adjustment in the Option Price or the
taking of any other action by the Committee, including without
limitation, the setting aside of any property for delivery to the
Participant upon the exercise of an Option or the full vesting of
an Award, then such adjustments shall be made, or other action
shall be taken, by the Committee and shall be effective for all
purposes of the Plan and on each outstanding Option or Award that
involves the particular type of stock for which a change was
effected. Notwithstanding the foregoing provisions of this Section
4.4, pursuant to Section 8.3 below, a Participant holding Stock
received as a Restricted Stock Award shall have the right to
receive all amounts, including cash and property of any kind,
distributed with respect to the Stock upon the Participant's
becoming a holder of record of the Stock.
4.5 General Adjustment Rules. No adjustment or substitution
provided for in this Section 4 shall require the Company to sell a
fractional share of Stock under any Option, or otherwise issue a
fractional share of Stock, and the total substitution or adjustment
with respect to each Option and other Award shall be limited by
deleting any fractional share. In the case of any such substitu-
tion or adjustment, the total Option Price for the shares of Stock
then subject to the Option shall remain unchanged but the Option
Price per share under each such Option shall be equitably adjusted
by the Committee to reflect the greater or lesser number of shares
of Stock or other securities into which the Stock subject to the
Option may have been changed, and appropriate adjustments shall be
made to Restricted Stock Awards to reflect any such substitution or
adjustment.
4.6 Determination by the Committee, Etc. Adjustments under this
Section 4 shall be made by the Committee, whose determinations with
regard thereto shall be final and binding upon all parties thereto.
Section 5
Reorganization or Liquidation
If the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or
substantially all of the assets or more than 50% of the outstanding
voting stock of the Company is acquired by any other corporation,
business entity or person, or in case of a reorganization (other
than a reorganization under the United States Bankruptcy Code),
including a divisive reorganization under Section 355 of the Code,
or liquidation of the Company, and if the provisions of Section 12
do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to
the Plan and outstanding Options and other Awards, either (i) make
appropriate provision for the adoption and continuation of the Plan
by the acquiring or successor corporation and for the protection of
any such outstanding Options and other Awards by the substitution
on an equitable basis of appropriate stock of the Company or of the
merged, consolidated or otherwise reorganized corporation that will
be issuable with respect to the Stock, provided that no additional
benefits shall be conferred upon the Participants holding such
Options and other Awards as a result of such substitution, and the
excess of the aggregate Fair Market Value of the shares subject to
such Options immediately before such substitution over the Option
Price thereof is not more than the excess of the aggregate Fair
Market Value of the shares subject to such Options immediately
before such substitution over the Option Price thereof, or (ii)
upon written notice to the Participants, provide that all unexer-
cised Options must be exercised within a specified number of days
of the date of such notice or they will be terminated. In the
latter event, the Committee shall accelerate the exercise dates of
outstanding Options and accelerate the restriction period and
modify the performance requirements for any outstanding Awards so
that all Options and other Awards become fully vested prior to any
such event.
Section 6
Participation
6.1 In General. Participants in the Plan shall be those Eligible
Employees who, in the judgment of the Committee, are performing, or
during the term of their incentive arrangement will perform, vital
services in the management, operation and development of the
Company or an Affiliated Corporation, and significantly contribute,
or are expected to significantly contribute, to the achievement of
long-term corporate economic objectives. Participants may be
granted from time to time one or more Awards; provided, however,
that the grant of each such Award shall be separately approved by
the Committee, and receipt of one such Award shall not result in
automatic receipt of any other Award. Upon determination by the
Committee that an Award is to be granted to a Participant, written
notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Each Participant
shall, if required by the Committee, enter into an agreement with
the Company, in such form as the Committee shall determine and that
is consistent with the provisions of the Plan, specifying such
terms, conditions, rights and duties. Awards shall be deemed to be
granted as of the date specified in the grant resolution of the
Committee, which date shall be the date of any related agreement
with the Participant. In the event of any inconsistency between
the provisions of the Plan and any such agreement entered into
hereunder, the provisions of the Plan shall govern.
6.2 Restriction on Award Grants to Certain Individuals. Notwith-
standing the foregoing provisions of Section 6.1, no Awards shall
be granted to any lineal descendant of Adolph Coors, Jr. without
the prior written approval of counsel to the Company as to the
effect of any such grant on the possible status of the Company as
a "personal holding company" within the meaning of Section 542 of
the Internal Revenue Code.
Section 7
Stock Options
7.1 Grant of Stock Options. Coincident with or following
designation for participation in the Plan, a Participant may be
granted one or more Options. In no event shall the exercise of one
Option affect the right to exercise any other Option or affect the
number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 7.2(j).
7.2 Stock Option Certificates. Each Option granted under the Plan
shall be evidenced by a written stock option certificate. A stock
option certificate shall be issued by the Company in the name of
the Participant to whom the Option is granted (the "Option Holder")
and shall incorporate and conform to the conditions set forth in
this Section 7.2, as well as such other terms and conditions, not
inconsistent herewith, as the Committee may consider appropriate in
each case.
(a) Number of Shares. Each stock option agreement shall
state that it covers a specified number of shares of the Stock, as
determined by the Committee.
(b) Price. The price at which each share of Stock covered by
an Option may be purchased shall be determined in each case by the
Committee and set forth in the stock option certificate.
(c) Duration of Options; Restrictions on Exercise. Each
stock option agreement shall state the period of time, determined
by the Committee, within which the Option may be exercised by the
Option Holder (the "Option Period"), and shall also set forth any
installment or other restrictions on Option exercise during such
period, if any, as may be determined by the Committee.
(d) Termination of Employment, Death, Disability, Etc. Each
stock option agreement shall provide as follows with respect to the
excise of the Option upon termination of the employment or the
death of the Option Holder:
(i) If the employment of the Option Holder is terminated
within the Option Period for cause, as determined by the Company,
the Option shall thereafter be void for all purposes. As used in
this subsection 7.2(d), "cause" shall mean a gross violation, as
determined by the Company, of the Company's established policies
and procedures, provided that the effect of this subsection 7.2(d)
shall be limited to determining the consequences of a termination
and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to
the termination of any employee.
(ii) If the Option Holder retires from employment by the
Company or its affiliates during the Option Period pursuant to the
Company's retirement policy, or if the Option Holder becomes
disabled (as determined pursuant to the Company's Long-Term
Disability Plan), the Option may be exercised by the Option Holder,
or in the case of death by the persons specified in subsection
(iii) of this subsection 7.2(d), within thirty-six months following
his or her retirement or disability (provided that such excise must
occur within the Option Period), but not thereafter. In any such
case, the Option may be exercised only as to the shares as to which
the Option had become exercisable on or before the date of the
Option Holder's termination of employment.
(iii) If the Option Holder dies during the Option Period
while still employed or within the three-month period referred to
in (iv) below, or within the thirty-six-month period referred to in
(ii) above, the Option may be exercised by those entitled to do so
under the Option Holder's will or by the laws of descent and
distribution within fifteen months following the Option Holder's
death, (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be
exercised only as to the shares as to which the Option had become
exercisable on or before the date of the Option Holder's death.
(iv) If the employment of the Option Holder by the
Company is terminated (which for this purpose means that the Option
Holder is no longer employed by the Company or by a Affiliated
Corporation) within the Option Period for any reason other than
cause, retirement pursuant to the Company's retirement policy,
disability or the Option Holder's death, the Option may be
exercised by the Option Holder within three months following the
date of such termination (provided that such exercise must occur
within the Option Period), but not thereafter. In any such case,
the Option may be exercised only as to the shares as to which the
Option had become exercisable on or before the date of termination
of employment.
(e) Transferability. Each stock option agreement shall
provided that the Option granted therein is not transferable by the
Option Holder except by will or pursuant to the laws of descent and
distribution, and that such Option is exercisable during the Option
Holder's lifetime only by him or her, or in the event of disability
or incapacity, by his or her guardian or legal representative.
(f) Agreement to Continue in Employment. Each stock option
agreement shall contain the Option Holder's agreement to remain in
the employment of the Company, at the pleasure of the Company, for
a continuous period of at least one year after the date of such
stock option agreement, at the salary rate in effect on the date of
such agreement or at such changed rate as may be fixed, from time
to time, by the Company.
(g) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the
method for exercising the Option granted therein shall be by
delivery to the Corporate Secretary of the Company of written
notice specifying the number of shares with respect to which such
Option is exercised and payment of the Option Price. Such notice
shall be in a form satisfactory to the Committee and shall specify
the particular Option (or portion thereof) which is being exercised
and the number of shares with respect to which the Option is being
exercised. The exercise of the Stock Option shall be deemed
effective upon receipt of such notice by the Corporate Secretary
and payment to the Company. If requested by the Company, such
notice shall contain the Option Holder's representation that he or
she is purchasing the Stock for investment purposes only and his or
her agreement not to sell any Stock so purchased in any manner that
is in violation of the Securities Act of 1933, as amended, or any
applicable state law. Such restrictions, or notice thereof, shall
be placed on the certificates representing the Stock so purchased.
The purchase of such Stock shall take place at the principal
offices of the Company upon delivery of such notice, at which time
the purchase price of the Stock shall be paid in full by any of the
methods or any combination of the methods set forth in (ii) below.
A properly executed certificate or certificates representing the
Stock shall be issued by the Company and delivered to the Option
Holder. If certificates representing Stock are used to pay all or
part of the exercise price, separate certificates for the same
number of shares of Stock shall be issued by the Company and
delivered to the Option Holder representing each certificate used
to pay the Option Price, and an additional certificate shall be
issued by the Company and delivered to the Option Holder represent-
ing the additional shares, in excess of the Option Price, to which
the Option Holder is entitled as a result of the exercise of the
Option.
(ii) The exercise price shall be paid by any of the
following methods or any combination of the following methods:
(A) in cash;
(B) by certified or cashier's check payable to the
order of the Company;
(C) by delivery to the Company of certificates
representing the number of shares then owned by the Option Holder,
the Fair Market Value of which equals the purchase price of the
Stock purchased pursuant to the Option, properly endorsed for
transfer to the Company; provided however, that no Option may be
exercised by delivery to the Company of certificates representing
Stock, unless such Stock has been held by the Option Holder for
more than six months; for purposes of this Plan, the Fair Market
Value of any shares of Stock delivered in payment of the purchase
price upon exercise of the Option shall be the Fair Market Value as
of the exercise date; the exercise date shall be the day of
delivery of the certificates for the Stock used as payment of the
Option Price; or
(D) by delivery to the Company of a properly executed
notice of exercise together with irrevocable instructions to a
broker to deliver to the Company promptly the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan
from the broker to the Option Holder necessary to pay the exercise
price.
(h) Date of Grant. An option shall be considered as having
been granted on the date specified in the grant resolution of the
Committee.
(i) Notice of Sale of Stock; Withholding. Each stock option
agreement shall provide that, upon exercise of the Option, the
Option Holder shall make appropriate arrangements with the Company
to provide for the amount of additional withholding required by
Sections 3102 and 3402 of the Internal Revenue Code and applicable
state income tax laws, including payment of such taxes through
delivery of shares of Stock or by withholding Stock to be issued
under the Option, as provided in Section 17.
(j) Issuance of Additional Option. If an Option Holder pays
all or any portion of the exercise price of an Option with Stock,
or pays all or any portion of the applicable withholding taxes with
respect to the exercise of an Option with Stock which has been held
by the Option Holder for more than six months, the Committee shall
grant to such Option Holder a new Option covering the number of
shares of Stock used to pay such exercise price and/or withholding
tax. The new Option shall have an Option Price per share equal to
the Fair Market Value of a share of Stock on the date of the
exercise of the Option and shall have the same terms and provisions
as the Option, except as otherwise determined by the Committee in
its sole discretion. Effective for Options granted on and after
January 1, 1994, this section 7.2(j) shall be null and void.
7.3 Shareholder Privileges. No Option Holder shall have any
rights as a shareholder with respect to any shares of Stock covered
by an Option until the Option Holder becomes the holder of record
of such Stock, and no adjustments shall be made for dividends or
other distributions or other rights as to which there is a record
date preceding the date such Option Holder becomes the holder of
record of such Stock, except as provided in Section 4.
Section 8
Restricted Stock Awards
8.1 Grant of Restricted Stock Awards. Coincident with or
following designation for participation in the Plan, the Committee
may grant a Participant one or more Restricted Stock Awards
consisting of shares of Stock. The number of shares granted as a
Restricted Stock Award shall be determined by the Committee.
8.2 Restrictions. A Participant's right to retain a Restricted
Stock Award granted to him under Section 8.1 shall be subject to
such restrictions, including but not limited to his continuous
employment by the Company or an Affiliated Corporation for a
restriction period specified by the Committee or the attainment of
specified performance goals and objectives, as may be established
by the Committee with respect to such Award. The Committee may in
its sole discretion require different periods of employment or
different performance goals and objectives with respect to
different Participants, to different Restricted Stock Awards or to
separate, designated portions of the Stock shares constituting a
Restricted Stock Award. In the event of the death or disability
(as defined in subsection 7.2(d)) of a Participant, or the
retirement of a Participant in accordance with the Company's
established retirement policy, all employment period and other
restrictions applicable to Restricted Stock Awards then held by him
shall lapse with respect to a pro rata part of each such Award
based on the ratio between the number of full months of employment
completed at the time of termination of employment from the grant
of each Award to the total number of months of employment required
for such Award to be fully nonforfeitable, and such portion of each
such Award shall become fully nonforfeitable. The remaining
portion of each such Award shall be forfeited and shall be
immediately returned to the Company. In the event of a Partici-
pant's termination of employment for any other reason, any
Restricted Stock Awards as to which the employment period or other
restrictions have not been satisfied (or waived or accelerated as
provided herein) shall be forfeited, and all shares of Stock
related thereto shall be immediately returned to the Company.
8.3 Privileges of a Stockholder, Transferability. A Participant
shall have all voting, dividend, liquidation and other rights with
respect to Stock in accordance with its terms received by him as a
Restricted Stock Award under this Section 8 upon his becoming the
holder of record of such Stock; provided, however, that the
Participant's right to sell, encumber, or otherwise transfer such
Stock shall be subject to the limitations of Sections 9 and 11.2.
8.4 Enforcement of Restrictions. The Committee shall cause a
legend to be placed on the Stock certificates issued pursuant to
each Restricted Stock Award referring to the restrictions provided
by Sections 8.2 and 8.3 and, in addition, may in its sole discre-
tion require one or more of the following methods of enforcing the
restrictions referred to in Sections 8.2 and 8.3:
(a) Requiring the Participant to keep the Stock
certificates, duly endorsed, in the custody of the Company while
the restrictions remain in effect; or
(b) Requiring that the Stock certificates, duly
endorsed, be held in the custody of a third party while the
restrictions remain in effect.
Section 9
Purchase of Stock
9.1 General. From time to time the Company may make an offer to
certain Participants, designated by the Committee in its sole
discretion, to purchase Stock from the Company. The number of
shares of Stock offered by the Company to each selected Participant
shall be determined by the Committee in its sole discretion. The
purchase price for the Stock shall be as determined by the
Committee in its sole discretion and may be less than the Fair
Market Value of the Stock. The Participants who accept the
Company's offer shall purchase the Stock at the time designated by
the Committee. The purchase shall be on such additional terms and
conditions as may be determined by the Committee in its sole
discretion.
9.2 Other Terms. The Committee may, in its sole discretion, grant
Options, Restricted Stock, or any combination thereof, on terms and
conditions determined by the Committee, in its sole discretion, to
the Participants who purchase Stock pursuant to Section 9.1.
Section 10
Other Common Stock Grants
From time to time during the duration of this Plan, the Board may,
in its sole discretion, adopt one or more incentive compensation
arrangements for Participants pursuant to which the Participants
may acquire shares of Stock, whether by purchase, outright grants,
or otherwise. Any such arrangements shall be subject to the
general provisions of this Plan and all shares of Stock issued
pursuant to such arrangements shall be issued under this Plan.
Section 11
Company Right To Purchase Stock
11.1 Right of First Refusal. (a) In the event of the death of a
Participant, or if a Participant at any time proposes to transfer
any of the Stock acquired pursuant to the Plan to a third party,
the Participant (or his personal representative or estate, as the
case may be) shall make a written offer (the "Offer") to sell all
of the Stock acquired pursuant to the Plan then owned by the
Participant (or thereafter acquired by the Participant's estate or
personal representative pursuant to any Award hereunder) to the
Company at the "purchase price" as hereinafter defined. In the
case of a proposed sale of any of the Stock to a third party, the
Offer shall state the name of the proposed transferee and the terms
and conditions of the proposed transfer. In the case of a proposed
sale through or to a registered broker/dealer, the Offer shall
state the name and address of the broker. The Company shall have
the right to elect to purchase all (but not less than all) of the
shares of Stock. The Company shall have the right to elect to
purchase the shares of Stock for a period of ten (10) days after
the receipt by the Company of the Offer. The provisions of this
Section 11 shall apply to proposed sales through or to a registered
broker/dealer at the prevailing market price, even if the prevail-
ing market price should fluctuate between the date the Company
receives the Offer and the date the Company elects to purchase the
shares of Stock. In all cases, the purchase price for the Stock
shall be determined pursuant to subsection 11.1(d).
(b) The Company shall exercise its right to purchase the
Stock by given written notice of its exercise to the Participant
(or his personal representative or estate, as the case may be). If
the Company elects to purchase the Stock, payment for the shares of
Stock shall be made in full by Company check. Any such payments
shall be made within ten (10) days after the election to purchase
has been exercised.
(c) If the Stock is not purchased pursuant to the foregoing
provisions, the shares of Stock may be transferred by the Partici-
pant to the proposed transferee named in the Offer to the Company,
in the case of a proposed sale to a third party. However, if such
transfer is not made within 120 days following the termination of
the Company's right to purchase, a new offer must be made to the
Company before the Participant can transfer any portion of his
shares and the provisions of this Section 11 shall again apply to
such transfer. If the Company's right of first refusal under this
Section 11 is created by an event other than a proposed transfer to
a third party, the shares of Stock shall remain subject to the
provisions of this Section 11 in the hands of the registered owner
of the Stock.
(d) The purchase price for each share of Stock purchased by
the Company pursuant to this Section 11 shall be equal to the Fair
Market Value of the Stock on the date the Company receives the
Offer under subsection 11.1(a).
11.2 Marking of Certificates. Each certificate representing
shares of Stock acquired pursuant to this Plan shall bear the
following legend:
The shares of stock represented by this Certificate are
subject to all the terms of the Adolph Coors Company Equity
Incentive Plan, as the Plan may be amended from time to time (the
"Plan") and to the terms of a [Non-Qualified Stock Option Agree-
ment] [Restricted Stock Agreement] [Stock Purchase Agreement]
between the Company and the Participant (the "Agreement"). Copies
of the Plan and the Agreement are on file at the office of the
Company. The Plan and the Agreement, among other things, limit the
right of the Owner to transfer the shares represented hereby and
provides that in certain circumstances the shares may be purchased
by the Company.
Section 12
Change in Control
12.1 In General. In the event of a change in control of the
Company as defined in Section 12.3, then (a) all Options shall
become immediately exercisable in full during the remaining term
thereof, and shall remain so, whether or not the Participants to
whom such Options have been granted remain employees of the Company
or an Affiliated Corporation; and (b) all restrictions with respect
to outstanding Restricted Stock Awards shall immediately lapse.
12.2 Limitation on Payments. If the provisions of this Section 12
would result in the receipt by any Participant of a payment within
the meaning of Section 280G of the Internal Revenue Code and the
regulations promulgated thereunder and if the receipt of such
payment by any Participant would, in the opinion of independent tax
counsel of recognized standing selected by the Company, result in
the payment by such Participant of any excise tax provided for in
Sections 280G and 4999 of the Internal Revenue Code, then the
amount of such payment shall be reduced to the extent required, in
the opinion of independent tax counsel, to prevent the imposition
of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of
the amount of such reduction to the Participant.
12.3 Definition. For purposes of the Plan, a "change in control"
shall mean any of the following:
(i) The acquisition of or the ownership of fifty
percent or more of the total Voting Stock of the Company then
issued and outstanding, by any person, or group of affiliated
persons, or entities not affiliated with the Company as of the
Effective Date of this Plan, without the consent of the Board of
Directors, or
(ii) The election of individuals constituting a
majority of the Board of Directors who were not either (A) members
of the Board of Directors prior to the election or (B) recommended
to the shareholders by management of the Company, or
(iii) A legally binding and final vote of the
shareholders of the Company in favor of selling all or substantial-
ly all of the assets of the Company.
Section 13
Rights of Employees; Participants
13.1 Employment. Nothing contained in the Plan or in any Option
or Restricted Stock Award granted under the Plan shall confer upon
any Participant any right with respect to the continuation of his
or her employment by the Company or any Affiliated Corporation, or
interfere in any way with the right of the Company or any Affiliat-
ed Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Participant from
the rate in existence at the time of the grant of an Option or
Restricted Stock Award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a
termination of employment shall be determined by the Committee at
the time.
13.2 Nontransferability. No right or interest of any Participant
in an Option or a Restricted Stock Award (prior to the completion
of the restriction period applicable thereto), granted pursuant to
the Plan, shall be assignable or transferable during the lifetime
of the Participant, either voluntarily or involuntarily, or
subjected to any lien, directly or indirectly, by operation of law,
or otherwise, including execution, levy, garnishment, attachment,
pledge or bankruptcy. In the event of a Participant's death, a
Participant's rights and interests in Options and Restricted Stock
Awards shall, to the extent provided in Sections 7,8 and 9, be
transferable by testamentary will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall
be made to, and exercise of any Options may be made by, the
Participant's legal representatives, heirs or legatees. If in the
opinion of the Committee a person entitled to payments or to
exercise rights with respect to the Plan is disabled from caring
for his affairs because of mental condition, physical condition or
age, payment due such person may be made to, and such rights shall
be exercised by, such person's guardian, conservator or other legal
personal representative upon furnishing the Committee with evidence
satisfactory to the Committee of such status.
Section 14
General Restrictions
14.1 Investment Representations. The Company may require any
person to whom an Option, Restricted Stock Award, Stock is granted,
or to whom Stock is sold, as a condition of exercising such Option
or receiving such Restricted Stock Award or Stock, or purchasing
such Stock, to give written assurances in substance and form
satisfactory to the Company and its counsel to the effect that such
person is acquiring the Stock subject to the Option, Restricted
Stock Award, Stock grant, or purchase of Stock, for his own account
for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with
Federal and applicable state securities laws.
14.2 Compliance with Securities Laws. Each Option and Restricted
Stock Award, and Stock grant or purchase shall be subject to the
requirement that, if at any time counsel to the Company shall
determine that the listing, registration or qualification or the
shares subject to such Option, Restricted Stock Award, Stock grant
or purchase upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or
regulatory body, is necessary as a condition of, or in connection
with, the issuance or purchase of shares thereunder, such Option,
Restricted Stock Award, or Stock grant or purchase may not be
accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
affected or obtained on conditions acceptable to the Committee.
Nothing herein shall be deemed to require the Company to apply for
or to obtain such listing, registration or qualification.
14.3 Changes in Accounting Rules. Notwithstanding any other
provisions of the Plan to the contrary, if, during the term of the
Plan, any changes in the financial or tax accounting rules
applicable to Options or Restricted Stock Awards shall occur that,
in the sole judgement of the Committee, may have a material adverse
effect on the reported earnings, assets or liabilities of the
Company, the Committee shall have the right and power to modify as
necessary, any then outstanding and unexercised Options and
outstanding Restricted Stock Awards as to which the applicable
employment or other restrictions have not been satisfied.
Section 15
Other Employee Benefits
The amount of any compensation deemed to be received by a Partici-
pant as a result of the exercise of an Option, the sale of shares
received upon such exercise, the vesting of any Restricted Stock
Award, or the purchase or grant of Stock, shall not constitute
"earnings" with respect to which any other employee benefits of
such employee are determined, including without limitation benefits
under any pension, profit sharing, life insurance or salary
continuation plan.
Section 16
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to time may
amend or modify the Plan provided, however, that no amendment or
modification may become effective without approval of the amendment
or modification by the shareholders if shareholder approval is
required to enable the Plan to satisfy any applicable statutory or
regulatory requirements, or if the Company, on the advice of
counsel, determines that shareholder approval is otherwise
necessary or desirable.
No amendment, modification or termination of the Plan shall in any
manner adversely affect any Options, Restricted Stock Awards or
Stock theretofore granted or purchased under the Plan, without the
consent of the Participant holding such Options Restricted Stock
Awards, or Stock.
Section 17
Withholding
17.1 Withholding Requirement. The Company's obligations to
deliver shares of Stock upon the exercise of any Option, the
vesting of any Restricted Stock Award, or the grant or purchase of
Stock shall be subject to the Participant's satisfaction of all
applicable federal, state and local income and other tax withhold-
ing requirements.
17.2 Withholding With Stock. The withholding obligation with
respect to the grant of Restricted Stock shall be satisfied by the
Company's withholding from the shares otherwise issuable to the
Participant shares of Stock having a value equal to the amount
required to be withheld. The value of shares of Stock to be
withheld shall be based on the Fair Market Value of the Stock on
the date that the amount of tax to be withheld is to be determined.
Section 18
Requirements of Law
18.1 Requirements of Law. The issuance of Stock and the payment
of cash pursuant to the Plan shall be subject to all applicable
laws, rules and regulations.
18.2 Federal Securities Law Requirements. If a Participant is an
officer or director of the Company within the meaning of Section
16, Awards granted hereunder shall be subject to all conditions
required under Rule 16b-3, or any successor rule promulgated under
the 1934 Act, to qualify the Award for any exception from the
provisions of Section 16(b) of the 1934 Act available under that
Rule. Such conditions shall be set forth in the agreement with the
Participant which describes the Award.
18.3 Governing Law. The Plan and all agreements hereunder shall
be construed in accordance with and governed by the laws of the
State of Colorado.
Section 19
Duration of the Plan
The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Option or Restricted Stock Award, or
Stock shall be granted or purchased after such termination.
Options and Restricted Stock Awards outstanding at the time of the
Plan termination may continue to be exercised, or become free of
restrictions, or paid, in accordance with their terms.
Dated: June 22, 1994
ADOLPH COORS COMPANY
ATTEST:
/s/ Patricia J. Smith /s/ M. Caroline Turner
--------------------- ----------------------
EXECUTIVE COMPENSATION
1994 ANNUAL INCENTIVE PLAN
PARTICIPANTS:
All employees in Paygroup 90 and other nominated individuals will
participate in an annual incentive program. Payments will be made in cash.
Participants who are newly hired or promoted into an eligible position during
the Plan year will receive a pro-rata share of the current plan based on the
number of calendar days spent in an eligible position divided by the actual
number of days during the year of the plan.
FINANCIAL TARGETS:
Annual Company goals will be measured based on pre-tax income (in
millions).
Minimum Target Maximum
76.5 85 127.5
ANNUAL INCENTIVE PROGRAM AWARD LEVELS AS A PERCENT OF BASE SALARY
AS OF 1-1-94 OR
PLAN ENTRY DATE IF LATER:
<TABLE>
<CAPTION>
Position Minimum Target Maximum
<S> <C> <C> <C>
CEO/COO 10% 50% 100%
Exec Staff 10% 40% 80%
VP 10% 30% 60%
Other 10% 25% 50%
</TABLE>
(Maximum payouts are at two times the percent of salary at target).
ANNUAL INCENTIVE PROGRAM MEASUREMENT MIX:
The CEO's bonus will be based entirely on company performance. All
other participant's bonuses will be based on two components, the achievement of
Company performance goals and the individual performance goals.
Company financial threshold must be achieved before individual
performance payout occurs. Achievement of company financial goals creates the
total bonus pool and pays each individual the portion of the bonus based
on the company measurement. The other portion of the bonus is based on
achievement of individual performance goals. Individual performance payouts,
to reward exceptional individual contributions, will be based on an
individual incentive multiplier of between 0 and 150% multiplied by
the bonus based upon the Company measurement.
<PAGE>
Individual performance measurements are to be aligned as much as
possible to areas they either work in or support. The Operations Controller
would be aligned with the Operations unit. Some positions are aligned on
a Company basis only for individual performance such as HR, Risk Management etc.
Examples of individual performance measurements are; financial plan performance,
Diversity goal achievement, safety goals, cost reductions, new product
development, project achievement etc.
Individual performance goals will be agreed upon before the Plan
year starts. Each participant will meet with their immediate supervisor to
develop individual goals in support of the Company strategies. These goals will
be written and signed off by the participant and the supervisor before
implementation. All individual goals must be reviewed and approved by the COO.
At the end of the Plan year each supervisor must submit in writing the
results of each individual performance goal and the individual performance
multiplier.
FORM AND TIMING OF PAYMENTS:
At the end of the plan year final awards will be calculated.
Payments will be made as soon as practicable after
the end of the plan year.
FEDERAL, STATE AND FICA TAX WITHHOLDING:
The Company will be required to withhold all applicable federal,
state and FICA income taxes on the awards.
TAX TREATMENT:
Participants realize taxable income at the date the incentive
payout is received.
DISCLAIMER:
Coors Brewing Company reserves the right to change, amend or
terminate this Plan at any time, for any reason.
NOT EMPLOYMENT CONTRACT:
At no time is this plan to be considered an employment contract
between the participants and the Company.
It does not guarantee participants the right to be continued as an
employee of the Company. It does not effect
a participants right to leave the Company or the Company's right to
discharge a participant.
TERMINATION PROVISIONS:
Participants must be on the payroll as of 1-1-1995 to receive
payment. Any exceptions must be approved by the CEO.
EXECUTIVE COMPENSATION
LONG-TERM INCENTIVE PLAN
1994-1996 Plan Cycle
PARTICIPANTS:
The CEO, COO, all officers of Coors Brewing company and other key personnel
selected by the CEO or COO.
Participants who are newly hired, promoted into an eligible position, or
selected for participation during the Plan
cycle will receive a pro-rata share of the current Plan based on the number of
calendar days spent in the eligible
position divided by the actual number of days during the performance cycle of
the Plan.
FINANCIAL TARGETS:
Long-term Company goals will be measured on cumulative Return on Invested
Capital (ROIC). ROIC is defined
as the earnings before interest, after tax, divided by debt plus equity. The
cumulative ROIC target for plan years
1994, 1995, and 1996 is 22.6. Minimum payout level is set at 90% of target
(20.3). Maximum payout level
is set at 150% of target (33.9). The Plan cycle will be for three years, with
payout in the beginning of the
fourth year. A new plan will begin every other year for another three year
cycle. (Bi-annual payout).
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
94 95 96 *
96 97 98 *
98 99 00 *
</TABLE>
* = Payout
LONG-TERM INCENTIVE PROGRAM AWARD LEVELS AS A PERCENT OF BASE SALARY AS OF THE
BEGINNING OF THE PLAN CYCLE (1/1/94) OR THE PLAN ENTRY DATE IF LATER (BI-ANNUAL
AND ANNUAL PERCENTAGES):
<TABLE>
<CAPTION>
Position Minimum Target Maximum
* * *
<S> <C> <C> <C>
CEO 10% (5%) 150% (75%) 300% (150%)
COO 10% (5%) 140% (70%) 280% (140%)
Exec. Staff 10% (5%) 100% (50%) 200% (100%)
VP 10% (5%) 60% (30%) 120% (60%)
Other 10% (5%) 40% (20%) 80% (40%)
</TABLE>
* Bi-annual payouts yield annual equivalent at the 90th percentile of market.
<PAGE>
VEHICLE TO PAY INCENTIVE:
One-half of all award payments will be paid in restricted shares of Coors Class
B Common non-voting stock, based on the Fair Market Value (FMV) at the time of
payout. The FMV is the average of the highest and the lowest prices of the
stock as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"). The shares will be granted under the Adolph Coors
Company Equity Incentive Plan. Restricted shares will be fully vested but will
be restricted from sale for a holding period of five years, commencing at the
time of payout (1997). The five-year transfer restriction will survive
termination of employment for any reason. The remaining one-half of any award
payment will be paid in cash. Upon entering the Plan, the Participant will have
the opportunity to elect one of two other alternatives: a) to use the cash
portion to purchase discounted Coors Class B non-voting stock (based on 75% of
the FMV at the time of Payout) or b) to have the entire award paid in the form
of stock options, the number of options to be 3 times the total award amount
divided by the FMV at the time the Participant entered the Plan. The
Participant will elect a percentage (a multiple of 10, but not more than 100)
of the total award amount, if any, be made in the form of stock options. All
shares will receive dividend during the restriction period.
DISCOUNTED STOCK PRICE AND TERM:
The price for discounted stock purchased at payout under alternative (a) will
be 75% of the FMV at the time of payout from the Plan. Restricted shares will
be fully vested but will be restricted from sale for a holding period of three
years from date of payout. The three-year transfer restriction will survive
termination of employment for any reason. Restricted shares will receive
dividends during the three year restriction period.
STOCK OPTION PRICE TERM:
The price for stock options under alternative (b) will be the new FMV at the
beginning of the Plan cycle,. New hires and individuals promoted who are
eligible to participate in the Plan and elect to receive stock options will
be issued stock options with a FMV on the date they entered the Plan. The stock
options will expire ten years following the end of the Plan cycle in which the
stock options were issues. The options will be subject to all other terms and
conditions of the Adolph Coors Company Equity Incentive Plan applicable to
options.
FEDERAL, STATE AND FICA TAX WITHHOLDING:
The Company will be required to withhold all applicable federal, state and FICA
income taxes on the awards.
TAX TREATMENT:
Normal Form of Payment. As stated above, in the absence of an election of
another alternative, any award payments will be paid one-half in cash and
one-half in Restricted Stock. The cash will be treated as compensation, subject
to withholding, in the year it is received.
<PAGE>
The Participant will be taxed on the Restricted Stock when the restrictions
lapse. At the time the Participant will recognize compensation, subject to
withholding, equal to the FMV for the Restricted Stock on the date the
restrictions lapse. In the alternative, the Participant may make an election
under Code section 83 (b) to recognize compensation equal to the FMV of the
Restricted Stock on the date it is granted. The election must be filed with the
Internal Revenue Service within 30 days after the date the Restricted Stock is
granted. The Participant's basis for the stock will be equal to the compensation
recognized. The Participant's holding period, for determining whether gain or
loss on a disposition is long- or short-term, will begin just after the
restrictions lapse, or, in the case of an election under Code section 83 (b),
just after the Restricted Stock is granted.
Election to Use Cash Portion to Purchase Stock. A participant who makes this
election will be taxed on the portion of the award paid in Restricted Stock as
described above under "Normal Form of Payment".
The cash will be treated as compensation , subject to withholding, in the year
paid. Upon the purchase of the discounted stock, the Participant will recognize
compensation, subject to withholding, equal to the excess of the FMV of the
discounted stock on the date the restrictions lapse over the amount paid. In
the alternative, the Participant may make and election under Code section 83 (b)
to recognize compensation at the time the discounted stock is purchased. The
election must be filed with the Internal Revenue Service within 30 days
after the date the discounted stock is purchased. If the participant makes the
election, the Participant will recognize compensation, subject to withholding,
equal to the excess of the fair market value of the stock on the date the
discounted stock is purchased over the amount paid. The Participant's basis for
the discounted stock will be equal to the amount paid for the discounted stock
plus the compensation recognized. The Participant's holding period, for
determining whether gain or loss on a disposition is long-or short-term, will
begin just after the restrictions lapse, or, in the case of an election under
Code Section 83 (b), just after the discounted stock is purchased.
Election to Receive an Option Grant. In general, the Participant will not
recognize income upon the grant of the options. Upon exercise of the options,
the Participant will recognize compensation equal to the excess of the FMV of
the stock on the date the option is exercised over the amount paid. For more
information concerning the ta treatment of exercise of options, consult "ERISA
and Federal Income Tax Consequences" in the Prospectus for the Equity Incentive
Plan. Participants should be aware, however, that although options are
generally not taxed upon grant, if the exercise price for the option is
substantially less than the FMV of the shares a the time the option is granted,
there is a risk that the Internal Revenue Service may assert that the
Participant must recognize compensation a the time the option is granted equal
to the excess of the FMV of the stock over the exercise price.
The portion of the award, if any, that is received in cash will be treated as
compensation, subject to withholding, in the year it is received.
TERMINATION PROVISION:
Payments to retired or terminated employees will be a the discretion of the CEO
and COO.
NOT EMPLOYMENT CONTRACT:
At no time is this Plan to be considered an employment contract between the
participants and the Company. It does not guarantee participants the right to
be continued as an employee of the Company. It does not effect
a participants right to leave the Company or the Company's right to discharge
a participant.
DISCLAIMER:
Coors Brewing Company reserves the right to change, amend or terminate this Plan
at any time, for any reason by resolution of its Board of Directors.
$144,000,000
REVOLVING CREDIT
AGREEMENT
dated as of
December 12,
1994
among
ADOLPH COORS
COMPANY
as Borrower
and
THE BANKS NAMED
HEREIN
as Banks
<PAGE>
TABLE OF
CONTENTS
ARTICLE I
DEFINITIONS
Page
SECTION 1.01.
Definitions
Adjusted Debt Adjusted LIBOR Rate
Affiliate
Applicable Margin
Authorized Officer
Bank
Base Rate
Base Rate Loan
BHC
Bid Borrowing
Bid Loan
Bloomberg Financial Markets
Borrower
Borrowing
Business Day
Capital Lease Obligations
Capitalization
Capitalized Interest
Change in Control
Code
Commitment
Commitment Fee
Consolidated Subsidiary
Debt
Default
Dollars
Effective Date
Eligible Assignee
Environmental Laws
ERISA
ERISA Affiliate
Euro-Dollar Reserve Percentage
Event of Default
Exchange Act
Facility Fee
Federal Funds Rate
Governmental Authority
Intangible Assets
Interest Expense
Interest Period
Interest Portion of Rentals
Law
Lending Offices
LIBOR Auction
LIBOR Rate
LIBOR Rate Loan
Lien
Loan
London Interbank Offered Rate
Majority Banks
Minimum Tangible Net Worth
Money Market Absolute Rate
Money Market Absolute Rate Auction
Money Market Absolute Rate Loan
Money Market LIBOR Loan
Money Market LIBOR Rate
9
Money Market Loan
9
Money Market Margin
9
Money Market Quote
9
Money Market Quote Request
9
Net Income 9
Net Tangible Assets
9
Net Worth 9
New Equity Issuance
9
Notice of Borrowing
10
Options 10
PBGC 10
Person 10
Plan 10
Principal Plant
10
Provisions for Taxes
11
Rating 11
Reference Rate 12
Refunding Borrowing
12
Register 12
"Regulation U" and "Regulation X"
12
Required Banks 12
Restricted Subsidiary
12
SEC 13
Subordinated Debt
13
Subsidiary 13
Syndicated Borrowing
13
Syndicated Loan
13
Tangible Net Worth
13
Termination Date
13
Total Assets 14
Type 14
Unrestricted Subsidiary
14
SECTION 1.02. Accounting Terms and Determinations
14
ARTICLE II
THE CREDITS
SECTION 2.01. Syndicated Borrowings
(a) The Commitments14
(b) Limitations on Syndicated Loans
(c) Borrowing Amounts
(d) Revolving Credit
(e) Ratable Basis
SECTION 2.02. Notice of Syndicated Borrowings
(a) Notice to Banks
(b) Irrevocable; Confirmation
SECTION 2.03. Money Market Borrowings
(a) The Money Market Option
(b) Limitation on Bid Loans
(c) Money Market Quote Request
(d) Submission and Contents of Money Market Quotes
(e) Acceptance and Notice by Borrower
(f) Allocation by Borrower
(g) Effect on Commitment
(h) Variances
SECTION 2.04. [THIS SECTION 2.04 IS RESERVED]
SECTION 2.05. Interest Period for Borrowings
(a) Base Rate Borrowings
(b) LIBOR Rate and Money Market LIBOR Borrowings
(c) Money Market Absolute Rate Borrowing
(d) Outside Limit
SECTION 2.06. Maturity of Loans
SECTION 2.07. Interest Rate Options
(a) Base Rate Loans
(b) LIBOR Rate
(c) Money Market LIBOR Rate
(d) Money Market Absolute Rate
(e) Determination of Interest Rates
SECTION 2.08. Interest Rate Unavailable
(a) LIBOR Unavailable
(b) Federal Funds Rate Unavailable
SECTION 2.09. Default Rate
SECTION 2.10. Evidence of Loans/Borrowings
(a) Loan Account; Note
(b) Register
SECTION 2.11. Failure to Give Notice, Automatic
Conversion
SECTION 2.12. Prepayments
SECTION 2.13. Funding Losses
SECTION 2.14. General Rules as to Payments
SECTION 2.15. Funding of Loans
(a) Disbursements
(b) Net Payments
SECTION 2.16. Fees
(a) Commitment Fees
(b) Facility Fees
(c) Payment of Fees
(d) Bid Loans
SECTION 2.17. Optional Reduction of Commitments
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions to Effectiveness
(a) Counterparts
(b) Legal Opinion
(c) Officer Certificates
(d) Other Documents
(e) Notes
SECTION 3.02. Conditions to Borrowings
(a) Notice of Borrowing
(b) Loan Limit
(c) No Default
(d) Representations and Warranties
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention
SECTION 4.03. Binding Effect
SECTION 4.04. Financial Information
SECTION 4.05. No Material Adverse Change
SECTION 4.06. Litigation
SECTION 4.07. Compliance with ERISA
SECTION 4.08. Compliance with Laws
SECTION 4.09. Taxes
SECTION 4.10. Subsidiaries
SECTION 4.11. Not an Investment Company
SECTION 4.12. No Margin Stock
SECTION 4.13. Full Disclosure
SECTION 4.14. Excluded Principal Plants
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Information
(a) SEC Reports
(b) Financial Statements
(c) Compliance Certificates
(d) Other Reports
(e) Notice of Default
(f) Principal Plant Report
(g) Other Information
SECTION 5.02. Payment of Obligations
SECTION 5.03. Maintenance of Property
SECTION 5.04. Insurance
SECTION 5.05. Conduct of Business and Maintenance
of Existence
SECTION 5.06. Compliance with Laws
SECTION 5.07. Inspection of Property, Books and
Records
SECTION 5.08. Use of Proceeds
SECTION 5.09. Environmental Matters
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Limitations on Liens 40
(a) Principal Plants
(b) After Acquired Property
(c) Permitted Debt
SECTION 6.02. Limitation on Debt of Restricted
Subsidiaries
(a) Debt Limits
(b) Permitted Debt
SECTION 6.03. Consolidations, Mergers and Sales
of Assets
SECTION 6.04. Other Loan Agreements
ARTICLE VII
FINANCIAL COVENANTS
SECTION 7.01. Minimum Tangible Net Worth
SECTION 7.02. Debt to Capitalization
ARTICLE VIII
DEFAULTS AND EVENTS OF TERMINATION
SECTION 8.01. Events of Default
(a) Principal
(b) Interest
(c) Covenant Default
(d) Representations and Warranties
(e) Monetary Default
(f) ERISA Default
(g) Change in Control
(h) Judgments
(i) Voluntary Bankruptcy
(j) Involuntary Bankruptcy
SECTION 8.02. Consequence of Event of Default
SECTION 8.03. Notice of Default
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01. [THIS SECTION 9.01 IS RESERVED]
SECTION 9.02. Illegality
SECTION 9.03. Increased Cost
(a) Change in Law
(b) Certificate
(c) Substitute Loans
SECTION 9.04. Capital Adequacy
(a) Additional Compensation
(b) Certificate
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices
SECTION 10.02. No Waivers
SECTION 10.03. Expenses, etc
SECTION 10.04. Set-Offs
(a) Set-Offs
(b) Sharing of Recoveries
SECTION 10.05. Taxes
(a) Bank Income Tax
(b) Withholding Tax
SECTION 10.06. Amendments and Waivers
SECTION 10.07. Replacement of Banks
<PAGE>
SECTION 10.08. Assignments and Participations
(a) Successors and Assigns
(b) Assignments
(c) Bid Loans
(d) Participations
(e) Notice of Assignments and Participations
(f) Subsequent Participations and Assignments
SECTION 10.09. Collateral
SECTION 10.10. Confidentiality
SECTION 10.11. Alternative Liquidity
SECTION 10.12. Governing Law
SECTION 10.13. Counterparts; Integration
<PAGE>
EXHIBITS AND SCHEDULES
SCHEDULE 4.05 No Material Adverse Change Disclosure
SCHEDULE 4.06 Litigation Disclosure
EXHIBIT A Form of Notice of Syndicated Borrowing
EXHIBIT B Form of Money Market Quote Request
EXHIBIT C Form of Money Market Quote
EXHIBIT D Form of Notice of Money Market Borrowing
EXHIBIT E Form of Promissory Note
EXHIBIT F Opinion of Counsel for the Borrower
EXHIBIT G Assignment and Acceptance
SCHEDULE 1 Schedule of Banks
SCHEDULE 2 Excluded from Principal Plants
SCHEDULE 3 Interest Rate Calculation
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT (the or this "Agreement") dated as
of
December 12, 1994, is among ADOLPH COORS COMPANY, a Colorado
corporation (the
"Borrower") and the BANKS (each a "Bank" and collectively the
"Banks") listed
on the signature pages hereof.
WITNESSETH:
WHEREAS, Borrower has requested from the Banks and the Banks are
willing to
make available in the amounts listed on the signature pages hereof
to
Borrower a revolving line of credit in an aggregate amount not to
exceed One
Hundred Forty Four Million Dollars ($144,000,000) on the terms and
conditions
contained herein; and
WHEREAS, the term "Borrowing" denotes the aggregation of Loans of
a single
Type to be made by one or more Banks to the Borrower pursuant to
Article II
on a single date for a single Interest Period. For purposes of
this
Agreement, Borrowings are classified either by reference to the
pricing of
Loans constituting such Borrowing (e.g., a "Base Rate Borrowing" is
a
Borrowing comprised of Base Rate Loans) or by reference to the
provisions of
Article II under which participation therein is determined (i.e.,
a
"Syndicated Borrowing" is a Borrowing comprised of simultaneous
Syndicated
Loans of the same Type in which all Banks participate in proportion
to their
prorata share of Commitments pursuant to Section 2.01, while a "Bid
Borrowing" is a Borrowing comprised of simultaneous Bid Loans of
the same
Type made by one or more Banks whose offer to make such Loans as a
part of
such Borrowing has been accepted by Borrower under the auction bid
process
pursuant to Section 2.03).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the
following meanings (and words in the singular include the plural,
and vice
versa):
"Adjusted Debt" means, as of any date of determination, all Debt of
the
Borrower and its Consolidated Subsidiaries (without duplication)
less all
Subordinated Debt.
"Adjusted LIBOR Rate" has the meaning set forth in Section 2.07(b).
"Affiliate" means, as to any Person, any other Person that,
directly or
indirectly, controls, is controlled by or is under common control
with, such
Person.
"Applicable Margin" means, as of the date of determination, with
respect to a
LIBOR Rate Loan, the rate per annum, as set forth in the right-hand
column
below, based on the Rating (which shall be the higher Rating in the
event of
a split Rating) in effect on such day for Borrower's senior
unsecured
nonconvertible long-term indebtedness:
Rating Applicable Margin
A Minus or A3 or Higher 25 basis points
BBB+ or Baa1 30 basis points
BBB or Baa2 35 basis points
BBB- or Baa3 50 basis points
Lower than BBB- or Baa3 70 basis points
"Authorized Officer" means any of the following officers of the
Borrower:
the chairman or vice chairman of the board of directors, chief
executive
officer, chief financial officer, president, treasurer, any vice
president
(however designated), any assistant treasurer, any secretary, or
any
assistant secretary.
"Bank" means each bank listed on the signature pages hereof as
having a
Commitment, and its successors and permissible assigns.
"Base Rate" has the meaning set forth in Section 2.07(a).
"Base Rate Loan" means any Loan under this Agreement made or
maintained at
the Base Rate.
"BHC" has the meaning set forth in Section 9.04(a).
<PAGE>
"Bid Borrowing" has the meaning set forth in the second Whereas
clause to
this Agreement.
"Bid Loan" means any Money Market Loan made by a Bank as part of a
Bid
Borrowing pursuant to Section 2.03.
"Bloomberg Financial Markets" means the financial market reporting
service
known as of the Effective Date as "Bloomberg Financial Markets" and
any
successor to such service; or if Bloomberg Financial Markets or
such
successor shall cease to perform such service, then such other
financial
market reporting service or other system that the Borrower and the
Banks
shall agree shall perform such service.
"Borrower" means Adolph Coors Company, a Colorado corporation, and
its
successors and permissible assigns.
"Borrowing" has the meaning set forth in the second Whereas clause
to this
Agreement.
"Business Day" means a day other than a Saturday or Sunday and on
which banks
are open for business in New York City and on which wire transfers
may be
effectuated among member banks of the Federal Reserve System
through use of
the fedwire funds transfer system and if the applicable Business
Day relates
to any LIBOR Rate Loan or any Money Market LIBOR Loan, on which
commercial
banks are open for international business (including dealings in
Dollar
deposits) in the London interbank market.
"Capital Lease Obligations" of any Person means, as of any date of
determination, the aggregate amount of lease obligations that
would, in
accordance with generally accepted accounting principles, be
required to be
capitalized on a balance sheet of such Person at such date.
"Capitalization" of the Borrower means, as of any date of
determination, the
sum of Adjusted Debt and Net Worth of the Borrower.
"Capitalized Interest" means, for any period, the aggregate amount
that
would, in accordance with generally accepted accounting principles,
be
excluded from interest expense on a consolidated statement of
income of the
Borrower and its Consolidated Subsidiaries for such period, and
included as
part of the cost of capital assets as reflected on Borrower's
consolidated
balance sheet at the end of such period.
"Change in Control" means the occurrence, after the Effective Date
of this
Agreement, of (i) any Person or two or more Persons acting in
concert or as a
"group" (within the meaning of Rule 13d-3 (the "Rule") of the SEC
under the
Exchange Act) acquiring "beneficial ownership" (within the meaning
of the
Rule) directly or indirectly, of securities of the Borrower (or
other
securities convertible into such securities) representing 50% or
more of the
combined voting power of all securities of the Borrower entitled to
vote in
the election of directors, (ii) during any period of up to 24
consecutive
months, commencing before or after the Effective Date of this
Agreement,
individuals who at the beginning of such 24-month period were
directors of
the Borrower ceasing for any reason to constitute a majority of the
Board of
Directors of the Borrower unless the individuals replacing such
individuals
were nominated by the Board of Directors of the Borrower, or (iii)
any Person
or two or more Persons acting in concert or as a group acquiring by
contract
or otherwise, or entering into a contract or arrangement that upon
consummation will result in its or their acquisition of such
beneficial
ownership as described in clause (i); provided, that, the Person or
group of
Persons referred to in clauses (i) and (iii) of this definition
shall not
apply to or include any Person who is a trustee or beneficiary of
the Adolph
Coors, Jr. Trust and the successors of such Person, or any Person
or any
group of Persons in which one or more of the Persons who are
trustees or
beneficiaries of the Adolph Coors, Jr. Trust and their successors
are
members.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor
statute.
"Commitment" means, with respect to each Bank, the total stated
Dollar amount
(without regard to utilization thereof) set forth opposite the name
of such
Bank on the signature pages hereof, as such amount may be reduced
from time
to time pursuant to Section 2.17.
"Commitment Fee" has the meaning set forth in Section 2.16(a).
"Consolidated Subsidiary" of any Person means at any date, any
Subsidiary or
other entity the accounts of which would be consolidated with those
of such
Person in its consolidated financial statements as of such date.
"Debt" of any Person means, at any date, without duplication, (i)
all
obligations of such Person for borrowed money, (ii) all obligations
of such
Person evidenced by bonds, debentures, notes or other similar
instruments,
(iii) all non-contingent obligations of such Person in respect of
letters of
credit or other similar instruments, (iv) all Capital Lease
Obligations of
such Person as lessee under capital leases, (v) all Debt of others
secured by
a Lien on any asset of such Person, whether or not such Debt is
assumed by
such Person, and (vi) all direct guarantees by such Person of Debt
(as
defined in clause (i) through (v) of this definition) of other
Persons;
provided that
(x) if Debt referred to in clause (v) above is without recourse to
the
Borrower or any Subsidiary, the amount of such Debt shall be
calculated at
the lesser of (A) the aggregate outstanding principal amount of
such Debt or
(B) the aggregate fair realizable value of the assets securing such
Debt, and
(y) when calculating the amount of Debt of the Borrower and its
Consolidated
Subsidiaries on a consolidated basis, obligations of the Borrower
or any
Consolidated Subsidiary that are eliminated, in consolidation
pursuant to
generally accepted accounting principles shall be eliminated.
"Default" means any condition or event which constitutes an Event
of Default
or which with the giving of notice or lapse of time, or both, would
become an
Event of Default.
"Dollars" or "$" means United States dollars or other lawful
currency of the
United States.
"Effective Date" has the meaning set forth in Section 3.01.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of
the United States, or any State thereof, having Total Assets in
excess of
$5,000,000,000, and which is in compliance with all minimum capital
requirements imposed by its primary banking regulator; (ii) a
commercial bank
organized under the laws of any other country which is a member of
the
Organization for Economic Cooperation and Development or a
political
subdivision of any such country, and having Total Assets in excess
of
$5,000,000,000; provided, that, such bank is acting through a
branch or
agency located in the United States; (iii) the central bank of any
country
which is a member of the Organization for Economic Cooperation and
Development; (iv) any Bank or Affiliate of a Bank; (v) a finance
company,
insurance company or other financial institution or fund (whether
a
corporation, partnership or other entity) which is engaged in
making,
purchasing or otherwise investing in commercial loans in the
ordinary course
of its business, and having Total Assets in excess of
$5,000,000,000; and
(vi) any other Person acceptable to the Borrower.
"Environmental Laws" mean any and all laws, statutes, ordinances,
rules,
regulations, judgments, orders, decrees, permits, licenses, or
other
governmental restrictions or requirements of a Governmental
Authority
relating to the environment, which are binding on Borrower.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"ERISA Affiliate" means all trades or businesses (whether or not
incorporated) under common control which, together with the
Borrower, are
treated as a single employer under Section 414(c) of the Code.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section
2.07(b).
"Event of Default" has the meaning set forth in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Facility Fee" has the meaning set forth in Section 2.16(b).
"Federal Funds Rate" has the meaning set forth in Section 2.07(a).
"Governmental Authority" means the United States of America, any
state or
other political subdivision thereof and any Person exercising
executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to the government of the same.
"Intangible Assets" of a Person means, to the extent included in
such
Person's Total Assets, all of the following: (i) goodwill,
organizational
expenses, research and development expenses, unamortized debt
discount and
expense, trademarks, trade names, copyrights, patents, patent
applications,
licenses and rights in any thereof, and other similar intangibles,
and (ii)
any investments in and advances to nonconsolidated Affiliates, all
as
determined in accordance with generally accepted accounting
principles, on a
consolidated basis.
"Interest Expense" of the Borrower means, for any period, the sum
of (i) the
aggregate amount that would, in accordance with generally accepted
accounting
principles, be included as interest expense on a consolidated
statement of
income of the Borrower and its Consolidated Subsidiaries for such
period,
(ii) Capitalized Interest for such period, and (iii) Interest
Portion of
Rentals for such period.
"Interest Period" with respect to each Type of Loan has the meaning
set forth
in Section 2.05, as applicable.
"Interest Portion of Rentals" means, for any period, the amount
that would,
under generally accepted accounting principles, be reflected as the
interest
portion of rental expense on a consolidated statement of income of
the
Borrower and its Consolidated Subsidiaries for such period.
"Law" means any law, constitution, statute, treaty, regulation,
rule,
ordinance, order, injunction, writ, decree or award of any
Governmental
Authority, which is binding on Borrower.
"Lending Offices" means, as to any Bank, the lending branches or
offices
specified on Schedule 1 hereto with respect to any Type of Loan, as
applicable, or such other of its branches or offices as such Bank
may from
time to time designate by notice to the Borrower.
<PAGE>
"LIBOR Auction" means a solicitation of Money Market Quotes setting
forth
Money Market Margins based on the London Interbank Offered Rate
pursuant to
Section 2.03.
"LIBOR Rate" has the meaning set forth in Section 2.07(b).
"LIBOR Rate Loan" means a Loan under this Agreement made or
maintained at the
LIBOR Rate.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge,
security interest or encumbrance of any kind in respect of such
asset,
including the interest of a lender or lessor under any conditional
sale
agreement, capital lease or other title retention agreement
relating to such
asset.
"Loan" means any Syndicated Loan or any Bid Loan and "Loans" means
Syndicated
Loans and Bid Loans or any combination of the foregoing, as the
context
requires.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(b).
"Majority Banks" means at any time Banks having at least 51% of the
aggregate
amount of the Commitments, or, if the Commitments have been
terminated, the
Banks having at least 51% of the aggregate unpaid outstanding
principal
amount of all Loans.
"Minimum Tangible Net Worth" has the meaning set forth in Section
7.01.
"Money Market Absolute Rate" has the meaning set forth in Section
2.07(d).
"Money Market Absolute Rate Auction" means a solicitation of Money
Market
Quotes setting forth Money Market Absolute Rates pursuant to
Section 2.03.
"Money Market Absolute Rate Loan" means a Loan made by a Bank
pursuant to an
Absolute Rate Money Market Auction or maintained as a Money Market
Absolute
Loan under this Agreement.
<PAGE>
"Money Market LIBOR Loan" means a Loan made by a Bank pursuant to
a LIBOR
Auction or maintained as a Money Market LIBOR Loan under this
Agreement.
"Money Market LIBOR Rate" has the meaning set forth in Section
2.07(c).
"Money Market Loan" means a Loan under this Agreement made or
maintained as a
Money Market LIBOR Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d)(ii)(D).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in
accordance with Section 2.03(d).
"Money Market Quote Request" means a request by the Borrower to the
Banks to
make offers to make a Money Market Loan in accordance with Section
2.03(c).
"Net Income" of any Person means, for any period, the aggregate
amount that
would, in accordance with generally accepted accounting principles,
be
included under the caption "Net Income (Loss)" on a consolidated
statement of
income of such Person and its Consolidated Subsidiaries for such
period.
"Net Tangible Assets" means the Total Assets of Borrower and its
Consolidated
Subsidiaries less Intangible Assets (to the extent included in such
Total
Assets) all as computed in accordance with generally accepted
accounting
principles as of the last day of the fiscal quarter of Borrower
most recently
ended.
"Net Worth" of any Person means, as of any date of determination,
the total
amount of shareholders' equity that would be shown on the
consolidated
balance sheet of such Person and its Consolidated Subsidiaries, as
determined
in accordance with generally accepted accounting principles.
"New Equity Issuance" means the sale of capital stock by the
Borrower or the
equity resulting from the conversion of convertible debt
securities, as
prescribed by generally accepted accounting principles.
<PAGE>
"Notice of Borrowing" means a Notice of Syndicated Borrowing or
Notice of
Money Market Borrowing, as applicable, pursuant to Section 2.02 or
Section 2.03.
"Options" means the interest rate options available to the Borrower
for
selection or request for quotation with respect to the interest
rate to be
borne by a Loan, pursuant to the applicable Notice of Borrowing.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a
trust or any other entity or organization, including a government
or
political subdivision or an agency or instrumentality thereof.
"Plan" means, at any time, an employee pension benefit plan which
is covered
by Title IV of ERISA or subject to the minimum funding standards
under
Section 412 of the Code and is either maintained or contributed to
by
Borrower or any ERISA Affiliate.
"Principal Plant" means any brewery, or any manufacturing,
processing or
packaging plant owned as of the Effective Date or hereafter
acquired by the
Borrower or any Subsidiary, but shall not include
(a) any plant listed or referred to on Schedule 2 attached hereto,
(b) any brewery, or any manufacturing, processing or packaging
plant of the
Borrower or any Subsidiary which the Board of Directors of Borrower
shall
have determined (successive determinations and redeterminations
being
permitted without restrictions) is not of material importance to
the total
business conducted by the Borrower and any Restricted Subsidiary,
(c) any plant which the Board of Directors of Borrower shall have
determined
is used primarily for transportation, marketing or warehousing,
including as
of the Effective Date those plants listed on Schedule 2 attached
hereto
(successive determinations and redeterminations being permitted
without
restriction),
(d) any real property which does not contain, and is not material
to the
operation of, any brewery, or any manufacturing, processing or
packaging
plant owned as of the Effective Date or hereafter acquired by the
Borrower or
any Subsidiary that constitutes a "Principal Plant" under the other
provisions of this definition, or
(e) any brewery, or any manufacturing, processing or packaging
plant or group
of plants hereafter acquired by the Borrower or any Subsidiary from
any
Person or group of related Persons in one transaction or a series
of related
transactions if the aggregate purchase price (which amount shall
equal the
sum of any cash or cash equivalents and the value of any other
consideration
paid by the Borrower or such Subsidiary and the principal amount of
any Debt
assumed by the Borrower or such Subsidiary from such Person or
group of
related Persons) for such plant (and any other plants acquired by
the
Borrower or any Subsidiary from such Person or group of related
Persons as
part of such transaction or series of transactions) does not exceed
$50
million.
"Provisions for Taxes" means for any period, the provision for
taxes (current
and deferred) that would in accordance with generally accepted
accounting
principles, be reflected on the consolidated statement of income of
the
Borrower and its Consolidated Subsidiaries for such period.
"Rating" means a rating category (including any numerical or other
modifiers)
actually assigned by Standard & Poor's Rating Group or Moody's
Investors
Service, Inc. and any successor thereto which is a nationally
recognized
rating agency, to a Person's senior unsecured nonconvertible
indebtedness or,
if no such rating category is at the time of determination so
assigned, an
implied rating category that is one rating category (including any
numerical
or other modifiers) higher than the rating category so assigned to
such
Person's senior unsecured nonconvertible unenhanced subordinated
indebtedness; provided, however, that if an actual or implied
rating category
is not at any time assigned by at least one such rating agency to
the
Borrower's senior unsecured nonconvertible indebtedness, the
Borrower will
apply for a private rating from at least one such rating agency
with respect
to the indebtedness of the Borrower under this Agreement, and the
rating
category so obtained shall be used for the purposes of this
definition as it
relates to the Borrower's senior unsecured nonconvertible
indebtedness. If
no rating is assigned, the Banks and the Borrower will agree on the
rating
category that will be followed for pricing purposes.
"Reference Rate" for any day of a relevant Interest Period means
the per
annum rate of interest, as reported on such day by Bloomberg
Financial
Markets as the prime rate for Bank of America National Trust and
Savings
Association ("BofA"), as publicly announced from time to time by
BofA as its
"reference rate." It is a rate set by BofA based upon various
factors
including BofA's costs and desired return, general economic
conditions and
other factors, and is used as a reference point for pricing some
loans, which
may be priced at, above, or below such announced rate. Any change
in the
reference rate announced by BofA shall take effect at the opening
of business
on the day specified in the public announcement of such change.
"Refunding Borrowing" means a Borrowing which, after application
of the
proceeds thereof, results in no net increase in the aggregate
outstanding
principal amount of Loans made by any Bank.
"Register" has the meaning set forth in Section 2.10.
"Regulation U" and "Regulation X" means those Regulations so
designated of
the Board of Governors of the Federal Reserve System, as in effect
from time
to time.
"Required Banks" means at any time Banks having at least 66 2/3% of
the
aggregate amount of the Commitments, or, if the Commitments have
been
terminated, the Banks having at least 66-2/3% of the aggregate
unpaid
outstanding principal amount of all Loans.
"Restricted Subsidiary" means (i) any Subsidiary which owns or
operates a
Principal Plant, except any Subsidiary incorporated, or the
principal place
of business of which is located, outside the present fifty states
of the
United States of America and the District of Columbia and (ii) any
other
Subsidiary which the Board of Directors of Borrower, shall classify
as a
Restricted Subsidiary until such time as the Borrower may, by
further Board
action, classify such Subsidiary as an Unrestricted Subsidiary,
successive
such classifications being permitted without restriction; provided,
however,
that the Borrower shall not make any such classification, if
immediately
after giving effect to such classification or successive
classification, the
Borrower and any one or more Restricted Subsidiaries could not
create,
assume, guarantee or suffer to exist $1.00 of additional Debt
pursuant to
clause (c) of Section 6.01 hereof, with the effect that any such
classification or successive classification made in violation of
this proviso
shall be void and such Subsidiary shall maintain its prior
classification.
"SEC" means the Securities and Exchange Commission, or any
successor
organization.
"Subordinated Debt" means all Debt of the Borrower and its
Consolidated
Subsidiaries created or otherwise incurred subsequent to the
Effective Date
that shall have been expressly subordinated in right of payment
upon any
distribution of assets of the Borrower or such Subsidiary upon any
dissolution, winding up, liquidation or reorganization of the
Borrower or
such Subsidiary, whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or
any other
marshalling of the assets and liabilities of the Borrower or such
Subsidiary
to the Borrower's obligations under this Agreement.
"Subsidiary" means any corporation or other entity of which
securities or
other ownership interests having ordinary voting power to elect a
majority of
the board of directors or other persons performing similar
functions are at
the time directly or indirectly owned by the Borrower.
"Syndicated Borrowing" has the meaning set forth in the second
Whereas clause
to this Agreement.
"Syndicated Loan" means any Base Rate Loan or LIBOR Loan, as
applicable, made
by a Bank as a part of a Syndicated Borrowing pursuant to Section
2.01.
"Tangible Net Worth" of a Person means, at any date of
determination, such
Person's Net Worth less Intangible Assets, on a consolidated basis.
"Termination Date" means December 12, 1998, or if such day is not
a Business
Day, the next succeeding Business Day.
<PAGE>
"Total Assets" of any Person means all property, whether real,
personal,
tangible, intangible or otherwise, which, in accordance with
generally
accepted accounting principles, would be included in determining
total assets
as shown on the assets portion of a consolidated balance sheet of
such Person
and its Consolidated Subsidiaries.
"Type" means, with respect to a Loan, a single category of Loan
made under
this Agreement with reference to the pricing or interest rate of
such Loan,
e.g. Base Rate Loan, Money Market LIBOR Loan.
"Unrestricted Subsidiary" means, at the time of any determination,
any
Subsidiary of Borrower that is not a Restricted Subsidiary.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise
specified or defined herein, all accounting terms used herein shall
be
interpreted, all accounting determinations and financial covenant
determinations hereunder shall be made, and all financial
statements required
to be delivered hereunder shall be prepared, in accordance with
generally
accepted accounting principles as in effect from time to time,
applied on a
basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated
financial statements of the Borrower and its Consolidated
Subsidiaries
delivered to the Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Syndicated Borrowings.
(a) The Commitments. Each Bank severally agrees, on the terms and
conditions
set forth in this Agreement, to
make Base Rate Loans and LIBOR Rate Loans to the Borrower pursuant
to this
Section 2.01 upon the request of the Borrower from time to time
during the
period from and including the Effective Date up to but excluding
the
Termination Date in an aggregate principal amount not exceeding at
any one
time outstanding the amount of such Bank's Commitment. If a
Syndicated
Borrowing is requested, Money Market Loans made by each Bank
pursuant to
Section 2.03 shall not reduce such Bank's obligation to lend its
prorata
share of the remaining undrawn aggregate commitments. The failure
of any Bank
to make a Syndicated Loan shall not relieve any other Bank of its
obligation
to lend under this Section 2.01, but no Bank shall be responsible
for any
such failure by any other Bank.
(b) Limitations on Syndicated Loans. Notwithstanding anything in
this
Agreement to the contrary, the aggregate principal amount
outstanding under
all Loans (Syndicated and Bid Loans taken together) under this
Agreement at
any one time shall not exceed the aggregate amount of the
Commitments of all
Banks in effect at such time.
(c) Borrowing Amounts. Each Borrowing with respect to LIBOR Rate
Loans under
this Section 2.01 shall be in an aggregate principal amount of at
least
$5,000,000 and integral multiples of $1,000,000 in excess thereof
(except
that any such Borrowing may be in the aggregate amount of the
unused
Commitments). Each Borrowing with respect to a Base Rate Loan
under this
Section 2.01 shall be in an aggregate principal amount of at least
$1,000,000
and integral multiples of $1,000,000 in excess thereof (except that
any such
Borrowing may be in the aggregate amount of the unused
Commitments). One or
more different Syndicated Borrowings may be made on the same day.
(d) Revolving Credit. Within the limits set forth in this Section
2.01, and
subject to the provisions of this Agreement, the Borrower may
borrow, repay,
or prepay and reborrow at any time prior to the Termination Date
under this
Section 2.01.
(e) Ratable Basis. Each individual Syndicated Borrowing shall
consist of
Syndicated Loans of the same Type for the same Interest Period made
on the
same day simultaneously by the Banks ratably in proportion to the
amounts of
their Commitments.
SECTION 2.02. Notice of Syndicated Borrowings.
(a) Notice to Banks. In order to effect a Syndicated Borrowing,
the Borrower
shall give each Bank a
Notice of Syndicated Borrowing, in writing or by telephone, prior
to 12:00
Noon (New York City time) on (x) the same Business Day of each Base
Rate
Borrowing (e.g., notice on Monday, borrow on Monday), (y) three
Business Days
before each LIBOR Rate Borrowing (e.g., notice on Monday, borrow on
Thursday), specifying:
(i) the date of such proposed Borrowing, which shall be a
Business Day,
(ii) the aggregate principal amount of such Borrowing, and the
aggregate
principal amount of such Bank's share,
(iii) the interest rate Option (Base Rate or LIBOR Rate) selected
for such
Borrowing, and
(iv) the duration of the Interest Period applicable to such
Borrowing.
(b) Irrevocable; Confirmation. Once given to the Banks, a Notice
of
Syndicated Borrowing is irrevocable and binding on the Borrower.
If the
Borrower gives a Notice of Syndicated Borrowing by telephone, the
Borrower
shall promptly confirm it by telex or facsimile copy, substantially
in the
form of Exhibit A attached hereto. In the event of a discrepancy
between a
Bank's record of such telephone notice and the Borrower's
confirmation
thereof, the Bank's record shall be determinative, absent
demonstrable error.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Syndicated Borrowings
pursuant
to Section 2.01 and, subject to
subsection (b) below irrespective of the amount of a Bank's or any
other
Bank's Commitment, the Borrower may, as set forth in this Section
2.03,
request the Banks to make offers to make Money Market Loans to the
Borrower
from time to time during the period from and including the
Effective Date up
to but excluding the Termination Date. The Banks may, but shall
have no
obligation to, make such offers and the Borrower may, but shall
have no
obligation to, accept any such offers, in each case in the manner
set forth
in this Section.
(b) Limitation on Bid Loans. Notwithstanding anything in this
Agreement to
the contrary, the aggregate principal amount outstanding under all
Loans
(Syndicated and Bid Loans taken together) under this Agreement at
any one
time <PAGE>
shall not exceed the aggregate amount of the Commitments of all
Banks in
effect at such time.
(c) Money Market Quote Request. In order to request offers to make
Money
Market Loans under this Section 2.03, Borrower shall give each
Bank, in
writing or by telephone, a Money Market Quote Request
substantially in the
form of Exhibit B hereto not later than 12:00 Noon (New York City
time)
(x) five Business Days before the date of the Borrowing proposed
therein, in
the case of a LIBOR Auction (e.g., request on Monday, borrow on the
next
Monday), or (y) one Business Day before the date of Borrowing
proposed
therein, in the case of an Absolute Rate Auction (e.g., request on
Monday,
borrow on Tuesday), specifying:
(i) the date of such proposed Borrowing, which shall be a
Business Day,
(ii) the aggregate amount of such proposed Borrowing, which shall
be at
least $5,000,000 and integral multiples of $1,000,000 in excess
thereof,
(iii) the duration of the Interest Period applicable thereto, and
(iv) whether the Money Market Quotes requested are to set forth a
Money
Market Margin or a Money Market Absolute Rate.
If the Borrower gives a Money Market Quote Request by telephone,
the Borrower
shall promptly confirm it by telex or facsimile copy. In the event
of a
discrepancy between a Bank's record of such telephone notice and
the
Borrower's confirmation thereof, the Bank's record shall be
determinative,
absent demonstrable error.
The Borrower may request offers to make Money Market Loans for more
than one
Interest Period in a single Money Market Quote Request. One or
more
different Money Market Borrowings may be made on the same day.
(d) Submission and Contents of Money Market Quotes.
(i) Each Bank may, at its option, submit a Money Market Quote
containing an
offer or offers to make Money Market Loans in response to any Money
Market
Quote Request. Each Money Market Quote must comply with the
requirements of
this subsection (d) and must be submitted to the Borrower by telex,
facsimile
copy or hand delivery not later than (x) 2:00 P.M. (New York City
time) four
Business Days before the proposed Borrowing, in the case of a LIBOR
Auction,
or (y) 11:00 A.M. (New York City time) on the same Business Day of
the
proposed Borrowing, in the case of an Absolute Rate Auction.
Subject to
Articles III and VIII, once given to the Borrower, any Money
Market Quote
shall be irrevocable and binding on the quoting Bank. The failure
of any
Bank to make a Money Market Loan accepted by the Borrower pursuant
to this
Section 2.03 shall not relieve any other Bank of its obligation to
make a
Money Market Loan accepted by the Borrower pursuant to this Section
2.03, but
no Bank shall be responsible for any such failure by any other
Bank.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit C
hereto and shall in any case specify:
(A) the proposed date of Borrowing, which shall be as specified in
the Money
Market Quote Request,
(B) the proposed Interest Period(s) for which each such offer is
being made,
which shall be as specified in the Money Market Quote Request,
(C) the principal amount of the Money Market Loan for which each
such offer
is being made, which (x) may be equal to, more than or less than
the
Commitment of the quoting Bank and may specify a minimum and
maximum,
(y) must be at least $1,000,000 and (z) may not exceed the
aggregate
principal amount of Money Market Loans for which offers were
requested,
(D)in the case of a LIBOR Auction, the margin above or below the
applicable
London Interbank Offered Rate (the "Money Market Margin") offered
for each
such Money Market Loan, expressed as a percentage (rounded to the
nearest
1/100th of 1 percent) to be added to or subtracted from such base
rate,
(E)in the case of an Absolute Rate Auction, the rate of interest
per annum
(rounded to the nearest 1/100th of 1 percent), offered for each
such Money
Market Loan, and
(F) the identity of the quoting Bank.
(iii) Any Money Market Quote shall be disregarded and be of no
force and
effect if it:
(A) does not substantially comply with the provisions of
subsection (d)(ii)
above,
(B) contains qualifying, conditional or similar language,
(C)proposes terms other than or in addition to those set forth in
the
applicable Money Market Quote Request, or
(D) arrives after the time set forth in subsection (d)(i).
(e) Acceptance and Notice by Borrower.
(i) Not later than (x) 12:00 Noon (New York City time) three
Business Days
bfore the proposed date of Borrowing, in the case of a LIBOR
Auction, or (y)
1:00 P.M. (New York City time) on the same Business Day of the
proposed
Borrowing, in the case of an Absolute Rate Auction, the Borrower
shall
notify, in writing or by telephone, the Banks that have made offers
in
accordance with subsection (d) of this Section 2.03 either that (A)
the
auction and the proposed Money Market Borrowing is canceled for any
reason or
(B) one or more of such offers contained in the applicable Money
Market
Quotes is accepted. Failure by Borrower to deliver timely notice
shall be
deemed to be a notice of cancellation except with the consent of
any Bank the
offer of which is accepted.
<PAGE>
(ii) In the case of acceptance of one or more of such offers,
Borrower
shall give notice (a "Notice of Money Market Borrowing"), in
writing or by
telephone, within the time period specified in clause (i) of this
subsection
(e) of Section 2.03, to all Banks, in substantially the form of
Exhibit D
hereto, specifying:
(A) whether one or more of such Bank's offers have been accepted or
rejected,
(B) if accepted, the aggregate amount of each Money Market Loan to
be made by
such Bank as part of such Borrowing, the applicable Interest
Period, and the
applicable Money Market Absolute Rate or Money Market Margin,
(C) the aggregate principal amount of offers of all Banks for each
Interest
Period that have been accepted,
(D) the lowest, highest and the auction clearing interest rates
offered to
the Borrower in connection with the relevant Money Market Quote
Request,
(E) the aggregate principal amount of all Loans outstanding under
the
Agreement after taking into consideration the Loans accepted in
such
Borrowing,
(iii) The Borrower may accept in whole or in part any Money
Market Quote
meeting the requirements of subsection (d); provided that:
(A) the aggregate principal amount of each Money Market Borrowing
shall not
exceed the aggregate amount requested by Borrower in the related
Money Market
Quote Request,
(B) the aggregate principal amount of each Money Market Loan to be
made by
any Bank shall be subject to any minimum or maximum specified by
such Bank in
its Money Market Quote,
<PAGE>
(C) the principal amount of each Money Market Borrowing must be at
least
$5,000,000 and integral multiples of $1,000,000 in excess thereof,
and
(D) acceptance of offers may only be made on the basis of ascending
Money
Market Margins or Money Market Absolute Rates, as the case may be.
If the Borrower gives Notice of Money Market Borrowing by
telephone, the
Borrower shall promptly confirm it by telex or facsimile copy. In
the event
of a discrepancy between a Bank's record of such telephone notice
and the
Borrower's confirmation thereof, the Bank's record shall be
determinative,
absent demonstrable error.
(f) Allocation by Borrower. If offers are made by two or more
Banks with the
same Money Market Margins or Money Market Absolute Rates, as the
case may be,
for a greater aggregate principal amount than the amount in respect
of which
offers are accepted for the related Interest Period, the principal
amount of
Money Market Loans in respect of which such similar offers are
accepted shall
be allocated by the Borrower among such Banks as nearly as possible
(in such
multiples, not greater than $100,000, as the Borrower may deem
appropriate)
in proportion to the principal amounts of such offers.
Determinations by the
Borrower of such proportionate amounts of Money Market Loans shall
be
conclusive in the absence of demonstrable error.
(g) Effect on Commitment. Any Money Market Loan made by a Bank
under this
Section 2.03 shall be considered usage of the facility for the
purpose of
fees and availability. Outstanding Money Market Loans do not
affect the
requirement of any bank to fund its prorata share under a
Syndicated Loan.
(h) Variances. The time periods set forth in this Section 2.03
related to
the conduct of any auction may be varied as the Borrower and the
participating Banks may agree.
SECTION 2.04. [THIS SECTION 2.04 IS RESERVED].
<PAGE>
SECTION 2.05.Interest Period for Borrowings.
(a) Base Rate Borrowings. The "Interest Period" with respect to
each Base
Rate Borrowing means the period
commencing on the day the Base Rate Loans are made and ending up to
180 days
thereafter, as the Borrower may elect in the Notice of Syndicated
Borrowing;
provided that:
(i) any Interest Period which would otherwise end on a day which
is not a
Business Day shall be extended to the next succeeding Business Day;
and
(ii) if the Interest Period is longer than 90 days, interest with
respect
thereto shall also be paid on the day falling 90 days after the
commencement
of the Interest Period and each successive 90 day anniversary
thereof.
(b) LIBOR Rate and Money Market LIBOR Borrowings. The "Interest
Period" with
respect to each LIBOR Rate Borrowing and Money Market LIBOR
Borrowing means
the period commencing on the day the LIBOR Loans or Money Market
LIBOR Loans,
as the case may be, constituting such Borrowing are made and ending
one, two,
three or six months thereafter (or other period up to six months
agreed upon
by the Borrower and the Banks), as the Borrower may elect in the
applicable
Notice of Borrowing; provided that:
(i) any Interest Period which would otherwise end on a day which
is not a
Business Day shall be extended to the next succeeding Business Day
unless
such Business Day falls in another calendar month, in which case
such
Interest Period shall end on the next preceding Business Day;
(ii) any Interest Period which begins on the last Business Day of
a calendar
month (or on a day for which there is no numerically corresponding
day in the
calendar month at the end of such Interest Period) shall end on the
last
Business Day of a calendar month; and
(iii) if the Interest Period is longer than three months, interest
with
respect thereto shall also be paid on the day ending three months
after the <PAGE>
commencement of the Interest Period and each successive three month
anniversary thereof.
(c)Money Market Absolute Rate Borrowing. The "Interest Period"
with respect
to each Money Market Absolute Rate Borrowing means the period
commencing on
the day the Money Market Absolute Rate Loans constituting such
Borrowing are
made and ending on any day up to 180 days thereafter, as the
Borrower may
elect in the applicable Notice of Borrowing; provided that:
(i) any Interest Period which would otherwise end on a day which
is not a
Business Day shall be extended to the next succeeding Business Day;
and
(ii) if the Interest Period is longer than 90 days, interest with
respect
thereto shall also be paid on the day falling 90 days after the
commencement
of the Interest Period and each successive 90 day anniversary
thereof.
(d)Outside Limit. Notwithstanding any of the foregoing provisions
of this
Section 2.05, no "Interest Period" applicable to any Loan shall
extend beyond
the Termination Date and any Interest Period which otherwise would
so extend
shall end on the Termination Date.
SECTION 2.06.Maturity of Loans. Each Loan included in any
Borrowing shall
mature, and the principal amount thereof shall be due and payable,
on the
last day of the then current Interest Period applicable to such
Borrowing.
SECTION 2.07.Interest Rate Options. The principal amount of each
Loan while
outstanding shall bear interest for each day from the day such Loan
is made
until due, payable on the last day of each Interest Period
applicable thereto
(subject to the definitional provisions of Section 2.05), at a rate
per annum
(based on a 360-day year and actual days elapsed, in the case of
non-Base
Rate Loans, and a 365-day year (366-day year in leap years), in the
case of
Base Rate Loans, in all cases counting the first day but not the
last day of
any Interest Period) equal to one of the following interest rates
selected or
accepted by the Borrower, as applicable: Base Rate, LIBOR Rate,
Money Market
LIBOR Rate and Money Market Absolute Rate, in each case as
described below in
this Section 2.07.
(a)Base Rate Loans. Each Base Rate Loan shall bear interest at the
Base
Rate.
The "Base Rate" applicable to any Base Rate Loan for any day during
the
Interest Period applicable thereto means a rate per annum equal to
the higher
of (A) the Reference Rate in effect for such day or (B) the Federal
Funds
Rate for such day plus 0.50%. Any change in the Base Rate due to
a change in
the Reference Rate shall be effective on the date specified in the
public
announcement of such change, and any change in the Base Rate due to
a change
in the Federal Funds Rate shall be effective on the effective date
of such
change in the Federal Funds Rate.
"Federal Funds Rate" means, on any day, the effective closing rate
(rounded
upwards, if necessary, to the next higher 1/100 of 1%) for the
previous
Business Day as reported by Bloomberg Financial Markets as the
"federal funds
rate" for such previous Business Day, or, if such rate is not so
published
or reported, the average of the quotations (rounded upwards, if
necessary, to
the next higher 1/100 of 1%) for such day (which shall be a
Business Day or
the next preceding Business Day) received by the Borrower from
three federal
funds brokers of recognized standing selected by it.
(b)LIBOR Rate. Each LIBOR Loan shall bear interest at the LIBOR
Rate.
The "LIBOR Rate" applicable to any LIBOR Loan for any day during
any Interest
Period applicable thereto means a rate per annum equal to the sum
of the
Applicable Margin for such day plus the applicable Adjusted LIBOR
Rate.
The "Adjusted LIBOR Rate" applicable to any Interest Period means
a rate per
annum equal to the quotient obtained (rounded upwards, if
necessary, to the
next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank
Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period with
respect to a LIBOR Rate Loan or a Money Market LIBOR Loan, as the
case may
be, means the index rate per annum, as reported by Bloomberg
Financial
Markets, at which deposits in Dollars are offered in immediately
available
funds to major banks in the London interbank market at
approximately
11:00 A.M. (London time) two Business Days before the first day of
such
Interest Period for a maturity comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed
as a decimal) as determined by the Borrower, which is in effect on
such day,
as obtained by Borrower from the Denver Branch of the Kansas City
Federal
Reserve Bank, as prescribed by the Board of Governors of the
Federal Reserve
System (or any successor) for determining the maximum reserve
requirement
(including, without limitation, any basic, supplemental or
emergency
reserves) for a member bank of the Federal Reserve System with
deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (as
defined in Regulation D promulgated by the Board of Governors from
time to
time). The Adjusted LIBOR Rate shall be adjusted automatically on
and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(c)Money Market LIBOR Rate. Each Money Market LIBOR Loan shall
bear interest
on the outstanding principal amount thereof, for the Interest
Period
applicable thereto, at a rate per annum equal to the sum of the
applicable
London Interbank Offered Rate for such Interest Period plus (or
minus) the
Money Market Margin quoted by the Bank making such Loan as a part
of the
applicable Bid Borrowing in accordance with Section 2.03(d)(ii)(D)
(the
"Money Market LIBOR Rate" for such Loan).
(d) Money Market Absolute Rate. Each Money Market Absolute Rate
Loan shall
bear interest on the outstanding principal amount thereof, for the
Interest
Period applicable thereto, at a rate per annum equal to the
Absolute Rate
quoted by the Bank making such Loan as a part of the applicable Bid
Borrowing
in accordance with Section 2.03(d)(ii)(E) (the "Money Market
Absolute Rate"
for such Loan).
(e) Determination of Interest Rates. The Borrower shall determine
each
interest rate with respect to which it has responsibility to make
such
determination pursuant to and in accordance with Schedule 3 to this
Agreement
which is incorporated in this Agreement by this reference. The
Borrower
shall give prompt notice to the participating Banks by telex,
facsimile or
cable of each rate of interest so determined, and its determination
thereof
shall be conclusive in the absence of demonstrable error.
SECTION 2.08.Interest Rate Unavailable.
(a) LIBOR Unavailable. If, on any date on which an interest rate
based on
LIBOR would otherwise be set, (i) the
Borrower shall determine in accordance with Schedule 3 hereto that
adequate
and reasonable means do not exist for ascertaining the interest
rate based on
LIBOR, with respect to any Interest Period, including, without
limitation,
the inability or failure of the Borrower to obtain sufficient
information
with respect to rates from the applicable source as contemplated by
this
Agreement and Schedule 3, or (ii) Majority Banks shall have
notified the
Borrower that the Adjusted LIBOR Rate, as determined by the
Borrower, will
not adequately and fairly reflect the cost to Majority Banks of
funding a
proposed Loan for such Interest Period, the Borrower shall
forthwith give
notice thereof to the Banks, whereupon until the Majority Banks
notify the
Borrower that the circumstances giving rise to such suspension no
longer
exist, the obligations of the Banks to make LIBOR Rate Loans, shall
be
suspended. Each Bank shall from time to time upon request of the
Borrower
provide in good faith to Borrower information with respect to such
Bank
concerning the status of circumstances giving rise to any such
suspension.
Unless the Borrower notifies the Banks at least one Business Day
before the
date of any proposed Borrowing affected by the circumstances
described in
this subsection (a) for which a Notice of Borrowing has previously
been
given that it elects not to borrow on such date, such Borrowing
shall instead
be made as a Base Rate Borrowing and the Banks shall make such Base
Rate
Loans.
(b) Federal Funds Rate Unavailable. If, on any date on which a
Base Rate
would otherwise be set, the Borrower shall have determined in
accordance with
the terms of Schedule 3 hereto that it is unable to ascertain the
Federal
Funds Rate for any reason, including, without limitation, the
inability or
failure of the Borrower to obtain sufficient bids or publications
contemplated by this Agreement and Schedule 3, the Borrower shall
forthwith
give notice thereof to the Banks, whereupon until the Borrower
shall notify
the Banks that the circumstances giving rise to such inability no
longer
exist, the Base Rate shall be the Reference Rate.
SECTION 2.09. Default Rate. Any sum of principal, interest, fees,
or other
amounts payable by Borrower under any Loan or otherwise hereunder
if not paid
when due (whether before or after acceleration) shall bear interest
(payable
on demand) from its due date until payment in full (computed daily
on the
basis of a 360 day year and actual days elapsed) of a rate per
annum equal to
2% above the Reference Rate, reset daily.
SECTION 2.10.Evidence of Loans/Borrowings.
(a) Loan Account; Note. Each Bank shall maintain in accordance
with its
usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Bank resulting
from each
Loan owing to such Bank from time to time, including the amounts of
principal
and interest payable and paid to such Bank from time to time
hereunder. The
Borrower shall execute and deliver to each Bank a promissory note
substantially in the form of Exhibit E attached hereto.
(b) Register. The Borrower shall maintain at its address referred
to in
Section 10.01 a register for the recordation of the names and
addresses of
the Banks (including any assignees which have become Banks pursuant
to an
Assignment and Acceptance pursuant to Section 10.08) and the
Commitment of,
and principal amount of the Loans owing to, each Bank from time to
time (the
"Register"). The Register shall evidence the indebtedness of the
Borrower
under this Agreement by individual Bank and in the aggregate and
include a
record of the dates and amounts of each Borrowing, the Type of
Loans and the
Interest Period applicable thereto, and the amounts of principal or
interest
payable, paid or prepaid in connection therewith. The entries in
the
Register shall be conclusive and binding for all purposes, absent
demonstrable error, and the Borrower and the Banks may treat each
Person
whose name is recorded in the Register as a Bank hereunder for all
purposes
of this Agreement. The Register shall be available for inspection
by any
Bank at any reasonable time and from time to time upon reasonable
prior
notice.
SECTION 2.11. Failure to Give Notice, Automatic Conversion. If the
Borrower
is otherwise entitled under this Agreement to repay any Syndicated
Loans
maturing at the end of an Interest Period applicable thereto with
the
proceeds of a new Syndicated Borrowing, and the Borrower fails to
repay such
Syndicated Loans using its own moneys and fails to give a Notice of
Borrowing
in connection with such new Syndicated Borrowing, a new Syndicated
Borrowing
shall be deemed to be made on the date such Syndicated Loans mature
in an
amount equal to the principal amount of the Syndicated Loans so
maturing.
The Syndicated Loans comprising such new Syndicated Borrowing shall
be Base
Rate Loans and the Interest Period for such Borrowing shall be 30
days.
SECTION 2.12. Prepayments. The Borrower may prepay any Base Rate
Loan in
whole at any time, or from time to time in part in amounts
aggregating at
least $1,000,000, by paying the principal amount to be prepaid
together with
accrued interest thereon to the date of prepayment. Each such
optional
prepayment shall be applied to prepay ratably the Base Rate Loans
of the
several Banks included in such Borrowing. Except as provided in
the
foregoing of this Section 2.12, and, subject to Section 2.13,
except as
provided in Section 9.02 and 9.03 of this Agreement, Borrower may
not prepay
all or any portion of the principal amount of any Loan (Syndicated
and Bid)
prior to the maturity thereof.
SECTION 2.13. Funding Losses. If for any reason the Borrower makes
any
payment of principal with respect to any non-Base Rate Loan under
this
Agreement on any day prior to the last day of the Interest Period
applicable
thereto, or if for any reason the Borrower fails to borrow any such
Loan
after notice has been given to any Bank in accordance with this
Agreement,
the Borrower shall reimburse each Bank within 15 days of demand for
any
resulting loss or expense incurred by it including (without
limitation) any
loss incurred in obtaining, liquidating or employing deposits from
third
parties, but excluding loss of margin for the period after any such
payment
or failure to borrow, provided that such Bank shall have delivered
to the
Borrower a certificate as to the amount of such loss or expense in
reasonable
detail, which certificate shall be conclusive in the absence of
demonstrable
error.
SECTION 2.14. General Rules as to Payments. The Borrower shall
make each
payment of principal, interest, fees and otherwise to be made under
this
Agreement not later than 12:00 Noon (New York City time) on the
date when due
to the Banks (or their applicable Lending Office) at their
respective and
appropriate addresses listed in Schedule 1. All payments shall be
made in
Dollars in immediately available funds. Each payment shall be made
only on a
Business Day. If the day on which a payment shall be due is not a
Business
Day, the date for payment thereof shall be extended to the next
succeeding
Business Day (unless, in the case of LIBOR Rate or Money Market
LIBOR,
otherwise expressly provided herein). If the date for any payment
of
principal is extended by operation of law or otherwise, interest
thereon
shall be payable for such extended time.
SECTION 2.15. Funding of Loans.
(a) Disbursements. Not later than 2:00 P.M. (New York City time)
on the date
of each Borrowing, each Bank
participating therein shall (except as provided in subsection (b)
of this
Section) make available its share of such Borrowing, in immediately
available
funds, to the Borrower at the Borrower's account designated on the
signature
page hereto, or such other account as may be designated by Borrower
by notice
to the Banks.
(b) Net Payments. If any Bank makes a new Loan hereunder on a day
on which
the Borrower is to repay all or any part of an outstanding Loan
from such
Bank, such Bank shall automatically apply the proceeds of its new
Loan
against principal amount due to make such repayment and only an
amount equal
to the difference (if any) between the amount being borrowed and
the amount
being repaid shall be made available by such Bank to the Borrower
as provided
in subsection (a), or remitted by the Borrower to the Bank as
provided in
Section 2.14, as the case may be.
SECTION 2.16. Fees.
(a) Commitment Fees. Borrower shall pay to each Bank, as
consideration for
such Bank's Commitment hereunder, a commitment fee ("Commitment
Fee") equal
to the rate per annum (based on actual days elapsed and a 360 day
year) set
forth in the right-hand column below on the daily average of the
Bank's
prorata share of the unused Commitments of all Banks [as such
unused
Commitments may be adjusted pursuant to subsection (d) of this
section 2.16
below] for each day (from and including the Effective Date but
excluding the
Termination Date) based on the Rating (which shall be the higher
Rating in
the event of a split rating) in effect on each day as set forth in
the left-
hand column below.
<PAGE>
<TABLE>
<CAPTION>
Rating Rate Per Annum
<S> <C>
A Minus or A3 or Higher 7.5 basis points
BBB+ or Baa1 10 basis points
BBB or Baa2 12.5 basis points
BBB- or Baa3 15 basis points
Lower than BBB- or Baa3 20 basis points
</TABLE>
(b) Facility Fees. Borrower shall pay to each Bank ratably in
proportion to
its Commitment, a facility fee ("Facility Fee") equal to 1/20 of 1%
per annum
(based on actual days elapsed and a 360 day year) on the daily
average of the
aggregate amount of the Commitments, regardless of utilization
thereof, and
regardless of the Rating, for each day (from and including the
Effective Date
but excluding the Termination Date)
(c) Payment of Fees. Accrued Commitment Fees and Facility Fees
under this
Section 2.16 shall be payable quarterly in arrears on each March
31, June 30,
September 30 and December 31 of each year during the term of this
Agreement,
and on the Termination Date or, if earlier, the date of termination
of the
Commitments in their entirety. Payment of all such Commitment Fees
and
Facility Fees shall be made by check mailed on the first Business
Day
following the aforesaid dates.
(d) Bid Loans. Any Bid Loans made by a Bank under this Agreement
up to the
full amount of the total Commitments shall be considered usage of
the
facility for purposes of calculating the Commitment Fees due under
subsection
(a) of this Section 2.16. Outstanding Bid Loans made by any Bank
shall
reduce the unused Commitments of all banks on a prorata basis under
this
Agreement for purposes of calculating the Commitment fees under
subsection
(a) of this Section 2.16.
SECTION 2.17. Optional Reduction of Commitments. The Borrower from
time to
time, upon at least three Business Days' notice to the Banks, may
irrevocably
reduce ratably among the Banks the unused portion (without regard
to
outstanding Bid Loans) of the aggregate Commitments; provided that
(i) such
reduction shall be by an aggregate amount of at least $5,000,000,
and
integral multiples in excess thereof of $1,000,000 (except a
reduction may be
in the amount of the aggregate unused Commitments), and (ii) the
aggregate
Commitments shall not be reduced to an amount less than the
aggregate
principal amount of all Loans then outstanding. In the event the
Commitments
are reduced to zero, this Agreement shall terminate and any
Facility Fees and
Commitment Fees then accrued shall become immediately payable.
ARTICLE III
CONDITIONS
SECTION 3.01. Conditions to Effectiveness. This Agreement will
become
effective on the date (the "Effective Date") when all of the
following have
occurred:
(a) Counterparts. Counterparts of this Agreement shall have been
executed
and delivered to the Banks by the Borrower and counterparts of this
Agreement
shall have been executed and delivered by each Bank to the Borrower
and the
other Banks.
(b) Legal Opinion. An opinion of counsel for the Borrower (which
counsel may
be an employee of the Borrower), reasonably acceptable to the
Required Banks,
dated the Effective Date and substantially in the form of Exhibit
F hereto
and covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request
shall have
been delivered to each Bank. In rendering its opinion, such
counsel may
rely, to the extent such counsel deems reliance proper, on the
opinions of
other counsel as to certain matters, all as reasonably acceptable
to the
Required Banks.
(c) Officer Certificates. A Certificate, dated the Effective Date,
signed by
an Authorized Officer, to the effect set forth in clause (d) of
Section 3.02
and to the further effect that no Default or Event of Default shall
have
occurred and be continuing shall have been delivered by the
Borrower to each
Bank.
(d) Other Documents. All documents which the Required Banks may
reasonably
request relating to the existence of the Borrower, the corporate
authority
for and the validity of this Agreement, incumbency of officers and
such
persons who are authorized to execute Notices of Borrowing and like
instruments hereunder and any other relevant matters, all
<PAGE>
in form and substance reasonably satisfactory to the Required Banks
shall
have been delivered to the Banks.
(e) Notes. A promissory note substantially in the form of Exhibit
E with
appropriate insertions shall have been executed by the Borrower and
delivered
to each of the Banks.
SECTION 3.02. Conditions to Borrowings. The obligation of each
Bank to
make any Loan (Syndicated and Bid) on the occasion of each
Borrowing is
subject to the satisfaction of the following conditions:
(a) Notice of Borrowing. The Banks shall have received (or be
deemed to have
received) the applicable Notice of Borrowing as required by Article
II.
(b) Loan Limit. Immediately after such Borrowing, the aggregate
outstanding
principal amount of the Loans shall not exceed the aggregate amount
of the
Commitments.
(c) No Default. Immediately after such Borrowing, no Default or
Event of
Default shall have occurred and be continuing.
(d) Representations and Warranties. On the date of such
Borrowing, (i) in
the case of any Borrowing other than a Refunding Borrowing, the
representations and warranties of the Borrower contained in Article
IV of the
Agreement shall be true and correct in all material respects on and
as of the
date of such Borrowing, and (ii) in the case of any Refunding
Borrowing, the
representations and warranties contained in Article IV of this
Agreement
(excluding Section 4.05 and Section 4.06, as to which no
representation and
warranty is then required to be made) shall be true and correct in
all
material respects on and as of the date of such Refunding
Borrowing.
Each Borrowing (or Refunding Borrowing, as applicable) hereunder
shall be
deemed to be a representation and warranty by the Borrower on the
date of
such Borrowing as to the facts specified in clauses (b), (c) and
(d) of this
Section as if Borrower had delivered a certificate to the Banks
affirming
such facts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants severally to the Banks that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation
duly incorporated, validly existing
and in good standing under the laws of Colorado, and has all
corporate powers
and all material governmental licenses, authorizations, consents
and
approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention.
The execution, delivery and performance by the Borrower of this
Agreement are
within the Borrower's corporate powers, have been duly authorized
by all
necessary corporate action, require no action by or in respect of,
or filing
with, any Governmental Authority, and do not contravene, or
constitute a
default under, any provision of applicable Law or of the articles
of
incorporation or by-laws of the Borrower or of any material term of
any
material agreement or other instrument binding upon the Borrower or
result in
the creation or imposition of any Lien on any asset of the Borrower
or any of
its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement has been duly
executed and
delivered by the Borrower and constitutes the valid and binding
agreement and
obligations of the Borrower, enforceable in accordance with their
terms
subject to applicable bankruptcy, reorganization, insolvency,
moratorium and
similar laws affecting creditors rights generally, and to general
principles
of equity (whether considered in a court of law or in equity).
SECTION 4.04. Financial Information. The consolidated financial
statements
of Borrower for the year ended December 26, 1993, and the quarters
ended
March 20, 1994, June 12, 1994, and October 2, 1994, fairly present,
in
conformity with generally accepted accounting principles, the
consolidated
financial position and results of operations of the Borrower and
its
Consolidated Subsidiaries as of such dates.
SECTION 4.05. No Material Adverse Change. Except as disclosed on
Schedule
4.05 hereto, since October 2, 1994, there has been no material
adverse change
in the business, operations or financial position of the Borrower
and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.06. Litigation. Except as disclosed on Schedule 4.06
hereto,
there is no action, suit or proceeding pending, or to the knowledge
of the
Borrower, threatened against or affecting the Borrower or any of
its
Subsidiaries before any court or arbitrator or any governmental
body, agency
or official in which there is a reasonable probability of an
adverse decision
that would materially adversely affect the business, operations or
financial
position of the Borrower and its Consolidated Subsidiaries,
considered as a
whole, or which in any manner draws into question the validity of
this
Agreement or the Borrower's obligations hereunder.
SECTION 4.07. Compliance with ERISA. Borrower and each ERISA
Affiliate have
fulfilled their obligations under the minimum funding standards of
ERISA and
the Code with respect to each Plan and are in compliance in all
material
respects with the presently applicable provisions of ERISA and the
Code, and
have not incurred any material liability to the PBGC or a Plan
under Title IV
of ERISA other than a liability to the PBGC for premiums under
Section 4007
of ERISA.
SECTION 4.08. Compliance with Laws. Neither the Borrower nor any
of its
Subsidiaries is in violation of any applicable Law (including, but
not
limited to, Environmental Laws, ERISA and the Code) except where
failure to
so comply would not have a reasonable probability of having a
material
adverse effect on the business, operations or financial position of
the
Borrower and its Consolidated Subsidiaries, considered as a whole.
SECTION 4.09. Taxes. The Borrower and its Subsidiaries have filed
all United
States federal income tax returns and all other material tax
returns which
are required to be filed by them and have paid all taxes due
pursuant to such
returns or pursuant to any assessment received by the Borrower or
any
Subsidiary, other than taxes contested in good faith by the
Borrower or such
Subsidiary or for which adequate reserves have been set aside in
accordance
with generally accepted accounting principles. The charges,
accruals and
reserves on the books of the Borrower and its Subsidiaries in
respect of
taxes or other governmental charges are, in the opinion of the
Borrower,
adequate.
SECTION 4.10. Subsidiaries. Each of the Borrower's Restricted
Subsidiaries
is a corporation duly incorporated, validly existing and in good
standing
under the laws of its jurisdiction of incorporation, and has all
corporate
powers and all material governmental licenses, authorizations,
consents and
approvals required to carry on its business as now conducted, the
absence of
which would have a material adverse effect on the business,
operations or
financial position of the Borrower and its Consolidated
Subsidiaries,
considered as a whole.
SECTION 4.11. Not an Investment Company. The Borrower is not an
"investment
company" within the meaning of the Investment Company Act of 1940,
as
amended.
SECTION 4.12. No Margin Stock. No part of the proceeds of any Loan
will be
used for the purpose of purchasing or carrying any "margin stock"
within the
meaning of Regulation U or X promulgated by the Board of Governors
of the
Federal Reserve System.
SECTION 4.13. Full Disclosure. There is no fact which the Borrower
has not
disclosed in writing to the Banks on or prior to the Effective Date
which
has, or as far as the Borrower can now reasonably foresee will
have, a
material adverse effect on the ability of the Borrower to perform
its
obligations under this Agreement or to pay the principal or the
interest on
any Loan or any fees or other amounts due hereunder.
SECTION 4.14. Excluded Principal Plants. Schedule 2, as it may be
amended
from time to time after the Effective Date by the Borrower by the
execution
and delivery of such amended Schedule or a certificate pursuant to
Section 5.01(g) to the Banks, contains a complete and accurate list
of the
plants owned by the Borrower or any Subsidiary excluded from the
definition
of "Principal Plant" pursuant to the terms of such definition.
ARTICLE V
GENERAL COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or
any amount payable under this
Agreement remains unpaid, unless and to the extent the Required
Banks waive
compliance in writing:
SECTION 5.01. Information.
(a) SEC Reports. The Borrower will deliver to each Bank within 15
days of
the filing thereof with the SEC or
delivery thereof to its shareholders, a copy of the annual and
quarterly
reports and other filings (excluding exhibits) made by the Borrower
with the
SEC under the Exchange Act or delivered to its shareholders, or if
Borrower
in the future becomes exempt from the reporting requirements of
such Act,
copies of the financial statements as provided in paragraph (b) of
this
Section 5.01.
(b) Financial Statements. If and when Borrower is no longer
subject to the
reporting requirements under the Exchange Act, Borrower will
deliver to each
Bank (i) within 90 days after the end of each fiscal year of the
Borrower, a
copy of the consolidated financial statements of the Borrower and
its
Consolidated Subsidiaries as of the end of such fiscal year,
together with an
opinion thereon by Price Waterhouse or other independent public
accountants
of nationally recognized standing; and (ii) within 45 days after
the end of
each of the first three quarters of each fiscal year of the
Borrower, the
unaudited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and that
portion of
the fiscal year ending with such quarter, all certified (subject to
normal
year-end adjustments) as to fairness of presentation, generally
accepted
accounting principles and consistency by an Authorized Officer.
(c) Compliance Certificates. Quarterly, simultaneously with the
delivery of
each set of quarterly financial statements referred to in clause
(a) or (b)
above, Borrower will deliver to the Banks a certificate of an
Authorized
Officer stating, to the best of such Authorized Officer's
knowledge,
(i) whether the Borrower was in compliance with the Financial
Covenants
contained in Article VII as of the date of such financial
statements, and
setting forth in reasonable detail the calculations required to
establish the
Borrower's compliance with such Covenants; and (ii) whether any
Default or
Event of Default has occurred and is continuing on the date of such
certificate and, if any Default or Event of Default then exists,
setting
forth the details thereof and the action which the Borrower is
taking or
proposes to take with respect thereto.
(d) Other Reports. Promptly upon their becoming available to the
Borrower,
the Borrower will deliver to the Banks (except to the extent
already covered
by subsection (a) of this Section 5.01) a copy of (i) all regular
or special
reports or effective registration statements (excluding
registration
statements on Form S-8 or any substitute form adopted by the SEC)
which the
Borrower or its Subsidiaries shall file with the SEC and (ii) all
reports,
proxy statements, financial statements and other information
distributed by
the Borrower to its shareholders generally.
(e) Notice of Default. No later than three Business Days after
becoming
aware thereof, Borrower will deliver to the Bank a certificate of
an
Authorized Officer as to the occurrence of any Default or Event of
Default
setting forth the details thereof and the action which the Borrower
is taking
or proposes to take with respect thereto.
(f) Principal Plant Report. Promptly after any determination by
the Board of
Directors of Borrower of any exclusion of a plant from the
definition of
Principal Plant, Borrower will deliver a certificate of an
Authorized Officer
to the Banks setting forth such determination, which certificate
shall
constitute an amendment to Schedule 2 hereof.
(g) Other Information. From time to time Borrower shall provide
any Bank
such additional information regarding the financial position of the
Borrower
and its Subsidiaries or matters related to verifying Borrower's
compliance
with this Agreement as any Bank may reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower will pay and
discharge,
and will cause each Subsidiary to pay and discharge, as and when
due, all
their material obligations and liabilities, including, without
limitation,
tax liabilities, except where the same may be contested in good
faith by
appropriate proceedings or for which adequate reserves have been
set aside in
accordance with generally accepted accounting principles or as to
which a
bona fide dispute may exist, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted
accounting
principles, adequate reserves for the accrual of any of the same.
<PAGE>
SECTION 5.03. Maintenance of Property. The Borrower shall, and
shall cause
each of its Subsidiaries to, maintain its properties and assets in
normal
working order and condition and make all necessary repairs,
renewals,
replacements, additions, betterments and improvements thereto,
ordinary wear
and tear and obsolescence excepted, all as in the judgment of the
Borrower
may be necessary so that the business carried on in connection
therewith may
be properly and advantageously conducted at all times; provided,
however,
that nothing in this Section 5.03 shall prevent the Borrower or one
of its
Subsidiaries from discontinuing the operation and maintenance of
any of its
properties if such discontinuance is, in the judgment of the
Borrower or such
Subsidiary, desirable in the conduct of its business and not
disadvantageous
in any material respect to the Banks.
SECTION 5.04. Insurance. The Borrower shall, and shall cause each
of its
Subsidiaries to, maintain with financially sound and reputable
insurers such
insurance as may be required by law and such other insurance
(including self-
insurance) to such extent and against such hazards and liabilities
as
Borrower determines to be reasonably prudent.
SECTION 5.05. Conduct of Business and Maintenance of Existence.
Except as
otherwise permitted in Section 6.03, to the extent necessary or
desirable in
the normal conduct of the business of the Borrower and each
Subsidiary, the
Borrower will preserve, renew and keep in full force and effect and
will
cause each Subsidiary to preserve, renew and keep in full force and
effect,
their corporate existences, rights, privileges and franchises.
SECTION 5.06. Compliance with Laws. The Borrower will comply, and
will cause
each Subsidiary to comply, with all applicable Laws (including,
without
limitation, ERISA and Environmental Laws) except where the failure
to comply
would not have a reasonable probability of having a material
adverse effect
on the business, operations or financial position of the Borrower
and its
Consolidated Subsidiaries, considered as a whole.
SECTION 5.07. Inspection of Property, Books and Records. The
Borrower will
keep, and will cause each Subsidiary to keep, proper books of
record and
account in which full, true and correct entries shall be made of
all dealings
and transactions in relation to its business and activities; and
will permit,
and will cause each Subsidiary to permit, representatives of any
Bank at such
Bank's expense to visit and inspect any of their respective
properties, to
examine and make abstracts from any of their respective books and
records and
to discuss their respective affairs, finances and accounts with
their
respective officers, employees and independent public accountants
(with
representatives of the Borrower present in any discussions with
such
accountants), all at such reasonable times and as often as may
reasonably be
desired.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans made
under this
Agreement will be used by the Borrower for general corporate
purposes. None
of such proceeds will be used, directly or indirectly, for the
purpose,
whether immediate, incidental or ultimate, of purchasing or
carrying any
"margin stock" within the meaning of Regulation U or X.
SECTION 5.09. Environmental Matters. Except where the failure to
do so would
not have a reasonable probability of having a material adverse
effect on the
business, operations or financial position of Borrower and its
Consolidated
Subsidiaries, considered as a whole, the Borrower will (a) employ,
and cause
each of its Subsidiaries to employ, appropriate technology and
compliance
procedures to maintain compliance with any applicable
Environmental Laws,
(b) obtain and maintain, and cause each of its Subsidiaries to
obtain and
maintain, all material permits required by applicable Environmental
Laws in
connection with its or its Subsidiaries' operations, and (c)
dispose of, and
cause each of its Subsidiaries to dispose of, any and all
substances
reasonably known by Borrower to be hazardous or toxic substances
only at
facilities and with carriers reasonably believed to possess valid
permits
under applicable Environmental Laws.
ARTICLE VI
NEGATIVE COVENANTS
Borrower agrees that, so long as any Bank has any Commitment
hereunder or any
amount payable under this Agreement remains unpaid, unless and to
the extent
the Required Banks waive compliance in writing:
<PAGE>
SECTION 6.01. Limitations on Liens.
(a) Principal Plants. The Borrower will not create, assume,
guarantee or
otherwise become liable with
respect to (collectively, "incur"), and will not cause, suffer or
permit any
Restricted Subsidiary to incur, any Debt secured by a Lien on any
Principal
Plant, or on any capital stock of any Restricted Subsidiary,
without making
effective provisions whereby the Commitments shall be equally and
ratably
secured thereby, provided that the foregoing shall not apply to:
(i) purchase money pledges of, or purchase money mortgages or
liens on,
property acquired (including through merger or consolidation) after
the date
of execution of this Agreement, so long as such pledges, mortgages
and liens
shall attach only to the assets so acquired and improvements
thereon,
(ii) Liens existing at the time of acquisition (including
through merger
or consolidation) on property acquired after the date of execution
of this
Agreement, so long as such Liens (A) were not created or incurred
in
connection with or in contemplation of such acquisition and (B)
shall attach
only to the assets so acquired and improvements thereon,
(iii) Liens existing on property of a Subsidiary at the time it
becomes a
Restricted Subsidiary, so long as such Liens were not created or
incurred in
connection with or in contemplation of such Subsidiary becoming a
Restricted
Subsidiary,
(iv) Liens to secure all or any part of the cost of development or
construction of any property or assets or improvements thereon and
which
shall be released or satisfied within 120 days after completion of
such
development or construction,
(v) Liens required in connection with the acquisition,
construction or
development of additions or extensions to Principal Plants which
shall be
financed by obligations described in Section 103(b)(4)-(7) of the
Code or by
obligations entitled to substantially similar tax benefits under
<PAGE>
other legislation or regulations in effect from time to time,
(vi) Liens securing Debt owing to the Borrower or a Restricted
Subsidiary by
a Restricted Subsidiary,
(vii) Liens existing as of the Effective Date.
(viii) extensions, renewals or replacements of pledges, mortgages
or liens
referred to in clauses (i) to (vii), inclusive, above, and any
subsequent
refinancings of such extensions, renewals or replacements pursuant
to this
clause (viii), provided that the amount of Debt secured by such
extension,
renewal, replacement or subsequent refinancing shall not exceed the
principal
amount of Debt being extended, renewed, replaced or subsequently
refinanced,
nor shall the pledge, mortgage or lien be extended to any
additional
Principal Plant or capital stock of any Restricted Subsidiary,
(ix) as permitted by subsection (b) of this Section,
(x) as permitted by subsection (c) of this Section, or
(xi) Liens arising by operation of law or in the ordinary course
of business
of the Borrower or a Restricted Subsidiary which do not secure Debt
and do
not in the aggregate materially detract from the value of its
assets or
materially impair the use thereof in the operation of its business.
(b) After Acquired Property. If the Borrower or any Restricted
Subsidiary
shall at any time enter into a merger or consolidation with another
Person or
purchase all or substantially all of the assets of another Person,
or if the
Borrower shall sell all or substantially all of its assets to
another Person
and if such other Person has outstanding indebtedness secured by a
mortgage
or other lien which, by reason of an after-acquired property clause
or
similar provision therein contained, would extend, after such
merger,
consolidation, sale or purchase, to any Principal Plant owned by
the Borrower
or such Restricted Subsidiary immediately prior to such merger,
consolidation, sale or purchase, the Borrower or such Restricted
Subsidiary,
as the case may be, shall in such event be deemed to have created
a mortgage
or lien, within the prohibition of subsection (a) of this Section
6.01,
unless (i) such merger or consolidation involving a Restricted
Subsidiary
shall constitute a disposition by the Borrower of its interest in
the
Restricted Subsidiary and is otherwise in compliance with this
Agreement, or
(ii) either (A) at or prior to the effective date of such merger,
consolidation, sale or purchase, such mortgage or lien shall have
been
released of record or otherwise satisfied to the extent it would
extend to
such Principal Plant or (B) prior to such merger, consolidation,
sale or
purchase, the Borrower or such Restricted Subsidiary, as the case
may be,
shall have created, as security for the Commitments, a valid lien
which, upon
completion of said merger, consolidation, sale or purchase, will
rank equally
with or prior to the lien of such mortgage or other lien of such
other Person
on such Principal Plant.
(c) Permitted Debt. Notwithstanding the foregoing provisions of
this
Section 6.01, the Borrower and any one or more Restricted
Subsidiaries may
incur any Debt otherwise subject to the foregoing restrictions and
in
addition to that permitted by subsection (a) or (b) of this Section
(other
than pursuant to clause (x) of said subsection (a)), if, at the
time of such
incurrence and after giving effect thereto, the aggregate amount of
Debt
secured by pledges, mortgages or liens incurred pursuant to this
subsection
(c) which shall be outstanding at the time, when added to the
aggregate
amount of Debt incurred as permitted by Section 6.02(b) which
shall be
outstanding at the time and the aggregate amount of Debt incurred
as
permitted by Section 6.04 which shall be outstanding at the time
(computed
without duplication of amounts), does not exceed 10 percent of Net
Tangible
Assets and may renew, extend or replace such Debt subject to the
proviso in
clause (viii) of subsection (a) of this Section 6.01.
SECTION 6.02. Limitation on Debt of Restricted Subsidiaries.
(a) Debt Limits. The Borrower will not permit any Restricted
Subsidiary to
create, assume, incur or otherwise become liable with respect to
(collectively, "incur") any Debt, other than:
(i) Debt secured by a mortgage, pledge or lien which is permitted
to such
Restricted Subsidiary under the provisions of Section 6.01,
(ii) Debt owed to the Borrower or any other Restricted
Subsidiary,
(iii) Debt of a Person existing at the time it becomes a
Restricted
Subsidiary (unless such Person becomes a Restricted Subsidiary by
virtue of
(A) the classification or successive classification of such Person
as a
Restricted Subsidiary by the Board of Directors of Borrower or (B)
the
transfer of a Principal Plant to such Person by the Borrower or a
Restricted
Subsidiary), which Debt was not incurred in connection with or
contemplation
of becoming a Restricted Subsidiary,
(iv) Debt created in connection with, or with a view to,
compliance by such
Restricted Subsidiary with the requirements of any program, law,
statute or
regulation of any federal, state or local governmental authority,
which is
applicable to such Restricted Subsidiary and which provides
material
financial or tax benefits to such Restricted Subsidiary which are
not
available to the Borrower or are available to the Borrower only on
terms
which the Borrower's Board of Directors determines are not as
favorable as
those available to the Restricted Subsidiary,
(v) guarantees existing at the Effective Date of this Agreement,
(vi) guarantees and co-obligations of Debt with respect to which
the
Borrower is directly liable, and
(vii) extensions, renewals or replacements of any Debt referred
to in
clauses (i) to (vi), inclusive, above, and any subsequent
refinancings of
such extension, renewals or replacements pursuant to this clause
(vii),
provided that the amount of Debt secured by such extension,
renewal,
replacement or subsequent refinancing shall not exceed the
principal amount
of Debt being extended, renewed, replaced or subsequently
refinanced.
(b) Permitted Debt. Notwithstanding the provisions of subsection
(a) of this
Section 6.02, the Borrower may permit any Restricted Subsidiary to
incur Debt
which would otherwise be prohibited by such provisions, if, at the
time of
such incurrence and after giving effect thereto, the aggregate
amount of such
Debt incurred pursuant to this subsection (b) which shall be
outstanding at
the time, when added to the aggregate amount of Debt incurred as
permitted by
Section 6.01(c) which shall be outstanding at the time and the
aggregate
amount of Debt incurred as permitted by Section 6.04 which shall be
outstanding at the time (computed without duplication of amounts),
does not
exceed 10 percent of Net Tangible Assets and may permit such
Restricted
Subsidiary to renew, extend or replace any such Debt subject to the
proviso
in clause (vii) of subsection (a) of this Section 6.02.
SECTION 6.03. Consolidations, Mergers and Sales of Assets.
Borrower will not
merge or consolidate with or into, or convey, transfer, lease or
otherwise
dispose of (whether in one transaction or a series of related
transactions)
all or substantially all of its assets to, any Person, or permit
any of its
Restricted Subsidiaries to do so, except that (x) if no Default or
Event of
Default shall occur and be continuing immediately after giving
effect to such
transaction and (y) Borrower has delivered to the Banks a
certificate of an
Authorized Officer and an opinion of counsel to Borrower (which
counsel may
be an employee of the Borrower) reasonably satisfactory to the
Required
Banks, each stating that such transaction complies with this
Section 6.03 and
that all conditions precedent to such transaction have been
complied with:
(i) any Restricted Subsidiary of Borrower may merge or
consolidate with or
into, or dispose of assets as described above to, Borrower or any
other
Restricted Subsidiary,
(ii) Borrower may merge or consolidate with or into any Person,
including a
Subsidiary, provided that Borrower is the survivor, and
(iii) any Restricted Subsidiary may merge or consolidate with any
Person
(other than the Borrower or any other Restricted Subsidiary),
provided that
the Restricted Subsidiary is the survivor.
Notwithstanding the foregoing or any other provision of this
Agreement to the
contrary, and subject to the condition that immediately after
giving effect
to such transaction, no Default or Event of Default shall occur and
be
continuing, Borrower may declare and pay dividends or other
distributions in
respect of its capital stock.
SECTION 6.04. Other Loan Agreements. So long as any Bank has any
Commitment
hereunder, except in connection with the contemporaneous
refinancing of all
outstanding Loans hereunder and the termination of all Commitments
hereunder,
Borrower will not enter into any other credit agreement containing
terms
covered by Articles V, VI, VII and VIII of this Agreement more
restrictive on
Borrower in any material respect under such credit agreement than
the terms
of such Articles under this Agreement are on the Borrower; provided
that,
the restriction contained in this Section 6.04 shall not apply (a)
to
restrict the issuance of senior debt securities of the Borrower
pursuant to
the Indenture dated as of March 15, 1990 (as amended and
supplemented from
time to time), between the Borrower and the trustee named therein,
(b) to
restrict the incurrence of Debt by the Borrower under existing
uncommitted
lines of credit between Borrower and any of the Banks (and any
continuations
thereof) in accordance with their terms or under like credit
arrangements
with the Banks or other financial institutions or (c) to restrict
the
Borrower from entering into other credit agreements (or incurring
Debt
thereunder) otherwise subject to the foregoing restriction
contained in this
Section 6.04 under which the aggregate outstanding principal amount
of Debt
incurred under such agreements, at the time of such incurrence and
after
giving effect thereto, when added to the aggregate amounts of Debt
permitted
to be outstanding under Section 6.01(c) and 6.02(b), does not
exceed 10
percent of Net Tangible Assets, and Borrower may renew, extend or
replace any
such Debt under such other credit agreements and subsequently
refinance the
same, provided that the amount of Debt so renewed, extended or
replaced or
subsequently refinanced thereof shall not exceed the principal
amount of Debt
being renewed, extended, replaced or subsequently refinanced.
ARTICLE VII
FINANCIAL COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or
any amount payable under this Agreement remains unpaid, unless and
to the
extent the Required Banks waive compliance in writing:
SECTION 7.01. Minimum Tangible Net Worth. Borrower will have a
Tangible Net
Worth equal to or more than $550,000,000 plus 50% of positive Net
Income for
each quarter in which Borrower reports such positive Net Income,
plus two-
thirds of any New Equity Issuance ("Minimum Tangible Net Worth").
Net Income
shall be calculated on a cumulative basis commencing with the first
day of
the fiscal quarter beginning December 26, 1994 and ending on the
date which
is the last day of the fiscal quarter of Borrower most recently
ended.
SECTION 7.02. Debt to Capitalization. Borrower will have Adjusted
Debt equal
to or less than 45 percent of Capitalization, and Adjusted Debt
including
Subordinated Debt equal to or less than 50 percent of
Capitalization
including Subordinated Debt, measured at the end of each fiscal
quarter of
Borrower (including the fourth quarter), as reported on Borrower's
consolidated financial statements for such quarter.
ARTICLE VIII
DEFAULTS AND EVENTS OF TERMINATION
SECTION 8.01. Events of Default. An "Event of Default" shall mean
the
occurrence of one or more of the following events or conditions
(whatever the
reason and
whether voluntary, involuntary or by operation of law) and
continuance
thereof at a time when any Bank has any Commitment hereunder or any
amount
payable under this Agreement remains unpaid, unless and to the
extent,
subject to Section 10.06, the Required Banks waive the same in
writing:
(a) Principal. Borrower shall fail to pay when due any principal
of any Loan
under this Agreement.
(b) Interest. Borrower shall fail to pay when due any interest on
any Loan,
any fee or any other amount (other than principal) payable
hereunder and such
failure shall have continued for five Business Days.
(c) Covenant Default. Borrower shall fail to observe or perform
(i) any
financial covenant contained in Article VII of this Agreement as of
the
applicable dates of determination of such covenants or (ii) any
other
covenant or agreement contained in this Agreement and such failure
shall have
continued for 30 days after written notice thereof has been given
to the
Borrower by any Bank.
(d) Representations and Warranties. Any representation or warranty
made by
the Borrower in this Agreement or in any certificate, financial
statement or
other document delivered as required by this Agreement shall prove
to have
been incorrect in any material respect when made (or deemed made).
(e) Monetary Default. Borrower or any Subsidiary shall fail to
make any
payment in respect to any Debt (other than (i) Debt the aggregate
principal
amount of which does not exceed $20,000,000 and (ii) the Loans)
when due
(including any applicable grace period).
(f) ERISA Default. Borrower or any ERISA Affiliate shall have
committed a
failure described in Section 302(f)(1) of ERISA or Section
412(n)(1) of the
Code and shall have failed to obtain a waiver pursuant to Section
303 of
ERISA and Section 412(d) of the Code with respect to such failure.
(g) Change in Control. A Change in Control shall occur with
respect to the
Borrower.
(h) Judgments. One or more judgments or orders for the payment of
money in
excess of $20,000,000 on a claim or claims not covered by insurance
shall be
rendered against the Borrower or any Subsidiary, and such judgments
or orders
shall have continued unsatisfied and in effect without being
vacated,
discharged, dismissed or stayed for 45 consecutive days after such
judgments
or orders shall have become final and nonappealable.
(i) Voluntary Bankruptcy. Borrower or any Restricted Subsidiary
shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or
other similar official of it or any substantial part of its
property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding
commenced against it, or shall make a general assignment for the
benefit of
creditors, or shall fail generally to pay its debts as they become
due, or
shall take any corporate action to authorize any of the foregoing.
(j) Involuntary Bankruptcy. An involuntary case or other
proceeding shall be
commenced against the Borrower or any Restricted Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator,
custodian or other similar official of it or any substantial part
of its
property, and such involuntary case or other proceeding shall
remain
undismissed and unstayed for a period of 60 consecutive days; or an
order
granting any such relief or making any such appointment shall be
entered
against the Borrower or any Subsidiary under the federal bankruptcy
laws as
now or hereafter in effect and the continuance of such order
unstayed and in
effect for a period of 30 consecutive days.
SECTION 8.02. Consequence of Event of Default. If there exists any
Event of
Default specified in subsections (a) through (h) of Section 8.01,
then the
Required Banks may, by notice to the Borrower, (i) terminate the
Commitments
and they shall thereupon terminate, and (ii) declare the principal
amount
outstanding under all Loans (together with accrued interest
thereon) to be,
and the Loans shall thereupon become, immediately due and payable
without
presentment, demand, protest or other notice of any kind, all of
which are
hereby waived by the Borrower; provided that, if there exists any
Event of
Default specified in clause (i) or (j), then without any notice to
the
Borrower or any other act by the Banks, the Commitments shall
thereupon
terminate and the Loans (together with accrued interest thereon)
shall become
immediately due and payable without presentment, demand, protest or
other
notice of any kind, all of which are hereby waived by the Borrower.
SECTION 8.03. Notice of Default. Each Bank shall give notice to
the other
Banks promptly upon giving notice to Borrower under Section
8.01(c)(ii).
ARTICLE IX
CHANGE IN CIRCUMSTANCES
SECTION 9.01. [This section 9.01 is reserved].
SECTION 9.02. Illegality. If, after the Effective Date, the
adoption of any
applicable law, rule or regulation, or any change therein, or any
change in
the interpretation or administration thereof by any governmental
authority,
central bank or comparable agency charged with the interpretation
or
administration thereof, or compliance by any Bank (or its Lending
Office)
with any request or directive (whether or not having the force of
law) of any
such authority, central bank or comparable agency shall make it
unlawful or
impossible for any Bank (or its Lending Office) to make, maintain
or fund one
or more of its non-Base Rate Loans and such Bank shall so notify
the other
Banks and the Borrower, whereupon until such Bank notifies the
Borrower and
the other Banks that the circumstances giving rise to such
suspension no
longer exist, the obligation of such Bank (but no other Bank) to
make such
Loans shall be suspended. Before giving any notice pursuant to
this Section,
such Bank shall designate a different Lending Office or take other
action if
such designation or action will avoid the need for giving such
notice and
will not, in the judgment of such Bank, be otherwise
disadvantageous to such
Bank. If such Bank shall determine pursuant to this Section 9.02
that it may
not lawfully continue to maintain and fund any of its outstanding
non-Base
Rate Loans to maturity and shall so specify in such notice, the
Borrower
shall immediately prepay in full the then outstanding principal
amount of
each such Loan, together with accrued interest thereon and the
Borrower shall
pay in full any amounts required pursuant to Section 2.13 hereof.
Concurrently with prepaying each such Loan, the Borrower at its
option shall
borrow a Loan of any Type not affected by the suspension in an
equal
principal amount from such Bank (on which interest and principal
shall be
payable contemporaneously with the related Loans constituting the
applicable
Borrowing of the other Banks), and such Bank shall make such Loan.
As of
the Effective Date each Bank confirms that it has no knowledge of
any event
that would cause this Section to apply. After the Effective Date,
each Bank
will promptly notify the Borrower of any event of which it has
knowledge that
would cause this Section to apply. After a Bank gives notice as
provided
herein to suspend such Bank's obligations to make the affected
Loans, until
contrary notice is given by such Bank as provided herein, all Loans
that
would otherwise be made by such Bank but for the suspension shall
be made at
the Borrower's option as Loans of any Type not affected by the
suspension (on
which <PAGE>
principal and interest shall be payable contemporaneously with the
related
Loans constituting the applicable Borrowing of the other Banks).
SECTION 9.03. Increased Cost.
(a) Change in Law. If, after the Effective Date, the adoption of
any
applicable law, rule or regulation, or any change therein, or any
change in
the interpretation or administration thereof by any governmental
authority,
central bank or comparable agency of the United States (or
political
subdivision thereof) charged with the interpretation or
administration
thereof, or compliance by any Bank (or its Lending Office) with any
request
or directive (whether or not having the force of law) reflecting
any of the
foregoing of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax,
duty or
other charge with respect to the Bank's participation in this
Agreement or
shall change the basis of taxation of payments to any Bank (or its
Lending
Office) of the principal of or interest on its Loans or any other
amounts due
under this Agreement in respect thereof (except for changes in the
rate of
tax on the overall net income of such Bank or its Lending Office
imposed by
the jurisdiction in which such Bank's principal executive office or
Lending
Office is located),
(ii) shall impose, modify or deem applicable any reserve, special
deposit
or similar requirement (including, without limitation, any such
requirement
imposed by the Board of Governors of the Federal Reserve System,
but
excluding (A) any requirement described in Section 9.04, and (B)
any
requirement included in any applicable Euro-Dollar Reserve
Percentage)
against assets of, deposits with or for the account of, or credit
extended
by, any Bank (or its Lending Office), or
(iii) shall impose on any Bank (or its Lending Office) or on the
relevant
market for such Bank's Loans, any other condition directly
affecting such
Loans or its obligation to make such Loans,
<PAGE>
and the result of any of the foregoing is to increase the cost to
such Bank
(or its Lending Office) of making or maintaining any Loan, or to
reduce the
amount of any sum received, receivable, or retained by such Bank
(or its
Lending Office) under this Agreement by an amount deemed by such
Bank to be
material, then within 15 days after demand by such Bank accompanied
by the
certificate referred to in subsection (b) of this Section, the
Borrower shall
pay to such Bank such additional amount or amounts as will
compensate such
Bank for such increased cost or reduction, provided such
compensatory amounts
relate to such increased costs or such reductions incurred by the
Bank no
more than 90 days prior to such demand or relate to a retroactive
increased
cost or reduction imposed on the Bank no more than 90 days prior to
such
demand.
(b) Certificate. As of the Effective Date, each Bank confirms that
it has no
knowledge of any event that would entitle such Bank to compensation
pursuant
to this Section. After the Effective Date, each Bank will
promptly notify
the Borrower of any event of which it has knowledge which would
entitle such
Bank to compensation pursuant to this Section and will designate a
different
Lending Office or take other action if such designation or action
would avoid
the need for, or reduce the amount of, such compensation and will
not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.
A
certificate of any Bank claiming compensation under this Section
setting
forth the additional amount or amounts to be paid to it hereunder
and the
method of calculation in reasonable detail shall be conclusive in
the absence
of demonstrable error. In determining such amount, such Bank may
use any
reasonable averaging and attribution methods.
(c) Substitute Loans. If any Bank has demanded compensation under
this
Section 9.03(a), at the option of the Borrower and upon five
Business Days
notice to such Bank, unless and until such Bank has notified
Borrower that
the circumstances giving rise to such demand no longer exist, (i)
all Loans
that would otherwise be made by such Bank of the Type for which the
Bank has
demanded compensation shall be made at the Borrower's option as any
Type of
Loan not affected by such demand (on which interest and principal
shall be
payable contemporaneously with the related Loans constituting the
applicable
Borrowing of the other Banks), and/or (ii) any outstanding Loans
of such
Bank of the Type affected by the demand shall be immediately
prepaid in full
with accrued interest thereon and the Borrower shall pay in full
any amounts
required pursuant to Section 2.13 hereof. Concurrently with
prepaying each
such Loan, the Borrower shall borrow at its option a Loan of any
Type not
affected by the demand in an equal principal amount from such Bank
(on which
interest and principal shall be payable contemporaneously with the
related
Loans constituting the applicable Borrowing of the other Banks),
and such
Bank shall make such Loan.
SECTION 9.04. Capital Adequacy.
(a) Additional Compensation. If any Bank reasonably determines
that the
adoption of any applicable law,
rule or regulation regarding capital adequacy, or any change
therein, or any
change in the interpretation or administration thereof by any
governmental
authority, central bank or comparable agency of the United States
(or any
political subdivision thereof) or the Bank for International
Settlements
("BIS") charged with the interpretation or administration thereof,
or
compliance by any Bank (or its Lending Office) with any request or
directive
regarding capital adequacy (whether or not having the force of law)
reflecting any of the foregoing of any such authority, central bank
or
comparable agency or the BIS, has or would have the effect of
reducing the
rate of return on the capital of such Bank or its "bank holding
company," as
defined in Section 1841(a) of the Bank Holding Company Act, as
amended
(herein "BHC"), as a direct consequence and cause of such Bank's
obligations
under this Agreement (taking into consideration such Bank's
policies with
respect to capital adequacy) by an amount deemed by such Bank to be
material,
then within 15 days after demand by such Bank accompanied by the
certificate
referred to in subsection (b) of this Section, the Borrower shall
pay to such
Bank (for the account of the BHC, as applicable) such additional
amount or
amounts as will compensate such Bank or BHC for such reduction to
the extent
the same is allocable to the Bank's obligations under this
Agreement,
provided such compensatory amounts relate to actual reductions
incurred by
the Bank or BHC no more than 60 days prior to such demand or relate
to a
retroactive reduction imposed on the Bank or BHC no more than 60
days prior
to such demand.
(b) Certificate. As of the Effective Date, each Bank confirms that
it has no
knowledge of an event which would entitle such Bank or BHC to
compensation
pursuant to this Section. After the Effective Date, each Bank will
promptly
notify the Borrower of any event of which it has knowledge which
would
entitle such Bank or BHC to compensation pursuant to this Section
and will
designate a different Lending Office or take other action if such
designation
or action will avoid the need for, or reduce the amount of, such
compensation
and will not, in the judgment of such Bank, be otherwise
disadvantageous to
such Bank. A certificate of any Bank claiming compensation under
this
Section setting forth the additional amount or amounts to be paid
to it
hereunder and the method of calculation in reasonable detail (which
shall
indicate whether any demand relates to compensation of a BHC) shall
be
conclusive in the absence of demonstrable error. In determining
such amount,
such Bank may use any reasonable averaging and attribution methods.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. Except where telephonic instructions or
notices are
authorized, all notices and other
communications provided for hereunder shall be in writing.
Telephonic
notice, which shall be effective when telephoned, shall be promptly
confirmed
in writing. Any notices and other communications between the
parties hereto
to be given in writing shall be given by mailing the same, postage
prepaid,
or by telex, cable, facsimile or personal delivery to each party at
its
address set forth on the signature pages hereto or Schedule 1 or to
such
other addresses as any such party may in writing hereafter
indicate. All
such notices and communications shall be effective (a) when
received if
mailed by first-class U.S. mails or sent by overnight courier, (b)
when
delivered to the telegraph company if telegraphed, (c) when
confirmed by
telex answerback if telexed, (d) when confirmed by the transmitting
party as
being received if sent by facsimile machine and (e) in all other
cases, when
delivered or received. Any communications between the parties
hereto
authorized to be given by telephone (which shall be effective when
telephoned) shall be confirmed in writing by the party initiating
the
communication as provided in the Agreement.
SECTION 10.02. No Waivers. No failure or delay by any Bank in
exercising any
right, power or privilege hereunder shall operate as a waiver
thereof, except
as and to the extent of an express time limit contained in this
Agreement or
as may be barred by the applicable statute of limitations, nor
shall any
single or partial exercise thereof preclude any other or further
exercise
thereof or the exercise of any other right, power or privilege.
The rights
and remedies herein provided shall be cumulative and not exclusive
of any
rights or remedies provided by law.
SECTION 10.03. Expenses, etc. Borrower agrees to pay, and agrees
to save
each Bank harmless against any loss, liability, claim, damage or
expenses
incurred by any Bank related to, (i) all reasonable out-of-pocket
expenses
and attorneys fees of the Banks in connection with the review and
negotiation
(whether or not closed), execution and delivery of this Agreement
or with any
other document entered into in connection herewith, as agreed upon
by the
Borrower and each Bank in a separate agreement between the Borrower
and each
Bank, (ii) all reasonable out-of-pocket expenses and attorneys fees
of the
Banks in connection with any waiver, consent or amendment to this
Agreement
or any waiver, consent or amendment to any other document entered
into in
connection herewith, (iii) if an Event of Default occurs, all
reasonable
out-of-pocket expenses and attorneys fees of the Banks in
connection with
such Event of Default and the investigation, collection and other
enforcement
proceedings resulting therefrom, (iv) all stamp, documentary,
transfer,
recording or filing taxes and fees or like impositions and charges
determined
by any Bank to be payable in connection with the execution and
delivery (but
not the ongoing performance of) this Agreement, and related to or
arising out
of any delay or omission by Borrower to pay the same, and (v) any
investigative, administrative or judicial proceeding relating to or
arising
out of any actual or proposed use of proceeds of Loans under this
Agreement;
provided that no Bank shall have the right to be indemnified
hereunder for
its own gross negligence or willful misconduct as determined by a
court of
competent jurisdiction.
SECTION 10.04. Set-Offs.
(a) Set-Offs. Upon the occurrence of an Event of Default and so
long as such
Event of Default is continuing,
each Bank shall have the right, in addition to all other rights and
remedies
available to it, without notice to the Borrower, to set-off against
and to
appropriate and apply to the unpaid principal amount of any Loan,
interest
accrued thereon or other amount owing by the Borrower hereunder
that shall
have become due and payable (by acceleration or otherwise), any
debt owing
to, and any other funds held in any manner for the account of, the
Borrower
by such Bank including, without limitation, all funds in all
deposit accounts
(whether time or demand, general or special, provisionally credited
or
finally credited, or otherwise) now or hereafter maintained by the
Borrower
with such Bank. Such right shall exist whether or not such Bank
shall have
made any demand hereunder, whether such debt owing to or funds held
for the
account of the Borrower is or are matured or unmatured, and
regardless of
the existence or adequacy of any collateral, guaranty or any other
security,
right or remedy available to the Bank. Each Bank shall promptly
notify
Borrower of any set-off hereunder, but the failure to give notice
shall not
affect the validity of such set-off.
(b) Sharing of Recoveries. Each Bank agrees that if it shall, by
exercising
any right of set-off or counterclaim or otherwise, receive payment
of a
proportion of the aggregate amount of principal and interest due
with respect
to Loans owed to it which is greater than the proportion received
by any
other Bank in respect of the aggregate amount of principal and
interest due
with respect to Loans owed to such other Bank, the Bank receiving
such
proportionately greater payment shall purchase such participations
in the
Loans owed to the other Banks, and such other adjustments shall be
made, as
may be required so that all such payments of principal and interest
with
respect to the Loans shall be shared by the Banks prorata; provided
that if
all or any portion of such excess amount is thereafter recovered
from such
Bank, such purchase shall be rescinded and the purchase price
restored to the
extent of such recovery, without interest.
SECTION 10.05. Taxes.
(a) Bank Income Tax. Notwithstanding any other provision of this
Agreement,
Borrower shall not be obligated
to pay, directly or indirectly, any franchise tax imposed on, or
any tax on
or measured by the overall net income or gross income of, any Bank
(or
Lending Office) by any jurisdiction or taxing authority, or any
withholding
tax required to be withheld by Borrower thereon by any jurisdiction
or taxing
authority.
<PAGE>
(b) Withholding Tax. If any Bank is a "foreign corporation"
within the
meaning of the Code, such Bank shall deliver to the Borrower:
(i) if such Bank claims an exemption from, or a reduction of,
United States
withholding tax under a tax treaty, a properly completed Internal
Revenue
Service ("IRS") form 1001 on or before the Effective Date, or if
the Borrower
consents in writing, before the payment of any interest in the
first calendar
year and in each third succeeding calendar year during which
interest may be
paid under this Agreement,
(ii) if such Bank claims that interest paid under this Agreement
is exempt
from United States withholding tax because it is effectively
connected with a
United States trade or business of such Bank, two properly
completed and
executed copies of IRS form 4224 on or before the Effective Date,
or if the
Borrower consents in writing, before the payment of any interest is
due in
the first taxable year of such Bank and in each succeeding taxable
year of
such Bank during which interest may be paid under this Agreement,
or
(iii) such other form or forms on or before such other time or
times as may
be required under the Code or other laws of the United States as a
condition
to exemption from, or reduction of, United States withholding tax
because of
the basis on which such exemption or reduction is claimed by such
Bank.
Such Bank agrees to notify the Borrower of any change in
circumstances which
would modify or render invalid any claimed exemption or reduction.
Where any Bank is entitled to a reduction in the applicable
withholding tax,
the Borrower may withhold from any interest payment to such Bank an
amount
equivalent to the applicable withholding tax after taking into
account such
reduction. If the forms or other documentation required by this
Section
10.05 hereof are not delivered to the Borrower, then the Borrower
may
withhold from any interest payment to the Bank not providing such
forms or
other documentation, an amount equivalent to the applicable
withholding tax.
If the IRS or any authority of the United States or other
jurisdiction
asserts a claim that the Borrower did not properly withhold tax
from amounts
paid to or for the account of any Bank (because the appropriate
form was not
delivered, was not properly executed, or because such Bank failed
to notify
the Borrower of a change in circumstances which rendered the
exemption from,
or reduction of, withholding tax ineffective, or for any other
reason) such
Bank shall indemnify the Borrower fully for all amounts paid,
directly or
indirectly, by the Borrower as tax or otherwise, including
penalties and
interest, together with all expenses incurred, including legal
expenses,
allocated staff costs, and any out of pocket expenses.
In the event that any Bank assigns any of its rights hereunder
pursuant to
Section 10.08 hereof, the assignee shall comply and be bound by the
terms of
this Section 10.05 as though it were the assignor Bank.
SECTION 10.06. Amendments and Waivers. This Agreement and any
provision of
this Agreement may be amended, supplemented, modified or waived if
and only
if such amendment, supplement, modification or waiver is in writing
and is
signed by the Borrower and the Required Banks; provided that no
such
amendment, supplement, waiver or modification shall, unless signed
by all the
Banks, (i) increase or decrease the Commitment of any Bank or
subject any
Bank to any additional obligation, (ii) reduce the principal of or
rate of
interest on any Loan or any fees hereunder, (iii) postpone the date
fixed for
any payment of principal of or interest on any Loan or any fees
hereunder or
(iv) change the amount of the Commitments or the aggregate unpaid
principal
amount of the Loans or the number of Banks that shall be required
for the
Banks or any of them to take any action under this Section or any
other
provision of this Agreement or (v) extend the Termination Date.
Notwithstanding the foregoing, any amendment, supplement,
modification or
waiver to the provisions of this Agreement relating to any
outstanding Bid
Loan under a Bid Borrowing may be made if the same is in writing
and signed
by the Borrower and all Bid Banks that are participants in such Bid
Borrowing.
SECTION 10.07. Replacement of Banks. If any Bank (a "Notice Bank")
makes
demand for amounts owed under Section 9.03 or Section 9.04 or
10.03(iv) or
gives notice under Section 9.02 that it can no longer participate
in Loans,
then in each case Borrower shall have the right, if no Default or
Event of
Default exists, and subject to the terms and conditions set forth
in
Section 10.08, to designate an Eligible Assignee (a "Replacement
Bank") to
purchase the Notice Bank's share of outstanding Loans and to assume
the
Notice Bank's obligations to Borrower under this Agreement. Subject
to the
foregoing, the Notice Bank agrees to assign to the Replacement Bank
its share
of outstanding Loans and its Commitment and to delegate to the
Replacement
Bank its obligations to Borrower under this Agreement pursuant to
an
Assignment and Acceptance in substantially the form attached hereto
as
Exhibit G. Without in any way prejudicing the rights of the Banks
to make
demand and receive compensation or reimbursement pursuant to the
Sections named above, nothing in those Sections shall give any Bank
the right
to receive the same amount more than once and each Bank shall
promptly pay
after discovery thereof any such excess amount so received to the
Borrower.
SECTION 10.08. Assignments and Participations.
(a) Successors and Assigns. The provisions of this Agreement shall
be
binding upon and inure to the benefit of
the parties hereto and their respective successors and permissible
assigns;
provided that except as provided in Section 6.03, the Borrower may
not assign
or otherwise transfer any of its rights under this Agreement
without the
prior written consent of all the Banks.
(b) Assignments. Each Bank may (and if requested by Borrower
pursuant to
Section 10.07 upon at least 20 Business Days' notice to such Bank
will)
assign to one or more Banks or other entities all or a portion of
its rights
and obligations under this Agreement (including, without
limitation, all or a
portion of its Commitment and the Syndicated Loans owing to it);
provided,
however, that
(i) each such assignment shall be of a constant, and not a
varying,
percentage of all rights and obligations under this Agreement
(other than any
Bid Loans)
(ii) the amount of the Commitment of the assigning Bank being
assigned
pursuant to each such assignment (determined as of the date of the
Assignment
and Acceptance with respect to such assignment) shall in no event
be less
than 50% of all such rights and obligations of the Assignor or less
than
$5,000,000 (in aggregate outstandings and unused Commitment) and
shall be an
integral multiple of $1,000,000 in excess thereof,
(iii) each such assignment shall be to an Eligible Assignee and
shall
require the prior consent of Borrower (not unreasonably withheld);
provided,
that, only prior notice to the Borrower need be given if such
assignment is
made to an Affiliate of the assignor or to another Bank hereunder,
(iv) each such assignment made as a result of a demand by
Borrower pursuant
to Section 10.07 shall be arranged by Borrower at its expense, and
shall be
either an assignment of all of the rights and obligations of the
assigning
Bank under this Agreement or an assignment of a portion of such
rights and
obligations made concurrently with one or more other such
assignments which
together cover all of the rights and obligations of the assigning
Bank under
this Agreement,
(v) no Bank shall be obligated to make any such assignment as a
result of a
demand by the Borrower pursuant to Section 10.07 unless and until
such Bank
shall have received one or more payments from either Borrower or
one or more
Eligible Assignees in an aggregate amount at least equal to the
aggregate
outstanding principal amount of the Loans then owing to such Bank,
together
with accrued interest thereon to the date of payment of such
principal amount
and all other amounts then due and payable to such Bank under this
Agreement,
and
(vi) the parties to each such assignment shall execute and
deliver to the
Borrower and the other Banks counterparts of an Assignment and
Acceptance
substantially in the form of Exhibit G hereto.
Upon such execution, delivery, acceptance and recording, from and
after the
effective date specified in each Assignment and Acceptance, (x) the
assignee
thereunder shall be a party hereto and, to the extent that rights
and
obligations hereunder have been assigned to it pursuant to such
Assignment
and Acceptance, have the rights and obligations of a Bank hereunder
and
(y) the Bank assignor thereunder shall, to the extent that rights
and
obligations hereunder have been assigned by it pursuant to such
Assignment
and Acceptance, relinquish its rights and be released from its
obligations
under this Agreement (and, in the case of an Assignment and
Acceptance
covering all or the remaining portion of an assigning Bank's rights
and
obligations under this Agreement, such Bank shall cease to be a
party
hereto).
Notwithstanding any other provision to the contrary contained in
this
Agreement, any Bank may, without the consent of the Borrower,
assign all or a
portion of its rights under this Agreement and any notes which may
be issued
hereunder to a Federal Reserve Bank as collateral in accordance
with
Regulation A of the Board of Governors of the Federal Reserve
System and the
applicable operating circular of such Federal Reserve Bank.
(c) Bid Loans. Each Bank may assign to or participate with one or
more banks
or other entities any Bid Loans held by it without regard to the
restrictions
placed on assignments elsewhere in this Section 10.08; provided,
that, any
participation shall be made in accordance with subsection (d)
hereof and
provided, further, that any assignee of a Bid Loan that is not then
a Bank
hereunder shall not be entitled to demand any payments under
Sections 9.03,
9.04 and 10.03 hereof and shall have no voting rights or other
rights of a
Bank hereunder other than the right to demand and receive interest
and
principal payments at the times when due with respect to the Bid
Loans owned
by it.
(d)Participations. Each Bank may sell participations to one or
more Persons
in or to all or a portion of its rights and obligations under this
Agreement
(including, without limitation, all or a portion of its Commitment
and the
Loans owing to it); provided, however, that
(i) such Bank's obligations under this Agreement (including
without
limitation, its Commitment to Borrower hereunder) shall remain
unchanged,
(ii) such Bank shall remain solely responsible to the other
parties hereto
for the performance of such obligations,
(iii) such Bank shall remain the owner of any Loan for all
purposes of this
Agreement, and
(iv) Borrower and the other Banks shall continue to deal solely
and directly
with such Bank in connection with such Bank's rights and
obligations under
this Agreement. Subject to the foregoing the purchaser of such
participation
shall, to the fullest extent permitted by law, have the same, but
no more,
rights and benefits hereunder as it would have if it were a Bank
party to
this Agreement to the extent the selling Bank would have had such
rights and
benefits; and provided, however, that each such participation shall
be
granted pursuant to an agreement providing that the purchaser
thereof shall
not have the right to vote on, consent or object to any matters
relating to
the Agreement other than through the selling Bank and then only
with respect
to any action that would (1) reduce principal of or interest on any
Loan, or
other amounts or fees in which such purchaser has an interest, (2)
postpone
any date fixed for payment of principal of or interest on any such
Loan, or
other amounts or such fees in which such purchaser has an interest,
and
(3) extend the Termination Date.
(e) Notice of Assignments and Participations. The Borrower may, for
all
purposes of this Agreement, treat any Bank as the owner of the
Loans made by
such Bank until written notice of assignment shall have been
received by
Borrower. Upon written request of Borrower to a Bank, such Bank
shall
inform the Borrower of the Dollar amount of any Full Term
Participation (as
hereinafter defined) that such Bank has entered into; provided,
however, that
no Bank shall be obligated to disclose such information if the
disclosure
thereof would constitute a violation of law or regulation or
violate any
confidentiality agreement to which such Bank is subject. For the
purposes of
this subsection, "Full Term Participation" means a participation by
a Bank to
another Person whereby such other Person has purchased (pursuant to
a
participation agreement) all or a portion of such Bank's Commitment
from the
effective date of such participation agreement to the Termination
Date.
(f) Subsequent Participations and Assignments. Persons who have
become
assignees or participants pursuant to this Section 10.08 may grant
such
further assignments and participations only by complying with the
same
procedures that a Bank would be required to follow hereunder.
SECTION 10.09. Collateral. Each of the Banks represents to each of
the other
Banks that it in good faith is not relying upon any "margin stock"
(as
defined in Regulation U) as collateral in the extension or
maintenance of the
credit provided for in this Agreement.
SECTION 10.10. Confidentiality. Each Bank agrees that all
documentation and
other information made available by the Borrower to such Bank under
the terms
of this Agreement shall (except to the extent required by legal or
governmental process or otherwise by law, or if such documentation
and other
information is publicly available or hereafter becomes publicly
available
other than by action of such Bank, or was theretofore known to such
Bank
independent of any disclosure thereto by the Borrower) be held in
the
strictest confidence by such Bank and used solely in connection
with the
administration of Loans from time to time outstanding from such
Bank to the
Borrower; provided that (i) such Bank may disclose such
documentation and
other information to any other bank to which such Bank sells or
proposes to
sell a participation in its Loans hereunder, if such other bank,
prior to
such disclosure, agrees for the benefit of the Borrower to comply
with the
provisions of this Section; (ii) such Bank may disclose the
provisions of
this Agreement and the amounts, maturities and interest rates of
its Loans to
any purchaser or potential purchaser of such Bank's interest in any
Loan, and
(iii) such Bank may disclose such documentation and other
information to any
officer, director, agent, employee, attorney or other advisor of
such Bank,
with a need to know such information for the purpose of
administering this
agreement, so long as such individual, prior to such disclosure,
agrees for
the benefit of the Borrower to comply with the provisions of this
Section.
SECTION 10.11. Alternative Liquidity. From time to time after the
Effective
Date the Borrower may decide to issue its commercial paper in the
commercial
paper markets and, in that regard, use the credit available under
the
Commitments as a source of alternative liquidity for purposes of
obtaining or
enhancing a rating on its commercial paper by Standard & Poor's
Corporation
or Moody's Investors Service or similar nationally recognized
rating
organizations.
SECTION 10.12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF COLORADO.
SECTION 10.13. Counterparts; Integration. This Agreement may be
signed in
any number of counterparts, each of which shall be an original,
with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
This Agreement constitutes the entire agreement and understanding
among the
parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly
executed by their respective authorized officers as of the day and
year first
above written.
ADOLPH COORS COMPANY
By: ___________________________
Donald D. Breen
Assistant Secretary
Address for Notices:
12th and Ford Streets
Mail # BC560
Golden, Colorado 80401
Attention: Donald D. Breen
Telephone No.: (303) 277-2124
Facsimile number: (303) 277-5656
Account Information for Funding:
Bank of America NT&SA
555 California Street
San Francisco, CA 94104
ABA No: 121000358
Account Name: Adolph Coors Company
Account No.: 12335-13602
<PAGE>
Commitments
$40,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
By __________________________
Title:
$40,000,000 WACHOVIA BANK OF GEORGIA, NATIONAL ASSOCIATION
By __________________________
Title:
$23,000,000 CREDIT SUISSE
By __________________________
Title:
$17,000,000 ABN-AMRO BANK N.V.
By __________________________
Title:
<PAGE>
Commitments
$9,000,000 NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By __________________________
Title:
$7,500,000 COLORADO NATIONAL BANK
By _________________________
Title:
$7,500,000 CRESTAR BANK
By __________________________
Title:
TOTAL COMMITMENTS
$144,000,000
============
<PAGE>
SCHEDULE 4.05
NO MATERIAL ADVERSE CHANGE DISCLOSURE
None, except as might be disclosed in Borrower's 1993 Annual Report
on Form
10-K, Quarterly Reports on Form 10-Q delivered to the Banks
pursuant to
Section 4.04.
<PAGE>
SCHEDULE 4.06
LITIGATION DISCLOSURE
1. Matters disclosed in Borrower's 1993 Annual Report on Form 10-K
and
Quarterly Reports on Form 10-Q delivered to the Banks pursuant to
Section
4.04.
<PAGE>
Schedule of Banks
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
BANK OF AMERICA For Notices (credit matters):
Bank of America
555 California Street
41st Floor
San Francisco, CA 94104
Attention: Michael J. Dasher
Vice President
Telephone: (415) 622-2126
Fax: (415) 622-4585/2514
For LIBOR and Reference Rate
Borrowings and Fee Payments:
Bank of America NT&SA
1850 Gateway Boulevard
Concord, CA 94520-3281
Attention: Linda Crawford
Telephone: (510) 675-7343
Fax: (510) 675-7531/7532
For Payments:
Bank of America NT&SA Concord
ABA #: 121000358
Attention: Linda Crawford
Bancontrol Account #: 12331-83980
RE: Adolph Coors Company
Money Market Loans:
Bank of America NT&SA
555 California Street, 10th Floor
San Francisco, CA 94104
Attention: Carolyn Alberts
Short-Term Asset Sales
Telephone: (415) 622-2064
(415) 622-6026
Fax: (415) 622-2235
(415) 622-2237
<PAGE>
WACHOVIA BANK OF GEORGIA, For Notices:
NATIONAL ASSOCIATION
Wachovia Corporate Services, Inc.
191 Peachtree Street, N.E.
28th Floor, MC 372
Atlanta, GA 30303
Attention: Michael D.S. Kerner
Banking Officer
Telephone:(404) 332-6756
Fax: (404) 332-6898
For Payments:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Mail Code 372
Attention:
Loan Specialist
Telephone:
(404) 332-4466
Fax: (404) 332-6898
Lending Offices:
For all Types of Loans:
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Mail Code 372
Attention: Loan Specialist
Telephone: (404) 332-4466
Fax: (404) 332-6898
CREDIT SUISSE For Notices (credit matters):
Credit Suisse
633 West Fifth Street
Los Angeles, CA 90071
Attention: Stephen M. Flynn
Member of Senior Management
Telephone: (213) 955-8215
Fax: (213) 955-8245
For Notices (operations/
administration):
Credit Suisse
633 West Fifth Street
Los Angeles, CA 90071
Attention: Rita Asa
Telephone: (213) 955-8284
Telex: 67227 (CREDSUIS)
Fax: (213) 955-8251
For Payments and Lending Offices:
For all Types of Loans:
Credit Suisse
One Liberty Plaza
165 Broadway
New York, NY 10006
Account No. 90499602
Account Name: Loans Dept. Clearing
Acct.
Reference: Adolph Coors Company
ABN-AMRO BANK N.V. For Notices:
135 S. LaSalle Street
Suite 425
Chicago, IL 60603
Attention: Sean M. Stack
Telex: 6732700
Answerback: ABN AMRO CGO
Telephone: (312) 443-2543
Fax: (312) 606-8425
For Operational Matters:
ABN AMRO BANK N.V.
135 S. LaSalle Street
Suite 425
Chicago, IL 60603
Attn: Loan Administration
Telex: 6732700
Answerback: ABN AMRO CGO
Telephone: (312) 443-2961
Fax: (312) 606-8435
Payment Instructions:
ABN AMRO BANK N.V.
New York, NY
ABA # 026009580
F/O ABN AMRO Bank N.V.-Chicago Branch
Acct. No. 651-0-010111-42
REF: Adolph Coors Company
<PAGE>
NORWEST BANK COLORADO, NA For Notices:
1740 Broadway
Denver, CO 80274-8673
Attention: Georgianne Brummett
Telephone: (303) 863-5069
Fax: (303) 863-6670
For Payments:
Lending Offices:
For all Types of Loans:
1740 Broadway
Denver, CO 80274-8673
Attention: Theresa Blea
Banking Assistant
Telephone: (303) 863-6078
Fax: (303) 863-6670
COLORADO NATIONAL BANK For Notices:
P.O. Box 5168, CNDT 0312
Denver, CO 80217
Attention: Terry Kercheval
Telephone: (303) 585-4236
Fax: (303) 585-4246
For Payments:
Lending Offices:
For all Types of Loans:
P.O. Box 5168, CNDT 0312
Denver, CO 80217
Attention: Terry Kercheval
Telephone: (303) 585-4236
Fax: (303) 585-4246
CRESTAR BANK For Notices:
919 East Main Street
Richmond, VA 23219
Attention: James P. Duval, Jr.
Telephone: (804) 782-7558
Telex: 827420 Crestar Bank
Fax: (804) 782-5413
For Payments:
<PAGE>
Lending Offices:
For all Types of Loans:
919 East Main Street
Richmond, VA 23219
Attention: James P. Duval, Jr.
Telephone: (804) 782-7558
Telex: 827420 Crestar Bank
Fax: (804) 782-5413
/TABLE
<PAGE>
EXCLUDED FROM PRINCIPAL PLANTS*
I. EXCLUDED PLANTS
Facility Location
II. FACILITIES NOT OF MATERIAL IMPORTANCE TO THE TOTAL BUSINESS
Facility Location
III. FACILITIES USED PRIMARILY FOR TRANSPORTATION, MARKETING OR
WAREHOUSING
<TABLE>
<CAPTION>
Facility Location
<S> <C>
Distribution Warehouse Anaheim, California
Distribution Warehouse Boise, Idaho
Distribution Warehouse Denver, Colorado
Distribution Warehouse Omaha, Nebraska
Distribution Warehouse Oklahoma City, Oklahoma
Distribution Warehouse San Bernardino, California
Distribution Warehouse Hayward, California
Grain Elevator Burley, Idaho
Grain Elevator Huntley, Montana
Grain Elevator Longmont, Colorado
Grain Elevator Monte Vista, Colorado
Grain Elevator Worland, Wyoming
_________________________
*This Schedule may be amended from time to time during the term of
the
Agreement by execution and delivery of such amendment to the Banks
by the
Borrower.
FORM OF
NOTICE OF SYNDICATED BORROWING
[Date]
To: [Name of Bank],
Party to the Credit Agreement
referred to below
Attention:
From: Adolph Coors Company (the "Borrower")
Re: Revolving Credit Agreement (the "Credit
Agreement") dated as of __________, 19__,
among the Borrower and the Banks listed in the
signature pages thereof.
We hereby give you notice, irrevocable, pursuant to Section 2.02 of
the
Credit Agreement, that we request a Syndicated Borrowing under the
Credit
Agreement, and in that connection set forth below the information
relating to
such Borrowing (the "Proposed Borrowing"):
(i) The Business Day of the Proposed Borrowing is
_____________________,
19__.
(ii) The aggregate amount of the Proposed Borrowing is
$________________ and
the aggregate amount of your share of such Borrowing (based on the
proportion
that your unused Commitment bears to the total unused Commitments
immediately
prior to the Proposed Borrowing) is $___________________.
(iii) The Type of Syndicated Loans constituting the Proposed
Borrowing is
[Base Rate] [LIBOR Rate]
(iv) The duration of the Interest Period for each Loan made as
part of the
Proposed Borrowing is [_____ days]
[____ months].
The undersigned hereby certifies that the facts specified in
clauses (b), (c)
and (d) of Section 3.02 of the Credit Agreement will be true on the
date of
the Proposed Borrowing.
Very Truly yours,
ADOLPH COORS COMPANY
By______________________
Name:
Title:
FORM OF
MONEY MARKET QUOTE REQUEST
[Date]
To: [Name of Bank],
Party to the Credit Agreement
referred to below
Attention:
From: Adolph Coors Company (the "Borrower")
Re: Revolving Credit Agreement (the "Credit
Agreement") dated as of __________, 19__,
among the Borrower and the Banks listed in the signature pages
thereof.
We hereby request offers from you, pursuant to Section 2.03 of the
Credit
Agreement, of Money Market Quotes for the following proposed Money
Market
Borrowing(s):
Date of Borrowing: _____________________________
Principal Amount Interest Period(s)
$
$
Such Money Market Quotes should offer a Money Market [Absolute
Rate.]
[Margin. The applicable base rate is the London Interbank Offered
Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
ADOLPH COORS COMPANY
By___________________________
Title:
<PAGE>
FORM OF
MONEY MARKET QUOTE
[Date]
To: Adolph Coors Company (the "Borrower")
From: [Name of Bank],
Party to the Credit Agreement referred to below
Attention:
Re: Revolving Credit Agreement (the "Credit
Agreement") dated as of __________, 19__,
among the Borrower and the Banks listed in the
signature pages thereof.
In response to your Request dated _____________, 19__, we hereby
offer the
following Money Market Quote on the following terms:
1. Quoting Bank: ____________________________________
2. Person to contact at Quoting Bank: ___________________
3. Date of Borrowing: _______________________________
4. We hereby offer to make Money Market Loan(s) in the following
principal
amounts, for the following Interest Period(s) and at the following
rate(s):
Principal Amount
Interest Period(s)
Money Market
[Absolute Rate]
Maximum Minimum
$ $
$ $
We understand and agree that the offer(s) set forth above, subject
to
Articles III and VIII of the Credit Agreement, irrevocably
obligates us to
make the Money Market Loan(s) for which any offer(s) are accepted,
in whole
or in part.
Very truly yours,
[NAME OF BANK]
Dated:_________________________ By:_____________________
Authorized Officer
<PAGE>
FORM OF
NOTICE OF MONEY MARKET BORROWING
[Date]
To: [Name of Bank],
Party to the Credit Agreement
referred to below
Attention:
From: Adolph Coors Company (the "Borrower")
Re: Revolving Credit Agreement (the "Credit
Agreement") dated as of __________, 19__,
among the Borrower and the Banks listed in the
signature pages thereof.
We hereby give you notice, irrevocably, pursuant to Section 2.03
for Money
Market Borrowing of the Credit Agreement, that we request a Money
Market
Borrowing under the Credit Agreement, and in that connection set
forth below
the information relating to such Borrowing (the "Proposed
Borrowing"):
(i) Your offer(s) to make Money Market Loan(s) is [accepted]
[rejected].
(ii) The Business Day of the Proposed Borrowing is _______________
(as
specified in the related Request).
(iii) The principal amount of the Money Market Loan and Interest
Period
related thereto to be made by you are as follows:
Principal Amount Interest Period
(iv) The aggregate principal amount of Money Market Loans and each
Interest
Period accepted by Borrower and to be loaned by all Banks
participating in
the Proposed Borrowing are as follows:
Principal Amount Interest Period
<PAGE>
(v)The lowest, highest and auction clearing interest rates offered
to
Borrower in connection with the Proposed Borrowing are as follows:
Lowest Auction Clearing Highest
(vi)The total principal amount of borrowings outstanding under the
Credit
Agreement (after giving effect to the Proposed Borrowing) is
$________________.
The undersigned hereby certifies that the facts specified in
clauses (b), (c)
and (d) of Section 3.02 of the Credit Agreement will be true on the
date of
the Proposed Borrowing.
Very truly yours,
ADOLPH COORS COMPANY
By______________________
Name:
Title:
<PAGE>
FORM OF
PROMISSORY NOTE
[Effective Date]
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of [name]
(the "Bank"), at [address] , the unpaid principal amount
of each
Loan made by the Bank to the Borrower pursuant to the Credit
Agreement
referred to below on the last day of the Interest Period relating
to such
Loan. The Borrower promises to pay interest on the unpaid
principal amount
of each such Loan on the dates and at the rate or rates provided
for in the
Credit Agreement. All such payments of principal and interest
shall be made
at the office of _________________________ or such other office as
the holder
of the Note may specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of _______________, 199_ among the Borrower and
the Banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: _____________________
Title:
<PAGE>
OPINION OF COUNSEL FOR THE BORROWER
[Dated the Effective Date]
To the Banks
Referred to Below
Dear Sirs:
I am the Chief Legal Officer of Coors Brewing Company ("CBC") and
a Vice
President of Adolph Coors Company (the "Borrower"). Reference is
made to the
Revolving Credit Agreement (the "Credit Agreement") dated as of
____________,
199_, among the Borrower and the Banks listed on the signature
pages thereof.
Terms defined in the Credit Agreement are used herein as therein
defined.
I or others under my supervision have examined originals or copies,
certified
or otherwise identified to my satisfaction, of such documents,
corporate
records, certificates of public officials and other instruments and
have
conducted such other investigations of fact and law as deemed
necessary or
advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower and CBC are each a corporation duly incorporated,
validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate powers and all material
governmental
licenses, authorizations, consents and approvals required to carry
on its
respective business as now conducted, the absence of which would
have a
material adverse effect on the business or financial position of
the Borrower
and its Consolidated Subsidiaries, considered as a whole.
2. The execution, delivery and performance by the Borrower of the
Credit
Agreement are within the Borrower's corporate powers, have been
duly
authorized by all necessary corporate action, require no action by
or in
respect of, or filing with, any Governmental Authority and do not
contravene,
or constitute a default under, any provision of the articles of
incorporation
or by-laws of the Borrower, or, to the best of my knowledge, of any
applicable Law or of any material term of any agreement or other
instrument
binding upon the Borrower or result in the creation or imposition
of any Lien
on any asset of the Borrower or any of its Subsidiaries, which
contravention,
default, or creation or imposition of Lien would have a material
adverse
effect on the business or financial position of the Borrower and
its
Consolidated Subsidiaries, considered as a whole. The Credit
Agreement and
the credit extended thereunder are not subject to Regulation U of
the Board
of Governors of the Federal Reserve System.
<PAGE>
3. The Credit Agreement has been duly authorized, executed and
delivered by
the Borrower and constitutes a valid and binding agreement of the
Borrower
and the obligations of the Borrower thereunder constitute valid and
binding
obligations of the Borrower, enforceable in accordance with their
terms
subject to applicable bankruptcy, reorganization, insolvency,
moratorium and
similar laws affecting creditors' rights generally, and to general
principles
of equity (whether considered in a court of law or in equity).
4. To the best of my knowledge, except as disclosed in writing to
the Banks,
there is no action, suit or proceeding pending or threatened
against or
affecting the Borrower or CBC before any court or arbitrator or any
governmental body, agency or official, in which there is a
reasonable
probability of an adverse decision that would materially adversely
affect the
business or financial position of the Borrower and its Consolidated
Subsidiaries, considered as a whole, or which in any manner draws
into
question the validity of the Credit Agreement.
5. The Borrower is not an "investment company" within the meaning
of the
Investment Company Act of 1940, as amended.
I express no opinion as to matters governed by the laws of any
jurisdiction
other than the federal laws of the United States, and the laws of
the State
of Colorado. This opinion is being supplied to you solely in
connection with
the Credit Agreement, and may be relied upon in connection
therewith by you,
your assignees, purchasers of Bid Loans, and purchasers of
participations in
Loans and may not be relied upon for any other purpose or by any
other person
for any purpose. This opinion may not be used, quoted or delivered
by you to
any person other than your assignees, purchasers of Bid Loans, and
purchasers
of participations in Loans without my prior written consent.
Very truly yours,
M. Caroline Turner
Chief Legal Officer, Coors Brewing Company
Vice President, Adolph Coors Company
<PAGE>
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Revolving Credit Agreement dated as of
_________________ (the "Credit Agreement") among ADOLPH COORS
COMPANY, a
Colorado corporation (the "Borrower") and the BANKS named therein.
Terms
defined in the Credit Agreement are used herein with the same
meaning.
____________________ (the "Assignor") and _______________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee
here by purchases and assumes from the Assignor, that interest in
and to all
of the Assignor's rights and obligations under the Credit agreement
as of the
Effective Date (other than in respect of outstanding Bid Loans
owing to
Assignor) which represents the interest specified on Schedule 1 of
all
outstanding rights and obligations under the Credit Agreement
(other than in
respect of Bid Loans), including, without limitation, such interest
in the
Assignor's Commitment, and the Syndicated Loans owing to the
Assignor. After
giving effect to such sale and assignment, the Assignee's
Commitment and the
amount of the Syndicated Loans owing to the Assignee will be as set
forth in
Schedule 1.
2. Assignor and Assignee intend that this Assignment and Acceptance
effect a
novation (the "Novation") among the Assignor, Assignee and Borrower
with
respect to the interest being assigned hereunder.
3. The Assignor (i) represents and warrants that it is the legal
and
beneficial owner of the interest being assigned by it hereunder,
and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with
respect to any
statements, warranties or representations made in or in connection
with the
Credit Agreement or the execution, legality, validity,
enforceability,
genuineness, sufficiency or value of the Credit Agreement or any
other
instrument or document furnished pursuant thereto and (iii) makes
no
representation or warranty and assumes no responsibility with
respect to the
financial condition of the Borrower or the performance or
observance by the
Borrower of any of its obligations under the Credit Agreement or
any other
instrument or document furnished pursuant thereto.
4. The Assignee (i) confirms that it has received a copy of the
Credit
Agreement, together with copies of the financial statements of the
Borrower
referred to therein and such other documents and information as it
has deemed
appropriate to make its own credit analysis and decision to enter
into this
Assignment and Acceptance; (ii) agrees that it will, independently
and
without reliance upon the Assignor or any other Bank and based on
such
documents and information as it shall deem appropriate at the time,
continue
to make its own credit decisions in taking or not taking action
under the
Credit Agreement; (iii) confirms that it is an Eligible Assignee;
(iv) agrees
that it will perform in accordance with their terms all of the
obligations
which by the terms of the Credit Agreement are required to be
performed by it
as a Bank; [and] (v) specifies as its Lending Offices (and address
for
notices), as applicable, the offices set forth beneath its name on
the
signature pages hereof and [(vi) pursuant to Section 10.05(b) of
the Credit
Agreement, attaches the forms prescribed by the Internal Revenue
Service of
the United States certifying as to the Assignee's status for
purposes of
determining exemption from United States withholding taxes with
respect to
all payments to be made to the Assignee under the Credit Agreement
or such
other documents as are necessary to indicate that all such payments
are
subject to such rates at a rate reduced by an applicable tax
treaty].*
5. The effective date of this Assignment and Acceptance shall be
the date of
acceptance thereof by the Borrower, or such later date as otherwise
specified
on Schedule 1 hereto (the "Effective Date").
6. Upon such acceptance by the Borrower, as of the Effective Date,
(i) the
Assignee shall be a party to the Credit Agreement and, to the
extent provided
in this Assignment and Acceptance, have the rights and obligations
of a Bank
thereunder and (ii) the Assignor shall, to the extent provided in
this
Assignment and Acceptance, relinquish its rights and be released
and
discharged from its obligations under the Credit Agreement.
7. Upon such acceptance, from and after the Effective Date, the
Borrower
shall make all payments under the Credit Agreement in respect of
the interest
assigned hereby (including, without limitation, all payments of
principal,
interest and commitment fees with respect thereto) to the Assignee.
The
Assignor and Assignee shall make all appropriate adjustments in
payment under
the Credit Agreement for periods prior to the Effective Date
directly between
themselves.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and
Acceptance to be executed by their respective officers thereunto
duly
authorized, as of the Effective Date, such execution being made on
Schedule 1
hereto.
________________________
*If the Assignee is organized under the laws of a jurisdiction
outside the
United States.
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of ABN-AMRO BANK N.V.
(the "Bank"),
at 135 S. LaSalle Street, Suite 425, Chicago, IL 60603, the unpaid
principal
amount of each Loan made by the Bank to the Borrower pursuant to
the Credit
Agreement referred to below on the last day of the Interest Period
relating
to such Loan. The Borrower promises to pay interest on the unpaid
principal
amount of each such Loan on the dates and at the rate or rates
provided for
in the Credit Agreement. All such payments of principal and
interest shall
be made at the office of the Bank as shown on Schedule 1 to the
Credit
Agreement, or such other office as the holder of the Note may
specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary<PAGE>
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of CRESTAR BANK (the
"Bank"), at
919 East Main Street, Richmond, VA 23219, the unpaid principal
amount of
each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement
referred to below on the last day of the Interest Period relating
to such
Loan. The Borrower promises to pay interest on the unpaid
principal amount
of each such Loan on the dates and at the rate or rates provided
for in the
Credit Agreement. All such payments of principal and interest
shall be made
at the office of the Bank as shown on Schedule 1 to the Credit
Agreement, or
such other office as the holder of the Note may specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of CREDIT SUISSE (the
"Bank"), at
633 West Fifth Street, Los Angeles, CA 90071, the unpaid principal
amount of
each Loan made by the Bank to the Borrower pursuant to the Credit
Agreement
referred to below on the last day of the Interest Period relating
to such
Loan. The Borrower promises to pay interest on the unpaid
principal amount
of each such Loan on the dates and at the rate or rates provided
for in the
Credit Agreement. All such payments of principal and interest
shall be made
at the office of the Bank as shown on Schedule 1 to the Credit
Agreement, or
such other office as the holder of the Note may specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of NORWEST BANK COLORADO,
N.A. (the
"Bank"), at 1740 Broadway, Denver, CO 80274-8673, the unpaid
principal
amount of each Loan made by the Bank to the Borrower pursuant to
the Credit
Agreement referred to below on the last day of the Interest Period
relating
to such Loan. The Borrower promises to pay interest on the unpaid
principal
amount of each such Loan on the dates and at the rate or rates
provided for
in the Credit Agreement. All such payments of principal and
interest shall
be made at the office of the Bank as shown on Schedule 1 to the
Credit
Agreement, or such other office as the holder of the Note may
specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
SCHEDULE 1
to
Assignment and Acceptance
I. Assignor's interest in the amount of principal of outstanding
Syndicated
Loans prior to the Novation $_______
a. Assigned to Assignee ________% $________
b. Retained by Assignor ________% $________
II. Assignor's interest in the amount of the aggregate Commitments
(utilized
and unutilized) prior to the Novation$_______
a. Assigned to Assignee ________% $________
b. Retained by Assignor ________% $________
III. Assignee's interest in the amount of the aggregate Commitments
(utilized
and unutilized) and of total obligations of all Banks to Borrower
after the
Novation is $_______
IV. Assignor's interest in the amount of the aggregate Commitments
(utilized
and unutilized) and of total
Banks' obligations of all Banks to Borrower after
the Novation is $_______
V. The Effective Date* of the Novation is ___________________,
199_.
[NAME OF ASSIGNOR]
By:___________________________
Title:
[NAME OF ASSIGNEE]
By:______________________________
Title:
Address for Notices:
[Address]
<PAGE>
Lending Offices:
[List Address for each Type of Loan, as applicable]
Accepted, consented and agreed
to this ___ day of ______________,
199__
ADOLPH COORS COMPANY
By:________________________________
Title:
________________________________________
*Effective Date to be no earlier than the date of
acceptance by the Borrower.
<PAGE>
SCHEDULE 3
INTEREST RATE CALCULATION
1. The Borrower shall calculate the basis for the rates of interest
to be
borne by certain of the loans which may be made by the Banks to the
Borrower
under the Credit Agreement dated _______________, 199_ in
accordance with the
Credit Agreement and this Schedule 3:
2. Terms defined in the Credit Agreement shall bear the same
meanings herein
unless otherwise defined herein or the context otherwise requires.
3. Upon the terms and subject to the conditions hereinafter
mentioned, the
Borrower shall determine the Base Rate (including the Federal Funds
Rate),
the Adjusted LIBOR Rate (including the Euro-Dollar Reserve
Percentage and the
London Interbank Offered Rate ("LIBOR")) and LIBOR alone, which
serve as
bases for the interest rate of certain loans made under the Credit
Agreement.
4. (a) With respect to an Interest Period for which the interest
calculation
is to be based on LIBOR, the Borrower shall:
(i)In the case of a LIBOR Rate Syndicated Borrowing,
(A) obtain from the Denver Branch of the Kansas City Federal
Reserve Bank the
Euro-Dollar Reserve Percentage for such Interest Period, which
shall be that
percentage (expressed as a decimal) which is in effect on the first
day of
such Interest Period, as prescribed by the Board of Governors of
the Federal
Reserve System (or any successor) for determining the maximum
reserve
requirement (including, without limitation, any basic, supplemental
or
emergency reserves) for a member bank of the Federal Reserve System
with
deposits exceeding five billion dollars in respect of "Eurocurrency
liabilities" (as defined in Regulation D promulgated by the Board
of
Governors from time to time),
(B) obtain the index rate per annum, as reported by Bloomberg
Financial
Markets, at which deposits in Dollars for the selected Interest
Period as
specified in the applicable Notice of Borrowing are offered in
immediately
available funds to major banks in the London interbank market at
approximately 11:00 a.m. (London time) two Banking Days before the
first day
of the relevant Interest Period, and
(C) determine the Adjusted Libor Rate for the relevant Interest
Period to be
the quotient obtained by dividing (aa) the applicable LIBOR
obtained pursuant
to paragraph 4(a) (i) (B) by (bb) a percentage (expressed as a
decimal) equal
to 1.00 minus the applicable Euro-Dollar Reserve Percentage. The
Adjusted
LIBOR Rate shall be adjusted automatically on and as of the
effective date of
any change in the Euro-Dollar Reserve Percentage.
In the event that (x) Borrower cannot obtain the LIBOR rate under
paragraph
4(a)(i)(B) for any reason or (y) the Borrower shall have determined
(which
determination shall be conclusive and binding upon the Borrower and
the Banks
absent demonstrable error) that by reason of changes affecting the
London
interbank market, adequate and reasonable means do not exist for
ascertaining
LIBOR for the relevant Interest Period, the Borrower shall notify
the Bank or
Banks to which a Notice of Borrowing was given with respect to the
applicable
Borrowing of such fact as soon as possible (and provide information
concerning the basis for any such determination described in (y)
above).
(ii) In the case of a Money Market Libor Borrowing, obtain the
applicable
LIBOR by undertaking the same process described in 4(a)(i)(B).
(b) As soon as possible after the determination of the Adjusted
LIBOR Rate or
any adjustment thereof or LIBOR, as the case may be, the Borrower
shall
forthwith notify the Bank or Banks to which a Notice of Borrowing
was given
with respect to the applicable Borrowing of such determination by
telephone,
confirmed by written or telegraphic communication. The Borrower
shall
simultaneously with such confirmation provide such Bank or Banks
with a
certificate showing in reasonable detail the applicable interest
calculation
determination or adjustment pursuant to this paragraph 4.
5. (a) With respect to an Interest Period for which the interest
calculation
is to be based on the Base Rate, the Borrower shall:
(i) obtain daily during such Interest Period the per annum rate of
interest,
as reported by Bloomberg Financial Markets, as publicly announced
from time
to time by Bank of America National Trust and Savings Association,
as its
"reference rate";
(ii) determine the Federal Funds Rate daily during such Interest
Period
which shall be, on any day, the effective closing rate (rounded
upwards, if
necessary, to the next higher 1/100 of 1%) for the previous
Business Day as
reported by Bloomberg Financial Markets as the "federal funds rate"
for such
previous Business Day, or, if such rate is not so published or
reported, the
average of the quotations (rounded upwards, if necessary, to the
next higher
1/100 of 1%) for such day (which shall be a Business Day or the
next
preceding Business Day) received by Borrower from three federal
funds brokers
of recognized standing selected by it;
(iii) as applicable, (x) on the last day of each month falling
within such
Interest Period, determine the Base Rate for the applicable portion
of each
month then ending, which shall be equal to the average of the daily
rates of
interest with the rate on each day being equal to the higher rate
obtained
under (i) above or the rate calculated pursuant to (ii) above plus
0.50%, or
(y) at 12:00 noon (New York City time) on the last day of the
applicable
Interest Period, or at any other time requested by any Bank,
determine the
Base Rate for the applicable Interest Period then ending, which
shall be
calculated in the same manner as provided in clause (x) of this
clause (iii).
In the event that the Borrower shall have determined (which
determination
shall be conclusive and binding upon the Borrower and the Banks
absent
demonstrable error) that by reason of changes affecting the
appropriate
market, adequate and reasonable means do not exist for ascertaining
the
Federal Funds Rate for the relevant Interest Period, the Borrower
shall
notify the Bank or Banks to which a Notice of Borrowing was given
with
respect to the applicable Borrowing of such fact as soon as
possible (and
provide information concerning the basis for any such
determination).
(b) At 12:00 noon (New York City time) on the first day of the
month
following each month for which the Base Rate has been determined,
the
Borrower shall notify the Bank or Banks to which a Notice of
Borrowing was
given with respect to the applicable Borrowing of such
determination by
telephone, confirmed by written or telegraphic communication. The
Borrower
shall simultaneous with such confirmation provide such Bank or
Banks with a
certificate showing in reasonable detail the applicable interest
rate
calculation determination or adjustment pursuant to this paragraph
5.
6. The determination of LIBOR, the Adjusted LIBOR Rate or the Base
Rate by
the Borrower shall be final and binding on the Borrower and the
Banks in the
absence of demonstrable error.
ADOLPH COORS COMPANY
Authorized Officer's Certificate
Donald D. Breen, the undersigned, hereby certifies as follows:
1. He is the duly elected, qualified and acting Assistant Secretary
of Adolph
Coors Company, a Colorado corporation (the "Company"), and as such
is
authorized to execute and deliver this certificate pursuant to
Section
3.01(c) of the $144,000,000 Revolving Credit Agreement dated as of
December
12, 1994, among the Company and the Banks named therein (the
"Agreement").
All capitalized terms not otherwise defined shall have the meanings
given
them in the Agreement.
2. The representations and warranties of the Company contained in
Article IV
of the Agreement are true and correct in all material respects on
and as of
the date hereof.
3. On and as of the date hereof no Default or Event of Default has
occurred
and is continuing.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
as of
December 12, 1994.
Donald D. Breen
Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of BANK OF AMERICA (the
"Bank"), at
555 California Street, 41st Floor, San Francisco, CA 94104, the
unpaid
principal amount of each Loan made by the Bank to the Borrower
pursuant to
the Credit Agreement referred to below on the last day of the
Interest Period
relating to such Loan. The Borrower promises to pay interest on
the unpaid
principal amount of each such Loan on the dates and at the rate or
rates
provided for in the Credit Agreement. All such payments of
principal and
interest shall be made at the office of the Bank as shown on
Schedule 1 to
the Credit Agreement, or such other office as the holder of the
Note may
specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of COLORADO NATIONAL BANK
(the
"Bank"), at 950 17th Street, Denver, CO 80202, the unpaid
principal amount
of each Loan made by the Bank to the Borrower pursuant to the
Credit
Agreement referred to below on the last day of the Interest Period
relating
to such Loan. The Borrower promises to pay interest on the unpaid
principal
amount of each such Loan on the dates and at the rate or rates
provided for
in the Credit Agreement. All such payments of principal and
interest shall
be made at the office of the Bank as shown on Schedule 1 to the
Credit
Agreement, or such other office as the holder of the Note may
specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of (the "Bank"), at, the
unpaid
principal amount of each Loan made by the Bank to the Borrower
pursuant to
the Credit Agreement referred to below on the last day of the
Interest Period
relating to such Loan. The Borrower promises to pay interest on
the unpaid
principal amount of each such Loan on the dates and at the rate or
rates
provided for in the Credit Agreement. All such payments of
principal and
interest shall be made at the office of the Bank as shown on
Schedule 1 to
the Credit Agreement, or such other office as the holder of the
Note may
specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPANY
By: Donald D. Breen
Title: Assistant Secretary
PROMISSORY NOTE
December 12, 1994
For value received, ADOLPH COORS COMPANY, a Colorado corporation
(the
"Borrower"), promises to pay to the order of WACHOVIA BANK OF
GEORGIA, N.A.
(the "Bank"), at 191 Peachtree Street, N.E., 28th Floor, MC 372,
Atlanta, GA
30303, the unpaid principal amount of each Loan made by the Bank to
the
Borrower pursuant to the Credit Agreement referred to below on the
last day
of the Interest Period relating to such Loan. The Borrower
promises to pay
interest on the unpaid principal amount of each such Loan on the
dates and at
the rate or rates provided for in the Credit Agreement. All such
payments of
principal and interest shall be made at the office of the Bank as
shown on
Schedule 1 to the Credit Agreement, or such other office as the
holder of the
Note may specify.
All Loans made by the Bank, the Type of Loan, the respective
maturities
thereof and all repayments of the principal thereof shall be
recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the
schedule
attached to and made a part hereof; provided that the failure of
the Bank to
make any such recordation or endorsement shall not affect the
obligations of
the Borrower hereunder or under the Credit Agreement.
This note is being executed and delivered pursuant to the Revolving
Credit
Agreement dated as of December 12, 1994 among the Borrower and the
banks
listed on the signature pages thereof (as the same may be amended
from time
to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are
used herein with the same meanings. Reference is made to the
Credit
Agreement for provisions for the prepayment hereof and the
acceleration of
the maturity hereof.
This Note shall be governed by the laws of the State of Colorado.
ADOLPH COORS COMPAN
BY: Donald D. Breen
Title: Assistant Secretary
</TABLE>
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<NAME> ADOLPH COORS COMPANY
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-25-1994
<PERIOD-START> DEC-27-1993
<PERIOD-END> DEC-25-1994
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<SECURITIES> 23152
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<COMMON> 11000
0
1260
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<TOTAL-LIABILITY-AND-EQUITY> 1371576
<SALES> 2040330
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<CGS> 1062789
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<INCOME-PRETAX> 104220
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