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 (NO FEE REQUIRED)
For the fiscal year ended December 28, 1997
OR
o 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
Commission file number 0-8251
ADOLPH COORS COMPANY
(Exact name of registrant as specified in its charter)
Colorado 84-0178360
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Golden, Colorado 80401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 279-6565
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock (non-voting), no par value
(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 16, 1998:
Class A Common Stock - 1,260,000 shares
Class B Common Stock - 35,020,455 shares
PART I
ITEM 1. Business
(a) General Development of Business
Founded in 1873 and incorporated in Colorado in 1913, Adolph
Coors Company (ACC or the Company) is the holding company for
Coors Brewing Company (CBC), the third-largest U.S. brewer.
CBC owns Coors Distributing Company (CDC) and several smaller
subsidiaries, including Coors Transportation Company; Coors
Energy Company (CEC); the majority of The Wannamaker Ditch
Company and The Rocky Mountain Water Company, which carry process
water from nearby Clear Creek to various CBC reservoirs in the
Golden area; Coors Brewing Company International, Inc. (CBCI);
Coors Global, Inc. (Global); Coors Intercontinental, Inc. (Intercontinental);
Coors Nova Scotia Co. and Coors Japan Company, Ltd. (Coors Japan).
CDC owns and operates distributorships in several markets across
the United States. CDC's 1997 operations accounted for approximately
5.7% of CBC's total beer sales volume.
Through a subsidiary, CEC continues to operate a gas transmission
pipeline that provides energy to CBC's Shenandoah facility.
CBC, CBCI, Global and Intercontinental own Coors Brewing
International C.V. (the CV), which in turn owns Coors Brewing
Iberica, S.A. (Coors Iberica) and Coors Services, S.A. Established in
1995, Coors Services, S.A. provides management and administrative services
to CBC. The CV acts as a holding company and a finance subsidiary.
Coors Brewing International, Ltd. (CBIL), owned by ACC and based
in London, was created in December 1997. Effective January 1,
1998, it provides management and administrative services to CBC.
CBIL also provides sales and distribution services for Coors
products in European markets other than Spain.
In addition to CBC and CBIL, ACC owns Coors Canada, Inc. (CCI),
which in turn owns a 50.1% interest in Coors Canada, a
partnership. CCI's partners in Coors Canada, Carling O'Keefe
Breweries of Canada, Ltd. (Carling) and The Molson Company, Ltd.
(Molson Company), each own equal minority interests in the
partnership. The partnership, which began operations January 1,
1998, is to develop the business related to Coors products in
Canada. The partnership agreement replaces the interim arrangement
that the Company and Molson Company operated under during 1997. See
further discussion of the Canadian business under section (c) below.
Some of the following statements describe the Company's expectations of future
products and business plans, financial results, performance and events.
Actual results may differ materially from these forward-looking statements.
(b) Financial Information About Industry Segments
The Company has continuing operations in a single industry
segment, the production and marketing of malt-based beverages.
(c) Narrative Description of Business
Coors Brewing Company - General
CBC produces, markets and sells high-quality malt-based
beverages. CBC concentrates on distinctive premium and above-
premium brands that provide higher-than-average margins. Most of
CBC's sales are in U.S. markets; however, the Company is
committed to building profitable sales in international markets.
Sales of malt beverages totaled 20.6 million barrels in 1997,
20.0 million barrels in 1996 and 20.3 million barrels in 1995.
(See Item 7 for discussion of changes in volume.)
Marketing
Principal products and services: CBC currently has 18 brands in
its portfolio, of which five are premium products that make up
the Coors family of beers: Coors Light(R), Original Coors(R), Coors(R)
Extra Gold, Coors(R) Dry and Coors(R) Non-Alcoholic. CBC also produces and
markets Zima(R), an innovative malt-based, above-premium beverage.
CBC offers specialty, above-premium beers, including Winterfest(R);
Blue Moon(TM) Honey Blonde Ale; Blue Moon(TM) Belgian White Ale; Blue
Moon(TM) Raspberry Cream Ale; Blue Moon(TM) Abbey Ale and Blue Moon(TM)
Harvest Pumpkin Ale, a seasonal product. CBC also sells licensed products,
including George Killian's(R) Irish Red(TM) Lager and George Killian's(R)
Irish(TM) Honey. CBC distributed Steinlager(R), New Zealand's number-one
premium beer, under license from Lion Nathan International of New Zealand until
the end of 1997.
CBC also sells popular-priced products, including Keystone(R)
Premium, Keystone(R) Light, Keystone(R) Dry and Keystone(R) Ice.
CBC's beverages are sold throughout the United States. CBC exports or produces
and sells many products overseas, as described in greater detail below.
CBC owns and operates The Sandlot Brewery(R) at Coors Field(R)
ballpark in Denver, Colorado. This brewery, which is open year-
round, makes a variety of specialty beers and has an annual
capacity of approximately 4,000 barrels.
New products/opportunities: Blue Moon Abbey Ale was introduced in
February 1997.
During 1997, Coors Artic Ice(R) and Coors Artic Ice Light(R), Herman
Joseph's(R), Blue Moon(TM) Nut Brown Ale, Killian's(R) Irish Brown(TM),
Coors(R) Cutter and Keystone(R) Amber Light were discontinued because the
market performances of these products did not meet expectations.
Brand names, trademarks, patents and licenses: CBC owns trademarks on
all brands it produces and recognizes that consumer knowledge of and
loyalty to its brand names and trademarks are vital to CBC's long-term
success. It also holds several patents, with expiration dates ranging from
1998 to 2018, on innovative processes related to product formulae, can
making, can decorating and certain other technical operations, together with
several design patents for innovative packaging. CBC receives revenue from
royalties and licenses, but its business is not dependent upon this revenue.
Brand performance: Coors Light is CBC's best-selling brand and has generated
more than two-thirds of its total sales volume for the past three years. CBC's
second-most-popular brand is Original Coors. Premium and above-premium beers
accounted for approximately 88% of CBC's total 1997 sales volume.
Domestic sales: The Company's highest-volume states are California, Texas,
Pennsylvania, New York and New Jersey, comprising 47% of total domestic volume.
Eight geographic field business areas manage domestic sales which
allow CBC to better anticipate and respond to wholesaler and consumer needs.
International business: Through its U.S. and foreign production
facilities, CBC markets its products to approximately 37 international
markets and to U.S. military bases worldwide. Export sales are more
profitable, on a per-barrel basis, than domestic sales.
Under an interim agreement that was in effect until January 1, 1998, Molson
Breweries of Canada Limited (Molson) brewed and distributed Original Coors
and Coors Light in Canada, where Coors Light is the best-selling light beer.
After Molson permitted Miller Brewing Company (Miller) to purchase a 20%
ownership interest in Molson in 1993, the Company initiated two legal actions
regarding its licensing arrangement with Molson. On October 18, 1996, an
arbitration panel ruled that the licensing agreement terminated in 1993 when
Miller acquired its ownership interest in Molson. This ruling returned
Canadian rights to all CBC brands to CBC and required Molson to compensate
CBC for the period beginning April 2, 1993. In April 1997, the Company
settled all legal disputes among CBC, Molson, Miller and related parties.
Under terms of the settlement, Molson paid the Company approximately $72
million, which was included in ACC's second quarter 1997 results as a
special credit net of certain related legal expenses. The arbitration panel
also found that Molson had underpaid royalties from January 1, 1991, to
April 1, 1993. Molson paid CBC $6.1 million in cash (net of $680,000 of
withholding taxes) during 1996 to cover the unpaid royalties plus interest.
Coors Canada began operations January 1, 1998, to develop the business
related to Coors products in Canada. Under the partnership agreement,
Coors Canada is responsible for marketing Coors products in Canada, while
the partnership contracts with Molson Breweries for the brewing,
distribution and sales of these brands. Coors Canada receives an amount
from Molson Breweries generally equal to net sales revenue generated from
the Coors brands less production, distribution, sales and overhead costs
related to these sales.
Coors Japan, the exclusive importer of Coors products into Japan
and based in Tokyo, distributes, markets and sells CBC's products
in Japan, where the Coors brand has been one of the top three
foreign premium brands for 10 years.
Beginning in 1991, CBC formed Jinro-Coors Brewing Company (JCBC),
a joint venture with Jinro Limited of the Republic of Korea.
Until late 1997, CBC owned one-third of JCBC, while Jinro Limited
owned the remaining two-thirds. JCBC's financial results have not
been included in CBC's financial statements, as CBC's investment
is accounted for under the cost basis of accounting, since it has
not had the ability to significantly influence JCBC's business
operations and the investment has been considered temporary. In
December 1997, CBC exercised the put option it held on its $22-
million investment in JCBC, which requires Jinro Limited to
purchase, in Korean Won, CBC's investment at the greater of cost
or market value by June 24, 1998. See Items 7 and 8 for further
discussion of this matter.
In March 1994, Coors Iberica purchased a 500,000-hectoliter
brewery in Zaragoza, Spain, from El Aguila S.A. of Madrid, Spain,
which is owned 51% by Amsterdam-based Heineken, N.V. (the world's
second-largest brewer). Coors Iberica brews Coorsr Gold for sale
in Spain and the Coorsr Extra Gold brand for export to
approximately 14 international markets. El Aguila and Coors
jointly distribute Coors products in Spain, while Coors manages
marketing efforts. This arrangement provides certain advantages
over exporting products directly from U.S. facilities. Financial
results of the Zaragoza brewery are included in ACC's financial statements.
Since September 1992, a licensing agreement has been in place
that allows Scottish Courage to brew and distribute Coorsr Extra
Gold in the United Kingdom. A joint venture between CBC and
Scottish Courage has marketed the product during this period.
Beginning in early 1998, Coors' Zaragoza, Spain brewery will be
the source for Coorsr Extra Gold to be sold in the United Kingdom,
and Scottish Courage will continue to distribute the product. Scottish
Courage will continue to perform some packaging services.
In early 1996, ACC established a foreign sales corporation, Coors Export Ltd.,
to utilize favorable U.S. tax laws applicable to foreign sales.
Product distribution: A national network of 558 independent
distributors and four distributorships owned and operated by CDC
deliver CBC products to U.S. retail markets. Some distributors
operate multiple branches, bringing the total number of U.S.
distributor/branch locations to 611. Independent distributors
deliver CBC products to some export/international markets under
certain licensing and distribution agreements.
To ensure the highest product quality, CBC monitors distributors'
methods of handling Coors products. This monitoring helps ensure
adherence to proper refrigeration and rotation guidelines for
CBC's malt beverages at both wholesale and retail locations.
Distributors are required to replace CBC products if consumer
sales have not occurred within prescribed time frames.
Transportation
Given the location of its three production facilities in the
U.S., CBC must ship its products a greater distance than most
competitors. By packaging some products in the Memphis and
Shenandoah facilities, CBC improves the efficiency of
distribution and lowers freight costs to certain markets. Major
competitors have multiple breweries from which to deliver
products, thereby incurring lower transportation costs than CBC.
Approximately 44% of the products packaged at CBC's production
facilities are transported by railcar to satellite redistribution
centers or directly to distributors throughout the country. The
railcars assigned to CBC are specially built and insulated to keep Coors
products cold en route. Any disruption by strike in the rail industry
would impact CBC more than its major competitors, but, in management's
opinion, the risk of such disruption appears low.
The remaining 56% of products are shipped by truck and intermodal
(piggyback) directly to distributors or to satellite redistribution
centers. Transportation vehicles are also refrigerated or insulated to
keep CBC's malt beverages at proper temperatures while in transit.
CBC currently uses 14 strategically located satellite redistribution
centers to receive product from production facilities and to prepare
shipments to distributors. In 1997, approximately 60% of packaged products
were shipped direct to distributors, and approximately 40% moved through the
satellite redistribution centers.
Operations
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 and distribution
facility near Elkton, Virginia (referred to as the Shenandoah facility).
The Golden brewery is the source location for all brands with the
Coors name except for Coors Non-Alcoholic. Approximately 65% of
CBC's beer is packaged in Golden; most of the remainder is
shipped in bulk from the Golden brewery to the Memphis and
Shenandoah facilities for blending, finishing and packaging.
The Memphis facility currently packages all products exported
from the United States and brews and packages Zima, Killian's
Irish Honey, Coors Non-Alcoholic, and all of the Blue Moon
products. CBC also contract brews small volumes of several products for
other companies at the Memphis facility. Depending on product mix and
market opportunities, the full utilization of brewing capacity in Memphis
may or may not require additions to plant and equipment.
The Shenandoah facility currently packages certain CBC products
for distribution to Eastern U.S. markets and could be expanded if
necessary and if opportunities warranted the required financial commitment.
At the end of 1997, CBC had approximately 25 million barrels of
annual brewing capacity and 30 million barrels of annual
packaging capacity. Current capacity depends upon product mix and
may change with shifting consumer preferences for specific brands
or packages. CBC's three facilities provide sufficient brewing
and packaging capacity to meet foreseeable consumer demand.
Most of CBC's aluminum can, end, glass bottle and malt
requirements are produced in owned facilities or facilities
operated by joint ventures in which CBC is a partner. CBC has
arranged for sufficient container supplies with its joint venture
partners and has sufficient malting facilities to fulfill its
current and projected requirements.
Container manufacturing facilities: CBC owns a can manufacturing
facility that produces approximately 3.8 billion aluminum cans
per year, and an aluminum can end manufacturing facility, which
provides CBC aluminum ends and tabs. Total container properties
comprise approximately 9.0% of the book value of CBC's
properties. In 1994, CBC and American National Can Company (ANC)
formed a joint venture to produce beverage cans and ends at CBC's
manufacturing facilities for sale to CBC and outside customers.
The joint venture's initial term is seven years but can be
extended for two additional three-year terms. The joint venture
has improved the technology and utilization of both facilities
and has enhanced the returns on this investment. In 1997, CBC
purchased approximately 96% of the cans produced by the joint
venture. The joint venture is committed to supplying 100% of the
Golden facility's can and end requirements.
In June 1995, CBC and Anchor Glass Container Corporation (Anchor)
established a joint venture partnership, the Rocky Mountain
Bottle Company (RMBC), to produce glass bottles at the CBC glass
manufacturing facility. The joint venture has lowered unit costs,
increased output and created efficiencies at the glass plant. CBC
contributed approximately $16.2 million in machinery, equipment and
certain personal property to RMBC. The partnership's initial term is
10 years (ending 2005) and can be extended for additional two-year periods.
Effective February 5, 1997, Owens-Brockway Glass Container, Inc.
(Owens) replaced Anchor as CBC's partner in RMBC as a result of
Anchor's bankruptcy in September 1996 and the related sale of
certain Anchor assets to Owens and Consumers Packaging, Inc.
Further, Owens has replaced Anchor as the 100% preferred supplier
of bottles to CBC for bottle requirements not met by RMBC. Owens'
replacement of Anchor did not significantly impact RMBC's operations.
In 1997, RMBC produced approximately 871 million bottles; CBC
purchased approximately 97% of the bottles produced. To assist in
accomplishment of its goal of manufacturing bottles with recycled
material, CBC constructed a glass recycling facility in Wheat
Ridge, Colorado, in 1994 and doubled the amount of glass the
facility can recycle annually. RMBC operates the recycling facility.
Other facilities: CBC owns waste treatment facilities that process waste
from CBC's manufacturing operations and from the City of Golden.
In September 1995, CBC sold its power plant equipment and support
facilities to Trigen-Nations Energy Corporation, L.L.L.P.
(Trigen) for approximately $22 million. CBC has agreed to
purchase from Trigen the electricity and steam needed to operate
its Golden facilities. This 25-year agreement also requires that
significant capital improvements be made by Trigen.
CBC continues to improve asset utilization by divesting non-core
assets and by continuing to improve capacity utilization through joint
ventures and alliances. CBC is exploring a combination of capital
improvements and outsourcing to provide for its long-term malting needs.
Capital improvements: In 1997, the Company spent approximately
$60 million in capital expenditures. While management plans to
invest appropriately in order to ensure ongoing productivity and
efficiency of CBC assets, a high priority will be given to those
projects the Company believes offer attractive returns. The
Company expects its capital expenditures for 1998 to be in the
range of $75 to $85 million.
Raw Materials/Sources and Availability
CBC's beers are made with all natural ingredients, and its
brewing cycle is one of the longest in the industry. CBC adheres
to strict formulation and quality standards in selecting its raw
materials and believes it has sufficient access to raw materials
and packaging supplies to meet its quality and production requirements.
Barley, barley malt, starch and hops: CBC uses proprietary
strains of barley, developed by its own agronomists, in most of
its malt beverages. 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 in Golden
produces malt for all CBC products except Blue Moon. CBC maintains
inventory levels in owned locations sufficient to continue production
in the event of any disruption in barley or malt supplies.
Rice and refined cereal starch (which are interchangeable in
CBC's brewing process) and foreign and domestic hops are purchased from
outside suppliers. Adequate inventories are maintained to continue
production through any foreseeable disruption in supply.
Water: CBC uses naturally filtered water from underground
aquifers to brew malt beverages at its Golden facility. Water
from private deep wells is used for brewing, final blending and
packaging operations at plants located outside Colorado. Water
quality and composition were primary factors in all facility site selections.
Water from CBC's sources in Golden and Memphis is well balanced with
minerals and dissolved solids to brew high-quality malt beverages.
CBC continually monitors the quality of all the water used in its
brewing and blending processes for compliance with its 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 its 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 1997, approximately 60% of CBC's
malt beverages were packaged in aluminum cans. CBC purchases most
of its cans and ends from the joint venture with ANC. Aluminum
cans for products packaged at the Memphis plant are purchased
from an outside supplier.
Glass bottles were used to package approximately 29% of CBC's
beverages in 1997; about half of these bottles were produced by RMBC.
The remainder (11%) of the malt beverages sold during 1997 was
packaged primarily in quarter- and half-barrel stainless steel kegs.
Graphic Packaging Corporation, a subsidiary of ACX Technologies,
Inc. (ACX), supplies much of the secondary packaging for CBC's
products, including bottle labels and paperboard products.
Supply contracts with ACX companies: When ACX Technologies, Inc.
(ACX) was spun off from ACC in 1992, CBC negotiated long-term
supply contracts with certain ACX subsidiaries for aluminum,
starch and packaging materials. These contracts, negotiated at
market prices, were to be in effect through 1997. The aluminum
contracts were canceled in 1995, and the starch contract was extended
in 1997 to run through 1999. The contract for packaging materials was
modified in 1997 and extended until at least 1999. See Item 13, Certain
Relationships and Related Transactions for further details.
Energy: CBC purchases electricity and steam for its Golden
manufacturing facilities from Trigen. CEC supplies Trigen with
coal for its steam generator system. CBC does not anticipate
future energy supply problems.
Seasonality of the Business
The beer industry is subject to seasonal sales fluctuation. CBC's
sales volumes are normally at their lowest in the first and
fourth quarters and highest in the second and third quarters. The
Company's fiscal year is a 52- or 53-week year that ends on the
last Sunday in December. The 1997 and 1996 fiscal years were 52
weeks long, while fiscal 1995 was 53 weeks long.
Research and Project Development
CBC's research and project development spending relates primarily
to new products and packages; brewing processes, ingredients and
equipment; packaging supplies and environmental improvements and
cost reductions in processes and packaging materials. These
activities are meant to improve the quality and value of CBC's
products while reducing costs through more efficient processing
and packaging techniques and equipment design, as well as improved
raw materials. Approximately $14.6 million, $15.3 million and $16.3
million were spent on research and development in 1997, 1996 and 1995,
respectively. The Company expects to spend approximately $14.1 million
on research and project development in 1998.
To support new product development, CBC maintains a fully equipped pilot
brewery, with a 6,500-barrel annual capacity, within the Golden facility
enabling CBC to brew small batches of innovative products without
interrupting ongoing production and operations in the main brewery.
Regulations
Federal laws and regulations govern the operations of breweries;
the federal government and all states regulate trade practices,
product content and labeling, advertising and marketing practices,
distributor relationships 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.
Many foreign governments apply tariffs on products such as CBC's when
exported into their nations. The Company must also deal with varying
levels and types of foreign government regulation when attempting to sell
its products in those countries.
A number of emerging regulatory/legislative issues could impact
the Company's business operations over the next few years,
including: i) potential increases in federal, state and local excise
taxes; ii) restrictions on the advertising and sale of alcohol beverages;
iii) new packaging regulations and taxes; iv) and others.
Federal excise taxes on malt beverages are currently $18 per
barrel. State excise taxes also are levied at rates that ranged
in 1997 from a high of $32.65 per barrel in Alabama to a low of
$0.62 per barrel in Wyoming, with an average of $7.69 per barrel.
In 1997, CBC recognized approximately $386 million in federal and
state excise taxes. A substantial increase in federal or state
excise taxes would have a negative impact on sales and
profitability of the entire industry, including CBC. CBC is
vigorously opposed to any increases in federal, state or local
excise taxes and will work diligently to ensure that its view is represented.
The Company anticipates increased scrutiny and focus on alcohol
advertising and underage consumption among lawmakers and advocacy
groups. The increased scrutiny is due to a number of circumstances
outside the control of CBC. CBC intends to strengthen its and support
the industry's self-regulation activities, including continuing efforts
that demonstrate its social responsibility in advertising, sales,
community education and prevention and research.
Environmental
Compliance with federal, state and local environmental laws and
regulations did not materially affect the Company's 1997 capital
expenditures, earnings or competitive position.
The Company continues to promote the efficient use of resources,
waste reduction and pollution prevention. Programs currently
under way include recycling, down-weighting of product packages
and, where practical, increasing the recycled content of product
packaging materials, paper and other supplies. Several employee
task forces continually seek effective ways to control hazardous
materials and to reduce emissions and waste.
Employees and Employee Relations
The Company has approximately 5,800 full-time employees. Of CBC's
three domestic production facilities, Memphis plant workers are the only
significant employee group that has union representation (Teamsters). In
general, relations with employees have been satisfactory.
Competitive Conditions
Known trends and competitive conditions: Industry and competitive
information was compiled from the following industry sources: Beer
Marketer's Insights and The Maxwell Consumer Report. While management
believes these sources are reliable, the Company cannot guarantee the
absolute accuracy of these numbers and estimates.
1997 industry overview: The beer industry in the United States
is highly competitive. Industry volume growth has averaged less
than 1% annually since 1991. In one of the most competitive years
of the decade, 1997 saw domestic beer industry shipments decline
slightly. By contrast, 1996 domestic shipments were up 0.8% from
the year before. In recent years, brewers have attempted to gain
market share through competitive pricing, marketing, promotions
and innovative packaging. In 1997, price promotions and price
discounting were more extensive than a year earlier,
significantly reducing revenue growth for major U.S. brewers.
Revenue per barrel for the two largest U.S. brewers declined in
1997, despite modest posted price increases early in the year.
The pricing environment continues to be very competitive; no
nationwide increases in beer prices were announced late in 1997
or early in 1998. Instead of a posted price increase, the two
largest U.S. brewers have announced plans to reduce the depth and
duration of price discounting in 1998. If competitors concentrate
primarily on market share gains in 1998 instead of profitability,
it will place additional downward pressure on pricing. Unit
volume growth for major U.S. brewers continues to depend on
growth in light beer sales, pricing, introductions of new
products and expansion into international markets.
A number of important trends continued in the U.S. beer market in
1997. The first was a trend toward "trading up." Consumers
continued to move away from lower-priced brands to higher-priced
brands, especially imports. Unlike in recent years,
microbreweries as a group did not benefit from this trend in
1997. Sales by micros were flat for 1997 after years of double-
digit growth in this segment. In fact, sales for six of the ten
largest microbrewers were down in 1997, with the top ten as a group down
1%. In contrast, imports' sales volume rose more than 10% in 1997.
The recent proliferation of products continued to slow as major
brewers focused efforts on their core brands. In 1997, CBC
continued to eliminate product variations by reducing the number
of brands by seven, or 28% of its portfolio. CBC now offers 18 products.
The U.S. brewing industry also continues to consolidate,
primarily at the wholesale level. As a leading example, Miller
Brewing Company (Miller) has reduced the number of Miller
distributors to 729 in 1997 from 906 in 1995 and intends to
reduce this number to approximately 500 by 2002.
CBC competitive position: CBC's malt beverages compete with
numerous above-premium, premium, low-calorie, popular-priced, non-
alcohol and imported brands produced by national, regional, local
and international brewers. Nearly 86% of U.S. beer volume is
attributable to the top four domestic brewers: Anheuser-Busch,
Inc. (AB); Philip Morris, Inc., through its subsidiary Miller;
CBC; and The Stroh Brewery Company (now including G. Heileman
Brewing). CBC competes most directly with AB and Miller, the
dominant companies in the industry. CBC is the nation's third-
largest brewer and, according to Beer Marketer's Insights
estimates, accounted for approximately 10.3% of the total 1997
U.S. brewing industry shipments of malt beverages (including
exports and U.S. shipments of imports). This compares to AB's
45.5% share and Miller's 21.8% share.
Given its industry position, CBC continues to face significant
competitive disadvantages related to economies of scale. Besides
lower transportation costs achieved by competitors with multiple
breweries, these larger brewers also recognize economies of scale
in advertising expenditures because of their greater volume. CBC,
in an effort to achieve and maintain national advertising
exposure, must spend substantially more per barrel of beer sold
than its major competitors. Significant levels of advertising are
necessary for CBC to hold and increase its U.S. market share.
Additionally, CBC is competitively disadvantaged in some markets
because its distributors have lower average annual sales than
distributors of competing brewers in same markets. This, coupled
with ongoing price competition, puts more pressure on CBC's
margins in comparison to those of CBC's principal competitors.
ITEM 2. Properties
The Company's major facilities are:
Facility Location Product
Brewery/packaging Golden, CO Malt beverages/packaged
malt beverages
Packaging Elkton, VA Packaged malt beverages
Brewery/packaging Memphis, TN Malt beverages/packaged
malt beverages
Brewery/packaging Zaragoza, Spain Malt beverages/packaged
malt beverages
Can and end plants Golden, CO Aluminum cans and ends
Distribution warehouse Anaheim, CA Wholesale beer distribution
Meridian, ID
Denver, CO
Oklahoma City, OK
Tulsa, OK*
San Bernardino, CA*
Glenwood Springs, CO*
* Leased.
The original brewery site at Golden, which is approximately 2,400
acres, contains brewing, packaging, can manufacturing and related
facilities, as well as gravel deposits and water-storage facilities.
CBC's can and end plants are operated by a joint venture between CBC and ANC.
CBC's bottle plant is operated by a joint venture between CBC and Owens.
The distribution warehouses are operated by CDC.
The Company owns 2,700 acres of land in Rockingham County,
Virginia, where the Shenandoah facility is located, and 132 acres
in Shelby County, Tennessee, where the Memphis facility is located.
All of the Company's facilities are well-maintained and suitable
for their respective operations. In 1997, CBC estimates that its
brewing facilities operated at approximately 83% of the 1998
brewing capacity and its packaging facilities operated at
approximately 68% of the 1998 packaging capacity. Annual
production capacity can vary due to product and packaging mix and seasonality.
ITEM 3. Legal Proceedings
See the Environmental section of Item 7 Management's Discussion and
Analysis of Financial Condition and Results of Operations 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 are expected
to result in liability that would be material to the Company's
financial position or results of operations.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Adolph Coors Company's (ACC's) Class B common stock is traded
over the counter and is included in the NASDAQ National Market
listings with the ticker 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 16, 1998 is as follows:
Title of class Number of record holders
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 3,334
Preferred stock, non-voting, None issued
$1 par value
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. The Company expects to continue
paying dividends at least at this level in the future:
1997
Market price
High Low Dividends
First quarter 22 1/8 17 1/2 $ 0.125
Second quarter 28 3/8 18 7/8 $ 0.125
Third quarter 39 1/4 25 5/8 $ 0.150
Fourth quarter 41 1/4 30 3/4 $ 0.150
1996
Market price
High Low Dividends
First quarter 24 1/4 17 3/4 $ 0.125
Second quarter 19 7/8 16 3/4 $ 0.125
Third quarter 23 3/4 17 1/2 $ 0.125
Fourth quarter 22 3/4 17 1/2 $ 0.125
ITEM 6. Selected Financial Data
Following is ACC's selected financial data for 11 years ended
December 28, 1997:
(In thousands, except per share) 1997 1996 1995** 1994
Barrels of malt beverages sold 20,581 20,045 20,312 20,363
Summary of Operations:
Net sales $1,822,151 $1,742,056 $1,690,701 $1,673,252
Cost of goods sold 1,120,778 1,127,689 1,106,635 1,073,370
Marketing, general
and administrative 585,491 527,007 518,888 505,668
Special (credits) charges (31,517) 6,341 (15,200) (13,949)
Total operating expenses 1,674,752 1,661,037 1,610,323 1,565,089
Operating income 147,399 81,019 80,378 108,163
Other expense - net 506 6,044 7,100 3,943
Income before income taxes 146,893 74,975 73,278 104,220
Income tax expense 64,633 31,550 30,100 46,100
Income from
continuing operations $ 82,260 $ 43,425 $ 43,178 $ 58,120
Per share of common stock
- basic $ 2.21 $ 1.14 $ 1.13 $ 1.52
- diluted $ 2.16 $ 1.14 $ 1.13 $ 1.51
Income from
continuing operations as a
percentage of net sales 4.5% 2.5% 2.6% 3.5%
Financial Position:
Working capital $ 158,048 $ 124,194 $ 36,530 $ (25,048)
Properties - net $ 733,117 $ 814,102 $ 887,409 $ 922,208
Total assets $1,412,083 $1,362,536 $1,384,530 $1,371,576
Long-term debt $ 145,000 $ 176,000 $ 195,000 $ 131,000
Other long-term liabilities $ 23,242 $ 32,745 $ 33,435 $ 30,884
Shareholders' equity $ 736,568 $ 715,487 $ 695,016 $ 674,201
Net book value per share
of common stock $ 19.79 $ 18.83 $ 18.21 $ 17.59
Total debt to total
capitalization 19.0% 21.2% 24.9% 20.6%
Return on average
shareholders' equity 11.3% 6.2% 6.3% 8.9%
Other Information:
Dividends $ 20,523 $ 18,983 $ 19,066 $ 19,146
Per share of common stock $ 0.55 $ 0.50 $ 0.50 $ 0.50
Gross profit $ 701,373 $ 614,367 $ 584,066 $ 599,882
Capital expenditures $ 60,373 $ 65,112 $ 157,599 $ 160,314
Depreciation, depletion
and amortization $ 117,166 $ 121,121 $ 122,830 $ 120,793
Full-time employees 5,800 5,800 6,200 6,300
Market price range of
common stock:
High $ 41 1/4 $ 24 1/4 $ 23 1/4 $ 20 7/8
Low $ 17 1/2 $ 16 3/4 $ 15 1/8 $ 14 3/4
** 53-week year versus 52-week year.
(In thousands, except per share) 1993 1992 1991 1990
Barrels of malt beverages sold 19,828 19,569 19,521 19,297
Summary of Operations:
Net sales $1,595,597 $1,566,606 $1,543,007 $1,483,873
Cost of goods sold 1,050,650 1,051,362 1,052,228 986,352
Marketing, general
and administrative 467,138 441,943 448,393 409,085
Special charges 122,540 -- 29,599 30,000
Total operating expenses 1,640,328 1,493,305 1,530,220 1,425,437
Operating (loss) income (44,731) 73,301 12,787 58,436
Other expense - net 12,099 14,672 4,403 5,903
(Loss) income before income taxes (56,830) 58,629 8,384 52,533
Income tax (benefit) expense (14,900) 22,900 (8,700) 20,300
(Loss) income from
continuing operations $ (41,930) $ 35,729 $ 17,084 $ 32,233
Per share of common stock
- basic $ (1.10) $ 0.95 $ 0.46 $ 0.87
- diluted $ (1.10) $ 0.95 $ 0.46 $ 0.87
(Loss) income from continuing
operations as a
percentage of net sales (2.6%) 2.3% 1.1% 2.2%
Financial Position:
Working capital $ 7,197 $ 112,302 $ 110,443 $ 201,043
Properties - net $ 884,102 $ 904,915 $ 933,692 $1,171,800
Total assets $1,350,944 $1,373,371* $1,844,811 $1,761,664
Long-term debt $ 175,000 $ 220,000 $ 220,000 $ 110,000
Other long-term liabilities $ 34,843 $ 52,291 $ 53,321 $ 58,011
Shareholders' equity $ 631,927 $ 685,445* $1,099,420 $1,091,547
Net book value per share
of common stock $ 16.54 $ 18.17* $ 29.33 $ 29.20
Total debt to total
capitalization 26.3% 24.3% 19.5% 9.2%
Return on average
shareholders' equity (6.4%) (0.2%) 2.3% 3.6%
Other Information:
Dividends $ 19,003 $ 18,801 $ 18,718 $ 18,591
Per share of common stock $ 0.50 $ 0.50 $ 0.50 $ 0.50
Gross profit $ 544,947 $ 515,244 $ 490,779 $ 497,521
Capital expenditures $ 120,354 $ 115,450 $ 241,512 $ 183,368
Depreciation, depletion
and amortization $ 118,955 $ 114,780 $ 108,367 $ 98,081
Full-time employees 6,200 7,100 7,700 7,000
Market price range of
common stock:
High $ 23 1/8 $ 22 7/8 $ 24 1/4 $ 27 3/8
Low $ 15 $ 15 1/2 $ 17 3/8 $ 17 1/8
Note: Numbers in italics include results of discontinued operations.
* Reflects the dividend of ACX Technologies, Inc. to shareholders
during 1992.
(In thousands, except per share) 1989** 1988 1987
Barrels of malt beverages sold 17,698 16,534 15,658
Summary of Operations:
Net sales $1,372,373 $1,278,097 $1,170,098
Cost of goods sold 913,994 829,423 751,056
Marketing, general
and administrative 397,844 380,131 340,418
Special charges 41,670 -- --
Total operating expenses 1,353,508 1,209,554 1,091,474
Operating income 18,865 68,543 78,624
Other expense (income) - net 2,546 (6,471) (6,022)
Income before income taxes 16,319 75,014 84,646
Income tax expense 9,100 28,700 33,500
Income from
continuing operations $ 7,219 $ 46,314 $ 51,146
Per share of common stock
- basic $ 0.20 $ 1.26 $ 1.40
- diluted $ 0.20 $ 1.26 $ 1.40
Income from continuing
operations as a
percentage of net sales 0.5% 3.6% 4.4%
Financial Position:
Working capital $ 193,590 $ 196,687 $ 242,406
Properties - net $1,012,940 $1,033,012 $ 975,781
Total assets $1,530,783 $1,570,765 $1,456,493
Long-term debt $ -- -- --
Other long-term liabilities $ 16,138 $ 19,367 $ 26,376
Shareholders' equity $1,060,900 $1,062,064 $1,031,811
Net book value per share
of common stock $ 28.75 $ 29.00 $ 28.19
Total debt to total
capitalization 2.0% 1.7% 0.4%
Return on average
shareholders' equity 1.2% 4.5% 4.8%
Other Information:
Dividends $ 18,397 $ 18,311 $ 18,226
Per share of common stock $ 0.50 $ 0.50 $ 0.50
Gross profit $ 458,379 $ 448,674 $ 419,042
Capital expenditures $ 149,616 $ 157,995 $ 199,541
Depreciation, depletion
and amortization $ 122,439 $ 111,432 $ 99,422
Full-time employees 6,800 6,900 6,800
Market price range of
common stock:
High $ 24 3/8 $ 21 $ 30
Low $ 17 3/8 $ 16 1/2 $ 16 1/4
Note: Numbers in italics include results of discontinued operations.
** 53-week year versus 52-week year.
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
INTRODUCTION
Adolph Coor Company (ACC or the Company) is the holding company for Coors
Brewing Company (CBC), which produces and markets high-quality
malt-based beverages.
This discussion summarizes the significant factors affecting ACC's
consolidated results of operations, liquidity and capital resources for
the three-year period ended December 28, 1997, and should be read in
conjunction with the financial statements and the notes thereto
included elsewhere in this report.
ACC's fiscal year is a 52- or 53-week year that ends on the last Sunday
in December. The 1997 and 1996 fiscal years were 52 weeks long, while
fiscal 1995 was 53 weeks long.
Certain unusual or nonrecurring items impacted ACC's financial results
for 1997, 1996 and 1995; restatement of results excluding special items
permits clear evaluation of its ongoing operations. These special items
are summarized below.
Summary of operating results:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands, except earnings per share)
Operating income:
As reported $147,399 $81,019 $80,378
Excluding special items $115,882 $87,360 $65,178
Net income:
As reported $ 82,260 $43,425 $43,178
Excluding special items $ 68,309 $47,299 $33,944
Earnings per share:
As reported - basic $2.21 $1.14 $1.13
- diluted $2.16 $1.14 $1.13
Excluding special items - basic $1.84 $1.25 $0.89
- diluted $1.80 $1.24 $0.89
1997: For the 52-week fiscal year ended December 28, 1997, ACC
reported net income of $82.3 million, or $2.21 per basic share ($2.16
per diluted share). During 1997, the Company received a $71.5-million
payment from Molson Breweries of Canada Limited (Molson Breweries) to
settle legal disputes with ACC and CBC, less approximately $3.2 million
in related legal expenses. ACC also recorded a $22.4-million reserve
related to the recoverability of CBC's investment in Jinro-Coors
Brewing Company of Korea, as well as a $14.4-million charge related to
CBC's brewery in Zaragoza, Spain, for the impairment of certain long-
lived assets and goodwill and for severance costs for a limited workforce
reduction. These special items amounted to a credit of $31.5 million to
pretax income, or $0.37 per basic share ($0.36 per diluted share), after
tax. Without this special credit, ACC would have reported net earnings of
$68.3 million, or $1.84 per basic share ($1.80 per diluted share).
1996: For the 52-week fiscal year ended December 29, 1996, ACC
reported net income of $43.4 million, or $1.14 per basic and diluted
share. During 1996, the Company received royalties and interest from
Molson in response to the October 1996 arbitration ruling that Molson
had underpaid royalties from January 1, 1991, to April 1, 1993.
Further, ACC recorded a gain from the 1995 curtailment of certain
postretirement benefits, charges for Molson-related legal expenses and
severance expenses for a limited work force reduction. These special
items amounted to a pretax charge of $6.3 million, or $0.11 per basic
share ($.10 per diluted share), after tax. Without this net special
charge, ACC would have reported net earnings of $47.3 million, or $1.25
per basic share ($1.24 per diluted share).
1995: For the 53-week fiscal year ended December 31, 1995, ACC
reported net income of $43.2 million, or $1.13 per basic and diluted
share. In the fourth quarter, the Company recorded a gain from the
curtailment of certain postretirement benefits and a severance charge
for a limited work force reduction. These special items amounted to a
pretax credit of $15.2 million, or $0.24 per basic and diluted share,
after tax. ACC would have reported net income of $33.9 million, or
$0.89 per basic and diluted share, without this net special credit.
Trend summary - percentage increase (decrease) for 1997, 1996 and 1995:
The following table summarizes trends in operating results, excluding
special items.
1997 1996 1995
Volume 2.7% (1.3%) (0.3%)
Net sales 4.6% 3.0% 1.0%
Average base 1.7% 2.1% 1.0%
price increase
Gross profit 14.2% 5.2% (2.6%)
Operating income 32.6% 34.0% (30.8%)
Advertising 8.5% 0.5% 0.9%
expense
Selling, general 15.6% 13.5% 2.2%
and
administrative
CONSOLIDATED RESULTS OF CONTINUING OPERATIONS - 1997 VS. 1996 AND 1996
VS. 1995 (EXCLUDING SPECIAL ITEMS)
1997 vs. 1996: Net sales increased 4.6% driven primarily by an
increase in unit volume of 2.7%. This increase in net sales was also
attributable to increased international sales, which generate higher
revenue per barrel than domestic sales; greater revenues related to the
Canadian business due to the favorable impact of the interim agreement
in effect during the year with Molson Breweries and net price increases.
Gross profit in 1997 rose 14.2% to $701.4 million from 1996 due to the
4.6% increase in net sales, as discussed above, along with a 0.6%
reduction in cost of goods sold. Increases in cost of goods caused by
higher sales volume were offset by reduced can costs; higher income
recognized from the CBC's joint ventures which produce bottles and
cans; lower costs related to fixed asset write-offs; lower costs for
employee benefits and less depreciation expense.
Operating income increased 32.6% to $115.9 million in 1997 as a result
of the higher gross profit discussed above, offset by an 11.1% increase
in marketing, general and administrative expenses. Advertising costs
increased 8.5% over 1996, with increased marketing investment in
premium brands and international advertising costs. General and
administrative costs increased primarily due to incentive compensation;
continued investment in both domestic and international sales
organizations; higher costs of operating distributorships (a
distributorship was acquired in mid-1997) and increases in
administrative and start-up costs for certain foreign operations.
Net non-operating expenses in 1997 declined significantly from 1996
because of a 62.1% decrease in net interest expense partially offset by
a 26.7% decrease in miscellaneous income. Increased cash and investment
balances attributed to improved cash flow resulted in higher interest
income on investments, causing the change in net interest expense.
Decreased royalties earned on certain can production technologies
caused the decrease in miscellaneous income.
The Company's effective tax rate decreased to 40.8% in 1997 from 41.8%
in 1996 primarily due to higher tax-exempt income and foreign tax
credits. The 1997 effective tax rate exceeded the statutory rate
primarily because of the effects of certain foreign investments.
Net earnings for 1997 were $68.3 million, or $1.84 per basic share
($1.80 per diluted share), compared to $47.3 million, or $1.25 per
basic share ($1.24 per diluted share) for 1996, representing increases
of 47.2% (basic) and 45.2% (diluted) in earnings per share.
1996 vs. 1995: Even though unit volume decreased 1.3%, net sales
increased 3.0% in 1996 from 1995. The decrease in unit volume was
caused by a shorter fiscal year in 1996 (1996 consisted of 52 weeks
versus 53 weeks in 1995). On a comparable-calendar basis, 1996 sales
volume was essentially unchanged from 1995. Net sales increased in 1996
from 1995 due to price increases; lower price promotion expenses; reduced
freight charges as a result of direct shipments to certain markets;
increased international and export sales, which generate higher revenue
per barrel than domestic sales; the impact of CBC's interim agreement with
Molson Breweries, which became effective in the fourth quarter, and the
slight reductions in excise taxes related to the increase in export sales.
Lower Zima and Artic Ice volumes and greater proportionate Keystone volumes
negatively impacted net sales per barrel in 1996.
Gross profit in 1996 rose 5.2% to $614.4 million from 1995 due to the
3.0% increase in net sales, as discussed above, offset in part by a
1.9% increase in cost of goods sold. Cost of goods sold increased due
to cost increases in paper and glass packaging materials; abandonments
of certain capital projects; cost increases for certain new contract-
brewing arrangements and cost increases for Japanese operations, which
began in the fourth quarter of 1995. The increase in cost of goods sold
was partially offset by the favorable impact of decreases in brewing
material costs; changes in brand mix (specifically, increases in Coors
Light volume offset in part by decreases in Zima volume and increases
in Keystone volume) and slightly favorable labor costs. Additionally, 1995
gross profit included the cost of the Zima Gold termination and withdrawal.
Operating income increased 34.0% to $87.4 million in 1996 from 1995
primarily due to a 5.2% increase in gross profit discussed earlier; a
6.1% decrease in research and development expenses; offset partially by
a 13.5% increase in general and administrative (G&A) expenses.
Marketing expenses were relatively unchanged from 1995. G&A expenses
increased due to continued investments in domestic and foreign sales
organizations; increases in officers' life insurance expenses;
increases in costs of operating distributorships (a distributorship was
acquired in 1995) and increases in administrative costs for certain
foreign operations. Research and development expenses decreased due to
the planned reduction in the number of capital projects in 1996.
Net non-operating expenses in 1996 declined 14.9% from 1995 because of
a 47.5% increase in net miscellaneous income offset in part by a 5.4%
increase in net interest expense. Increased royalties earned on certain
can-decorating technologies drove the increase in miscellaneous income.
Additionally, net interest expense increased due to interest incurred
on the Senior Notes and reductions in the amount of interest
capitalized on capital projects.
The Company's effective tax rate increased to 41.8% in 1996 from 41.6%
in 1995 primarily due to changes in cash surrender values of officers'
life insurance. Further, the 1996 effective tax rate exceeded the
statutory rate because of the effects of certain non-deductible
expenses and foreign investments.
Net earnings for 1996 were $47.3 million, or $1.25 per basic share
($1.24 per diluted share), compared to $33.9 million, or $0.89 per
basic and diluted share, for 1995, representing a 40.4% increase in
basic earnings per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash provided by
operating activities and external borrowings. As of December 28, 1997,
ACC had working capital of $158.0 million, and its net cash position
was $168.9 million compared to $110.9 million as of December 29, 1996,
and $32.4 million as of December 31, 1995. In addition to its cash
resources, ACC had short-term investments of $42.2 million at December
28, 1997, compared to $6.0 million at December 29, 1996. ACC also had
$47.1 million of marketable investments with maturities exceeding one
year at December 28, 1997, and no comparable investments at December
29, 1996. ACC had no marketable investments other than cash equivalents
at December 31, 1995. The Company believes that cash flows from
operations and short-term borrowings will be sufficient to meet its
ongoing operating requirements; scheduled principal and interest
payments on indebtedness; dividend payments; costs to make computer
software Year 2000 compliant and anticipated capital expenditures in
the range of $75 to $85 million for production equipment, information
systems, repairs and upkeep and environmental compliance.
Operating activities: Net cash provided by operating activities was
$260.6 million for 1997, $189.6 million for 1996 and $92.4 million for
1995. The increase in cash flows provided by operating activities in
1997 compared to 1996 was attributable primarily to higher net income,
decreases in inventories and other assets and increases in accounts
payable and accrued expenses and other liabilities, partially offset by
increases in accounts and notes receivable. The decrease in inventories
primarily resulted from lower levels of packaging supplies inventories
on hand. The decrease in other assets is due to a reduction in other
supplies. The increase in accounts payable and accrued expenses and
other liabilities relative to 1996 reflects accruals for incentive
compensation and increased payables for excise taxes. The increase in
accounts and notes receivable reflects higher sales volumes and higher
amounts due from container joint venture partners.
The 1996 increase in cash flows from operations was primarily due to
decreases in inventories; moderate decreases in accounts payable and
accrued expenses and other liabilities (relative to significant
decreases in 1995) and decreases in accounts and notes receivable. The
decrease in inventories primarily resulted from a higher proportion of
shipments directly to distributors rather than shipments through to
satellite redistribution centers. The moderate decreases in accounts
payable and accrued expenses and other liabilities, compared to 1995,
reflects the significant payment of obligations to various suppliers, including
advertising agencies, in 1995. Accounts and notes receivable declined because
sales were lower during the last 12 to 16 days of 1996 than during the same
period of 1995. CBC's credit terms are generally 12 to 16 days.
Investing activities: During 1997, ACC spent $127.9 million on
investing activities compared to $51.4 million in 1996 and $118.5
million in 1995. The 1997 increase was due primarily to ACC's
investments in marketable securities with extended maturities that are
not considered cash equivalents. The net of purchases over sales of
these securities was $83.3 million in 1997. Capital expenditures
decreased to $60.4 million in 1997 from $65.1 million in 1996 and
$157.6 million in 1995. In 1997, capital expenditures focused on
enhancing packaging operations, while 1996 expenditures focused on
information systems and expansion of packaging capacity. In 1995,
capital expenditures focused on upgrades and expansion of Golden-based
facilities - particularly bottling capacity. Proceeds from property
sales were $3.3 million in 1997, compared to $8.1 million in 1996 and
$44.4 million in 1995. Proceeds from property sales in 1995 were
unusually high because of the sale of the power plant equipment and
support facilities for $22.0 million and the sale of certain bottleline
machinery and equipment under a sale-leaseback transaction, for $17.0 million.
Financing activities: Net cash used in financing activities was $72.0
million during 1997 attributable to principal payments on ACC's medium-
term notes of $20.5 million, net purchases of Class B common stock for
$35.6 million and dividend payments of $20.5 million.
ACC spent $59.3 million on financing activities during 1996 due
primarily to principal payments on its medium-term notes of $38.0
million, purchases of Class B common stock for $3.0 million and
dividend payments of $19.0 million.
During 1995, the Company generated $31.0 million of cash from financing
activities due to the receipt of $100 million from a private placement
of Senior Notes, which was offset by principal payments on medium-term
notes of $44 million, purchases of Class B common shares of $9.9
million and dividend payments of $19.1 million.
Debt obligations: As of December 28, 1997, ACC had $67.5 million
outstanding in medium-term notes. With cash on hand, the Company repaid
principal of $20.5 million and $38 million on these notes in 1997 and
1996, respectively. Principal payments of $44 million in 1995 were funded
by a combination of cash on hand and borrowings. Fixed interest rates on
these notes range from 8.63% to 9.05%. Aggregate annual maturities on
outstanding notes are $27.5 million in 1998 and $40 million in 1999.
In the third quarter of 1995, ACC completed a $100-million private
placement of Senior Notes at fixed interest rates ranging from 6.76% to
6.95% per annum. The repayment schedule is $80 million in 2002 and $20 million
in 2005. The proceeds from this borrowing were used primarily to reduce debt
under the revolving line of credit and to repay principal on the medium-
term notes.
The Company's debt-to-total capitalization ratio was 19.0% in 1997,
21.2% at the end of 1996 and 24.9% at the end of 1995.
Revolving line of credit: In addition to the medium-term notes and the
Senior Notes, the Company has an unsecured, committed credit
arrangement totaling $200 million and as of December 28, 1997, had all
$200 million available. This line of credit has a five year term which
expires in 2002, with two optional one-year extensions. A facilities
fee is paid on the total amount of the committed credit. The only
restriction for withdrawal is a debt-to-total-capitalization covenant,
with which the Company was in compliance at year-end 1997.
CBC's distribution subsidiary in Japan has two revolving lines of
credit that it uses in normal operations. Each of these facilities
provides up to 500 million yen (approximately $4.0 million each) in
short-term financing. As of December 28, 1997, the approximate yen equivalent
of $4.5 million was outstanding under these arrangements and included in
Accrued expenses and other liabilities in the consolidated balance sheets.
Hedging activities: As of December 28, 1997, hedging activities
consisted exclusively of hard currency forward contracts to directly
offset hard currency exposures. These irrevocable contracts reduced the
risk to financial position and results of operations of changes in the
underlying foreign exchange rate. Any variation in the exchange rate
accruing to the contract would be offset by a similar change in the
related obligation. Therefore, after execution of the contract,
variations in exchange rates would not impact the Company's financial
statements. ACC's hedging activities and hard currency exposures are
minimal. The Company does not enter into derivative financial
instruments for speculation or trading purposes.
Stock repurchase plan: On November 13, 1997, the board of directors
authorized the extension of the Company's stock repurchase program
through 1998. The program authorizes repurchases of up to $40 million
of ACC's outstanding Class B common stock during 1998. Repurchases will
be financed by funds generated from operations or possibly from short-
term borrowings. The Company spent approximately $25 million in 1997 to
repurchase common stock, primarily in purchasing almost 1 million
shares of outstanding Class B common stock under the previously
approved stock repurchase program.
Investment in Jinro-Coors Brewing Company: CBC invested approximately
$22 million for a 33% interest in Jinro-Coors Brewing Company (JCBC) in
1992. CBC has accounted for this investment under the cost basis of
accounting, given that CBC has not had the ability to exercise
significant influence over JCBC and that CBC's investment in JCBC has
been considered temporary. This investment included a put option that
was exercised by CBC in December 1997. The put option entitled CBC to
require Jinro Limited (the 67% owner of JCBC) to purchase CBC's investment
at the greater of cost or market value (both measured in Korean Won).
Beginning in April 1997, Jinro Limited, a publicly-traded subsidiary of
Jinro Group, missed debt payments and began attempting to restructure.
In response to its financial difficulties and those of its subsidiaries
(including JCBC), Jinro Group has been working with its creditors and
the government to restructure its debts and has begun selling real
estate and merging and/or selling businesses. The financial
difficulties of JCBC and Jinro Limited, the guarantor of the put option
discussed above, called into question the recoverability of CBC's
investment in JCBC. Therefore, during the second quarter of 1997, CBC
fully reserved for its investment in JCBC. This reserve was classified
as a special charge in the accompanying statements of income.
CBC exercised its put option in December 1997. Since Jinro Limited's
obligation under the put is measured in Korean Won and given the
current significant devaluation of that currency, the full amount
received from Jinro Limited would be significantly less (approximately
half as of December 28, 1997) than the value of CBC's original
investment. Jinro Limited, which is operating under protection from its
creditors under the Korean composition law, has until June 1998 to
perform its obligation under the put option. Given Jinro Limited's current
financial condition and the volatility of the Korean economy, CBC cannot
predict whether Jinro Limited will be able to perform under this obligation.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
This report contains "forward-looking statements" within the meaning of
the federal securities laws. These forward-looking statements include,
among others, statements concerning the Company's outlook for 1998;
overall and brand-specific volume trends; pricing trends and industry
forces; cost reduction strategies and their results; targeted goals for
return on invested capital; the Company's expectations for funding its
1998 capital expenditures and operations; the Company's expectations
for funding work on computer software to make it compliant with Year
2000; and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. These forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed in or implied by the statements.
To improve its financial performance, the Company must grow premium
beverage volume, achieve modest price increases for its products and
reduce its overall cost structure. The most important factors that
could influence the achievement of these goals -- and cause actual results
to differ materially from those expressed in the forward-looking
statements -- include, but are not limited to, the following:
- - the inability of the Company and its distributors to develop and
execute effective marketing and sales strategies for Coors products;
- - the potential erosion on sales revenues through discounting or a
higher proportion of sales in value-packs;
- - a potential shift in consumer preferences toward lower-priced
products in response to price increases;
- - a potential shift in consumer preferences away from the premium light
beer category, including Coors Light;
- - the intensely competitive, slow-growth nature of the beer industry;
- - demographic trends and social attitudes that can reduce beer sales;
- - the continued growth in the popularity of imports and other specialty beers;
- - increases in the cost of aluminum, paper packaging and other raw materials;
- - the Company's inability to reduce manufacturing, freight and overhead
costs to more competitive levels;
- - changes in significant laws and government regulations affecting
environmental compliance and income taxes;
- - inability to achieve targeted improvements in CBC's distribution system;
- - the imposition of excise or other taxes;
- - restrictions on advertising (e.g., media, outdoor ads or sponsorships);
- - labor issues, including union activities that required a substantial
increase in cost of goods sold or led to a strike, impairing
production and decreasing sales;
- - significant increases in federal, state or local beer or other excise taxes;
- - increases in rail transportation rates or interruptions of rail service;
- - potential impact of industry consolidation;
- - risks associated with investments and operations in foreign countries,
including those related to foreign regulatory requirements; exchange rate
fluctuations and local political, social and economic factors; and
- - risk that computer systems of the Company's significant suppliers and
customers may not be Year 2000 compliant.
These and other risks and uncertainties affecting the Company are
discussed in greater detail in this report and in the Company's other
filings with the Securities and Exchange Commission.
OUTLOOK FOR 1998
Volume gains are expected to increase net sales in 1998; however, the
pricing environment is expected to be extremely competitive, restraining
expectations of net sales per barrel. Also, increased value-pack activity
may have an unfavorable impact on top-line performance due to lower margins.
Income from the Company's Canadian business is expected to be 25% to
30% lower per barrel in 1998 than in 1997, based on current sales
trends and 1998 plans for marketing investments. Revenue received under
the Company's interim agreement with Molson Breweries, which expired at
year-end 1997, provided higher earnings per barrel than those expected
as a result of the new partnership with Molson Company and Carling. On
the other hand, the partners of Coors Canada see considerable growth
potential for Coors products in Canada in the future.
For fiscal year 1998, raw material costs are expected to be up
slightly, but fixed costs and freight costs are expected to be down
slightly. This outlook could change if aluminum or paper cost trends
change during the first nine months of 1998. CBC continues to pursue
improvements in its operations and technology functions to achieve cost
reductions over time.
Advertising and other general and administrative costs are expected to
increase but at a lower rate than in 1997. Management continues to
monitor CBC's market opportunities and to invest behind its brands and
sales efforts accordingly. Incremental sales and marketing spending
will be determined on an opportunity-by-opportunity basis.
See the item titled Year 2000 under CONTINGENCIES of this section for a
discussion of the expected financial impact of this issue.
Total net interest expense is expected to be lower in 1998 based on
CBC's more favorable cash position and its lower outstanding debt
relative to its 1997 financial position. Net interest expense could be
less favorable than expected if the Company decides to invest a
substantial portion of its cash balances. Additional outstanding common
stock may be repurchased in 1998 as approved by the ACC board of
directors in November 1997.
The effective tax rate for 1998 is not expected to differ significantly
from the 1997 effective tax rate applied to income excluding special
items. The level and mix of pretax income for 1998 could affect the
actual rate for the year.
In 1998, CBC has planned capital expenditures (including contributions
to its container joint ventures for capital improvements, which will be
recorded on the books of the joint venture) in the range of $75 to $85
million. In addition to CBC's 1998 planned capital expenditures,
incremental strategic investments will be considered on a case-by-case basis.
CONTINGENCIES
Environmental: The Company was one of numerous parties named by the
Environmental Protection Agency (EPA) as a "potentially responsible
party" (PRP) for the Lowry 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 cleanup 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 PRPs 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. Further, the Company agreed to pay a
specified share of costs if total remediation costs exceeded this
amount. The Company remitted its agreed share of $30 million, based on
the $120 million assumption, to a trust for payment of site
remediation, operating and maintenance costs.
The City and County of Denver; Waste Management of Colorado, Inc. and
Chemical Waste Management, Inc. are expected to implement site
remediation. The EPA's projected costs to meet the announced
remediation objectives and requirements are currently below the $120
million assumption used for ACC's settlement. The Company has no reason
to believe that total remediation costs will result in additional
liability to the Company.
From time to time, ACC also is notified that it is or may be a PRP
under the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA) or similar state laws for 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 be immaterial to its financial position and results of operations for
these sites. There can be no certainty, however, that the Company will not
be named as a PRP at additional CERCLA sites in the future, or that the
costs associated with those additional sites will not be material.
While it is impossible to predict the Company's eventual aggregate cost
for environmental and related matters, management believes that any
payments, if required, for these matters would be made over a period of
time in amounts that would not be material in any one year to the
Company's results of operations or its financial or competitive
position. The Company believes adequate disclosures have been provided
for losses that are reasonably possible. Further, as the Company continues
to focus on resource conservation, waste reduction and pollution prevention,
it believes that potential future liabilities will be reduced.
Year 2000: As the Year 2000 approaches, ACC recognizes the need to
ensure its operations will not be adversely impacted by Year 2000
software failures. The Company is addressing this issue to ensure the
availability and integrity of its financial systems and the reliability
of its operational systems. ACC has established processes for
evaluating and managing the risks and costs associated with this
problem. The Company has and will continue to make certain investments
in its software systems and applications to ensure that it is Year 2000
compliant. The financial impact to ACC of Year 2000 remediation costs
is anticipated to be in the range of $10 to $15 million in each of 1998
and 1999. In addition, ACC is working with its suppliers and customers
to ensure their compliance with Year 2000 issues in order to avoid any
interruptions in its business. While ACC does not at this time
anticipate significant problems with suppliers and customers, it is
developing contingency plans with these third parties due to the
possibility of compliance issues.
ACCOUNTING CHANGES
In March 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-1 "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1
requires that specified costs incurred in developing or obtaining
internal-use software, as defined by SOP 98-1, be capitalized once
certain criteria have been met and amortized in a systematic and
rational manner over the software's estimated useful life. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998, and
stipulates that costs incurred prior to initial application of the
statement not be adjusted according to the statement's provisions.
Adoption of SOP 98-1 is not expected to have a significant impact on
the Company's financial position or results of operations.
ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements Page(s)
Consolidated Financial Statements:
Report of Independent Accountants 27
Consolidated Statements of Income for each of
the three years in the period ended December 28, 1997 28
Consolidated Balance Sheets at December 28, 1997
and December 29, 1996 29-30
Consolidated Statements of Cash Flows for each of
the three years in the period ended December 28, 1997 31
Consolidated Statements of Shareholders' Equity
for each of the three years in the period ended
December 28, 1997 32
Notes to Consolidated Financial Statements 33-51
Report of Independent Accountants
To the Board of Directors and Shareholders of Adolph Coors Company:
In our opinion, the accompanying consolidated balance sheets and
related consolidated statements of income, shareholders' equity and
cash flows present fairly, in all material respects, the financial
position of Adolph Coors Company and its subsidiaries at December 28,
1997, and December 29, 1996, and the results of their operations and
their cash flows for each of the three years in the period ended
December 28, 1997, 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.
PRICE WATERHOUSE LLP
Denver, Colorado
February 12, 1998
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands, except per share data)
Sales - domestic and international $2,208,231 $2,121,367 $2,075,917
Less: beer excise taxes (386,080) (379,311) (385,216)
Net sales 1,822,151 1,742,056 1,690,701
Costs and expenses:
Cost of goods sold 1,120,778 1,127,689 1,106,635
Marketing, general and administrative 585,491 527,007 518,888
Special (credits) charges (Note 9) (31,517) 6,341 (15,200)
Total operating expenses 1,674,752 1,661,037 1,610,323
Operating income 147,399 81,019 80,378
Other income (expense):
Interest income 9,360 2,821 1,345
Interest expense (13,560) (13,907) (11,863)
Miscellaneous - net 3,694 5,042 3,418
Total (506) (6,044) (7,100)
Income before income taxes 146,893 74,975 73,278
Income tax expense (Note 5) (64,633) (31,550) (30,100)
Net income $ 82,260 $ 43,425 $ 43,178
Net income per common share - basic $ 2.21 $ 1.14 $ 1.13
Net income per common share - diluted $ 2.16 $ 1.14 $ 1.13
Weighted average number of outstanding
common shares - basic 37,218 37,966 38,164
Weighted average number of outstanding
common shares - diluted 38,056 38,219 38,283
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 28, December 29,
1997 1996
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 168,875 $ 110,905
Short-term investments 42,163 5,958
Accounts and notes receivable:
Trade, less allowance for doubtful accounts
of $557 in 1997 and $275 in 1996 89,731 86,421
Affiliates 19,677 14,086
Other, less allowance for certain claims of
$1,500 in 1997 and $0 in 1996 15,077 13,836
Inventories:
Finished 44,729 43,477
In process 20,119 23,157
Raw materials 35,654 40,737
Packaging materials, less allowance for
obsolete inventories of $1,049 in 1997
and $1,046 in 1996 5,977 13,699
106,479 121,070
Other supplies, less allowance for obsolete
supplies of $4,165 in 1997 and $2,273 in 1996 32,362 36,103
Prepaid expenses and other assets 18,224 18,836
Deferred tax asset (Note 5) 24,606 9,427
Total current assets 517,194 416,642
Properties, at cost and net (Note 2) 733,117 814,102
Excess of cost over net assets of businesses
acquired, less accumulated amortization
of $5,726 in 1997 and $4,778 in 1996 22,880 21,374
Other assets (Note 10) 138,892 110,418
Total assets $1,412,083 $1,362,536
December 28, December 29,
1997 1996
Liabilities and Shareholders' Equity (In thousands)
Current liabilities:
Current portion of long-term debt (Note 4) $ 27,500 $ 17,000
Accounts payable:
Trade 113,864 110,696
Affiliates 18,072 12,424
Accrued salaries and vacations 58,257 39,482
Taxes, other than income taxes 52,805 30,976
Federal and state income taxes (Note 5) 13,660 8,983
Accrued expenses and other liabilities 74,988 72,887
Total current liabilities 359,146 292,448
Long-term debt (Note 4) 145,000 176,000
Deferred tax liability (Note 5) 76,219 76,083
Postretirement benefits (Note 8) 71,908 69,773
Other long-term liabilities 23,242 32,745
Total liabilities 675,515 647,049
Commitments and contingencies
(Notes 3, 4, 5, 6, 7, 8, 10 and 12)
Shareholders' equity (Notes 6 and 11):
Capital stock:
Preferred stock, non-voting, $1 par value
(authorized: 25,000,000 shares; issued: none) -- --
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, $0.24 stated value
(authorized: 100,000,000 shares;
issued: 35,599,356 in 1997 and
36,662,404 in 1996) 8,476 8,729
Total capital stock 9,736 9,989
Paid-in capital -- 31,436
Retained earnings 730,628 671,972
Foreign currency translation adjustment (3,796) 2,090
Total shareholders' equity 736,568 715,487
Total liabilities and shareholders' equity $1,412,083 $1,362,536
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended
December 28, December 29, December 31,
1997 1996 1995
Cash flows from operating activities: (In thousands)
Net income $ 82,260 $ 43,425 $ 43,178
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in net earnings of
joint ventures (15,893) (11,467) (13,687)
Reserve for joint venture investment 21,978 -- --
Depreciation, depletion and
amortization 117,166 121,121 122,830
Loss on sale or abandonment of
properties and intangibles 5,594 12,535 1,274
Impairment charge 10,595 -- --
Deferred income taxes (15,043) 17,696 3,610
Change in operating assets and
liabilities:
Accounts and notes receivable (10,971) 2,232 (9,952)
Inventories 14,051 18,076 2,135
Other assets 3,742 (2,128) (655)
Accounts payable 9,599 (8,175) (32,180)
Accrued expenses and other
liabilities 37,475 (3,712) (24,139)
Net cash provided by operating
activities 260,553 189,603 92,414
Cash flows from investing activities:
Purchases of investments (122,800) (5,958) --
Sales and maturities of investments 39,499 -- --
Additions to properties and intangible
assets (60,373) (65,112) (157,599)
Proceeds from sale of properties
and intangibles 3,273 8,098 44,448
Distributions from joint ventures 12,500 5,000 --
Other (25) 6,569 (5,338)
Net cash used in investing
activities (127,926) (51,403) (118,489)
Cash flows from financing activities:
Issuance of stock under stock plans 24,588 4,674 4,117
Purchases of stock (60,151) (6,975) (9,936)
Dividends paid (20,523) (18,983) (19,066)
Proceeds from long-term debt -- -- 100,000
Payments of long-term debt (20,500) (38,000) (44,000)
Other 4,544 -- (116)
Net cash (used in) provided
by financing activities (72,042) (59,284) 30,999
Cash and cash equivalents:
Net increase in cash and cash equivalents 60,585 78,916 4,924
Effect of exchange rate changes on
cash and cash equivalents (2,615) (397) 294
Balance at beginning of year 110,905 32,386 27,168
Balance at end of year $ 168,875 $ 110,905 $ 32,386
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Foreign
Common stock currency
issued Paid-in Retained translation
Class A Class B capital earnings adjustment Total
(In thousands, except per share data)
Balances, December 25, 1994 $ 1,260 $ 8,825 $39,460 $623,418 $1,238 $674,201
Shares issued under stock
plans 59 4,058 4,117
Purchase of stock (137) (9,799) (9,936)
Other 2,522 2,522
Net income 43,178 43,178
Cash dividends-$0.50 per share (19,066) (19,066)
Balances, December 31, 1995 1,260 8,747 33,719 647,530 3,760 695,016
Shares issued under stock
plans 61 4,613 4,674
Purchase of stock (79) (6,896) (6,975)
Other (1,670) (1,670)
Net income 43,425 43,425
Cash dividends-$0.50 per share (18,983) (18,983)
Balances, December 29, 1996 1,260 8,729 31,436 671,972 2,090 715,487
Shares issued under stock
plans 236 25,145 25,381
Purchase of stock (489)(56,581) (3,081) (60,151)
Other (5,886) (5,886)
Net income 82,260 82,260
Cash dividends-$0.55 per share (20,523) (20,523)
Balances, December 28, 1997 $ 1,260 $ 8,476 $ -- $730,628 $(3,796) $736,568
See notes to consolidated financial statements.
ADOLPH COORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
Summary of Significant Accounting Policies
Principles of consolidation: The consolidated financial
statements include the accounts of Adolph Coors Company (ACC),
its principal subsidiary, Coors Brewing Company (CBC), and the
majority-owned and controlled domestic and foreign subsidiaries
of both ACC and CBC (collectively referred to as "the Company").
All significant intercompany accounts and transactions have been
eliminated. The equity method of accounting is used for the
Company's 50% or less owned affiliates over which the Company has
the ability to exercise significant influence (see Note 10). The
Company has other investments which are accounted for at cost.
Nature of operations: The Company is a multinational brewer and
marketer of beer and other malt-based beverages. The vast
majority of the Company's volume is sold in the United States to
independent wholesalers. The Company's international volume is
produced, marketed and distributed under varying business arrangements
including export, direct investment, joint ventures and licensing.
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 28, 1997,
a 52-week period; December 29, 1996, a 52-week period and
December 31, 1995, a 53-week period.
Investments in marketable securities: ACC invests excess cash on
hand in interest-bearing debt securities. At December 28, 1997,
$42.2 million of these securities were classified as current
assets and $47.1 million were classified with longer term assets,
as their maturities exceeded one year. All of these securities
were considered to be available-for-sale. The fair value of these
securities at December 28, 1997, approximated their amortized cost.
Concentration of credit risk: The majority of the accounts
receivable balances are 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.
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 $43.4 million and $43.1 million
at December 28, 1997, and December 29, 1996, respectively.
Properties: Land, buildings and equipment are stated at cost.
Depreciation is provided principally on the straight-line method
over the following estimated useful lives: buildings and
improvements, 10 to 45 years; and machinery and equipment, 3 to
20 years. 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.
Hedging transactions: The Company periodically enters into short-
term forward contracts for foreign currency to hedge its exposure
to exchange rate fluctuations. The gains and losses on these
contracts are deferred and recognized in income when realized.
As of December 28, 1997, hedging activities consisted exclusively
of hard currency forward contracts to directly offset hard
currency exposures. These irrevocable contracts reduced the risk
to financial position and results of operations of changes in the
underlying foreign exchange rate. Any variation in the exchange
rate accruing to the contract would be offset by a similar change
in the related obligation. Therefore, after the execution of the
contract, variations in exchange rates would not impact the
Company's financial statements. The Company's hedging activities
and hard currency exposures are minimal. The Company does not enter into
derivative financial instruments for speculation or trading purposes.
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.
Impairment policy: The Company periodically evaluates its assets
to assess their recoverability from future operations using
undiscounted cash flows. Impairment would be recognized in
operations if permanent diminution in value occurs.
Advertising: Advertising costs, included in marketing, general
and administrative, are expensed when the advertising first takes
place. Advertising expense was $360.0 million, $331.9 million and
$330.4 million for years 1997, 1996 and 1995, respectively. The Company
had $9.6 million and $10.9 million of prepaid advertising production costs
reported as assets at December 28, 1997, and December 29, 1996, respectively.
Research and development: Research and project development
costs, included in marketing, general and administrative, are
expensed as incurred. These costs totaled $14.6 million, $15.3
million and $16.3 million in 1997, 1996 and 1995, respectively.
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 estimated reasonably.
Statement of Cash Flows: The Company defines cash equivalents as
highly liquid investments with original maturities of 90 days or
less. The fair value of these investments approximates their
carrying value. The Company's 1995 investment in the Rocky
Mountain Bottle Company was a $16.2 million non-cash transaction
that is not reflected as an investing activity in the Statement
of Cash Flows. During 1997, ACC issued $0.8 million in restricted
common stock under its management incentive compensation plan.
Income taxes paid were $66.8 million in 1997, $13.2 million in
1996 and $15.8 million in 1995.
Use of estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Reclassifications: Certain reclassifications have been made to
the 1996 and 1995 financial statements to conform with the 1997 presentation.
NOTE 2:
Properties
The cost of properties and related accumulated depreciation,
depletion and amortization consists of the following:
As of
December 28, December 29,
1997 1996
(In thousands)
Land and improvements $ 97,117 $ 98,666
Buildings 482,939 477,184
Machinery and equipment 1,516,034 1,511,665
Natural resource properties 8,906 10,423
Construction in progress 39,941 29,873
2,144,937 2,127,811
Less accumulated depreciation,
depletion and amortization (1,411,820) (1,313,709)
Net properties $ 733,117 $ 814,102
In March 1994, CBC, through its subsidiary Coors Brewing Iberica,
S.A. (Coors Iberica), purchased a 500,000-hectoliter brewery in
Zaragoza, Spain. During 1997, Coors Iberica addressed certain
capacity issues at its brewery, as well as certain employment
matters. Coors Iberica negotiated severance terms with labor
unions during the second quarter of 1997, which prompted CBC
management to update its evaluation of the recoverability of
Coors Iberica's long-lived assets and related goodwill. Certain
of these assets were deemed impaired in light of expected future,
undiscounted cash flows. During the second quarter of 1997, CBC
recorded an impairment charge of approximately $10.6 million and
severance costs of approximately $3.8 million, which have been
classified as special charges in the accompanying statements of
income. The impairment charge represented a reduction of the
carrying amounts of the impaired assets to their estimated fair
market values, which were determined with the aid of an
independent, third-party appraisal.
Interest incurred, capitalized, expensed and paid was as follows:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands)
Interest costs $15,460 $17,057 $18,433
Interest capitalized (1,900) (3,150) (6,570)
Interest expensed $13,560 $13,907 $11,863
Interest paid $14,643 $17,711 $16,613
NOTE 3:
Leases
The Company leases certain office facilities and operating
equipment under cancelable and non-cancelable agreements
accounted for as operating leases. At December 28, 1997, the
minimum aggregate rental commitment under all non-cancelable
leases was (in thousands): 1998, $5,403; 1999, $4,578; 2000,
$3,124; 2001, $2,353 and $15,021 for years thereafter. Total rent
expense was (in thousands) $13,870, $11,680 and $10,376 for years
1997, 1996 and 1995, respectively.
NOTE 4:
Debt
Long-term debt consists of the following:
As of
December 28, 1997 December 29, 1996
Carrying Fair Carrying Fair
value value value value
(In thousands)
Medium-term notes $ 67,500 $ 70,000 $ 88,000 $ 94,000
Senior Notes 100,000 101,000 100,000 101,000
Industrial development bonds 5,000 5,000 5,000 5,000
Total 172,500 176,000 193,000 200,000
Less current portion (27,500) (27,500) (17,000) (17,000)
$145,000 $148,500 $176,000 $183,000
Fair values were determined using discounted cash flows at
current interest rates for similar borrowings.
As of December 28, 1997, the Company had outstanding $67.5
million of unsecured medium-term notes. Interest is due
semiannually in April and October at fixed interest rates ranging
from 8.63% to 9.05% per annum. Aggregate annual maturities for
the notes issued are $27.5 million in 1998 and $40 million in 1999.
On July 14, 1995, the Company completed a $100-million private
placement of unsecured Senior Notes at fixed interest rates
ranging from 6.76% to 6.95% per annum. Interest on the notes is
due semiannually in January and July. The Notes are payable as
follows: $80 million in 2002 and $20 million in 2005.
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 and are secured by a letter
of credit. They are currently variable rate securities with
interest payable on the first of March, June, September and
December. The interest rate on December 28, 1997 was 4.3%.
The Company has an unsecured, committed credit arrangement
totaling $200 million and as of December 28, 1997, had all $200
million available. This line of credit has a five year term which
expires in 2002, with two optional one-year extensions. A facilities
fee is paid on the total amount of the committed credit. The only
restriction for withdrawal is a debt-to-total-capitalization covenant,
with which the Company was in compliance at year-end 1997.
CBC's distribution subsidiary in Japan has two revolving lines of
credit that it utilizes in its normal operations. Each of these
facilities provides up to 500 million yen (approximately $4.0
million each) in short-term financing. As of December 28, 1997,
the approximate yen equivalent of $4.5 million was outstanding
under these arrangements and included in Accrued expenses and
other liabilities in the accompanying balance sheets.
NOTE 5:
Income Taxes
Income tax expense (benefit) includes the following current and
deferred provisions:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands)
Current:
Federal $ 68,435 $ 8,878 $ 24,275
State and foreign 11,241 4,976 2,215
Total current tax expense 79,676 13,854 26,490
Deferred:
Federal (12,935) 12,154 6,062
State and foreign (2,108) 5,542 (2,452)
Total deferred tax (benefit)
expense (15,043) 17,696 3,610
Total income tax expense $ 64,633 $ 31,550 $ 30,100
The Company's income tax expense varies from the amount expected by
applying the statutory federal corporate tax rate to income as follows:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
Expected tax rate 35.0% 35.0% 35.0%
State income taxes, net of
federal benefit 3.9 4.3 4.7
Effect of foreign investments 0.8 1.6 0.6
(Non-taxable income) non-deductible
expenses and losses (0.4) 1.9 0.8
Effect of reserve for joint venture
investment 4.8 -- --
Other, net (0.1) (0.8) --
Effective tax rate 44.0% 42.0% 41.1%
The Company's deferred taxes are composed of the following:
As of
December 28, December 29,
1997 1996
Current deferred tax assets: (In thousands)
Deferred compensation and other
employee related $ 11,773 $ 11,865
Balance sheet reserves and accruals 18,560 9,051
Other 1,560 2,054
Valuation allowance (7,002) --
Total current deferred tax assets 24,891 22,970
Current deferred tax liabilities:
Balance sheet reserves and accruals 285 4,545
Other -- 8,998
Total current deferred tax liabilities 285 13,543
Net current deferred tax assets $ 24,606 $ 9,427
Non-current deferred tax assets:
Deferred compensation and other
employee related $ 2,999 $ 7,077
Balance sheet reserves and accruals 2,784 9,006
Other employee postretirement
benefits 28,158 27,724
Environmental accruals 1,469 2,308
Deferred foreign losses 2,142 --
Other 1,583 3,403
Total non-current deferred tax assets 39,135 49,518
Non-current deferred tax liabilities:
Depreciation and capitalized interest 115,226 123,855
Other 128 1,746
Total non-current deferred tax liabilities 115,354 125,601
Net non-current deferred tax liabilities $ 76,219 $ 76,083
The deferred tax assets have been reduced by a valuation allowance,
because management believes it is more likely than not that such benefits
will not be fully realized.
The Internal Revenue Service (IRS) has completed its examination
of the Company's federal income tax returns through 1992. The IRS
currently is examining the federal income tax returns for fiscal
years 1993 through 1995. In the opinion of management, adequate
accruals have been provided for all income tax matters and related interest.
The Company and ACX Technologies, Inc. (ACX) 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 ACX stock at the
end of 1992 and the assignment of responsibility for adjustments as a
result of audits by taxing authorities and is designed to preserve the
status of the distribution as tax-free (see Note 12).
NOTE 6:
Stock Option, Restricted Stock Award and Employee Award Plans
At December 28, 1997, the Company had four stock-based
compensation plans, which are described in greater detail below.
The Company applies APB Opinion No. 25 and related
interpretations in accounting for its plans. Accordingly, as the
exercise prices upon grant are equal to quoted market values, no
compensation cost has been recognized for the stock option
portion of the plans. Had compensation cost been determined for
the Company's stock option portion of the plans based on the fair
value at the grant dates for awards under those plans consistent
with the alternative method set forth under FASB Statement No.
123, the Company's net income and earnings per share would have
been reduced to the pro forma amounts indicated below:
1997 1996 1995
(In thousands, except
per share data)
Net income As reported $ 82,260 $ 43,425 $ 43,178
Pro forma $ 78,077 $ 42,793 $ 41,799
Net income per common share- As reported $ 2.21 $ 1.14 $ 1.13
basic Pro forma $ 2.10 $ 1.13 $ 1.09
Net income per common share- As reported $ 2.16 $ 1.14 $ 1.13
diluted Pro forma $ 2.05 $ 1.12 $ 1.09
The weighted-average fair value of options
granted under the 1990 Equity Incentive Plan
during the year is: $ 8.78 $ 7.21 $ 6.21
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1997 and 1996, respectively: dividend yield
of 2.47% and 2.535%; expected volatility of 36.06% and 26.7%, risk-free
interest rates of 6.52% and 5.74% for the 1990 Plan options and expected
lives of 10 years for both years.
1983 Plan: The 1983 non-qualified Adolph Coors Company Stock
Option Plan, as amended (the 1983 Plan) 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.
A summary of the status of the Company's 1983 Plan as of December
28, 1997, December 29, 1996, and December 31, 1995, and changes
during the years ending on those dates is presented below:
Options exercisable
at year end
Weighted- Weighted-
average average
exercise exercise
Shares price Shares price
Outstanding at December 25, 1994 411,101 $15.92 411,101 $15.92
Exercised 228,636 15.24
Forfeited 13,811 18.02
Outstanding at December 31, 1995 168,654 16.66 168,654 16.66
Exercised 100,231 16.54
Forfeited 18,908 21.97
Outstanding at December 29, 1996 49,515 14.85 49,515 14.85
Exercised 45,627 14.55
Forfeited 3,888 18.36
Outstanding at December 28, 1997 -- N/A -- N/A
Common stock available for options under the 1983 Plan as of
December 28, 1997, December 29, 1996, and December 31, 1995 was
716,886 shares, 712,998 shares and 694,090 shares, respectively.
1990 Plan: The 1990 Equity Incentive Plan (1990 EI Plan) that
became effective January 1, 1990, as amended, provides for two
types of grants: stock options and restricted stock awards. The
stock options have a term of 10 years with exercise prices equal
to fair market value on the day of the grant. For grants during
1997, one-third of the stock option grant vests in each of the
three successive years after the date of grant. For grants during
1994 through 1996, stock options vested at 10% for each $1 increase in
fair market value of ACC stock from date of grant, with a one-year holding
period, or vest 100% after nine years. Once a portion has vested, it is not
forfeited even if the fair market value drops.
A summary of the status of the Company's 1990 EI Plan as of
December 28, 1997, December 29, 1996, and December 31, 1995, and
changes during the years ending on those dates is presented below:
Options exercisable
at year end
Weighted- Weighted-
average average
exercise exercise
Shares price Shares price
Outstanding at December 25, 1994 775,248 $16.02 232,635 $15.44
Granted 600,561 16.75
Exercised 25,190 14.98
Forfeited 64,567 16.57
Outstanding at December 31, 1995 1,286,052 16.35 512,708 15.95
Granted 614,674 21.27
Exercised 107,327 16.26
Forfeited 70,035 18.84
Outstanding at December 29, 1996 1,723,364 18.01 846,273 16.30
Granted 1,573,742 20.23
Exercised 901,834 17.71
Forfeited 143,093 19.21
Outstanding at December 28, 1997 2,252,179 19.61 769,202 18.25
Common stock available for options under the 1990 EI Plan as of
December 28, 1997, December 29, 1996, and December 31, 1995 was
4,675,195 shares, 3,105,844 shares and 3,650,483 shares, respectively.
In 1997, 40,201 shares of restricted stock were issued under the
1990 EI Plan. Vesting in the restricted stock award is one year
from the date of grant. The compensation cost associated with
these awards was immaterial.
In 1996, 45,390 shares of restricted stock were issued under the
1990 EI Plan. Vesting in the restricted stock awards is over a
three-year period from the date of grant. The compensation cost
associated with these awards is amortized to expense over the
vesting period. Compensation cost associated with these awards
was immaterial in 1997 and 1996.
1991 Plan: In 1991, the Company adopted the 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. A director may elect to receive his
remaining 80% retainer in cash, restricted stock or any
combination of the two. Grants of stock vest after completion of
the director's annual term. The compensation cost associated with
the EC Plan is amortized over the director's term. Compensation cost
associated with this plan was immaterial in 1997 and 1996. Common stock
reserved for this plan as of December 28, 1997, was 47,810 shares.
1995 Supplemental Compensation Plan: In 1995, the Company
adopted a supplemental compensation plan that covers
substantially all its employees. Under the plan, management is
allowed to recognize employee achievements through awards of
Coors Stock Units (CSUs) or cash. CSUs are a measurement
component equal to the fair market value of the Company's Class B
common stock. CSUs have a one-year holding period after which the
recipient may redeem the CSUs for cash, or, if the holder has 100
or more CSUs, shares of the Company's Class B common stock. Prior
to 1997, the CSUs had a six-month holding period. Awards under
the plan in 1997 and 1996 were immaterial.
Common stock available under this plan as of December 28, 1997,
was 83,707 shares.
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, interest-bearing
investments and real estate. The Company's funding policy is to
contribute annually not less than the ERISA minimum funding
standards, nor more than the maximum amount that can be deducted
for federal income tax purposes. Total expense for all these
plans was $14.1 million in 1997, $24.8 million in 1996 and $22.7
million in 1995. These amounts include the Company's matching for
the savings and investment (thrift) plan of $5.8 million in 1997
and $5.7 million each for 1996 and 1995. The decrease in 1997
pension expense versus 1996 was caused primarily by an
improvement in the funded position of the Coors Retirement Plan
and an increase in the discount rate (settlement rate) used to
compute 1997 pension cost to 7.75% from the rate used for 1996
pension cost of 7.25%. The increase in 1996 pension expense
versus 1995 was caused primarily by a decrease in the 1996
discount rate (settlement rate) to 7.25% from the 1995 rate of 8.5%.
Note that the settlement rates shown in the table on the following
page were selected for use at the end of each of the years shown.
Actuaries calculate pension expense annually based on data available at
the beginning of each year, which includes the settlement rate selected
and disclosed at the end of the previous year.
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands)
Service cost-benefits earned
during the year $ 11,234 $ 12,729 $ 9,858
Interest cost on projected
benefit obligations 32,730 31,162 29,285
Actual gain on plan assets (75,242) (65,504) (69,346)
Net amortization and deferral 39,539 40,691 47,005
Net pension cost $ 8,261 $ 19,078 $ 16,802
The funded status of the pension plans and amounts recognized in
the accompanying balance sheets are as follows:
As of
December 28, December 29,
1997 1996
(In thousands)
Actuarial present value of accumulated plan benefits,
including vested benefits of $368,288 in 1997 and
$332,444 in 1996 $385,989 $350,506
Projected benefit obligations for
services rendered to date $465,229 $422,516
Plan assets available for benefits 465,494 394,206
Plan assets (more than) less than projected
benefit obligations (265) 28,310
Unrecognized net gain 21,560 2,359
Prior service cost not yet recognized (16,577) (18,851)
Unrecognized net assets being recognized
over 15 years 4,110 5,800
Net accrued pension liability $ 8,828 $ 17,618
Significant assumptions used in determining the valuation of the
projected benefit obligations as of the end of 1997, 1996 and 1995 were:
1997 1996 1995
Settlement rate 7.25% 7.75% 7.25%
Increase in compensation levels 4.50% 5.00% 5.00%
Rate of return on plan assets 10.25% 10.25% 9.75%
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.
The obligation under these plans 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 9.0% in 1997 to 4.5% in the year
2007. The effect of an annual 1% increase in trend rates would
increase the accumulated postretirement benefit obligation by
approximately $3.5 million and $3.2 million in 1997 and 1996,
respectively. The effect of a 1% increase in trend rates also
would have increased the ongoing annual cost by $0.5 million and
$0.6 million in 1997 and 1996, respectively. The discount rate
used in determining the accumulated postretirement benefit obligation
was 7.25% and 7.75% at December 28, 1997, and December 29, 1996, respectively.
Net periodic postretirement benefit cost included the following:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands)
Service cost-benefits attributed to
service during the period $ 1,408 $ 2,065 $ 2,281
Interest cost on accumulated
postretirement benefit obligation 4,775 5,082 6,426
Amortization of net (gain) (353) (310) (560)
Net periodic postretirement benefit cost $ 5,830 $ 6,837 $ 8,147
Effective November 29, 1995, changes were made to postretirement
life insurance and medical benefits which resulted in a
curtailment gain of $3.3 million and $18.6 million in 1996 and
1995, respectively. The 1996 decrease in plan expense resulted
principally from the curtailment of these benefits. The 1997
decrease in expense was a result of an increase in the discount
rate used to 7.75% in 1997 from 7.25% in 1996.
The status of the postretirement benefit plan was as follows:
As of
December 28, December 29,
1997 1996
(In thousands)
Retirees $ 43,087 $ 39,780
Fully eligible active plan participants 5,411 5,014
Other active plan participants 19,418 17,883
Accumulated postretirement obligation 67,916 62,677
Unrecognized net gain 7,188 8,452
Unrecognized prior service cost 434 2,209
Accrued postretirement benefit obligation 75,538 73,338
Less current portion (3,630) (3,565)
Long-term postretirement benefit $ 71,908 $ 69,773
NOTE 9:
Special (Credits) Charges
The annual results for 1997 included a pretax net special credit
of $31.5 million, which resulted in after tax income of $0.37 per
basic share ($0.36 per diluted share). First quarter results
included a $1.0-million pretax charge for Molson Breweries of
Canada Limited (Molson) legal proceedings. Second quarter results
included a $71.5-million special credit relating to a payment
from Molson to settle legal disputes with the Company, less
approximately $2.2 million in related legal expenses. Also in the
second quarter, CBC recorded a $22.4-million reserve related to
the recoverability of its investment in Jinro-Coors Brewing
Company (JCBC) of Korea (Note 10), as well as a $14.4-million
charge related to CBC's brewery in Zaragoza, Spain (Note 2), for the
impairment of certain long-lived assets and goodwill and for
severance costs for a limited workforce reduction.
The annual results for 1996 included a pretax net special charge
of $6.3 million which resulted in after tax expense of $0.11 per
basic share ($0.10 per diluted share). Second quarter results included a
$5.2-million pretax charge for the ongoing Molson legal proceedings and
severance costs for restructuring the Company's engineering and construction
operations. Results of the third quarter included a $6.7-million pretax
credit for underpaid past royalties and interest from Molson (net of related
legal expenses) and income from the continuing effect of changes made in
payroll-related practices during 1995. Fourth quarter results included a
$7.9-million pretax charge for Molson-related legal expenses, partially
offset by underpaid past royalties from Molson and the continuing effect
of changes made in payroll-related practices during 1995.
Fourth quarter results for 1995 included a pretax net special
credit of $15.2 million which resulted in after tax income of
$0.24 per basic and diluted share. The net credit was primarily
the result of a gain for the curtailment of certain
postretirement benefits other than pensions (see Note 8).
Offsetting a portion of this curtailment gain are severance
charges for limited reductions of the Company's work force.
NOTE 10:
Investments
Equity method investments: The Company has 50% or less owned
investments in affiliates that are accounted for using the equity
method of accounting. These investments aggregated $51.7 million
and $47.6 million at December 28, 1997, and December 29, 1996,
respectively. These investment amounts are included in other
assets on the Company's consolidated balance sheets.
Summarized condensed balance sheet and income statement
information for the Company's equity method investments are as follows:
Summarized condensed balance sheets:
As of
December 28, December 29,
1997 1996
(In thousands)
Current assets $76,260 $69,975
Non-current assets 78,829 79,162
Current liabilities 40,859 38,186
Non-current liabilities 4,437 4,236
Summarized condensed statements of operations:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
(In thousands)
Net sales $372,479 $357,273 $363,864
Gross profit 39,459 37,372 44,890
Operating income 22,384 19,289 32,039
Company's equity in operating
income 15,893 11,467 13,687
The Company's share of operating income of these non-consolidated
affiliates is primarily included in cost of goods sold on the
Company's consolidated statements of income.
In 1995, CBC and Anchor Glass Container Corporation (Anchor)
formed a 50/50 joint venture to produce glass bottles at the CBC
glass manufacturing facility for sale to CBC and outside
customers. In 1996, Owens-Brockway Glass Container, Inc. (Owens)
purchased certain Anchor assets and assumed Anchor's role in the
partnership. The agreement has an initial term of 10 years and
can be extended for additional two-year periods. Under the terms
of the agreement, CBC agreed to contribute machinery, equipment
and certain personal property with an approximate net book value
of $16.2 million and Owens agreed to contribute technology and
capital, which would be used to modernize and expand the capacity
of the plant. Also under the agreement, CBC agreed to reimburse
certain annual operating costs of the facility and to purchase an
annual quantity of bottles, which together represent a 1998 commitment of
approximately $59 million. The expenditures under this agreement in 1997,
1996 and 1995 were approximately $59 million, $54 million and $23 million,
respectively. Additionally, the companies entered into another 10-year
agreement that made Owens a long-term, preferred supplier for CBC,
satisfying 100% of CBC's other glass requirements.
In 1994, CBC and American National Can Company (ANC) formed a
50/50 joint venture to produce beverage cans and ends at CBC
manufacturing facilities for sale to CBC and outside customers.
The agreement has an initial term of seven years and can be
extended for two additional three-year periods. Additionally, the
agreement requires CBC to purchase 100% of its can and end needs
from the joint venture at contracted unit prices and to pay an
annual fee for certain operating costs. The aggregate amount paid
to the joint venture for cans and ends in 1997, 1996 and 1995 was
approximately $227 million, $217 million and $238 million,
respectively. The estimated cost in 1998 under this agreement for
cans and ends is $231 million. Additionally, during 1997 CBC
received a $12.5-million distribution from this joint venture.
Cost investments: Included in other assets is $47.1 million of
investments in debt securities with maturities greater than one
year. The fair value of these investments approximates their
amortized cost, and they are considered to be available-for-sale.
CBC invested approximately $22 million in JCBC in 1992 for a 33%
interest. CBC has accounted for the investment under the cost
basis of accounting, given that CBC has not had the ability to
exercise significant influence over JCBC and that CBC's
investment in JCBC has been considered temporary. This investment
included a put option which, as discussed below, was exercised by
CBC in December 1997. The put option entitled CBC to require
Jinro Limited (the 67% owner of JCBC) to purchase CBC's investment at
the greater of cost or market value (both measured in Korean Won).
Beginning in April 1997, Jinro Limited, a publicly-traded
subsidiary of Jinro Group, missed debt payments and began
attempting to restructure. In response to its financial
difficulties and those of its subsidiaries (including JCBC),
Jinro Group has been working with its creditors and the Korean
government to restructure its debts and has begun selling real
estate and merging and/or selling businesses. The financial
difficulties of JCBC and Jinro Limited, the guarantor of the put
option discussed above, called into question the recoverability
of CBC's investment in JCBC. Therefore, during the second quarter of 1997,
CBC fully reserved for its investment in JCBC. This reserve was classified
as a special charge in the accompanying statements of income.
CBC exercised its put option in December 1997. Since Jinro
Limited's obligation under the put is measured in Korean Won and
given the current significant devaluation of that currency, the
full amount received from Jinro Limited would be significantly
less (by approximately half as of December 28, 1997) than the
value of CBC's original investment. Jinro Limited, which is
operating under protection from its creditors under the Korean
composition law, has until June 1998 to perform its obligation
under the put option. Given Jinro Limited's current financial
condition and the volatility of the Korean economy, CBC cannot
predict whether Jinro Limited will be able to perform under this obligation.
ACX: CBC is a limited partner in a partnership in which a
subsidiary of ACX is the 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 contributions of up to $500,000 upon call of the
general partner. Distributions are allocated equally between the
partners until CBC recovers its investment and thereafter 80% to
the general partner and 20% to CBC. Currently distributions are
still being split equally between the partners.
Colorado Baseball Partnership: In 1991, CBC entered into an
agreement with Colorado Baseball Partnership 1993, Ltd. for an
equity investment and multiyear 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 carrying value of this investment
approximates its fair value at December 28, 1997, and December 28, 1996.
The recognition of liability under the multiyear signage and advertising
package began in 1995 with the opening of Coors Field.
NOTE 11:
Stock Activity and Earnings Per Share
Capital stock: Both classes of common stock have the same rights
and privileges, except for voting, which (with certain limited
exceptions) is the sole right of the holder of Class A stock.
Activity in the Company's Class A and Class B common stock for
each of the three years ended December 28, 1997, December 29,
1996, and December 31, 1995, is summarized below:
Common stock
Class A Class B
Balances at December 25, 1994 1,260,000 37,066,940
Shares issued under stock plans -- 248,778
Purchase of stock -- (579,206)
Balances at December 31, 1995 1,260,000 36,736,512
Shares issued under stock plans -- 256,897
Purchase of stock -- (331,005)
Balances at December 29, 1996 1,260,000 36,662,404
Shares issued under stock plans -- 989,857
Purchase of stock -- (2,052,905)
Balances at December 28, 1997 1,260,000 35,599,356
At December 28, 1997, December 29, 1996, and December 31, 1995, 25,000,000
shares of $1 par value preferred stock were authorized but unissued.
On December 20, 1996, the board of directors authorized the
repurchase during 1997 of up to $40 million of ACC's outstanding
Class B common stock on the open market. During 1997, the Company
repurchased 969,500 shares for approximately $24.9 million under
this stock repurchase program. In November 1997, the board of
directors authorized repurchases of up to $40 million of stock
during 1998. As of March 20, 1998, ACC had repurchased 647,000
shares for approximately $20.5 million under this program.
Also during 1997, the Company purchased shares under the right-of-
first-refusal provision of its stock option plans and purchased
shares from one of its directors and various other sources.
Earnings per share: ACC adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128),
effective with year-end 1997 reporting. SFAS 128 requires
mandatory presentation of both a basic and diluted earnings per
share. All per share amounts have been restated to comply
with the requirements of SFAS 128. Basic and diluted net income
per common share were arrived at using the calculations outlined below:
For the years ended
December 28, December 29, December 31,
1997 1996 1995
Net income available to (In thousands, except per share data)
common shareholders $82,260 $43,425 $43,178
Weighted average shares
for basic EPS 37,218 37,966 38,164
Basic EPS $2.21 $1.14 $1.13
Effect of dilutive securities:
Stock options 751 225 113
Contingent shares not included in
shares outstanding for basic EPS 87 28 6
Weighted average shares
for diluted EPS 38,056 38,219 38,283
Diluted EPS $2.16 $1.14 $1.13
The dilutive effects of stock options were arrived at by applying
the treasury stock method, assuming the Company was to purchase
common shares with the proceeds from stock option exercises.
NOTE 12:
Commitments and Contingencies
Insurance: It is the Company's policy to act as a self-insurer
for certain insurable risks consisting primarily of employee
health insurance programs and general liability contract
deductibles. During 1997, the Company fully insured future risks
for workers' compensation and long-term disability, but maintains
a self-insured position for claims incurred prior to the
inception of the insurance coverage.
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 is approximately $7.5
million. Policyholders have been notified that all claims,
benefits and annuity payments will continue to be paid in full;
however, at this time, policyholders are unable to redeem the
full value of their policies for cash. A moratorium charge would
be applied to policies that are redeemed.
Letters of credit: As of December 28, 1997, the Company has
approximately $17 million outstanding in letters of credit with
certain financial institutions. These letters generally expire
within 12 months from the dates of issuance, which range from
March 1998 to October 1998. These letters of credit are being
maintained as security for performance on certain insurance
policies, operations of underground storage tanks, as parent guarantees
for bank financing and overdraft protection of a foreign subsidiary and
payments of liquor and duty taxes and energy billings.
Power supplies: In 1995, Coors Energy Company (CEC), a subsidiary of
CBC, sold a portion of its coal reserves to Bowie Resources Ltd. (Bowie).
CEC also entered into a 10-year agreement to purchase 100% of the brewery's
coal requirements from Bowie. The coal then is sold to Trigen-Nations
Energy Corporation, L.L.L.P. (Trigen).
In September 1995, CBC concluded the sale of its power plant and
support facilities to Trigen. In conjunction with this sale, CBC
agreed to purchase the electricity and steam needed to operate
the brewery's Golden facilities. CBC's financial commitment under
this agreement is divided between a fixed, non-cancelable cost of
approximately $12.5 million for 1998, which adjusts annually for
inflation, and a variable cost, which is generally based on fuel
cost and CBC's electricity and steam use.
ACX: At the end of 1992, the Company distributed to its
shareholders the common stock of ACX. ACX was formed in 1992 to
own the ceramics, aluminum, packaging and technology-based
development businesses which were then owned by ACC. William K.
Coors, a director of both ACC and ACX during 1997, and Peter H.
Coors are trustees of one or more family trusts that collectively
own all of ACC's voting stock and approximately 47% of ACX's
common stock. Joseph Coors, a director of ACC, resigned as
director of ACX in July 1996. ACC and ACX or their subsidiaries
have certain business relationships and have engaged, or proposed
to engage, in certain transactions with one another, as described below.
When ACX was spun off in 1992, CBC entered into market-based,
long-term supply agreements with certain ACX subsidiaries to
provide CBC packaging, aluminum and starch products. Under the
packaging supply agreement, CBC agreed to purchase all of its
paperboard (including composite packages, labels and certain can
wrappers) from an ACX subsidiary through 1997. In early 1997,
this contract was modified and extended until at least 1999. In
early 1997, ACX's aluminum manufacturing business was sold to a
third party. The aluminum contracts were canceled in 1995. Since
late 1994, ANC has been the purchasing agent for the joint
venture between ANC and CBC and has ordered limited quantities of
can, end and tab stock from the now-former ACX subsidiary.
Additionally, ANC purchased a small quantity of tab stock from
this subsidiary for the joint venture in early 1997. Under the
starch supply agreement, CBC agreed to purchase 100 million
pounds of refined corn starch annually from an ACX subsidiary
through 1997. In early 1997, this agreement was renegotiated, at
slightly higher rates, and extended through 1999. CBC's total
purchases under these agreements in 1997 were approximately $118
million. Purchases in 1998 under the packaging and starch supply
agreements are estimated to be approximately $120 million.
Environmental: 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 "potentially responsible parties" (PRPs) 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. Further,
the Company agreed to pay a specified share of costs if total
remediation costs exceeded this amount. The Company remitted its
agreed share, based on the $120 million assumption, to a trust
for payment of site remediation, operating and maintenance costs.
None of these payments was material to the Company's results of
operations or financial position.
The City and County of Denver, Waste Management of Colorado, Inc.
and Chemical Waste Management, Inc. have implemented site
remediation. The Environmental Protection Agency's projected
costs to meet the announced remediation objectives and
requirements are currently below the $120 million assumption used
for ACC's settlement. The Company has no reason to believe that total
remediation costs will result in additional liability to the Company.
Litigation: 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 itself 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
that these suits will not result in liabilities that would materially
affect the Company's financial position or results of operations.
Restructuring liability: At December 28, 1997, the Company had a
$3.4 million liability related to personnel accruals as a result
of a restructuring of operations that occurred in 1993. These
accruals relate to obligations under deferred compensation
arrangements and post-retirement benefits other than pensions.
Labor: Approximately 7% of the Company's work force, located
principally at the Memphis brewing and packaging facility, is
represented by a labor union with whom the Company engages in
collective bargaining. A labor contract prohibiting strikes took
effect in early 1997 and extends to the year 2001.
Rail transportation: The Company relies heavily upon rail
transportation to ship approximately half of its products to
satellite redistribution centers and to distributors throughout
the country. A major disruption in the railroad industry would
impact CBC significantly. However, the risk of such a disruption
at the current time appears to be low.
Year 2000 (unaudited): As the Year 2000 approaches, ACC
recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures. The Company is
addressing this issue to ensure the availability and integrity of
its financial systems and the reliability of its operational
systems. ACC has established processes for evaluating and
managing the risks and costs associated with this problem. The
Company has and will continue to make certain investments in its
software systems and applications to ensure that it is Year 2000
compliant. The financial impact to ACC of Year 2000 remediation
costs is anticipated to be in the range of $10 to $15 million in
each of 1998 and 1999. In addition, ACC is working with its
suppliers and customers to ensure their compliance with Year 2000
issues in order to avoid any interruptions in its business. While
ACC does not at this time anticipate significant problems with
suppliers and customers, it is developing contingency plans with
these third parties due to the possibility of compliance issues.
NOTE 13:
Quarterly Financial Information (Unaudited)
The following summarizes selected quarterly financial information
for each of the two years in the period ended December 28, 1997.
In the first and second quarters of 1997 and the second, third
and fourth quarters of 1996, certain adjustments were made which
were not of a normal and recurring nature. As described in Note
9, income in 1997 was increased by a special pretax credit of
$31.5 million, or $0.37 per basic share ($0.36 per diluted share)
after tax, and income in 1996 was decreased by a special pretax
charge of $6.3 million, or $0.09 per basic share ($0.10 per
diluted share) after tax. Refer to Note 9 for a further
discussion of special (credits) charges.
ADOLPH COORS COMPANY AND SUBSIDIARIES
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First Second Third Fourth Year
1997 (In thousands, except per share data)
Net sales $398,995 $520,826 $489,699 $412,631 $1,822,151
Gross profit $143,828 $220,163 $190,930 $146,452 $ 701,373
Net income $ 8,045 $ 51,018 $ 17,439 $ 5,758 $ 82,260
Net income per
common share - basic $ 0.21 $ 1.37 $ 0.47 $ 0.16 $ 2.21
Net income per
common share - diluted $ 0.21 $ 1.34 $ 0.46 $ 0.15 $ 2.16
First Second Third Fourth Year
1996 (In thousands, except per share data)
Net sales without certain
international income $370,413 $504,000 $454,857 $401,719 $1,730,989
International income 1,258 1,092 1,093 7,624 11,067
Net sales, as currently
reported $371,671 $505,092 $455,950 $409,343 $1,742,056
Gross profit $107,252 $196,759 $164,856 $145,500 $ 614,367
Net (loss) income ($ 3,007) $ 23,796 $ 18,675 $ 3,961 $ 43,425
Net (loss) income per
common share - basic ($ 0.08) $ 0.63 $ 0.49 $ 0.10 $ 1.14
Net (loss) income per
common share - diluted ($ 0.08) $ 0.63 $ 0.49 $ 0.10 $ 1.14
ITEM 9. Disagreements on Accounting and Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
(a) Directors
JOSEPH COORS (Age 80) is vice chairman of Adolph Coors Company
(ACC or the 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 is a member of
the Executive Committee and the Audit Committee. He is also a
director of Coors Brewing Company (CBC). He was a director of
ACX Technologies, Inc. (ACX) from October 1992 until his
resignation in July 1996 and now is director emeritus.
PETER H. COORS (Age 51) is vice president of ACC and chief
executive officer and vice chairman of CBC and has served
in that capacity since 1993. He has served as a director
of ACC since 1973. Prior to 1993, he served as executive
vice president of ACC and chairman of the brewing group.
He served as interim treasurer and chief financial officer
from December 1993 to February 1995. He is also a director
of CBC. He is a member of the Executive Committee. In his
career at CBC, 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). Since March 1996, he has
been a director of U.S. Bancorp. Since 1997, he has been a
director of Energy Corporation of America.
WILLIAM K. COORS (Age 81) is chairman of the board and president
of ACC and has served in such capacities since 1970 and
1989, respectively. He has served as a director since
1940. He is the chairman of the Executive Committee. He is
also a director and chairman of the board of CBC and ACX.
J. BRUCE LLEWELLYN (Age 70) has served as a director since 1989.
He was a member of the Audit Committee until May 1996 and
is the chairman of the Compensation Committee. He is also
a director of CBC. He is an attorney and is involved in
the management of several businesses in which he is an
investor. He is currently the chairman of the board and chief
executive officer of Philadelphia Coca Cola Bottling Co., Inc.
He is also a director of Teleport Communications Group, Inc.
LUIS G. NOGALES (Age 54) has served as a director since 1989. He
is a member of the Audit Committee and was a member of the
Compensation Committee until May 1996. He is also a
director of CBC. He is president of Nogales Partners, a
media acquisition firm (1990-present). In the past, he was
chairman and chief executive officer of Embarcadero Media
(1992-1997); 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). He is also a director of
Southern California Edison Company, Edison International
and Kaufman and Broad Home Corporation.
PAMELA H. PATSLEY (Age 41) joined the Company as a director in
November of 1996. She is also a director of CBC. She
chairs the Audit Committee and is a member of the
Compensation Committee. She is president, chief executive
officer and a director of Paymentech, Inc. in Dallas. She
began her career with First USA, Inc. in 1985 as a
founding officer of the company. Before joining First USA,
Patsley was with KPMG Peat Marwick. She is also a director
of First Virtual Holdings, Inc.
WAYNE R. SANDERS (Age 50) joined the Company as a director in
February of 1995. He is a member of the Compensation
Committee and the Audit Committee. He is also a director
of CBC. He is chairman of the board and chief executive
officer of Kimberly-Clark (K-C) Corporation in Dallas.
Sanders joined K-C in 1975 as a 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); and as president, World
Consumer, Nonwovens and Service and Industrial Operations
(1990). He was elected to K-C's board of directors in
August 1989. He is also a director of Texas Instruments
Incorporated and Chase Bank of Texas, a trustee of
Marquette University and a national trustee of the Boys
and Girls Clubs of America.
(b) Executive Officers
Of the above directors, Peter H. Coors and William K. Coors are
executive officers of ACC. The following also were executive
officers of ACC (as defined by Securities and Exchange Commission
(SEC) rules) at March 1, 1998:
CARL L. BARNHILL (Age 49) joined CBC in May 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.
L. DON BROWN (Age 52) joined CBC in July 1996 as senior vice
president of operations and technology. Prior to joining
CBC, he served as senior vice president of manufacturing
and engineering at Kraft Foods where his responsibilities
included manufacturing, engineering and operations quality
functions. During his years at Kraft from 1971-1996, he
held several positions of increasing responsibility in the
manufacturing and operations areas.
ROBERT W. EHRET (Age 53) joined CBC in May 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.
JOHN R. FAWCETT (Age 49) was named general manager of on-premise
sales and marketing at CBC in August 1997. Prior to that,
he was general manager of UniBev Ltd., a former division
of CBC, responsible for sales and marketing for the
brewery's specialty brands. Before joining CBC in
September 1995, Fawcett was chief executive officer of a
beverage wholesaler, Capital Wine and Beverage in
Columbia, SC. Prior to that, he was vice president of
sales at E&J Gallo.
W. LEO KIELY, III (Age 51) became president and chief operating
officer of CBC as of March 1, 1993. Prior to joining CBC
and for the period 1991 to 1993, 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. He is a director of Bell Sports
Corporation and Signature Resorts, Inc.
ROBERT D. KLUGMAN (Age 50) was named CBC's senior vice president
of corporate development in May 1994. In 1993, he was vice
president of corporate development. Prior to that, he was
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.
NORMAN E. KUHL (Age 57) was named senior vice president of CBC's
container business units in July 1997. Prior to that, he
was vice president of CBC's container business units
beginning January 1992, with responsibility for the can,
glass and end manufacturing areas. His experience includes
responsibility for warehousing, packaging, brewing,
malting and utilities. He became vice president in 1978.
In 1985, he became vice president and plant manager of the
Company's packaging and finishing plant in Virginia. In
1990 and 1991, he served as vice president and plant
manager of the brewery in Memphis.
KATHERINE L. MACWILLIAMS (Age 42) joined CBC in April 1996 as
vice president and treasurer. Prior to joining CBC, she
served as vice president of Capital Markets for UBS
Securities in New York where she was responsible for the
marketing of funding and asset-liability management
products to U.S. corporate clients. She has also held a
wide range of financial positions for The First National
Bank of Chicago; Sears, Roebuck and Co. and Ford Motor Company.
MICHAEL A. MARRANZINO (Age 50) was named senior vice president
and chief information officer in November 1997. Since
1994, he had served as CBC's senior vice president and
chief international officer. 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
information technology and sales and marketing areas,
including director of development, director for Coors and
Coors Extra Gold brands, director of sales and marketing
operations, director of field sales, director of sales
operations and technology system designer.
PATRICIA J. SMITH (Age 54) was named corporate secretary of CBC
and ACC in 1993. She also serves in the same capacity for
the majority of CBC's subsidiaries. She served as
assistant secretary of ACC and a number of its
subsidiaries from 1990-1993.
M. CAROLINE TURNER (Age 48) was named senior vice president and
general counsel for CBC in February 1997. She has served
as vice president and assistant secretary of ACC and
assistant secretary of CBC since January 1993. She served
as vice president, general counsel and chief legal officer
of CBC (1993-1996); and 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 55) was named CBC's senior vice
president of marketing in 1994. He joined CBC as vice
president of marketing in July 1993. Prior to joining CBC,
he directed 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.
TIMOTHY V. WOLF (Age 44) was named vice president 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 other officers who are not considered
executive officers 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.
(c) Significant Employees
None.
(d) Family Relationships
William K. Coors and Joseph Coors are brothers. Peter H. Coors is
a son of Joseph Coors.
(e) Business Experience
See discussion above in (a) and (b).
(f) Involvement in Legal Proceedings
None.
(g) Section 16 Disclosures
None.
ITEM 11. Executive Compensation
I. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
NAME & YEAR SALARY BONUS OTHER RESTRI SECURITIES LTIP ALL
PRINCIPAL ANNUAL CTED UNDERLYING PAYOUTS OTHER
POSITION ($) ($) COMP STOCK OPTIONS ($) COMP
(a) ($)(b) ($)(c) (#)(d) ($)(e)
William K. 1997 294,672 0 0 0 0 0 0
Coors,
Chairman 1996 288,624 0 0 0 0 0 16,168
of the Board,
CEO of Adolph 1995 285,624 0 0 0 0 0 34,095
Coors Company
Peter H. 1997 541,428 324,229 0 0 157,625 0 1,302,264
Coors, Vice
Chairman & CEO 1996 507,090 0 0 0 22,330 0 22,678
of Coors
Brewing 1995 506,248 0 0 0 29,328 0 89,976
Company
W. Leo Kiely 1997 424,692 263,593 0 0 92,451 0 9,392
III, President
& COO of Coors 1996 400,218 0 0 0 18,154 0 8,705
Brewing
Company 1995 399,376 0 0 0 23,843 0 8,458
L. Don Brown, 1997 360,504 280,000 112,233 0 33,600 0 9,132
Senior VP,
Operations & 1996 180,346 580,000 0 800,000 58,333 0 3,467
Technology of
Coors Brewing 1995 N/A N/A N/A N/A N/A N/A N/A
Company
Timothy V. 1997 326,516 163,834 0 0 44,134 0 83,303
Wolf, Senior
VP, & CFO of 1996 314,346 0 0 0 10,568 0 6,778
Coors Brewing
Company 1995 280,000 124,000 304,130 0 13,881 0 3,900
(a) Amounts awarded under the Management Incentive Compensation Program.
(b) In 1997, L. Don Brown received perquisites including moving
and relocation expenses of $81,691. In 1996, none of the named
executives received perquisites in excess of the lesser of
$50,000 or 10% of salary plus bonus. In 1995, Timothy V. Wolf
received perquisites including moving and relocation expenses of $293,450.
(c) In 1996, 45,390 shares of restricted stock were granted to L.
Don Brown. L. Don Brown's restricted stock award has a three-year
vesting period from the date of grant and is based on continuous
service during the vesting period. Dividends are paid to the
holder of the grant during the vesting period. The value as of
December 28, 1997 was $1,418,438. Restricted stock granted in
1993 to Peter H. Coors and W. Leo Kiely III vested in 1996.
No restricted stock grants were made in 1997 or 1995 to any of
the other named executives.
(d) See discussion under Item 11, Part II, for options issued in 1997.
(e) The amounts shown in this column are attributable to the
officer life insurance other than group life, 401(k) plans and
the excess of fair market value over option price for stock
options exercised in 1997.
Of the named executives, Peter H. Coors receives officer life
insurance provided by the Company until retirement. At the time
of retirement, the officer's life insurance program terminates
and a salary continuation agreement becomes effective. The
officer's life insurance provides six times the executive base
salary until retirement, at which time the Company becomes the
beneficiary. The Company provides term life insurance for W. Leo
Kiely III, L. Don Brown and Timothy V. Wolf. The officer's life
insurance provides six times the executive base salary until
retirement when the benefit terminates. The 1997 annual benefit
for each executive for both programs was: Peter H. Coors -
$7,299; W. Leo Kiely III - $4,642; L. Don Brown - $4,382 and
Timothy V. Wolf - $2,428.
The Company's 50% match on the first 6% of salary contributed by
the officer to ACC's qualified 401(k) plan was $4,750 for Peter
H. Coors; $4,750 for W. Leo Kiely III; $4,750 for L. Don Brown
and $4,750 for Timothy V. Wolf. Peter H. Coors and Timothy V.
Wolf exercised stock options in 1997. See discussion in Item 11,
Part III for stock option exercises in 1997.
In response to Code Section 162 of the Revenue Reconciliation Act of
1993, the Company appointed a special compensation committee to
approve and monitor performance criteria in certain performance-
based executive compensation plans for 1997.
II. OPTION/SAR GRANTS TABLE
Option Grants in Last Fiscal Year
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
ASSUMED RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
NAME UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN OR BASE
GRANTED FISCAL PRICE EXPIRATION
(#)(a) YEAR ($/SHARE) DATE 5% 10%
Peter H. 68,121 4% $18.7500 01/02/07 $2,190,292 $4,244,242
Coors 51,100 3% $20.6250 02/13/07 $1,547,204 $3,087,945
15,887 1% $31.7500 08/13/07 $ 304,283 $ 783,300
22,517 2% $38.4375 09/29/07 $ 280,685 $ 959,606
W. Leo 53,251 3% $18.7500 01/02/07 $1,712,177 $3,317,774
Kiely III 39,200 3% $20.6250 02/13/07 $1,186,896 $2,368,835
L. Don 33,600 2% $18.7500 01/02/07 $1,080,339 $2,093,430
Brown
Timothy 30,434 2% $18.7500 01/02/07 $ 978,543 $1,896,174
V. Wolf 13,700 1% $20.6250 02/13/07 $ 414,808 $ 827,883
(a) Grants vest one-third in each of the three successive years
after the date of grant. At December 28, 1997, the 1997 grants
were 0% vested because of the one year vesting requirement; however,
they will vest 33 1/3% on the one-year anniversary of the grant dates.
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End
Option/SAR Value
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
ACQUIRED ON REALIZED Exercis- Unexercis- Exercis- Unexercis-
NAME EXERCISE (#) ($)(a) able able able able
Peter H. 71,035 1,290,215 179,794 135,108 $2,274,572 $1,394,449
Coors
W. Leo 0 0 75,652 92,451 $1,015,974 $1,082,138
Kiely III
L. Don 0 0 58,333 33,600 $ 772,912 $ 420,000
Brown
Timothy 7,000 76,125 17,449 44,134 $ 197,528 $ 525,987
V. Wolf
(a) Values stated are the bargain element recognized in 1997,
which is the difference between the option price and the market
price at the time of exercise.
IV. LONG-TERM INCENTIVE PLAN AWARDS TABLE
The Long-Term Incentive Plan (LTIP) was canceled by the board of
directors at the November 1996 board meeting.
V. PENSION PLAN TABLE
The following table sets forth annual retirement benefits for
representative years of service and average annual earnings.
AVERAGE YEARS OF SERVICE
ANNUAL
COMPENSATION 10 20 30 40
$125,000 $21,875 $43,750 $65,625 $71,875
150,000 26,250 52,500 78,750 86,250
175,000(a) 30,625 61,250 91,875 100,625
200,000(a) 35,000 70,000 105,000 115,000
225,000(a) 39,375 78,750 118,125 129,375(a)
250,000(a) 43,750 87,500 131,250(a) 143,750(a)
275,000(a) 48,125 96,250 144,375(a) 158,125(a)
300,000(a) 52,500 105,000 157,500(a) 172,500(a)
325,000(a) 56,875 113,750 170,625(a) 186,875(a)
350,000(a) 61,250 122,500 183,750(a) 201,250(a)
375,000(a) 65,625 131,250(a) 196,875(a) 215,625(a)
400,000(a) 70,000 140,000(a) 210,000(a) 230,000(a)
425,000(a) 74,375 148,750(a) 223,125(a) 244,375(a)
450,000(a) 78,750 157,500(a) 236,250(a) 258,750(a)
475,000(a) 83,125 166,250(a) 249,375(a) 273,125(a)
500,000(a) 87,500 175,000(a) 262,500(a) 287,500(a)
525,000(a) 91,875 183,750(a) 275,625(a) 301,875(a)
550,000(a) 96,250 192,500(a) 288,750(a) 316,250(a)
575,000(a) 100,625 201,250(a) 301,875(a) 330,625(a)
600,000(a) 105,000 210,000(a) 315,000(a) 345,000(a)
(a) Maximum permissible benefit under ERISA from the qualified
retirement income plan for 1997 was $125,000. Annual compensation
exceeding $160,000 is not considered in computing the maximum
permissible benefit 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 qualified and non-
qualified retirement plans and credited years of service for
individuals named in Item 11(a) are as follows: William K. Coors
- - $274,441 and 58 years; Peter H. Coors - $503,255 and 26 years;
W. Leo Kiely III - $408,095 and 4 years; L. Don Brown - $379,635
and 2 years and Timothy V. Wolf - $317,989 and 3 years.
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, 1997, in which
the ratio of plan contributions to total compensation covered by
the plan was approximately 6.5%. Covered compensation is defined
as the total base salary (average of three highest consecutive
years out of the last 10) 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 life annuity.
In addition to the annual benefit from the qualified retirement
plan, Peter H. Coors is covered by a salary continuation
agreement. This agreement provides 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. 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 1997 eligible salary amounts as
representative of the last annual base salary, the estimated lump
sum amount for Peter H. Coors would be based upon an annual
benefit of $162,000, paid upon normal retirement.
VI. 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 ACC's Class B common stock (non-voting) 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 fair 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 NE directors' annual retainer is $32,000.
In 1997, the NE members of the board of directors were paid 50%
of the $32,000 annual retainer for the 1996-1997 term and 50% of
the $32,000 annual retainer for the 1997-1998 term, as well as
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 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.
VII. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
CBC has no agreements with executives or employees providing
employment for a set period.
L. Don Brown has an agreement providing a guaranteed bonus of 80%
of his base salary in 1996 and 1997. In addition, he received a
$200,000 signing bonus and a $100,000 transitional bonus in 1996.
If he were terminated without cause during the first two years,
he would receive 12 months of his total current annual salary
(base plus bonus).
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.
Under the 1990 Equity Incentive Plan (1990 EI Plan), if there is a change in
ownership of the Company, the options and restricted shares vest immediately.
VIII. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J. Bruce Llewellyn, Pamela H. Patsley and Wayne R. Sanders served
on the Compensation Committee during 1997.
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 5% of any class of voting securities as of March 16, 1998:
Name and address Amount and nature
Title of of beneficial of beneficial Percent
class owner ownership of class
Class A Adolph Coors, Jr. Trust, 1,260,000 shares for 100%
common Golden, Colorado; benefit of William K.
stock William K. Coors, Joseph Coors, Joseph Coors and
(voting) Coors, Joseph Coors, Jr., May Coors Tooker and their
Jeffrey H. Coors and lineal descendants living
Peter H. Coors, trustees at distribution
In addition, certain officers and directors hold interests in
other family trusts, as indicated in Item 12, Section (b).
(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 16, 1998:
Exercisable
options/
Shares restricted
Title of Name of beneficially stocks Percent
class beneficial owner owned awards (b) Total of class
Class B Joseph Coors 2,183 (a) 261 2,444(a) (a)
common Peter H. Coors 75,801 (a) 242,164 317,965(a) (a)
stock William K. Coors 320,807 (a) -- 320,807(a) (a)
(non- J. Bruce Llewellyn 6,184 785 6,969
voting) Luis G. Nogales 1,850 261 2,111
Pamela H. Patsley 356 627 983
Wayne R. Sanders 5,267 261 5,528
L. Don Brown -- 116,096 116,096
W. Leo Kiely III 11,000 108,604 119,604
Timothy V. Wolf 2,700 33,221 35,921
All executive officers
and directors as a
group (20 persons) 17,420,959 783,000 18,203,959 52%
(a) In 1996, William K. Coors and Peter H. Coors were two of the
trustees of the Adolph Coors Foundation, which owned 732,413
shares of Class B common stock. This stock was disposed of during
1997. 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 16,712,111 shares of Class B common stock.
These individuals, and others, are trustees of three other trusts
owning 267,100 shares of Class B common stock. In certain of
these trusts, they act solely as trustees and have no vested or
contingent benefits. The total of these trust shares, together
with other management shares shown above, represents 52% of the
total number of shares of such class outstanding.
(b) This column represents exercisable options to purchase shares
under the Company's 1990 EI Plan (as amended and restated) and
the 1991 Equity Compensation Plan for Non-Employee Directors (as
amended and restated) that could be exercised as of March 16,
1998. It reflects restricted stock awards granted under the 1990
EI Plan. Vesting in the restricted stock is over a three-year
period from date of grant for employee/officers and at the end of
the term for outside directors. In the event of a change in
control of the Company, the options and restricted shares vest
immediately. It also reflects a special restricted stock award
made in February 1997. This restricted stock has a one-year vesting period.
(c) Changes in Control
There are no arrangements that would later result in a change of
control of the Company.
ITEM 13. Certain Relationships and Related Transactions
(a) Transactions with Management and Others
There were no transactions that exceeded $60,000 with management
or others related to the Company.
(b) Certain Business Relationships
William K. Coors, a director of both ACC and ACX during 1997, and
Peter H. Coors are trustees of one or more family trusts that
collectively own all of ACC's voting stock and approximately 47%
of ACX's common stock (see Security Ownership of Certain
Beneficial Owners and Management in Item 12). Joseph Coors, a
director of ACC during 1997, resigned as director of ACX in July
1996. ACC and ACX, or their subsidiaries have certain business
relationships and have engaged or proposed to engage in certain
transactions with one another, as described below.
When ACX was spun off in 1992, CBC entered into market-based,
long-term supply agreements with certain ACX subsidiaries to
provide CBC packaging, aluminum and starch products. Under the
packaging supply agreement, CBC agreed to purchase all of its
paperboard (including composite packages, labels and certain can
wrappers) from an ACX subsidiary through 1997. In early 1997,
this contract was modified and extended until at least 1999. In
early 1997, ACX's aluminum manufacturing business was sold to a
third party. The aluminum contracts were canceled in 1995. Since
late 1994, American National Can Company (ANC) has been the
purchasing agent for the joint venture between ANC and CBC and
has ordered limited quantities of can, end and tab stock from the
now-former ACX subsidiary. Additionally, ANC purchased a small
quantity of tab stock for the joint venture from this subsidiary
in early 1997. Under the starch supply agreement, CBC agreed to
purchase 100 million pounds of refined corn starch annually from
an ACX subsidiary through 1997. In early 1997, this agreement was
renegotiated, at slightly higher rates, and extended through
1999. CBC's total purchases under these agreements in 1997 were
approximately $118 million. Purchases in 1998 under the packaging
and starch supply agreements are estimated to be approximately $120 million.
During 1997, CBC sold small quantities of aluminum scrap to a now-
former ACX subsidiary in the amount of $280,000. CBC also agreed
to sell brewery by-products to an ACX subsidiary for resale under
a contract through 1997. In early 1997, this agreement was extended
through 1999. CBC received approximately $9 million in 1997 under this
contract and estimates that 1998 receipts will be approximately $9 million.
Also with the spin-off, ACC, ACX and their subsidiaries
negotiated other agreements involving employee matters,
environmental management, tax sharing and trademark licensing.
These agreements govern certain relationships between the
parties, as described in the Company's report on Form 8-K dated
December 27, 1992, and contained in the information statement
mailed to ACC's shareholders at the time of the spin-off.
Certain ACC and ACX subsidiaries are parties to other
miscellaneous market-based transactions. In 1997, CBC provided
water and waste water treatment services to an ACX ceramics
facility located on property leased from CBC, and CBC received
real estate management and other services from the ACX real
estate brokerage subsidiary. In addition, CBC purchased
miscellaneous products from the ACX ceramics subsidiary,
including certain ceramic can tooling for CBC's can lines. During
1997, CBC received approximately $340,000 in total and paid
approximately $350,000 in total under these agreements and
transactions. In 1998, CBC expects to pay approximately $230,000
and receive approximately $260,000 under these agreements.
CBC is a limited partner in a partnership in which an ACX
subsidiary is the general partner. The partnership, which was
formed at the time of the spin-off, owns, develops, operates and
sells certain real estate previously owned directly by CBC or
ACC. Distributions of $1.3 million were made to both partners in
1997. Each partner is obligated to make additional cash
contributions of $500,000 upon call of the general partner.
Distributions are allocated equally between the partners until
CBC recovers its investment, and thereafter 80% to the general
partner and 20% to CBC. Currently distributions are still being
split equally between the partners.
(c) Indebtedness of Management
Employee loans could be made with the exercise of stock options
granted under the 1983 non-qualified Adolph Coors Company Stock
Option Plan. No such loans were made or outstanding in 1997.
No member of management or another with a direct or indirect
interest in ACC was indebted to the Company in excess of $60,000 in 1997.
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
All other schedules are omitted, because they are not applicable or the
required information is shown in the financial statements or notes thereto.
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
Allowance for doubtful (In thousands)
accounts
Year ended
December 28, 1997 $ 275 $1,627 $ -- ($1,345)(a) $ 557
December 29, 1996 $ 30 $ 393 $ -- ($ 148)(a) $ 275
December 31, 1995 $ 24 $ 198 $ -- ($ 192)(a) $ 30
Allowance for certain
claims
Year ended
December 28, 1997 $ -- $1,500 $ -- $ -- $1,500
December 29, 1996 $ -- $ -- $ -- $ -- $ --
December 31, 1995 $ -- $ -- $ -- $ -- $ --
Allowance for obsolete
inventories and supplies
Year ended
December 28, 1997 $3,319 $7,193 $ 426 ($5,724)(a) $5,214
December 29, 1996 $2,942 $4,941 $ 3 ($4,567)(a) $3,319
December 31, 1995 $2,210 $2,814 $ -- ($2,082)(a) $2,942
(a) Write-offs of uncollectible accounts or obsolete inventories and supplies.
(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 - By-laws, as amended and restated in
August 1997.
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* - 1983 non-qualified Adolph Coors Company
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* - Coors Brewing Company 1996 Annual
Management Incentive Compensation Plan.
(Incorporated by reference to Exhibit 10.4 to
Form 10-K for the fiscal year ended December 29, 1996)
Exhibit 10.5* - Coors Brewing Company Long-Term
Incentive Plan, 1994-1996 Plan Cycle.
(Incorporated by reference to Exhibit 10.5 to
Form 10-K for the fiscal year ended December 25, 1994)
Exhibit 10.6* - Adolph Coors Company 1990 Equity
Incentive Plan. (Amended during 1998)
Exhibit 10.7* - Coors Brewing Company Employee Profit
Sharing Program. (Incorporated by reference
to Exhibit 10.7 to Form 10-K for the fiscal
year ended December 31, 1995)
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. (Amended during 1997)
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.
(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
October 23, 1997.
Exhibit 10.16 - Adolph Coors Company Stock Unit Plan.
(Amended during 1997)
Exhibit 10.17* - Employment Contract and Termination
Agreement for L. Don Brown. (Incorporated by
reference to Exhibit 10.4 to Form 10-K for
the fiscal year ended December 29, 1996)
Exhibit 10.18* - Coors Brewing Company 1997 Annual
Management Incentive Compensation Plan.
(Incorporated by reference to Exhibit 10.4 to
Form 10-K for the fiscal year ended December 29, 1996)
Exhibit 10.19 - Form of Coors Brewing Company
Distributorship Agreement. (Incorporated by
reference to Exhibit 10.20 to Form 10-K for
the fiscal year ended December 29, 1996)
Exhibit 10.20* - Coors Brewing Company 1998 Annual
Management Incentive Compensation Plan.
Exhibit 21 - Subsidiaries of the Registrant.
Exhibit 23 - Consent of Independent Accountants.
* Represents a management contract
(b) Reports on Form 8-K
A report on Form 8-K dated April 30, 1997, was filed announcing a
settlement of legal disputes with Molson Breweries and related
parties. See further discussion in Item 1 Business of this filing.
(c) Other Exhibits
None.
(d) Other Financial Statement Schedules
None.
Other Matters
To comply with the July 13, 1990, amendments governing Form S-8
under the Securities Act of 1933, ACC offers as follows, which is
incorporated by reference into ACC's Registration Statements on
Form S-8 No. 33-2761 (filed January 17, 1986); No. 33-35035
(filed May 24, 1990); No. 33-40730 (filed May 21, 1991) and No. 33-59979
(filed June 6, 1995) and on Form S-3 No. 33-33831 (filed March 14, 1990):
Even though ACC could indemnify its directors, officers and
controlling persons for liabilities arising under the Securities
Act of 1933 under SEC regulations, the SEC has indicated that
such indemnification is against public policy and unenforceable.
If a director, officer or controlling person requests
indemnification for liabilities arising from securities being
registered (other than for reimbursements of amounts paid for the
successful defense of any lawsuit), ACC will ask a court if such
indemnification is against public policy and will follow that
court's ruling.
EXHIBIT 21
ADOLPH COORS COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
The following table lists ACC's subsidiaries and the respective
jurisdictions of their organization or incorporation as of
December 28, 1997. All subsidiaries are included in ACC's
consolidated financial statements.
State/country of
organization or
Name incorporation
Coors Brewing Company Colorado
Coors Brewing Company International, Inc. Colorado
Coors Brewing International C.V.(a) The Netherlands
Coors Brewing Iberica, S.A. Spain
Coors Services, S.A. Switzerland
Coors Distributing Company Colorado
Coors Energy Company Colorado
Gap Run Pipeline Company Colorado
Coors Nova Scotia Co. Canada
Coors Global, Inc. Colorado
Coors Intercontinental, Inc. Colorado
Coors Transportation Company Colorado
The Rocky Mountain Water Company Colorado
The Wannamaker Ditch Company Colorado
Coors Japan Company, Ltd. Japan
Coors Brewing International, Ltd. United Kingdom
Coors Export Ltd. Barbados, West Indies
Coors Canada, Inc. Canada
(a) Organized as a partnership for foreign purposes and as a
corporation for U.S. purposes.
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), (No. 33-40730),(No. 33-
59979) and (No. 333-45869) of Adolph Coors Company of our report
dated February 12, 1998 appearing on page 27 of this Form 10-K.
PRICE WATERHOUSE LLP
Denver, Colorado
March 27, 1998
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 and
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/ Luis G. Nogales
Peter H. Coors Luis G. Nogales
Chief Executive Officer
Coors Brewing Company
By /s/ Wayne R. Sanders By /s/ Pamela H. Patsley
Wayne R. Sanders Pamela H. Patsley
March 30, 1998
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BYLAWS
OF
ADOLPH COORS COMPANY
(A Colorado Corporation)
Amended and Restated as of August 14, 1997
BYLAWS
OF
ADOLPH COORS COMPANY
TABLE OF CONTENTS
Page
ARTICLE I - Offices 1
1. Principal Office 1
2. Registered Office 1
3. Other Offices 1
ARTICLE II - Shareholders' Meetings 1
1. Annual Meetings 1
2. Special Meetings 1
3. Place of Special Meetings 2
4. Notice of Meetings 2
5. Waiver of Notice 3
6. Action Without A Meeting 3
7. Fixing Record Date 4
8. Shareholder' List 4
9. Quorum 4
10. Adjournment 4
11. Voting 5
12. Conduct of Meetings 5
13. Proxies 6
14. Inspectors 7
15. Meeting by Telecommunication 7
ARTICLE III - Board of Directors 8
1. Authority, Election and Tenure 8
2. Number and Qualification 8
3. Annual and Regular Meetings 8
4. Special Meetings 8
5. Notice of Special Meetings 8
6. Waiver of Notice 9
7. Action Without a Meeting 9
8. Quorum and Voting 10
9. Organization and Procedure 10
10. Resignation 10
11. Removal 10
12. Vacancies 10
13. Dissenting Directors 11
14. Executive and Other Committees 11
15. Compensation of Directors 12
16. Meeting by Telecommunication 12
ARTICLE IV - Officers 12
1. Appointment and Tenure 12
2. Resignation, Removal and Vacancies 13
3. Temporary Delegation of Duties 13
4. Chairman of the Board 13
5. Chief Executive Officer 13
6. President 13
7. Vice Presidents 14
8. Secretary 14
9. Treasurer 14
10. Assistant Secretaries and Assistant Treasurers 15
11. Bond of Officers 15
12. Compensation 15
ARTICLE V - Directors' Conflicts of Interest 15
1. Conflicting Interest Transaction 15
2. Effect of Conflict of Interest 15
3. Notice to Shareholders 16
4. Interested Directors 16
ARTICLE VI - Indemnification 17
1. Directors 17
2. Officers and Employees 17
3. Mandatory Indemnification 17
4. Agents and Fiduciaries 17
5. Procedure 18
6. Other Remedies 18
7. Insurance 18
8. Notice to Shareholders 18
9. Selection of Counsel 19
ARTICLE VII - Execution of Instruments; Loans; Checks and
Endorsements; Deposits; Proxies 19
1. Execution of Instruments 19
2. Borrowing 19
3. Attestation 20
4. Loans to Directors, Officers and Employees 20
5. Checks and Endorsements 20
6. Deposits 20
7. Voting of Securities of Other Entities 20
ARTICLE VIII - Shares of Stock 21
1. Certificates of Stock 21
2. Shares Without Certificates 21
3. Transfer of Stock 21
4. Restrictions on Transfer 22
5. Preferred Stock 24
6. Holders of Record 25
7. Shares Held for the Account of a Specified Person
or Persons 25
8. Lost, Destroyed and Mutilated Certifica 25
ARTICLE IX - Dividends and Other Distributions 25
ARTICLE X - Corporate Records 25
1. Permanent Records 25
2. Records at Principal Office 26
3. Addresses of Shareholders 26
4. Record of Shareholders 26
5. Inspection of Corporate Records 27
6. Audits of Books and Accounts 27
ARTICLE XI - Miscellaneous 27
1. Corporate Seal 27
2. Fiscal Year 27
3. Emergency Bylaws and Actions 27
4. Amendments 27
5. Gender 27
6. Definitions 28
7. Conflicts 28
ARTICLE I
Offices
1. Principal Office. The principal office of Adolph Coors
Company (the "Company") shall be located in or near the City of
Golden, Colorado. The Board of Directors, from time to time, may
change the principal office of the Company.
2. Registered Office. The registered office of the Company
required by the Colorado Business Corporation Act, as it may be
amended or superseded (the "Act"), to be maintained in the State
of Colorado may be, but need not be, identical with the principal
office, and the address of the registered office may be changed
from time to time by the Board of Directors.
3. Other Offices. The Company may have one or more offices
at such place or places within or outside the State of Colorado
as the Board of Directors may from time to time determine or as
the business of the Company may require.
ARTICLE II
Shareholders' Meetings
1. Annual Meetings. The annual meeting of the holders of
the Class A Common Stock shall be held each year during the month
of May on such date and at such time and place, either within or
outside the State of Colorado, as may be determined by the Board
of Directors from time to time. At such meeting, the holders of
the Class A Common stock shall elect a Board of Directors and
shall transact such other business as may be brought properly
before the meeting. Holders of non-voting stock may be invited to
attend the annual meeting, but shall not vote except with respect
to matters on which their vote is required by the Act or the
Articles of Incorporation.
2. Special Meetings.
(a) Special meetings of shareholders for any purpose or
purposes, unless otherwise prescribed by the Act or by the
Articles of Incorporation, may be called at any time by the
Chairman, by the President (if he is also a member of the Board
of Directors) or by the Board of Directors. A special meeting
shall be called by the President or the Secretary upon one or
more written demands (which shall state the purpose or purposes
therefor) signed and dated by the holders of shares representing
not less than ten percent of all votes entitled to be cast on any
issue proposed to be considered at the meeting.
(b) The record date for determining the shareholders
entitled to demand a special meeting is the date of the earliest
of any of the demands pursuant to which the meeting is called, or
the date that is 60 days before the date the first of such
demands is received by the Company, whichever is later.
(c) Business transacted at any special meeting of
shareholders shall be limited to the purpose or purposes stated
in the notice of such meeting.
3. Place of Special Meetings. Special meetings of
shareholders shall be held at such place or places, within or
outside the State of Colorado, as may be determined by the Board
of Directors and designated in the notice of the meeting. If no
place is designated in the notice, or if a special meeting is
called otherwise than by the Board of Directors, the place of the
meeting shall be the principal office of the Company.
4. Notice of Meetings.
(a) Not less than 10 nor more than 60 days prior to each
annual or special meeting of shareholders, written notice of the
date, time and place of each meeting, and in the case of special
meetings the purpose or purposes for which the meeting is called,
shall be given to each shareholder entitled to vote at such
meeting. If the authorized shares of the Company are proposed to
be increased, at least 30 days' notice in like manner shall be
given. If the Act prescribes notice requirements for particular
circumstances (as in the case of the sale, lease or exchange of
the Company's assets other than in the usual and regular course
of business, or the merger or dissolution of the Company), the
provisions of the Act shall govern.
(b) Notice may be given in person or by telephone,
telegraph, teletype, electronically transmitted facsimile, or
other form of wire or wireless communication, and, if so given,
shall be effective when received by the shareholder. Notice may
also be given by deposit in the United States mail if addressed
to the shareholder's address shown in the Company's current
record of shareholders, and, if so given, shall be effective when
mailed.
(c) If three successive notices mailed to any
shareholder in accordance with the provisions of these Bylaws are
returned as undeliverable, no further notices to such shareholder
shall be necessary until another address for such shareholder is
made known to the Company.
5. Waiver of Notice.
(a) A shareholder may waive any notice, whether before
or after the date or time stated in the notice as the date or
time when any action will occur or has occurred. The waiver shall
be in writing, be signed by the shareholder entitled to the
notice, and be delivered to the Secretary for inclusion in the
minutes or filing with the corporate records, but such delivery
and filing shall not be conditions of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting:
(i) Waives objection to lack of notice or defective
notice of the meeting, unless the shareholder at
the beginning of the meeting objects to holding
the meeting or transacting business at the meeting
because of lack of notice or defective notice; and
(ii) Waives objection to consideration of a particular
matter at the meeting that is not within the
purpose or purposes described in the meeting
notice, unless the shareholder objects to
considering the matter when it is presented.
6. Action Without A Meeting.
(a) Any action required or permitted to be taken at a
shareholders' meeting may be taken without a meeting if all of
the shareholders entitled to vote thereon consent in writing to
the action taken. No action taken by written consent shall be
effective unless the Company has received writings that describe
and consent to the action, signed by all the shareholders
entitled to vote on such action. Unless otherwise provided by
the Act, action by written consent shall be effective as of the
date the last writing necessary to effect the action is received
by the Secretary, unless all of the writings necessary to effect
the action specify a later date as the effective date of the action.
(b) Any shareholder who has signed a writing describing
and consenting to action taken by written consent may revoke such
consent by a writing signed by the shareholder describing the
action and stating that the shareholder's prior consent thereto
is revoked, if such writing is received by the Company before the
effectiveness of the action.
(c) The record date for determining shareholders entitled
to take action without a meeting or entitled to be given notice
is the date a writing upon which the action is taken is first
received by the Company.
7. Fixing Record Date. The Board of Directors may fix a
future date as the record date to determine the shareholders
entitled to be given notice of a shareholders meeting, to demand
a special meeting, to vote at a meeting, to receive payment of a
distribution, or for any other proper purpose. Such record date
shall not be more than 70 days before the meeting or action
requiring a determination of shareholders. A determination of
shareholders entitled to be given notice of or to vote at any
meeting of shareholders is effective for any adjournment of the
meeting, unless the Board of Directors fixes a new record date,
which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
8. Shareholders' List.
(a) A complete list of the shareholders entitled to
notice of any shareholders' meeting shall be prepared by, or at
the direction of, the Secretary of the Company. Such
shareholders' list shall be arranged by voting groups (as defined
by the Act) and, within each voting group, by class or series of
shares, shall be alphabetical within each class or series and
shall show the address of, and the number of shares of each such
class and series that are held by, each shareholder.
(b) The shareholders' list shall be available for
inspection by any shareholder beginning on the earlier of ten
days before the meeting for which the list was prepared or two
business days after notice is given, and continuing through the
meeting and any adjournment thereof, at the Company's principal
office or at a place identified in the notice of the meeting in
the city where the meeting will be held. During the period the
list is available for inspection, a shareholder, or his agent or
attorney, is entitled on written demand to inspect and, subject
to the provisions of the Act, to copy the list during the
Company's regular business hours. Failure to prepare or make
available the shareholders' list does not affect the validity of
actions taken at the meeting.
9. Quorum. Shares entitled to vote as a separate voting
group may take action on a matter at a meeting only if a quorum
of those shares is represented in person or by proxy with respect
to that matter. Unless otherwise provided in the Act or in the
Company's Articles of Incorporation, a majority of the votes
entitled to be cast on a matter by a voting group constitutes a
quorum of that voting group for action on that matter. If a
quorum is not present with respect to a particular matter, the
shares present at the meeting shall have the power to adjourn the
meeting with respect to that matter, until the requisite number
of shares shall be present or represented.
10. Adjournment. When a meeting is for any reason
adjourned to another date, time or place, notice need not be
given of the adjourned meeting if the date, time and place
thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, any business may be transacted
that might have been transacted at the original meeting. If the
adjournment is for more than 120 days from the date of the
original meeting, or if, after the adjournment, a new record date
is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder entitled to vote at
such meeting as of the new record date.
11. Voting. Each outstanding share of record of Class A
Common Stock is entitled to one vote for the election of each
member of the Board of Directors and on other matters submitted
to a vote of the shareholders. Except where the Act or the
Articles of Incorporation require a different vote, if a quorum
exists, action on a matter other than the election of directors
is approved if the votes cast favoring the action exceed the
votes cast opposing the action. In an election of directors, a
majority of shares entitled to vote for directors is required in
order to elect a director. The voting rights of shares of Class B
Common Stock shall only be as required in certain instances by
the Act or the Articles of Incorporation. No shareholder shall be
permitted to cumulate his votes.
12. Conduct of Meetings. The chairman of the annual or any
special meeting of the shareholders shall be the Chairman of the
Board or, in his absence, any person designated by the Board of
Directors. The Secretary or, in his absence, any person appointed
by the chairman of the meeting shall act as Secretary of the
meeting. Meetings of shareholders shall be conducted in
accordance with the following rules:
(a) The chairman of the meeting shall have absolute
authority over matters of procedure and there shall be no appeal
from the ruling of the chairman. If the chairman, in his absolute
discretion, deems it advisable to dispense with the rules of
parliamentary procedure as to any meeting of shareholders or a
part thereof, the chairman shall so state and shall clearly state
the rules under which the meeting or appropriate part thereof
shall be conducted.
(b) If disorder shall arise that prevents continuation
of the legitimate business of the meeting, the chairman may quit
the chair and announce the adjournment of the meeting and upon
his so doing the meeting is immediately adjourned.
(c) The chairman may ask or require that anyone who is
not a bona fide shareholder or proxy leave the meeting.
(d) At any meeting of shareholders, a resolution or
motion shall be considered for vote only if the proposal is
brought properly before the meeting, which shall be determined by
the chairman of the meeting in accordance with the following provisions:
(i) Notice required by these Bylaws and by all
applicable federal or state statutes or
regulations shall have been given to, or waived
by, all shareholders entitled to vote on such
proposal. In the event notice periods of different
lengths apply to the same proposed action under
different laws or regulations, appropriate notice
shall be deemed given if there is compliance with
the greater of all applicable notice requirements.
(ii) Proposals may be made by the Board of Directors as
to matters affecting holders of any class of stock
issued by the Company. Proposals also may be made
by the holder of shares of Class A Common Stock.
(iii) Any proposal made by the Board of Directors or
the holder of shares of Class A Common Stock may
be made at any time prior to or at the meeting if
only the holder of Class A Common Stock is
entitled to vote thereon.
(iv) Any proposal on which holders of Class B Common
Stock are entitled to vote and concerning which
proxies may be solicited by the proponent or by
management shall be filed with the Secretary by
such dates as may be required by the proxy rules
promulgated by the Securities and Exchange Commission.
(v) A shareholder's proposal shall set forth (a) a
brief description of the matters desired to be
brought before the meeting and the reasons for
conducting such business at the meeting; (b) the
name and address, as they appear on the Company's
books, of the shareholder proposing such business;
(c) the class and number of such shares of the
Company which are beneficially owned by the
shareholder; (d) any financial interest of the
shareholder in such proposal; and (e) any other
information required by applicable statute or regulation.
(e) Nomination of persons to stand for election to the
Board of Directors at any annual or special shareholders meeting
may be made by the holders of the Company's Class A Common Stock
at any time prior to the vote thereon.
13. Proxies.
(a) At any shareholder meeting, a shareholder may
vote in person or by proxy. A shareholder may appoint a proxy by
signing an appointment form, either personally or by the
shareholder's duly authorized attorney-in-fact. A shareholder may
also appoint a proxy by transmitting or authorizing the
transmission of a telegram, teletype or other electronic
transmission providing a written statement of the appointment to
the Company, the proxy, or other person duly authorized by the
proxy to receive appointments as agent for the proxy. The
transmitted appointment shall set forth or be transmitted with
written evidence from which it can be determined that the
shareholder transmitted or authorized the transmission of the appointment.
(b) An appointment of a proxy is effective when the
appointment is received by the Company and the appointment is
effective for eleven months unless a different period is
expressly provided in the appointment form. An appointment of a
proxy shall be revocable by the shareholder only as provided by
the Act. Shares represented by proxy at a meeting of shareholders
shall be deemed to be present at the meeting.
14. Inspectors. The chairperson of the meeting may at any
time appoint one or more inspectors to serve at a meeting of the
shareholders. Such inspectors shall decide upon the
qualifications of voters, including the validity of proxies,
accept and count the votes for and against the matters presented,
report the results of such votes, and subscribe and deliver to
the Secretary of the meeting a certificate stating the number of
shares of stock within each voting group that is issued and
outstanding and entitled to vote thereon and the number of shares
within each voting group that voted for and against the matters
presented. The voting inspectors need not be shareholders of the
Company, and any director or officer of the Company may be an
inspector on any matter other than a vote for or against such
director's or officer's election to any position with the Company
or on any other matter in which such officer or director may be
directly interested.
15. Meeting by Telecommunication. If, and only if,
permitted by the Board of Directors, a shareholder may
participate in an annual or special shareholders' meeting by, or
the meeting may be conducted through the use of, any means of
communication by which all persons participating in the meeting
may hear each other during the meeting. If the Board of Directors
determines to allow shareholders to participate in a
shareholders' meeting by telecommunication, the Board shall
establish the terms and conditions under which shareholders may
participate by such means and shall cause the notice of the
meeting to contain such terms and conditions. Only shareholders
who comply with the terms and conditions indicated in such notice
shall be entitled to so participate by telecommunication in the
shareholders' meeting.
ARTICLE III
Board of Directors
1. Authority, Election and Tenure. Subject to any
provision of the Act and the Articles of Incorporation, all
corporate power shall be exercised by or under the authority of,
and the business and affairs of the Company shall be managed by,
a Board of Directors. The Board of Directors shall be elected at
each annual meeting of shareholders by the holders of the Class A
Common Stock. Each director shall hold office until the next
annual meeting of shareholders, until such director's successor
shall be elected and shall qualify, or until such director's
earlier death, resignation or removal.
2. Number and Qualification. At each annual meeting of
shareholders, the holders of the Class A Common Stock shall
determine the number of directors, which shall be no fewer than
three. Any increase in the number of directors between annual
meetings shall be approved by the holders of the Class A Common
Stock. Directors must be natural persons at least eighteen years
of age but need not be shareholders or residents of the State of Colorado.
3. Annual and Regular Meetings. The Board of Directors
shall hold its annual meeting without notice on the same day and
at the same place as, but just following, the annual meeting of
the shareholders, or at such other date, time and place as may be
determined by the Board of Directors. Regular meetings of the
Board of Directors shall be held without notice at such dates, times
and places as may be determined by the Board of Directors by resolution.
4. Special Meetings. Special meetings of the Board of
Directors may be held, with proper notice, upon the call of the
Chairman of the Board or by at least two members of the Board of
Directors at such time and place as specified in the notice.
5. Notice of Special Meetings.
(a) Notice of the date, time and place of each special
meeting of the Board of Directors shall be given to each director
at least two days prior to such meeting. The notice of a special
meeting of the Board of Directors need not state the purposes of
the meeting. Notice to each director of any special meeting may
be given in person; by telephone, telegraph, teletype,
electronically transmitted facsimile, or other form of wire or
wireless communication; or by mail or private carrier.
(b) Oral notice to a director of any special meeting
is effective when communicated. Written notice to a director of
any special meeting is effective at the earliest of: (i) the date
received; (ii) five days after it is mailed; or (iii) the date
shown on the return receipt if mailed by registered or certified
mail, return receipt requested, if the return receipt is signed
by or on behalf of the director to whom the notice is addressed.
6. Waiver of Notice.
(a) A director may waive any notice of a meeting
before or after the time and date of the meeting stated in the
notice. The waiver shall be in writing and signed by the director
entitled to the notice. Such waiver shall be delivered to the
Secretary for filing with the corporate records, but such
delivery and filing shall not be conditions of the effectiveness
of the waiver.
(b) A director's attendance at or participation in a
meeting waives any required notice to him of the meeting unless:
(i) At the beginning of the meeting, or promptly
upon his later arrival, the director objects
to holding the meeting or transacting business
at the meeting because of lack of notice or
defective notice and does not thereafter vote
for or assent to action taken at the meeting; or
(ii) If special notice was required of a particular
purpose, the director objects to transacting
business with respect to the purpose for which
such special notice was required and does not
thereafter vote for or assent to action taken
at the meeting with respect to such purpose.
7. Action Without a Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors may
be taken without a meeting if all members of the Board of
Directors consent to such action in writing. Such consent shall
be delivered to the Secretary for inclusion in the minutes or for
filing with the corporate records. Action is taken by written
consent at the time the last director signs a writing describing
the action taken, unless, before such time, any director has
revoked his consent pursuant to the provisions of the Act. Action
taken without a meeting is effective at the time it is taken
unless the directors establish a different effective date. Action
taken by written consent has the same effect as action taken at a
meeting of the Board of Directors, and may be described as such
in any document.
8. Quorum and Voting. Except as otherwise provided by the
Act or by these Bylaws, a majority of the directors in office at
the time of any regular or special meeting of the Board of
Directors shall constitute a quorum for the transaction of
business at such meeting. The vote of a majority of the directors
present at the meeting at which a quorum is present shall be the
act of the Board of Directors. In the absence of a quorum, a
majority of the directors present may, without notice other than
announcement at the meeting, adjourn the meeting from time to
time until a quorum can be obtained.
9. Organization and Procedure. The Board of Directors
shall elect a Chairman of the Board from among its members. If
the Board deems it necessary, it may elect a Vice-Chairman of the
Board from among its members to perform the duties of the
Chairman of the Board in his absence and such other duties as the
Board of Directors may assign. The Chairman of the Board or, in
his absence, the Vice-Chairman of the Board, or in his absence,
any director chosen by a majority of the directors present, shall
act as chairperson of the meetings of the Board of Directors. The
Secretary, any Assistant Secretary, or any other person appointed
by the chairperson shall act as secretary of each meeting of the
Board of Directors.
10. Resignation. Any director of the Company may resign at
any time by giving written notice to the Board of Directors or
the Secretary of the Company at the Company's principal office.
Such resignation shall take effect at the date of receipt of such
notice or at any later time specified therein and, unless
otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
11. Removal. Any director may be removed, either with or
without cause, at any time, at a special meeting of the holders
of the Class A Common Stock called for such purpose, if the
number of votes cast in favor of removal exceeds the number of
votes cast against removal. A vacancy in the Board of Directors
caused by any such removal may be filled by the holders of the
Class A Common Stock at such meeting or, if such shareholders at
such meeting shall fail to fill such vacancy, by a majority of
the remaining directors at any time before the end of the
unexpired term of the director removed.
12. Vacancies. Any directorship to be filled by reason of
an increase in the number of directors between annual meetings
shall be filled by the vote of the holders of the Class A Common
Stock and such director shall hold office until the next annual
meeting of shareholders and until his successor has been elected
and qualified. A vacancy occurring in the Board of Directors that
is not required by these Bylaws to be filled by the holder of the
Class A Common Stock shall be filled by the affirmative vote of a
majority of the remaining members of the Board even if the
remaining directors constitute less than a quorum. A director
elected to fill a vacancy shall be elected for the unexpired term
of his predecessor in office.
13. Dissenting Directors. A director who is present at a
meeting of the Board of Directors when corporate action is taken
is deemed to have assented to the action taken unless:
(a) He objects at the beginning of such meeting, or
promptly upon his later arrival, to the holding of the meeting or
the transacting of business at the meeting;
(b) He contemporaneously requests that his dissent or
abstention from the action taken be entered in the minutes of
such meeting; or
(c) He gives written notice of his dissent or
abstention to the presiding officer of such meeting before its
adjournment or to the Secretary of the Company promptly after
adjournment of such meeting.
The right of dissent as to a specific action in a meeting of the
Board or a committee is not available to a director who votes in
favor of such action.
14. Executive and Other Committees. Except as otherwise
required by the Act, the Board of Directors, by the vote of a
majority of the number of directors then in office, may designate
from among its members an executive committee and one or more
other committees each of which, to the extent provided in the
resolution and except as otherwise prescribed by the Act, shall
have and may exercise the authority delegated to them by the
Board of Directors by charter, resolution or otherwise. No
committee shall:
(a) authorize dividends or other distributions;
(b) approve or propose to shareholders action that the
Act requires to be approved by shareholders;
(c) fill vacancies on the Board of Directors or on any
of its committees;
(d) amend the Articles of Incorporation;
(e) adopt, amend, or repeal these Bylaws;
(f) approve a plan of merger not requiring shareholder approval;
(g) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the Board
of Directors; or
(h) authorize or approve the issuance or sale of
shares, or a contract for the sale of shares, or determine the
designation and relative rights, preferences, and limitations of
a class or series of shares, except that with respect to this
clause (h) the Board of Directors may authorize a committee to do
so within limits specifically prescribed by the Board of Directors.
The provisions of these Bylaws governing meetings, action without
meeting, notice, waiver of notice, and quorum and voting
requirements of the Board of Directors shall apply to committees
and the members thereof. Each committee established by the Board
of Directors shall prepare minutes of its meetings which shall be
delivered to the Secretary of the Company for inclusion in the
Company's records.
15. Compensation of Directors. The Board of Directors
shall determine and fix the compensation, if any, and the
reimbursement of expenses which shall be allowed and paid to the
directors. Nothing herein contained shall be construed to
preclude any director from serving the Company in any other
capacity or any of its subsidiaries in any other capacity and
receiving proper compensation therefor.
16. Meeting by Telecommunication. One or more members of
the Board of Directors may participate in a meeting of the Board
of Directors through the use of any means of communication by
which all persons participating in the meeting can hear each
other at the same time. Such participation shall constitute
presence in person at the meeting.
ARTICLE IV
Officers
1. Appointment and Tenure. The officers of the Company
shall consist of a Chairman of the Board (sometimes herein called
the "Chairman"), a President, a Secretary and a Treasurer. The
Board of Directors may also designate and appoint such other
officers and assistant officers as may be deemed necessary. The
Board of Directors shall appoint the Company's officers annually
or at such other times as the Board shall designate. Such
officers at all times shall be subject to the supervision,
direction and control of the Board of Directors. The Board of
Directors may delegate, by specific resolution, to an officer the
power to appoint other specified officers or assistant officers.
Each officer appointed shall continue in office until the next
annual meeting of the Board of Directors at which officers are
appointed, or until such officer's earlier death, resignation or
removal. Any two or more offices may be held by the same person.
Each officer shall be a natural person who is eighteen years of
age or older.
2. Resignation, Removal and Vacancies. Any officer may
resign at any time by giving written notice of resignation to the
Board of Directors by delivery of such notice to the Secretary.
Such resignation shall take effect when the notice is received by
the Company unless the notice specifies a later effective date,
and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. The
Board of Directors may remove any officer at any time with or
without cause. The Board of Directors may also delegate to an
officer the power to remove other specified officers or assistant
officers. If any office becomes vacant for any reason, the
vacancy may be filled by, or as specifically authorized by, the
Board of Directors. An officer appointed to fill a vacancy shall
serve for the unexpired term of such officer's predecessor, or
until such officer's earlier death, resignation or removal.
3. Temporary Delegation of Duties. In case of the absence
of any officer, or his disability to perform his duties, or for
any other reason deemed sufficient by the Board of Directors, the
Board may delegate the powers and duties of such officer to any
other officer or to any director temporarily, provided that a
majority of the whole Board concur and that no such delegation
shall result in giving to the same person conflicting duties.
4. Chairman of The Board. The Chairman of the Board shall
preside at meetings of the Board of Directors and of the
shareholders at which he is present, and shall perform such other
duties as the Board of Directors may from time to time determine.
5. Chief Executive Officer. The Chief Executive Officer
(sometimes referred to herein as the "CEO"), if one is elected by
the Board of Directors, shall perform all duties customarily
delegated to the chief executive officer of a corporation and
such other duties as may from time to time be assigned to him by
the Board of Directors and these Bylaws.
6. President. If there is no separate Chief Executive
Officer, the President shall be the CEO of the Company;
otherwise, the President shall be responsible to the CEO for the
day-to-day operations of the Company. The President shall have
general and active management of the business of the Company;
shall see that all orders and resolutions of the Board of
Directors are carried into effect; and shall perform all duties
as may from time to time be assigned by the Board of Directors or
the Chief Executive Officer.
7. Vice Presidents. The Vice Presidents, if any, shall
perform such duties and possess such powers as from time to time
may be assigned to them by the Board of Directors or the President.
8. Secretary. The Secretary of the Company (sometimes
referred to herein as the "Secretary") shall have the duty and power to:
(a) Assure that all notices are given in accordance
with the provisions of these Bylaws and as required by law.
(b) Prepare and maintain the minutes of the meetings
of the shareholders, the Board of Directors and committees
thereof, and other records and information required to be kept by
the Company pursuant to the Act, including those records set
forth in Article X of these Bylaws.
(c) Authenticate records of the Company.
(d) In general, perform all duties incident to the
office of Secretary and such other duties as may, from time to
time, be assigned to him by the Board of Directors or the President.
9. Treasurer. The Treasurer shall have the duty and power to:
(a) Have the charge and custody of, and be responsible
for, all funds and securities of the Company and deposit all such
funds in the name of the Company in such banks, trust companies
or other depositories as shall be selected in accordance with the
provisions of these Bylaws or as directed by the Board.
(b) Maintain books of account and records and exhibit
such books of account and records to any of the directors of this
Company at any reasonable time.
(c) Render a statement of the condition of the
finances of the Company as requested by the Board of Directors
and, if called upon to do so, make a full financial report at the
annual meeting of the shareholders.
(d) Receive, and give receipts for, monies due and
payable to the Company from any source whatsoever.
(e) In general, perform all of the duties incident to
the office of Treasurer and such other duties as may, from time
to time, be assigned to him by the Board of Directors or the President.
10. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers, if any, shall
perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the President or the Board
of Directors. In the absence or at the request of the Secretary
or the Treasurer, the Assistant Secretaries or Assistant
Treasurers, respectively, shall perform the duties and exercise
the powers of the Secretary or Treasurer, as the case may be.
11. Bond of Officers. The Board of Directors may require
any officer or agent to give the Company a bond in such sum and
with such surety or sureties as shall be satisfactory to the
Board of Directors for such terms and conditions as the Board of
Directors may specify, including without limitation for the
faithful performance of such officer's duties and for the
restoration to the Company of any property belonging to the
Company in such officer's possession or under the control of such officer.
12. Compensation. The salaries and other compensation of
the officers shall be fixed or authorized from time to time by
the Board of Directors. No officer shall be prevented from
receiving such salary or other compensation by reason of the fact
that he is also a director of the Company.
ARTICLE V
Directors' Conflicts of Interest
1. Conflicting Interest Transaction. The term "conflicting
interest transaction" means any of the following:
(a) A loan or other assistance by the Company to a
director of the Company or to an entity in which a director of
the Company is a director or officer or has a financial interest;
(b) A guaranty by the Company of an obligation of a
director of the Company or of an obligation of an entity in which
a director of the Company is a director or officer or has a
financial interest; or
(c) A contract or transaction between the Company and
a director of the Company or between the Company and an entity in
which a director of the Company is a director or officer or has a
financial interest.
2. Effect of Conflict of Interest. No conflicting interest
transaction shall be void or voidable solely because the
conflicting interest transaction involves a director of the
Company or an entity in which a director of the Company is a
director or officer or has a financial interest or solely because
the director is present at or participates in the meeting of the
Board of Directors which authorizes, approves, or ratifies the
conflicting interest transaction or solely because the director's
vote is counted for such purpose if:
(a) The material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the Board of Directors
or the committee, and the Board or committee in good faith
authorizes, approves, or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors
are less than a quorum; or
(b) The material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed, or are known to the shareholders
entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved, or ratified in
good faith by vote of such shareholders; or
(c) The conflicting interest transaction is fair as to
the Company as of the time it is authorized, approved, or
ratified by the Board of Directors, a committee thereof, or the shareholders.
3. Notice to Shareholders. The Board of Directors or a
committee thereof shall not authorize a conflicting interest
transaction consisting of a loan or guaranty pursuant to
paragraph (a) of Section 1 above until at least 10 days after
written notice of the proposed authorization of the loan or
guaranty has been given to the shareholders who would be entitled
to vote thereon if the issue of the loan or guaranty were
submitted to a vote of the shareholders.
4. Interested Directors. Interested directors may be
counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes,
approves, or ratifies the contract or transaction.
ARTICLE VI
Indemnification
1. Directors. The Company shall indemnify, to the fullest
extent allowed by the Act, but subject to all conditions and
limitations provided by the Act, any person who serves or who has
served at any time as a director of the company, and any director
who, at the request of the Company, serves or at any time has
served as a director, officer, partner, trustee, employee,
fiduciary or agent of any other foreign or domestic corporation
or other person or entity or of an employee benefit plan, against
any and all liabilities and reasonable expenses incurred in
connection with any action, suit, or proceeding to which such
director is made a party, and which may be asserted against him
in such capacity. A director shall be considered to be serving an
employee benefit plan at the Company's request if his duties to
the Company also impose duties on, or otherwise involve services
by, him to the plan or to participants in or beneficiaries of the
plan. The Company shall not indemnify a director with respect to
conduct not reasonably related to his service to, or as requested
by, the Company or with respect to a personal benefit improperly
received by him.
2. Officers and Employees. The Company shall indemnify, to
the extent and in the manner described herein, any person who
serves or who has served at any time as an officer or employee of
the Company, and any officer or employee who, at the request of
the Company, serves or at any time has served as a director,
officer, partner, trustee, employee, fiduciary or agent of any
other foreign or domestic corporation or other person or entity
or of an employee benefit plan, against any and all liabilities
and reasonable expenses incurred in connection with any action,
suit or proceeding which is or may be asserted against the
officer or employee for acts within the scope of the officer or
employee's duties in such capacity, except for matters in which
the person shall be adjudged in any action, suit, or proceeding
to be liable for his own gross negligence or willful misconduct
in the performance of any duty, and except for any personal
benefit improperly received by him.
3. Mandatory Indemnification. The Company shall indemnify
a director, Officer or employee who was wholly successful, on the
merits or otherwise, in the defense of any action, suit or
proceeding to which the person was a party because the person is
or was a director, officer or employee, against liabilities and
reasonable expenses incurred by him in connection with the
action, suit or proceeding.
4. Agents and Fiduciaries. The Company may indemnify a
person who serves or who has served at any time as an agent or
fiduciary of the Company against liabilities and reasonable
expenses incurred in connection with any action, suit, or
proceeding to which he is made a party, or which may be asserted
against him, by reason of serving in such a capacity, in such
circumstances and in such amounts as the Board of Directors shall
deem appropriate.
5. Procedure. In each instance in which indemnification is
claimed or requested under Section 1 of this Article VI, the
Board of Directors shall determine, or shall direct any person or
body, as permitted by the Act, to determine (a) whether or not
indemnification is permissible in the circumstances, and (b) the
amount of liability and expenses with respect to which
indemnification should be provided. The responsibility for
implementing the indemnification of officers and employees
pursuant to Section 2 of this Article VI may be assigned to such
officers within the Company as the Board of Directors determines.
However, the Board retains its authority to review or consider
such matters in appropriate circumstances.
6. Other Remedies. Except as limited by the Act, any
indemnification provided herein shall be in addition to any other
rights to which those indemnified may be entitled by the Act or
pursuant to any agreement, vote of shareholders or otherwise, and
shall be available to the heirs, personal representatives and
successors of the person entitled to such indemnification.
7. Insurance. The Company may purchase and maintain
insurance on behalf of a person who is or was a director,
officer, employee, fiduciary, or agent of the Company, or who,
while a director, officer, employee, fiduciary, or agent of the
Company, is or was serving at the request of the Company as a
director, officer, partner, trustee, employee, fiduciary, or
agent of another domestic or foreign corporation or other person
or entity or of an employee benefit plan, against liability
asserted against or incurred by the person in that capacity or
arising from his status as a director, officer, employee,
fiduciary, or agent, whether or not the Company would have power
to indemnify the person against the same liability under the Act.
Any such insurance may be procured from any insurance company
designated by the Board of Directors, whether such insurance
company is formed under the laws of this state or any other
jurisdiction of the United States or elsewhere, including any
insurance company in which the Company has an equity or any other
interest through stock ownership or otherwise.
8. Notice to Shareholders. If the Company indemnifies or
advances expenses to a director under this Article in connection
with a proceeding by or in the right of the Company, the Company
shall give written notice of the indemnification or advance to
the shareholders with or before the notice of the next
shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the Board of Directors,
such notice shall be given to the shareholders at or before the
time the first shareholder signs a writing consenting to such action.
9. Selection of Counsel. Notwithstanding any other
provision of this Article, the Company may condition the right to
indemnification of a director, officer or employee on its right
to select legal counsel representing such director, officer or
employee on the terms of this section 9.
The Company shall have the right to select counsel for any
director, officer or employee in any legal action that may give
rise to indemnification under this Article VI provided that: (a)
the Company consults with the director, officer or employee
seeking indemnification with respect to the selection of
competent legal counsel; and (b) the Company pays all reasonable
fees and costs incurred by the attorney in defending the
director, officer or employee (subject to the Company's right to
recover such fees and costs if it is determined at the conclusion
of the action, suit or proceeding that there is no right of indemnification).
Notwithstanding any other provision of this Article, the Company
shall not be responsible for indemnification of any director,
officer or employee who declines to use counsel reasonably
selected by the Company as provided in this Section 9. Counsel
shall be deemed to be reasonably selected by the Company if such
counsel is a competent attorney who can independently represent
the director, officer or employee consistent with the applicable
ethical standards of the Code of Professional Responsibility.
ARTICLE VII
Execution of Instruments; Loans; Checks and Endorsements;
Deposits; Proxies
1. Execution of Instruments. Except as otherwise provided
by the Board of Directors, the Chairman, the President, any Vice
President, the Treasurer or the Secretary shall have the power to
execute and deliver on behalf of and in the name of the Company
any instrument requiring the signature of an officer of the
Company. Unless authorized to do so by these Bylaws or by the
Board of Directors, no assistant officer, agent or employee shall
have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable pecuniarily for any
purpose or in any amount.
2. Borrowing. No loan shall be contracted on behalf of the
Company, and no evidence of indebtedness shall be issued,
endorsed or accepted in its name, unless authorized by the Board
of Directors or a committee designated by the Board of Directors
so to act. Such authority may be general or confined to specific
instances. When so authorized, an officer may (a) effect loans at
any time for the Company from any bank or other entity and for
such loans may execute and deliver promissory notes or other
evidences of indebtedness of the Company; and (b) mortgage,
pledge or otherwise encumber any real or personal property, or
any interest therein, owned or held by the Company as security
for the payment of any loans or obligations of the Company, and
to that end may execute and deliver for the Company such
instruments as may be necessary or proper in connection with such transaction.
3. Attestation. All signatures authorized by this Article
may be attested, when appropriate or required, by any officer of
the Company except the officer who signs on behalf of the Company.
4. Loans to Directors, Officers and Employees. The Company
may lend money to, guarantee the obligations of, and otherwise
assist directors, officers and employees of the Company, or
directors of another corporation of which the Company owns a
majority of the voting stock, only upon compliance with the
requirements of the Act.
5. Checks and Endorsements. All checks, drafts or other
orders for the payment of money, obligations, notes or other
evidences of indebtedness issued in the name of the Company and
other such instruments shall be signed or endorsed for the
Company by such officers or agents of the Company as shall from
time to time be determined by resolution of the Board of
Directors, which resolution may provide for the use of facsimile signatures.
6. Deposits. All funds of the Company not otherwise
employed shall be deposited from time to time to the Company's
credit in such banks or other depositories as shall from time to
time be determined by resolution of the Board of Directors, which
resolution may specify the officers or agents of the Company who
shall have the power, and the manner in which such power shall be
exercised, to make such deposits and to endorse, assign and
deliver for collection and deposit checks, drafts and other
orders for the payment of money payable to the Company or its order.
7. Voting of Securities and Other Entities. Unless
otherwise provided by resolution of the Board of Directors, the
Chairman, Chief Executive Officer, or the President, or any
officer designated in writing by any of them, is authorized to
attend in person, or may execute written instruments appointing a
proxy or proxies to represent the Company, at all meetings of any
corporation, partnership, limited liability company, association,
joint venture, or other entity in which the Company holds any
securities or other interests and may execute written waivers of
notice with respect to any such meetings. At all such meetings,
any of the foregoing officers, in person or by proxy as aforesaid
and subject to the instructions, if any, of the Board of
Directors, may vote the securities or interests so held by the
Company, may execute any other instruments with respect to such
securities or interests, and may exercise any and all rights and
powers incident to the ownership of said securities or interests.
Any of the foregoing officers may execute one or more written
consents to action taken in lieu of a formal meeting of such
corporation, partnership, limited liability company, association,
joint venture, or other entity.
ARTICLE VIII
Shares of Stock
1. Certificates of Stock. The issuance or sale of shares of
stock by the Company shall be made only upon authorization by the
Board of Directors. Stock certificates shall be in a form
designated by the Board of Directors which complies with
provisions of the Act. They shall be numbered in the order of
their issue and shall be signed by the President or the CEO and
by the Secretary or the Treasurer. Facsimile signatures may be
used if the certificate is countersigned by a transfer agent. A
transfer agent may be an independent third party, the Company
itself, or an employee of the Company. The validity of any
certificate for shares, otherwise valid, shall not be affected in
the event that the delivery of such a certificate occurs after an
officer or agent whose signature appears therein is no longer an
officer or agent. The stock record books and the blank stock
certificate books shall be kept by the Secretary or by any other
officer or agent designated by the Board of Directors for that
purpose. Notice of any restrictions on the transfer of stock
shall be printed or typed on each stock certificate issued by the Company.
2. Shares Without Certificates. The Board of Directors may
authorize the issuance of shares of the Company without
certificates. Such authorization shall not affect shares already
represented by certificates until they are surrendered to the
Company. Within a reasonable time following the issue or transfer
of shares without certificates, the Company shall send the
shareholder a complete written statement of the information that
would be required on certificates by the Act.
3. Transfer of Stock. Subject to any transfer restrictions
set forth or referred to on the stock certificate or of which the
Company otherwise has notice, shares of the Company shall be
transferable on the books of the Company upon presentation to the
Company or to the Company's transfer agent of a stock certificate
signed by, or accompanied by an executed assignment from, the
holder of record thereof, his duly authorized legal
representative, or other appropriate person as permitted by the
Act. The Company may require that any transfer of shares be
accompanied by proper evidence reasonably satisfactory to the
Company or to the Company's transfer agent that such endorsement
is genuine and effective. Upon presentation of shares for
transfer as provided above, the payment of all taxes, if any,
therefor, and the satisfaction of any other requirement of law,
including inquiry into and discharge of any adverse claims of
which the Company has notice, the Company shall issue a new
certificate to the person entitled thereto and cancel the old
certificate. Every transfer of stock shall be entered on the
stock books of the Company to accurately reflect the record
ownership of each share. The Board of Directors also may make
such additional rules and regulations as it may deem expedient
concerning the issue, transfer, and registration of certificates
for shares of the capital stock of the Company.
4. Restrictions on Transfer. The following provisions
shall govern (1) the transferability of all shares of the Class A
Common Stock and (2) the transferability of those shares of the
Class B Common Stock (non-voting) which were issued in
transactions which were not registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended
(the "Restricted Class B Shares"):
(a) The holder of any such share or shares of Class A
Common Stock desiring to sell such stock shall:
(i) First offer the shares to the Company and the
Company shall have the right and option for a
period of 90 days from the date such tender
is made to make such purchase.
(ii) Then offer such shares, or any remaining
shares, to William K. Coors and Joseph Coors,
or to the survivor of them if only one of
them is then living, and they shall have the
right and option for 30 days from the date
tender is made to them to make such purchase.
They or either of them may elect to exercise
the option in whole or in part and in the
absence of a contrary agreement between
themselves shall participate equally in any
such purchase.
(iii) The tenders above provided shall in each
case be of all and every one of the shares,
or of the remaining shares as the case may
be, which the offeror desires to sell and the
Company, and/or William K. Coors and Joseph
Coors, or the survivor of them if only one of
them is then living (individually, "the
offeree" and collectively, "the offerees")
shall successively have the right to purchase
all or any of the shares tendered for
purchase to it, to him, or to them.
(iv) The price to be paid by the offeree or
offerees, if the option is exercised in whole
or in part, shall be in cash (unless terms
are otherwise agreed upon) and shall be the
price agreed upon by the offeree or offerees
and the offeror, or if there is no such
agreement, then the price shall be equal to
the market value of the Class B Common Stock
(non-voting), i.e., the average of the high
and low bid price for the Class B Common
Stock on the last business day, prior to the
date of such tender, on which said Class B
Common Stock was traded.
(v) If any shares remain unsold after the
tenders provided for in subparagraphs (i) and
(ii) above, such remaining shares may,
subject to the provisions of subparagraph
(vi) below, be sold to third-parties free of
the restrictions on transfers set forth in
subparagraphs (i) through (iv) above.
(vi) If more than six months have elapsed after
the date the last said tender was made under
the provisions of subparagraph (ii) and such
tender was not accepted in whole or in part
before a sale to third parties could be
consummated under subparagraph (v), the
holder of the shares of Class A Common Stock
evidenced by the relevant stock certificate
must, before again attempting to sell all or
any part thereof, comply with the provisions
of subparagraphs (i) and (ii) above.
(b) Except as provided otherwise in these Bylaws, the
sale of any Restricted Class B Shares shall be made in accordance
with the following provisions:
(i) The holder of such shares shall offer the
shares to the Company, which shall have the
right and option for a period of ten days
from the date tender is made to make such purchase.
(ii) The price to be paid by the Company, if the
option is exercised in whole or in part,
shall be in cash (unless terms are otherwise
agreed upon) and shall be the price agreed
upon by the Company and the offeror, or if
there is no such agreement, then the price
shall be the market value of the stock (i.e.,
the average of the high and low bid price for
the stock) on the last business day, prior to
the date of such tender, on which the stock was traded.
(iii) If any shares remain unsold after the time
provided for in subparagraph (i) above, such
remaining shares may, subject to the
registration requirements of applicable
securities laws or exemptions therefrom, and
subject to the provisions of subparagraph
(iv) below, be sold to third parties free of
the restrictions on transfers contained in these Bylaws.
(iv) If more than six months have elapsed after the
date the last said tender was made under the
provisions of subparagraph (i) and such
tender was not accepted in whole or in part
before a sale to third parties could be
consummated under subparagraph (iii), the
holder of such shares must, before again
attempting to sell all or any part thereof, comply
with the provisions of this section of these Bylaws.
(c) The procedures set forth under subparagraph (b)
above shall not apply to a transfer by a shareholder when made by
his Last Will and Testament; or, in the case of intestacy, when a
transfer is effected pursuant to the laws of descent and
distribution; or to an inter vivos gift made by such shareholder;
provided the recipients of said stock and all persons claiming
by, through or under them shall be and remain bound by the
provisions of this section of the Bylaws.
(d) The restrictions contained herein shall not apply
to any shares of Class B Common Stock which have been sold to the
public. For the purposes hereof, the term "sold to the public"
shall mean the following:
(i) Any shares sold in transactions covered by an
effective registration statement under the
Securities Act of 1933, as amended; and
(ii) Any shares sold on the open market or
otherwise in transactions relying upon the
exemption from registration provided in
Section 4(1) of the Securities Act of 1933,
as amended, including sales made in
conformity with Rule 144 thereunder.
5. Preferred Stock. Shares of preferred stock shall be
issued by the Company only after filing the Statement of
Designations described in paragraph (d) of Article IV of the
Company's Articles of Incorporation with the Colorado Secretary
of State and satisfying all other requirements of the Articles of
Incorporation and the Act with respect thereto.
6. Holders of Record. The Company shall be entitled to
treat the holder of record of any share of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, except as may be allowed by these Bylaws or
required by the laws of Colorado.
7. Shares Held for the Account of a Specified Person or
Persons. The Board of Directors, in the manner provided by the
Act, may adopt a procedure whereby a shareholder of the Company
may certify in writing to the Company that all or a portion of
the shares registered in the name of such shareholder are held
for the account of a specified person or persons.
8. Lost, Destroyed and Mutilated Certificates. The holder
of any stock of the Company shall notify the Company of any loss,
destruction, or mutilation of the certificate therefor and the
Secretary shall cause a new certificate or certificates to be
issued to him upon the surrender of the mutilated certificate or,
in case of loss or destruction of the certificate, upon
satisfactory proof of such loss or destruction and, in the
discretion of the Secretary, the deposit of a bond in such form
and amount (not exceeding double the value of the stock
represented by such certificate) and with such surety or sureties
as the Secretary may require.
ARTICLE IX
Dividends and Other Distributions
Subject to the provisions of the Act, dividends and other
distributions may be declared by the Board of Directors in such
form, frequency and amounts as the condition of the affairs of
the Company shall render advisable.
ARTICLE X
Corporate Records
1. Permanent Records. The Company shall keep as permanent
records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or
the Board of Directors without a meeting, a record of all actions
taken by a committee of the Board of Directors in place of the
Board of Directors on behalf of the Company, and a record of all
waivers of notices of meetings of shareholders and of the Board
of Directors or any committee of the Board of Directors.
2. Records at Principal Office. The Company shall comply
with the provisions of the Act regarding maintenance of records
and shall keep the following records at its principal office:
(a) its Articles of Incorporation;
(b) its Bylaws;
(c) the minutes of all shareholders' meetings, and
records of all action taken by shareholders without a meeting,
for the past three years;
(d) all written communications within the past three
years to shareholders as a group or to the holders of any class
or series of shares as a group;
(e) a list of the names and business addresses of its
current directors and officers;
(f) a copy of its most recent corporate report
delivered to the Secretary of state pursuant to the Act; and
(g) all financial statements prepared for periods
ending during the last three years that a shareholder could have
requested pursuant to the Act.
3. Addresses of Shareholders. Each shareholder shall
furnish to the Secretary of the Company or the Company's transfer
agent an address to which notices from the Company, including
notices of meetings, may be directed and if any shareholder shall
fail so to designate such an address, it shall be sufficient for
any such notice to be directed to such shareholder at such
shareholder's address last known to the Secretary or transfer agent.
4. Record of Shareholders. The Secretary shall maintain,
or shall cause to be maintained, a record of the names and
addresses of the Company's shareholders, in a form that permits
preparation of a list of shareholders that is arranged by voting
group and, within each voting group, by class or series of
shares, that is alphabetical within each class or series, and
that shows the address of, and the number of shares of each class
or series held by, each shareholder.
5. Inspection of Corporate Records. Shareholders shall
have those rights to receive by mail or to inspect and copy such
Company records, pursuant to such procedures, as provided in the Act.
6. Audits of Books and Accounts. The Company's books and
accounts may be audited at such times and by such auditors as
shall be specified and designated by resolution of the Board of Directors.
ARTICLE XI
Miscellaneous
1. Corporate Seal. The corporate seal shall be in the form
approved by resolution of the Board of Directors. Said seal may
be used by causing it or a facsimile thereof to be impressed or
affixed or in any other manner reproduced. The impression of the
seal may be made and attested by either the Secretary or any
Assistant Secretary for the authentication of contracts or other
papers requiring the seal.
2. Fiscal Year. The fiscal year of the Company shall be as
established by the Board of Directors.
3. Emergency Bylaws and Actions. Subject to repeal or
change by action of the shareholders, the Board of Directors may
adopt emergency bylaws and exercise other powers in accordance
with and pursuant to the provisions of the Act.
4. Amendments. The Board of Directors may amend, restate,
or repeal the Bylaws or adopt new Bylaws by the affirmative vote
of the number of directors constituting two-thirds of the full
Board at any annual meeting of the Board or any other meeting
called for that purpose. The holder of the Class A Common Stock
by affirmative vote also may amend, restate, or repeal the Bylaws
or adopt new Bylaws at an annual shareholders meeting or a
special meeting called, wholly or in part, for such purpose. The
power of the Board of Directors to amend or repeal the Bylaws or
to adopt new Bylaws may be limited by the Articles of
Incorporation; by adoption of an amendment to the Articles of
Incorporation, or by an amendment to the Bylaws adopted by the
holder of the Class A Common Stock which reserves such authority
in whole or in part to said shareholder with respect to a
particular Bylaw.
5. Gender. The masculine gender is used in these Bylaws as
a matter of convenience only and shall be interpreted to include
the feminine gender as the circumstances indicate.
6. Definitions. Terms not otherwise defined in these
Bylaws shall have the meanings set forth in the Act.
7. Conflicts. In the event of any irreconcilable conflict
between these Bylaws and either the Articles of Incorporation or
the Act, the Articles of Incorporation shall control; provided
that, if there is any irreconcilable conflict between the
Articles of Incorporation and the Act, then the Act shall control.
The foregoing Bylaws of Adolph Coors Company, consisting of
22 pages, amended and restated as of August 14, 1997, were approved and
adopted by the Board of Directors on this 14th day of August 1997.
Secretary
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective February 12, 1998
TABLE OF CONTENTS
Page
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 2
Section 3 Plan Administration 2
3.1 General 2
3.2 Claims 3
Section 4 Stock Subject to the Plan 3
4.1 Number of Shares 3
4.2 Other Shares of Stock 3
4.3 Adjustments for Stock Split, Stock Dividend, Etc 3
4.4 Other Distributions and Changes in the Stock 4
4.5 General Adjustment Rules 4
4.6 Determination by the Committee, Etc 4
Section 5 Reorganization or Liquidation 4
Section 6 Participation 5
6.1 In General 5
6.2 Restriction on Award Grants to Certain Individuals 5
6.3 General Restrictions on Awards 5
Section 7 Stock Options 5
7.1 Grant of Stock Options 5
7.2 Stock Option Certificates 5
7.3 Shareholder Privileges 8
Section 8 Restricted Stock Awards 8
8.1 Grant of Restricted Stock Awards 8
8.2 Restrictions 8
8.3 Privileges of a Stockholder, Transferability 8
8.4 Enforcement of Restrictions 8
Section 9 Purchase of Stock 9
9.1 General 9
9.2 Other Terms 9
Section 10 Other Common Stock Grants 9
Section 11 Company Right To Purchase Stock 9
11.1 Right of First Refusal 9
11.2 Marking of Certificates 10
Section 12 Change in Control 10
12.1 In General 10
12.2 Limitation on Payments 10
Section 13 Rights of Employees; Participants 11
13.1 Employment 11
13.2 Nontransferability 11
Section 14 General Restrictions 11
14.1 Investment Representations 11
14.2 Compliance with Securities Laws 11
14.3 Changes in Accounting Rules 11
Section 15 Other Employee Benefits 12
Section 16 Plan Amendment, Modification and Termination 12
Section 17 Withholding 12
17.1 Withholding Requirement 12
17.2 Withholding With Stock 12
Section 18 Requirements of Law 12
18.1 Requirements of Law 12
18.2 Federal Securities Law Requirements 12
18.3 Governing Law 13
Section 19 Duration of the Plan 13
ADOLPH COORS COMPANY
EQUITY INCENTIVE PLAN
Amended and restated,
effective February 12, 1998
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,
the Company hereby amends and restates the Plan in its entirety,
effective February 12, 1998, provided, however, that the
amendment to Section 4.1 increasing the number of shares of
Stock subject to the Plan is effective November 19, 1997.
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 judgment, 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 AdministrationAdministration
3.1 General. 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.
3.2 Claims.
(a) A Participant who wishes to appeal any
determination of the Committee concerning an Award granted
pursuant to the Plan shall notify the Committee in a writing,
which shall state the basis for the appeal. The appeal shall be
filed with the Committee within 30 days after the date the
Participant received the notice from the Committee. The written
appeal may be filed by the Participant's authorized
representative. The Committee shall review the appeal and issue
its decision within 90 days after it receives the Participant's
appeal. If the Committee needs additional time to review the
appeal, it shall notify the Participant in writing and specify
when it expects to render its decision. After completion of its
review, the Committee shall notify the Participant of its
decision in writing, which shall state the reasons for the
Committee's decision.
(b) If, after the completion of the procedure set
forth in the preceding paragraph, the Participant wishes to
further pursue the appeal, the appeal shall be submitted to, and
determined through, binding arbitration in Denver, Colorado in
accordance with the arbitration procedures of the American
Arbitration Association ("AAA") existing at the time the
arbitration is conducted, before a single arbitrator chosen in
accordance with AAA procedures. The decision of the arbitrator
shall be enforceable as a court judgment.
Section 4
Stock Subject to the Plan
4.1 Number of Shares. Eight Million (8,000,000) 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
compensation 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 unexercised,
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
substitution 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 the Options immediately after 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 unexercised 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. Notwithstanding
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.
6.3 General Restrictions on Awards. Awards covering no
more than 1,000,000 shares of Stock may be granted to any
Participant under this Plan during the term of this Plan.
Section 7
Stock OptionsOptions
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 exercise 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 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 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 an
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 provide 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
representing 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 (the "Additional Shares").
Notwithstanding the foregoing, if a Participant has validly
elected, in accordance with the provisions of the Adolph
Coors Company Deferred Compensation Plan, or any successor
plan, to defer the receipt of such Additional Shares, then
such Additional Shares shall be issued and delivered to the
trustee of the trust formed pursuant to the provisions of
such Deferred Compensation Plan, or otherwise deferred in
accordance with the provisions of such Deferred Compensation
Plan, and the rights of the Participant with respect to such
Additional Shares shall be determined in accordance with the
provisions of the Deferred Compensation Plan.
(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 Participant'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 discretion 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 a 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 prevailing 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 Participant 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 Agreement] [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
substantially 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 Affiliated 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 of 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 effected 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
provision 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 judgment 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
Participant 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 withholding 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: ___________________________
ADOLPH COORS COMPANY
ATTEST:
____________________________
By:________________________________________
ADOLPH COORS COMPANY
EQUITY COMPENSATION PLAN
FOR
NON-EMPLOYEE DIRECTORS
Amended and Restated,
Effective August 14, 1997
SECTION 1
INTRODUCTION
1.1 Establishment; Amendment and Restatement. Adolph Coors
Company, a Colorado corporation (the "Company"), established the
Adolph Coors Company Equity Compensation Plan for Non-Employee
Directors (the "Plan") effective May 16, 1997, for those
directors ("Directors") of the Company who are neither officers
nor employees of the Company. The Plan provides for the grant of
restricted stock awards to Directors of the Company. The Plan was
amended and restated effective November 7, 1996. Section 10 of
the Plan provides that the Company, by action of the Board, may
amend the Plan from time to time. The Plan is hereby amended and
restated, effective August 14, 1997, as set forth herein.
1.2 Purposes. The purposes of the Plan are to encourage the
Directors to own shares of the Company's stock and thereby to
align their interests more closely with the interests of the
other shareholders of the Company, to encourage the highest level
of Director performance by providing the Directors with a direct
interest in the Company's attainment of its financial goals, and
to provide a financial incentive that will help attract and
retain the most qualified Directors.
1.3 Effective Date. The effective date of the amended and
restated Plan is August 14, 1997. The amended and restated Plan
and each award granted under the amended and restated Plan is
conditioned on and shall be of no force or effect until (a)
approval of the amended and restated Plan by the holders of a
majority of the shares of voting stock of the Company and (b)
receipt by the Company, in form and substance satisfactory to
counsel for the Company, of the concurrence of the staff of the
Securities and Exchange Commission with the opinions set forth in
a "no-action letter," related to Rule 16b-3 or any successor rule
("Rule 16b-3") promulgated under the Securities Exchange Act of
1934 (the "1934 Act"), unless the Company, on the advice of
counsel, determines that shareholder approval, a "no action
letter," or both are not necessary.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings
set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "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.
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.
(c) "Director" means a member of the Board who is neither an
officer nor an employee of the Company. For purposes of the Plan,
an employee is an individual whose wages are subject to the
withholding of federal income tax under section 3401 of the
Internal Revenue Code, and an officer is an individual elected or
appointed by the Board or chosen in such other manner as may be
prescribed in the bylaws of the Company to serve as such.
(d) "Disability" means a physical or mental condition of a
Director that is determined by the Social Security Administration
to entitle the Director to a Social Security disability benefit.
(e) "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.
(f) "Internal Revenue Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.
(g) "Restricted Stock Award" means an award of Stock granted to
a Director pursuant to Section 6 that is subject to certain
restrictions imposed in accordance with the provisions of the Plan.
(h) "Stock" means the no par value Class B (non-voting) Common
Stock of the Company.
(i) "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 Committee shall be responsible for the administration of the
Plan. However, the Committee shall have no authority, discretion
or power to select the Directors who will receive Restricted
Stock Awards, determine the Restricted Stock Awards to be granted
pursuant to the Plan, the number of shares of Stock to be issued
thereunder or the time at which such Restricted Stock Awards are
to be granted, establish the duration and nature of Restricted
Stock Awards or alter any other terms or conditions specified in
the Plan, except in the sense of administering the Plan subject
to the provisions of the Plan. Subject to the foregoing
limitations, the Committee, by majority action thereof, is
authorized to interpret the Plan, prescribe, amend and rescind
rules and regulations relating to the Plan, provide for
conditions and assurances deemed necessary or advisable to
protect the interests of the Company and make all other
determinations necessary or advisable for the administration of
the Plan, but only to the extent not contrary to the express
provisions of the Plan. 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. Fifty thousand (50,000) 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 which are issued as Restricted Stock
Awards 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 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 a Restricted Stock Award and which are forfeited, and any
shares of Stock that for any other reason are not issued to a
Director, shall automatically become 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 Restricted Stock Awards may be granted under
the Plan; and (ii) the shares of the Stock then included in each
outstanding Restricted Stock Award granted hereunder.
4.4 Dividend Payable in Stock of Another Corporation, Etc. If
the Company shall at any time pay or make any dividend or other
distribution upon the Stock payable in securities or other
property (except money or Stock), a proportionate part of such
securities or other property shall be set aside and delivered to
any Director then holding a Restricted Stock Award upon lapse of
all restrictions applicable to such Restricted Stock Award. Prior
to the time that any such securities or other property are
delivered to a Director in accordance with the foregoing, the
Company shall be the owner of such securities or other property
and shall have the right to vote the securities, receive any
dividends payable on such securities and in all other respects
shall be treated as the owner. If securities or other property
which have been set aside by the Company in accordance with this
Section are not delivered to a Director because restrictions
applicable to such Restricted Stock Award do not lapse, then such
securities or other property shall remain the property of the
Company and shall be dealt with by the Company as it shall
determine in its sole discretion.
4.5 Other Changes in Stock. In the event there shall be any
change, other than as specified in Sections 4.3 and 4.4, 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 such change equitably requires an
adjustment in the number or kind of shares subject to outstanding
Restricted Stock Awards or which have been reserved for issuance
pursuant to the Plan but are not then subject to a Restricted
Stock Award, then such adjustments shall be made by the Committee
and shall be effective for all purposes of the Plan and on each
outstanding Restricted Stock Award that involves the particular
type of stock for which a change was effected.
4.6 Rights to Subscribe. If 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 of any other corporation, there shall be reserved with
respect to the shares then outstanding pursuant to any Restricted
Stock Award the Stock or other securities which the Director
would have been entitled to subscribe for if immediately prior to
such grant the restrictions applicable to such Restricted Stock
Award had lapsed. Upon the lapse of all restrictions applicable
to Stock held pursuant to a Restricted Stock Award the Director
shall be provided the opportunity to subscribe for the additional
shares or other securities issuable with respect to such shares of Stock.
4.7 General Adjustment Rules. No adjustment or substitution
provided for in this Section 4 shall require the Company to issue
a fractional share of Stock, and the total substitution or
adjustment with respect to each Restricted Stock Award shall be
limited by deleting any fractional share. In the case of any such
substitution or adjustment appropriate adjustments shall be made
to Restricted Stock Awards to reflect any such substitution or adjustment.
4.8 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
PARTICIPATION
5.1 In General. Each Director shall receive Restricted Stock
Awards on the terms and conditions set forth under the Plan. Each
Director shall, if required by the Committee, enter into an
agreement with the Company, in such form as the Committee shall
determine and which is consistent with the provisions of the
Plan. 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.
5.2 Restriction on Award Grants to Certain Individuals.
Notwithstanding the foregoing provisions of Section 5.1, no
Restricted Stock 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 6
RESTRICTED STOCK AWARDS
6.1 Minimum Grant of Restricted Stock. Each Director shall
receive twenty percent of the value of his annual retainer as a
Director in the form of a Restricted Stock Award (the "Minimum
Grant"). If a Director is elected as a Director after the
beginning of the annual term for Directors, which begins at the
May annual shareholders meeting, the Director shall receive a
Minimum Grant in the form of a Restricted Stock Award based upon
twenty percent of the value of the retainer to be received by the
Director for the partial term.
6.2 Elective Grant of Restricted Stock. Each Director may make
an annual election (the "Election") to receive any or all of the
remaining cash balance of his annual retainer as a Director in
the form of a Restricted Stock Award (the "Elective Grant"). The
Minimum Grant and the Elective Grant are hereafter referred to as
the "Grants". The Election must be in writing and must be
delivered to the Secretary of the Company no later than the last
business day of the month during which the annual meeting of
shareholders of the Company is held, provided, however, that a
Director who is elected as a Director after the beginning of the
annual term may make an Election to receive an Elective Grant no
later than the last business day of the month during which the
Director is elected as a Director of the Company. Any Election
made by a Director pursuant to this Section 6.2 shall be irrevocable.
6.3 Date of Grant, Number of Shares. The Minimum Grant and
Elective Grant, if any, to Directors who are elected at the
annual meeting of shareholders shall be made on the last business
day of the month during which the annual meeting of shareholders
of the Company is held. The Minimum Grant and Elective Grant, if
any, to Directors who are elected subsequent to the annual
meeting of shareholders shall be made on the last business day of
the month during which the Director is elected as a Director of
the Company. The total number of shares of stock included in each
Restricted Stock Award shall be determined by dividing the amount
of the Director's retainer for such annual term that is to be
paid in restricted Stock by the Fair Market Value of a share of
Stock on the day the Restricted Stock is granted. In no event
shall the Company be required to issue fractional shares.
Whenever under the terms of this Section 6 a fractional share of
Stock would otherwise be required to be issued, an amount in lieu
thereof shall be paid in cash based upon the Fair Market Value of
such fractional share.
6.4 Retention of Award, Termination. If a Director's services
as a Board member terminate for any reason at any time before the
completion of the Director's annual term of service, the Director
shall be vested in a portion of the shares of Stock granted
pursuant to the Grants. The number of vested shares of Stock
shall be determined by multiplying the number of shares of Stock
included in the Grants by a fraction, the denominator of which is
the number of scheduled quarterly Directors' meetings for the
annual Director's term in question, or in the case of a Director
who is elected subsequent to the annual shareholders meeting, the
number of scheduled quarterly Directors' meetings remaining in
the annual term on and after the date of such election, and the
numerator of which is the number of scheduled quarterly
Directors' meetings attended by the Director in such term or a
portion of such term, as applicable. Any fractional share shall
be rounded down to the next whole share. The remaining number of
shares shall be nonvested and shall be forfeited.
6.5 Restrictions. Except as otherwise provided in the Plan,
shares of Stock received pursuant to a Restricted Stock Award may
not be sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of until the restrictions applicable to such
Stock have lapsed pursuant to Section 6.6.
6.6 Lapse of Restrictions. Except as provided in Section 9, all
restrictions on Stock covered by a Restricted Stock Award
pursuant to this Section 6 shall lapse upon completion of the
Director's annual term of service during which the Restricted
Stock Award was granted.
6.7 Privileges of a Stockholder, Transferability. A Director
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 6. A
Director's right to sell, encumber or otherwise transfer Stock
after restrictions applicable to such Stock pursuant to this
Section 6 have lapsed shall be subject to the limitations of Section 9.
6.8 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 imposed
in the Plan and, in addition, may in its sole discretion require
one or more of the following methods of enforcing such restrictions:
(a) Requiring the Director 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 7
REORGANIZATION OR CHANGE OF CONTROL
7.1 Reorganization. In the event that the Company is merged or
consolidated with another corporation (other than a merger or
consolidation in which the Company is the continuing corporation
and which does not result in any reclassification or change of
outstanding stock), 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
(other than a sale or conveyance in which the Company continues
as a holding company of an entity or entities that conduct the
business or businesses formerly conducted by the Company), or in
case of a reorganization (other than a reorganization under the
United States Bankruptcy Code) or liquidation of the Company, the
Committee, or the board of directors of any corporation assuming
the obligations of the Company, shall, as to the Plan and
outstanding Restricted Stock 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 Restricted Stock Awards by the substitution on
an equitable basis of appropriate stock of the Company or of the
merged, consolidated or otherwise reorganized corporation which
will be issuable with respect to the Stock, provided that no
additional benefits shall be conferred upon the Directors holding
such Restricted Stock Awards as a result of such substitution, or
(ii) accelerate the restriction period for any outstanding
Restricted Stock Awards so that all restrictions applicable to
Restricted Stock Awards shall lapse prior to any such event.
7.2 Change of Control. In the event of a change of control of
the Company, as defined below, then all restrictions with respect
to outstanding Restricted Stock Awards shall immediately lapse.
For purposes of the Plan, a "change of control" shall be deemed
to have occurred if during any period of two consecutive years
(not including any period prior to the Effective Date),
individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or whose
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority thereof.
SECTION 8
RIGHTS OF DIRECTORS
8.1 Retention as Director. Nothing contained in the Plan or in
any Restricted Stock Award granted under the Plan shall interfere
with or limit in any way the right of the shareholders of the
Company to remove any Director from the Board pursuant to the
bylaws of the Company, nor confer upon any Director any right to
continue in the service of the Company.
8.2 Nontransferability. No right or interest of any Director in
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 Director, 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 Director's death, a
Director's rights and interests in Restricted Stock Awards shall,
to the extent vested as provided in Section 6, be transferable by
testamentary will or the laws of descent and distribution. 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 9
COMPANY RIGHT TO PURCHASE STOCK
9.1 Right of First Refusal. (a) In the event of the death of a
Director, or if a Director at any time proposes to transfer to a
third party any of the Stock acquired pursuant to the Plan on or
after the effective date of this amended and restated Plan, the
Director (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
Director (or thereafter acquired by the Director's estate or
personal representative pursuant to any Restricted Stock 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 a 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 9 shall apply to proposed
sales through or to a registered broker/dealer at the prevailing
market price, even if the prevailing 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 9.1(d).
(b) The Company shall exercise its right to purchase the Stock
by given written notice of its exercise to the Director (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
Director 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 Director can transfer any
portion of his shares and the provisions of this Section 9 shall
again apply to such transfer. If the Company's right of first
refusal under this Section 9 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 9 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 9 shall be equal to the Fair
Market Value of the Stock on the date the Company receives the
Offer under subsection 9.1(a).
9.2 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 Compensation Plan for Non-Employee Directors, as
the Plan may be amended from time to time (the "Plan").
Copies of the Plan are on file at the office of the
Company. The Plan, among other things, limits 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 10
GENERAL RESTRICTIONS
10.1 Investment Representations. The Company may require any
Director to whom a Restricted Stock Award is granted, as a
condition of receiving such Restricted Stock Award, 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 Restricted Stock Award 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.
10.2 Compliance with Securities Laws. Each Restricted Stock
Award shall be subject to the requirement that, if at any time
counsel to the Company shall determine that the listing,
registration or qualification of the shares subject to such
Restricted Stock Award 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 of shares thereunder, such
Restricted Stock Award may not be accepted or exercised in whole
or in part unless such listing, registration, qualification,
consent or approval shall have been effected 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.
10.3 Changes in Accounting Rules. Notwithstanding any other
provision of the Plan to the contrary, if, during the term of the
Plan, any changes in the financial or tax accounting rules
applicable to Restricted Stock Awards shall occur which, in the
sole judgment 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 Restricted Stock Awards as to
which the applicable restrictions have not been satisfied.
10.4 Withholding of Tax. To the extent required by applicable
law and regulation, each Director must arrange with the Company
for the payment of any federal, state or local income or other
tax applicable to the Restricted Stock Award granted hereunder
before the Company shall be required to deliver to the Director a
certificate for such Stock free and clear of all restrictions
under Section 6 of this Plan.
SECTION 11
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 Restricted Stock Awards
theretofore granted under the Plan without the consent of the
Director holding such Restricted Stock Awards.
SECTION 12
REQUIREMENTS OF LAW
12.1 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.
12.2 Federal Securities Law Requirements. Awards granted
hereunder shall be subject to all conditions required under Rule
16b-3 to qualify the Restricted Stock 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 Director which describes the Restricted Stock Award.
12.3 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 13
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Board of
Directors, and no Restricted Stock Award shall be granted after such
termination. Restricted Stock Awards outstanding at the time of the Plan
termination shall become free of restrictions in accordance with their terms.
Dated: ______________________
ATTEST: ADOLPH COORS COMPANY
_____________________________ By:
TABLE OF CONTENTS
Page
SECTION 1- INTRODUCTION 1
1.1 Establishment; Amendment and Restatement 1
1.2 Purposes 1
1.3 Effective Date 1
SECTION 2 - DEFINITIONS 1
2.1 Definitions 1
2.2 Gender and Number 2
SECTION 3 - PLAN ADMINISTRATION 2
SECTION 4 - STOCK SUBJECT TO THE PLAN 3
4.1 Number of Shares 3
4.2 Other Shares of Stock 3
4.3 Adjustments for Stock Split, Stock Dividend, Etc 3
4.4 Dividend Payable in Stock of Another Corporation, Etc 3
4.5 Other Changes in Stock 4
4.6 Rights to Subscribe 4
4.7 General Adjustment Rules 4
4.8 Determination by the Committee, Etc 4
SECTION 5 - PARTICIPATION 4
5.1 In General 4
5.2 Restriction on Award Grants to Certain Individuals 4
SECTION 6 - RESTRICTED STOCK AWARDS 5
6.1 Minimum Grant of Restricted Stock 5
6.2 Elective Grant of Restricted Stock 5
6.3 Date of Grant, Number of Shares 5
6.4 Retention of Award, Termination. 5
6.5 Restrictions 6
6.6 Lapse of Restrictions 6
6.7 Privileges of a Stockholder, Transferability 6
6.8 Enforcement of Restrictions 6
SECTION 7 - REORGANIZATION OR CHANGE OF CONTROL 6
7.1 Reorganization 6
7.2 Change of Control 7
SECTION 8 - RIGHTS OF DIRECTORS 7
8.1 Retention as Director 7
8.2 Nontransferability 7
SECTION 9 - COMPANY RIGHT TO PURCHASE STOCK 7
9.1 Right of First Refusal 7
9.2 Marking of Certificates 8
SECTION 10 - GENERAL RESTRICTIONS 8
10.1 Investment Representations 8
10.2 Compliance with Securities Laws 9
10.3 Changes in Accounting Rules 9
10.4 Withholding of Tax 9
SECTION 11 - PLAN AMENDMENT, MODIFICATION AND TERMINATION 9
SECTION 12 - REQUIREMENTS OF LAW 9
12.1 Requirements of Law 9
12.2 Federal Securities Law Requirements 9
12.3 Governing Law 10
SECTION 13 - DURATION OF THE PLAN 10
ADOLPH COORS COMPANY
COORS STOCK UNIT PLAN
Amended and Restated
Effective August 14, 1997
Section 1
Introduction
1.1 Establishment. Adolph Coors Company, a Colorado corporation
(as defined in subsection 2.1(e), the "Company"), established the
Adolph Coors Company Coors Stock Unit Plan (the "Plan") effective
March 28, 1995, for certain employees of the Company and its
Affiliated Corporations (as defined in subsection 2.1(a)). The
Plan permits the grant of Coors Stock Units (as defined in
subsection 2.1(f)) to certain employees of the Company and its
Affiliated Corporations. Section 12 of the Plan provides that the
Company, by action of the Board, may amend the Plan from time to
time. The Plan is hereby amended and restated, effective August
14, 1997, as set forth herein. The provisions of the Plan, as so
amended and restated, shall be effective with respect to Coors
Stock Units granted on and after August 14, 1997. Coors Stock
Units granted prior to August 14, 1997 shall remain subject to
the provisions of the Plan prior to its amendment and restatement herein.
1.2 Purposes. The purposes of the Plan are to reward the
employees selected for participation in the Plan for exemplary
performance and to create in such employees a more direct
interest in the future success of the operations of the Company.
Section 2
Definitions
2.1 Definitions. The following terms shall have the meanings
set forth below:
(a) "Affiliated Corporation" means any corporation 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 certain bonus compensation amounts granted to
eligible employees under compensation award programs of the
Company, including, but not limited to, the Company's Spot Award
Program and Productivity Award Program.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means a committee consisting of members who are
empowered hereunder to take actions in the administration of the
Plan. 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) "Company" means Adolph Coors Company, a Colorado
corporation, or any company which is a successor thereto as a
result of merger, consolidation, liquidation or other reorganization.
(f) "Coors Stock Unit" means a measurement component equal to
the "Fair Market Value" of a share of the Company's Class B
common stock (non-voting), no par ("Class B Common Stock"). For
this purpose, "Fair Market Value" shall be based upon the average
of the highest and lowest prices of the Class B Common Stock as
reported on the National Association of Securities Dealers
Automated Quotation system ("NASDAQ") on a particular date. If
there are no transactions in Class B Common Stock on such date,
the "fair market value" shall be determined as of the immediately
preceding day on which there were stock transactions. If the
price of the Class B Common Stock is not reported on NASDAQ, the
fair market value of the Class B Common Stock on the particular
date shall be determined by the Committee using a reference
comparable to the NASDAQ system.
(g) "Effective Date" means the original effective date of the
Plan, March 28, 1995.
(h) "Eligible Employees" means those employees of the Company
and its Affiliated Corporations who are eligible to receive
Awards and who are designated by the Committee as Eligible
Employees under this Plan.
(i) "Internal Revenue Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.
(j) "Participant" means an Eligible Employee who has elected,
pursuant to Section 5, to defer receipt of his or her Award and
to have the amount so deferred converted into Coors Stock Units.
(k) "Termination Date" means the date of a Participant's
severance from employment with the Company and all Affiliated
Corporations for any reason, including but not limited to, death,
"Disability," "Retirement," resignation, voluntary or
involuntarily termination or otherwise. For purposes of this
Plan, "Retirement" shall mean termination of employment in
accordance with the Company's retirement policy, and "Disability"
shall mean termination of employment as a result of disability as
defined in the Company's Long Term Disability Plan.
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
3.1 Committee. The Plan shall be administered by the Committee.
No member of the Committee while serving as such shall be
eligible for participation in the Plan, and no person who is at the time
a Participant in the Plan shall be eligible to serve on the Committee.
3.2 Powers. The Committee shall have exclusive and final
authority to interpret the Plan consistent with the intent of the
Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, to delegate such responsibilities or duties
as are allowable under the Plan or by law and as it deems
desirable, and to make all other determinations necessary or
advisable for the administration of the Plan. A majority of the
members of the Committee shall constitute a quorum and all
determinations of the Committee will be made by a majority of a
quorum. Any determination by the Committee under the Plan may be
without notice of and without convening a meeting if evidenced by
one or more writings signed by a majority of all of the Committee
members. The Committee may act by telephonic meetings in which
all of its members participate with or without prior notice, or
in which a quorum participates after not less than twenty-four
(24) hours' notice in person, by telephonic, electronic or
written means. 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
Participation in the Plan
The Committee shall establish the criteria for participation of
Eligible Employees in the Plan. An Eligible Employee shall become
a Participant in the Plan upon designation as an Eligible
Employee and upon an election, by the Eligible Employee pursuant
to Section 5, to acquire Coors Stock Units in accordance with Section 5.
Section 5
Acquisition of Coors Stock Units
5.1 Election to Acquire Coors Stock Units. Each Eligible
Employee may make an election, pursuant to such procedures and at
such times as may be prescribed by the Committee, to receive
Coors Stock Units instead of any specified Award otherwise
payable to the Eligible Employee. Coors Stock Units acquired
pursuant to this Section shall be valued, for purposes of
determining the number of Coors Stock Units to be issued with
respect to the dollar amount of Award elected to be used for such
purpose, based upon the Fair Market Value of the Class B Common
Stock as of the date on which the Award would otherwise be
payable to such Eligible Employee. Only whole Coors Stock Units
shall be granted hereunder and any remaining portion of a
designated Award shall be paid to a Participant in cash. The
grant of Coors Stock Units and the payment of cash in accordance
with this Section 5.1 shall be subject to withholding of
applicable federal, state and local income and employment taxes.
5.2 Establishment of Individual Coors Stock Unit Accounts. The
Company shall establish, or shall cause to be established,
individual accounts ("Coors Stock Unit Accounts") for each
Participant who elects to receive Coors Stock Units which will be
unsecured and unfunded and will be maintained for each
acquisition of Coors Stock Units by a Participant under the Plan.
The Account for each Participant shall reflect the number of
Coors Stock Units acquired and held by such Participant and the
dividends paid by the Company on shares of Class B Common Stock
with respect to dividend record dates that occur on and after the
date as of which such Coors Stock Units are granted to the
Participant. While any Coors Stock Units are outstanding, and at
payment, if any, Participants will receive annual and final
statements showing the number of Coors Stock Units allocated to
their Account in the Plan, the value of dividend equivalents
allocated to their Account and the total value of the Account.
Section 6
Payments to Participants
6.1 Participant Election to Receive Payment. At any time
following the expiration of one year from the date of the
issuance of a Coors Stock Unit, a Participant may elect to
receive payment for the value of such Coors Stock Units and the
dollar amount of dividend equivalents that have been allocated to
the Participant's Coors Stock Unit Account. The Participant shall
elect to receive payment by submitting a written election, in a
form prescribed by the Committee, to the Committee or to such
person as may be specified by the Committee. The payment with
respect to a Participant's Coors Stock Units shall be based on
the Fair Market Value of the equivalent number of shares of Class
B Common Stock on the date that the Participant's election is
received by the Committee or its designee. Payments to
Participants under this Section should be made by Company check,
subject to any applicable withholding of federal, state or local
income or other taxes, within twenty (20) business days following
the receipt by the Committee of the Participant's election to
receive payment with respect to his or her Coors Stock Units.
6.2 Payment Following Termination Date. Except as otherwise
provided in this Section, a Participant in the Plan shall receive
payment, following the Participant's Termination Date, for all of
his or her Coors Stock Units and the dividend equivalents
credited to the Participant's Coors Stock Unit Account as of the
Participant's Termination Date. The Participant shall be entitled
to the payment of an amount equal to the Fair Market Value of the
equivalent amount of Class B Common Stock and the value of the
accumulated dividend equivalents allocated to the Participant's
Coors Stock Unit Account as of the Termination Date. Payment
shall be made to the Participant in a cash lump sum, subject to
applicable withholding of income tax and other amounts, within
twenty (20) business days following the Participant's Termination Date.
6.3 Death of a Participant. If a Participant dies before
receiving payment of all amounts payable to the Participant
hereunder, any amounts remaining shall be paid to the personal
representative of the Participant's estate.
6.4 Issuance of Class B Common Stock in Lieu of Cash Payments.
If a Participant has 100 or more Coors Stock Units allocated to
his or her Coors Stock Unit Account, the Participant (or his or
her estate) may elect to receive payment for the value of such
Coors Stock Units through the issuance of an equivalent number of
shares of Class B Common Stock. Elections to receive shares of
Class B Common Stock in lieu of cash payments shall be made in
accordance with such procedures as may be required from time to
time by the Committee. Payments to a Participant (or his or her
estate) with respect to dividend equivalents that have been
allocated to the Participant's Coors Stock Unit Account shall be
made in cash in all cases.
Section 7
Recapitalizations or Other Changes in the Outstanding
Stock of the Company
The number of Coors Stock Units authorized, issued and
outstanding under the Plan will be adjusted to reflect any stock
dividends, stock-splits or other capital restructuring of the
Company after the date of grant of a particular Coors Stock Unit
in a manner directly corresponding to adjustments in the number
and kind of outstanding shares of stock of the Company. The
Committee shall make such adjustments to outstanding Coors Stock
Units as shall be necessary, in its sole discretion, to equitably
reflect the effect of the change in the capital structure of the
Company upon the outstanding Coors Stock Units under this Plan.
Adjustments under this Section 7 shall be made by the Committee,
whose determinations with regard thereto shall be final and
binding upon all parties thereto.
Section 8
Adoption of Plan by Affiliated Corporations
8.1 Adoption of Plan. Any corporation, whether or not presently
existing, which is or shall become an Affiliated Corporation may
become a party to the Plan, with the consent of the Company, by
adopting the Plan for its Eligible Employees. Such Affiliated
Corporation shall deliver to the Company a certified copy of the
resolutions or other documents evidencing its adoption of the Plan.
8.2 Agency of the Company. By becoming a party to the Plan,
each Affiliated Corporation constitutes the Company as its agent
with authority to act for it in all transactions in which the
Company believes such agency will facilitate the administration
of the Plan and with authority to amend and terminate the Plan.
8.3 Disaffiliation and Withdrawal from Plan. Any Affiliated
Corporation that has adopted the Plan and that thereafter ceases
for any reason to be an Affiliated Corporation shall forthwith
cease to be a party to the Plan. Any Affiliated Corporation may,
by resolution of its board of directors and written notice
thereof to the Company provide from and after the end of any Plan
Year for the discontinuance of Plan participation by such
corporation and its Eligible Employees.
8.4 Effect of Disaffiliation or Withdrawal. If at the time of
disaffiliation or withdrawal the disaffiliating or withdrawing
corporation shall by resolution of its board of directors
determine to adopt a substantially identical Plan, then, as to
Employees of such corporation, no Plan termination shall be held
to have occurred and the new Plan shall, as to such Employees, be
deemed a continuation of this Plan.
8.5 Distribution Upon Disaffiliation or Withdrawal. In the
event of disaffiliation or withdrawal, if the provisions of
Section 8.4 are not followed, the Plan shall terminate as to such
Affiliated Corporation and the provisions of Section 12 shall apply.
Section 9
Rights of Employees
Nothing contained in the Plan or in any Coors Stock Unit 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 Affiliated 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. 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.
Section 10
General Restrictions
10.1 Investment Representations. The Company may require any
person to whom a Coors Stock Unit is granted, as a condition of
receiving such Coors Stock Unit, to give written assurances in
substance and form satisfactory to the Company and its counsel to
the effect that such person is acquiring the Coors Stock Unit 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.
10.2 Changes in Accounting Rules. Notwithstanding any other
provision of the Plan to the contrary, if, during the term of the
Plan, any changes in the financial or tax accounting rules
applicable to Coors Stock Units shall occur which, in the sole
judgment 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 Coors Stock Units.
Section 11
Other Employee Benefits
The amount of any compensation deemed to be received by a
Participant as a result of the receipt of a Coors Stock Unit or
cash payments for such Coors Stock Units 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 12
Plan Amendment, Modification and Termination
The Board may at any time terminate, and from time to time may
amend or modify the Plan. Upon termination of the Plan, no
further Coors Stock Units shall be issued, but the provisions of
the Plan shall remain applicable to all Coors Stock Units then
outstanding at the time of Plan termination. No amendment,
modification or termination of the Plan shall in any manner
adversely affect any Coors Stock Units theretofore granted under
the Plan, without the consent of the Participant holding such
Coors Stock Units.
Section 13
Setoff
All or part of any amount otherwise due and payable to a
Participant under the Plan may be setoff or applied by the
Company against any liability or reimbursement then due and
payable by the Participant to the Company or any Affiliated Corporation.
Section 14
Plan Funding
Obligations to Participants under the Plan will not be funded,
trusteed, insured or secured in any manner. The Participants
under the Plan shall have no security interest in any assets of
the Company or any Affiliated Corporation, shall have no interest
or right as a shareholder in the Company or any Affiliated
Corporation and shall be only general creditors of the Company.
Section 15
Non-Assignability of Rights
Except as provided in the Plan, no grant, right, benefit or
account of a Participant under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance,
or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge the same shall be void. No right or
benefit under the Plan shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefits except as expressly provided
herein. If any Participant should become bankrupt or attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge
any right or benefit hereunder, then such right or benefit shall,
in the discretion of the Committee, cease, and in such event, the
Company may hold or apply the same or any part thereof for the
benefit of the Participant or the Participant's spouse, children,
or other dependents, or any of them in such manner and in such
proportions as the Committee shall deem proper. The Company, the
Affiliated Corporations and the Committee shall have no liability
or obligation to any Participant or Participant's representative
on account of any variation in the Fair Market Value of the Class
B Common Stock or the value of a Participant's Coors Stock Unit Account.
Section 16
Withholding Taxes
The Company shall have the right to deduct from all amounts
payable to a Participant, including the issuance of shares of
Class B Common Stock in accordance with the provisions of Section
6.4, any taxes or other impositions required by law to be
withheld upon such payment.
Section 17
Requirements of Law
17.1 Requirements of Law. The issuance of Coors Stock Units and
the payment of cash pursuant to the Plan shall be subject to all
applicable laws, rules and regulations.
17.2 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 18
Duration of the Plan
The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Coors Stock Units shall be granted
after such termination. Coors Stock Units outstanding at the time
of the Plan termination shall continue to be paid in accordance
with their terms.
Dated: __________________
ADOLPH COORS COMPANY
ATTEST:
___________________________
By:_________________________________
TABLE OF CONTENTS
Page
Section 1 - Introduction 1
1.1 Establishment 1
1.2 Purposes 1
Section 2 - Definitions 1
2.1 Definitions 1
2.2 Gender and Number 2
Section 3 - Plan Administration 3
3.1 Committee 3
3.2 Powers 3
Section 4 - Participation in the Plan 3
Section 5 - Acquisition of Coors Stock Units 3
5.1 Election to Acquire Coors Stock Units 3
5.2 Establishment of Individual Coors Stock Unit Accounts 4
Section 6 - Payments to Participants 4
6.1 Participant Election to Receive Payment 4
6.2 Payment Following Termination Date 4
6.3 Death of a Participant 5
6.4 Issuance of Class B Common Stock in Lieu of Cash Payments 5
Section 7 - Recapitalizations or Other Changes in the Outstanding
Stock of the Company 5
Section 8 - Adoption of Plan by Affiliated Corporations 5
8.1 Adoption of Plan 5
8.2 Agency of the Company 5
8.3 Disaffiliation and Withdrawal from Plan 6
8.4 Effect of Disaffiliation or Withdrawal 6
8.5 Distribution Upon Disaffiliation or Withdrawal 6
Section 9 - Rights of Employees 6
Section 10 - General Restrictions 6
10.1 Investment Representations 6
10.2 Changes in Accounting Rules 6
Section 11 - Other Employee Benefits 7
Section 12 - Plan Amendment, Modification and Termination 7
Section 13 - Setoff 7
Section 14 - Plan Funding 7
Section 15 - Non-Assignability of Rights 8
Section 16 - Withholding Taxes 8
Section 17 - Requirements of Law 8
17.1 Requirements of Law 8
17.2 Governing Law 8
Section 18 - Duration of the Plan 9
Page 1 of 3
COORS BREWING COMPANY
1998 ANNUAL MANAGEMENT INCENTIVE COMPENSATION PLAN
(MIC)
PARTICIPANTS:
All Department Directors and above in salary grades E08 and E09
will participate in an annual incentive program known as the
Management Incentive Compensation Plan (MIC).
Participants who are newly hired or promoted into an eligible
position during the Plan year will be eligible to receive a pro-
rata share of the incentive payment 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.
ANNUAL INCENTIVE PROGRAM TARGET LEVELS AS A PERCENT OF BASE
SALARY AS OF 1-1-98 OR PLAN ENTRY DATE IF LATER:
Total On Target
Bonus
Position Potential
CEO/COO 50%
Executive Staff 40%
VP GBBU 35%
Vice President 30%
Other Participants 25%
BONUS PAYOUT PARAMETERS:
The Chief Executive Officer (CEO) and Chief Operating Officer
(COO) will be measured on Company financial performance only. All
other participants will be evaluated based on two components, the
achievement of Company financial performance goals and individual
performance goals. The percentages of the total potential bonus
are:
Company Individual
Position Component Component
CEO/COO 100% 0%
Executive Staff 75% 25%
Vice President 40% 60%
Other Participants 40% 60%
If the Company financial goals are achieved, each participant
will receive the portion of the bonus based on the Company
component. None of the Company portion will be paid if pre-tax
income falls below a minimum of 75% of the target financial goal.
The amount of the Company component will be reduced 2% from
target for each 1% that actual results fall below the target
pretax income goal. For each 1% the Company pretax income exceeds
the target goal, the target Company component will increase 2%.
COMPANY FINANCIAL TARGETS:
Annual Company financial goals will be measured based on pre-tax
income before special charges or credits for 1998 after incentive
plan payouts (in millions).
Minimum Target Maximum
95.25 127 190.5
Definitions:
Pretax Income - Income before income taxes for external reporting
as shown on the Annual Report. Income is defined as Revenues
(amounts received from the sales of beer) less Costs
(manufacturing costs including brewing, packaging, raw materials,
and freight, and all other costs required to run the business
including marketing, selling, support costs, interest
expense/(income), etc...). This includes both Domestic and
International and would also include the revenue and expenses
associated with entering an international market.
Special Charges (Credits) - Extraordinary items (one-time unusual
events) which are separately identified in the Company's internal
and external financial statements and other special items as
defined by management.
INDIVIDUAL PERFORMANCE GOALS:
The other portion of the bonus is based on achievement of
individual performance goals. The individual portion of the bonus
is not dependent on fulfillment of Company financial goals.
Individual performance payouts will be based on an individual
incentive multiplier of between 0 and 150%, multiplied by the
amount equal to the dollar amount of the individual performance
component at target:
Above Target 125-150%
On Target 100%
Below Target 0-70%
Individual performance goals will be documented and agreed upon
by February 1 of the Plan year or 30 days after the start date in
the Plan. Each participant will meet with his or her 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 or the
CEO. 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 at its sole
discretion. This Plan supersedes all prior documentation relating
to the Annual Management Incentive Compensation Plan.
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 1-1-1999 to receive
payment. Any exceptions must be approved by the CEO.
$200,000,000
REVOLVING CREDIT AGREEMENT
dated as of
October 23, 1997
among
ADOLPH COORS COMPANY
as Borrower,
NATIONSBANK OF TEXAS, N.A.
as Agent,
WACHOVIA BANK, N.A.
as Managing Agent,
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Agent,
and
THE BANKS NAMED HEREIN
as Banks
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Determinations. 14
ARTICLE II - THE CREDITS 14
SECTION 2.01. Syndicated Borrowings. 14
SECTION 2.02. Notice of Syndicated Borrowings. 16
SECTION 2.03. Money Market Borrowings 17
SECTION 2.04. THIS SECTION IS RESERVED 22
SECTION 2.05. Interest Period for Borrowings. 22
SECTION 2.06. Maturity of Loans and Payment of
Interest. 23
SECTION 2.07. Interest Rate Options 23
SECTION 2.08. Certain Loans or Interest Rates
Unavailable. 26
SECTION 2.09. Default Rate 26
SECTION 2.10. Evidence of Loans/Borrowings 27
SECTION 2.11. Failure to Give Notice, Automatic
Conversion 27
SECTION 2.12. Prepayments 27
SECTION 2.13. Funding Losses 28
SECTION 2.14. General Rules as to Payments 28
SECTION 2.15. Funding of Loans. 28
SECTION 2.16. Fees. 29
SECTION 2.17. Optional Reduction of Commitments 29
SECTION 2.18. Extension of Termination Date 30
SECTION 2.19. Letters of Credit 31
ARTICLE III - CONDITIONS 32
SECTION 3.01. Conditions to Effectiveness 32
SECTION 3.02. Conditions to Borrowings 33
ARTICLE IV - REPRESENTATIONS AND WARRANTIES 33
SECTION 4.01. Corporate Existence and Power 33
SECTION 4.02. Corporate and Governmental
Authorization;
No Contravention 34
SECTION 4.03. Binding Effect 34
SECTION 4.04. Financial Information 34
SECTION 4.05. Litigation 34
SECTION 4.06. Compliance with ERISA 34
SECTION 4.07. Compliance with Laws 34
SECTION 4.08. Taxes 35
SECTION 4.09. Subsidiaries 35
SECTION 4.10. Not an Investment Company 35
SECTION 4.11. No Margin Stock 35
SECTION 4.12. Full Disclosure 35
SECTION 4.13. Excluded Principal Plants 35
ARTICLE V - GENERAL COVENANTS 35
SECTION 5.01. Information 36
SECTION 5.02. Payment of Obligations 37
SECTION 5.03. Maintenance of Property 37
SECTION 5.04. Insurance 37
SECTION 5.05. Conduct of Business and Maintenance of
Existence 37
SECTION 5.06. Compliance with Laws 38
SECTION 5.07. Inspection of Property, Books and
Records 38
SECTION 5.08. Use of Proceeds 38
SECTION 5.09. Environmental Matters 38
SECTION 5.10. Delivery of Additional Guaranties 38
ARTICLE VI - NEGATIVE COVENANTS 39
SECTION 6.01. Limitations on Liens 39
SECTION 6.02. Limitation on Debt of Restricted
Subsidiaries 41
SECTION 6.03. Consolidations, Mergers and Sales of
Assets 42
SECTION 6.04. Other Loan Agreements 42
ARTICLE VII - FINANCIAL COVENANTS 43
SECTION 7.01. Debt to Capitalization. 43
ARTICLE VIII - DEFAULTS AND EVENTS OF TERMINATION 43
SECTION 8.01. Events of Default 43
SECTION 8.02. Consequence of Event of Default 45
SECTION 8.03. Notice of Default 45
ARTICLE IX - CHANGE IN CIRCUMSTANCES 45
SECTION 9.01. [This section 9.01 is reserved] 45
SECTION 9.02. Illegality 45
SECTION 9.03. Increased Cost 46
SECTION 9.04. Capital Adequacy 47
ARTICLE X - AGENT 48
SECTION 10.01. Appointment, Powers and Immunities.
48
SECTION 10.02. Rights of Agent as a Bank. 49
SECTION 10.03. Defaults. 49
SECTION 10.04. INDEMNIFICATION. 50
SECTION 10.05. Independent Credit Decisions. 50
SECTION 10.06. Several Commitments. 51
SECTION 10.07. Successor Agent. 51
ARTICLE XI - MISCELLANEOUS 51
SECTION 11.01. Notices 51
SECTION 11.02. No Waivers 52
SECTION 11.03. Expenses, etc. 52
SECTION 11.04. Set-Offs 52
SECTION 11.05. Taxes 53
SECTION 11.06. Amendments and Waivers 54
SECTION 11.07. Replacement of Banks 55
SECTION 11.08. Assignments and Participations 55
SECTION 11.09. Collateral 58
SECTION 11.10. Confidentiality 58
SECTION 11.11. Alternative Liquidity 59
SECTION 11.12. Governing Law 59
SECTION 11.13. WAIVER OF JURY TRIAL 59
SECTION 11.14. Counterparts; Integration 59
EXHIBITS
A Form of Revolving Note
B Form of Guaranty
C Form of Borrower's Notice of Syndicated Borrowing
D Form of Agent's Notice of Syndicated Borrowing
E Form of Money Market Quote Request
F Form of Money Market Quote
G Form of Notice of Money Market Borrowing
H Form of Opinion
I Form of Assignment and Acceptance Agreement
SCHEDULES
1 Addresses of Banks' Lending Offices
2 Locations
3 Material Adverse Change
4 Litigation
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT (the or this "Agreement")
dated as of October 23, 1997, is among ADOLPH COORS COMPANY,
a Colorado corporation (the "Borrower"), NATIONSBANK OF
TEXAS, N.A., a national banking association, as agent for
itself and the other Banks (in such capacity, together with
its successors in such capacity, the "Agent"), WACHOVIA
BANK, N.A., a national banking association, as managing
agent for itself and the other Banks (in such capacity,
together with its successors in such capacity, the "Managing
Agent"), THE FIRST NATIONAL BANK OF CHICAGO, a national
banking association, as co-agent for itself and the other
Banks (in such capacity, together with its successors in
such capacity, the "Co-Agent"), and each of the banks and
other lending institutions which is a party hereto (as
evidenced by the signature pages of this Agreement) or which
from time to time may become a party hereto or any successor
or assignee thereof (each a "Bank" and collectively the "Banks").
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 (the "Facility") in an aggregate amount not to exceed
Two Hundred Million Dollars ($200,000,000) 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 Pro Rata Shares 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). Syndicated Loans may be made in Dollars or
any other Available Currency.
NOW, THEREFORE, the parties hereto agree as follows:
I. ARTICLE
DEFINITIONS
A. SECTION Definitions. The following terms, as used
herein, have the following meanings (and words in the
singular include the plural, and vice versa):
"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.
"Agent" means as set forth in the opening paragraph of this Agreement.
"Agent's Notice of Syndicated Borrowing" means an
Agent's Notice of Syndicated Borrowing pursuant to Section 2.02.
"Applicable Margin" means, as of the date of
determination, (a) with respect to a LIBOR Rate Loan or
a Foreign Currency Rate Loan, the rate per annum, as
set forth in the right-hand column below, based on the
Rating (which shall be the higher of the two Ratings of
Standard & Poor's Inc. and Moody's Investor Corporation
or the Rating immediately below the higher of such two
Ratings if the two Ratings are split by more than one
Rating) deemed in effect on such day for Borrower's
senior unsecured nonconvertible long-term indebtedness:
Rating Applicable Margin
A/A2 or better 15.0 basis points
A-/A3 15.0 basis points
BBB+/Baa 1 16.5 basis points
BBB/Baa2 21.5 basis points
BBB-/Baa3 or lower 30.0 basis points
b) with respect to a Base Rate Loan, the Applicable Margin shall be zero.
The Applicable Margin shall be determined on the last
day of each calendar quarter of Borrower for the fiscal
quarter immediately following (as such quarters are
determined by Borrower pursuant to its customary
accounting policy) with respect to the Ratings in effect on such date.
"Assignee" means as specified in Section 11.08.
"Assigning Bank" means a Bank which makes an assignment
of all or part of its rights and obligations hereunder
as specified in Section 11.08.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Bank and its Assignee and
accepted by Agent pursuant to Section 11.08, in
substantially the form of Exhibit I hereto.
"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.
"Available Currency" means U.S. Dollars and any Foreign Currency.
"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.
"Base U.S. Dollar Amount" means with respect to any
Borrowing of the Loan originally borrowed in a Foreign
Currency, the amount of U.S. Dollars specified in the
Notice of Borrowing of which the Foreign Currency
amount advanced is the Equivalent Amount on the date of
such Borrowing, the amount of U.S. Dollars specified in
the Borrower's request for redenomination pursuant to
Section 2.02 of which the Foreign Currency amount to be
redenominated is the Equivalent Amount as of the date
of redenomination.
"BHC" has the meaning set forth in Section 9.04(a).
"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.
"Borrower" means Adolph Coors Company, a Colorado
corporation, and its successors and permissible assigns.
"Borrower's Notice of Syndicated Borrowing" means a
Borrower's Notice of Syndicated Borrowing pursuant to Section 2.02.
"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, any Money Market LIBOR Loan or any Foreign
Currency 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 (without duplication), the sum of
Total Debt and Net Worth of the Borrower.
"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.
"Closing Date" means October 23, 1997, the date of this Agreement.
"Co-Agent" has the meaning set forth in the opening
paragraph of this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Commitment" means, as to any Bank, the obligation of
such Bank to make or continue Loans and incur or
participate in Letter of Credit Liabilities hereunder
in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set
forth opposite the name of such Bank on the signature
pages hereto under the heading "Commitment" or, if such
Bank is a party to an Assignment and Acceptance, the
amount of the "Commitment" set forth in the most recent
Assignment and Acceptance of such Bank, as the same may
be reduced or terminated pursuant to Section 2.17 or
8.02, and "Commitments" means such obligations of all
Banks. As of the execution of this Agreement, the
aggregate principal amount of the Commitments is $200,000,000.
"Consolidated Subsidiary" of any Person means at any
date, any Subsidiary or other entity the accounts of
which, in accordance with GAAP, would be consolidated
with those of such Person in its consolidated financial
statements as of such date.
"Debt" of any Person means, at any date, without
duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments, (iii) all noncontingent obligations of
such Person in respect of letters of credit or other
similar instruments, (iv) all Capital Lease Obligations
of such Person as lessee under capital leases, (v) all
Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such
Person, and (vi) all direct guarantees by such Person
of Debt (as defined in clause (i) through (v) of this
definition) of other Persons; provided that
(x) if Debt referred to in clause (v) above is
without recourse to the Borrower or any
Subsidiary, the amount of such Debt shall be
calculated at the lesser of (A) the aggregate
outstanding principal amount of such Debt or
(B) the aggregate fair realizable value of the
assets securing such Debt,
(y) the amount of any Debt referred to in clause
(vi) above shall be deemed to be the reasonably
anticipated liability in respect thereof as
determined in accordance with GAAP, and
(z) when calculating the amount of Debt of the
Borrower and its Consolidated Subsidiaries on a
consolidated basis, obligations of the Borrower or
any Consolidated Subsidiary that are eliminated in
consolidation pursuant to generally accepted
accounting principles shall be eliminated.
"Default" means any condition or event which
constitutes an Event of Default or which with the
giving of notice or lapse of time, or both, would
become an Event of Default.
"Dollars" or "$" 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 consented to by Agent and the
Borrower, which consents may not be unreasonably withheld.
"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.
"Equivalent Amount" means the amount of a Foreign
Currency which is equivalent to a given amount of U.S.
Dollars as of the Relevant Date, determined by using
the Spot Rate on the date two Business Days prior to the Relevant Date.
"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.
"Extension Date" means the date, if any, from time to
time to which the Termination Date is actually extended
pursuant to Section 2.18.
"Facility" has the meaning set forth in the first
Whereas clause to this Agreement.
"Facility Fee" has the meaning set forth in Section 2.16(a).
"Federal Funds Rate" has the meaning set forth in Section 2.07(a).
"Foreign Currency" means British Pounds Sterling,
Canadian Dollars, French Francs, German Deutsche Marks,
Japanese Yen, Spanish Pesetas or any other freely
available currency which is freely transferable and
freely convertible into Dollars and in which dealings
and deposits are carried on in the London interbank
market, which shall be requested by the Borrower and
approved by each Bank.
"Foreign Currency Loan" means a Loan under the
Agreement made or maintained in a Foreign Currency.
"Foreign Currency Rate" has the meaning set forth in Section 2.07(c).
"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.
"Guarantor" means each of (i) Coors Brewing Company, a
Colorado corporation and the wholly owned Subsidiary of
the Borrower, and (ii) such additional Subsidiaries of
the Borrower (whether now or hereafter a Subsidiary),
if any, as shall be necessary so that the aggregate
assets of the Borrower and such Guarantors at all times
shall represent at least eighty percent (80%) of the
total assets of the Borrower and its Consolidated Subsidiaries.
"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 Period" with respect to each Type of Loan has
the meaning set forth in Section 2.05, as applicable.
"Issuing Bank" means NationsBank or such other Bank
which is a commercial bank as Borrower and NationsBank
may mutually designate from time to time which agrees
to be the issuer of Letters of Credit.
"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.
"Letter of Credit" means any standby or commercial
letter of credit issued by the Issuing Bank for the
account of Borrower pursuant to this Agreement.
"Letter of Credit Agreement" means, with respect to
each Letter of Credit to be issued by the Issuing Bank
therefor, the letter of credit application and
reimbursement agreement which such Issuing Bank
requires to be executed by Borrower in connection with
the issuance of such Letter of Credit.
"Letter of Credit Liabilities" means, at any time, the
aggregate undrawn face amount of all outstanding
Letters of Credit and all unreimbursed drawings under Letters of Credit.
"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.
Syndicated Loans also include Foreign Currency Loans.
"Loan Documents" means this Agreement, each Revolving
Note executed by Borrower hereunder, the Letter of
Credit Agreements, each guaranty executed in connection
with this Agreement and any other documents or
agreements executed in connection therewith, and also
includes any and all renewals, extensions,
modifications or amendments of any of the foregoing.
"Loan Party" means Borrower and each Guarantor.
"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.
"Managing Agent" means as set forth in the opening
paragraph of this Agreement.
"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.
"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).
"NationsBank" means NationsBank of Texas, N.A., a
national banking association, in its individual
capacity as a Bank.
"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.
"Notice of Borrowing" means a Borrower's Notice of
Syndicated Borrowing or Notice of Money Market
Borrowing issued by Borrower, as applicable, pursuant
to Section 2.02 or Section 2.03.
"Obligations" means (i) all obligations and
indebtedness now or hereafter owing by Borrower under
this Agreement, or otherwise arising in connection with
this Agreement or any of the other Loan Documents,
including without limitation, all loan repayment
obligations, accrued interest and fees, costs and
expenses as provided by this Agreement or any of the
other Loan Documents, and any other amounts from time
to time owing by Borrower to Agent, Co-Agent, Managing
Agent or any Bank in connection therewith; (ii) any and
all other indebtedness and obligations of every kind
and character now or hereafter owing by Borrower to
Agent, Co-Agent, Managing Agent or any Bank, whether
direct or indirect, primary or secondary, joint,
several, or joint and several, fixed or contingent,
including indebtedness and obligations, if any, which
may be assigned to or acquired by Agent, Co-Agent,
Managing Agent or any Bank; and (iii) any and all
renewals and extensions of the foregoing, or any part thereof.
"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.
"Pro Rata Share" means, as to any Bank, the percentage
equivalent of a fraction, the numerator of which is the
amount of the outstanding Commitment of such Bank (or,
if such Commitment has terminated or expired, the
outstanding principal amount of the Loans and Letter of
Credit Liabilities of such Bank) and the denominator of
which is the aggregate amount of the outstanding
Commitments of all Banks (or, if such Commitments have
terminated or expired, the aggregate outstanding
principal amount of the Loans and Letter of Credit
Liabilities of all Banks), as adjusted from time to
time in accordance with Section 11.08.
"Quarter End" means the last Business Day of each
March, June, September and December of each year during
the term of this Agreement.
"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 and the Banks
and the Borrower cannot agree on a rating, the Banks
and the Borrower agree that such disagreement will be
settled through an arbitration proceeding conducted in
accordance with the rules of the American Arbitration Association.
"Reference Rate" for any day of a relevant Interest
Period means the per annum rate of interest established
from time to time by NationsBank as its "prime rate."
It is a rate set by NationsBank based upon various
factors including NationsBank'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 prime rate announced
by NationsBank 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.
"Reimbursement Obligation" means the obligation of
Borrower to reimburse the Issuing Bank for any drawing
under a Letter of Credit.
"Relevant Date" means, with respect to any amounts
denominated or to be denominated in a Foreign Currency,
the date of Borrowing or the date of any redenomination
or payment pursuant to this Agreement in such Foreign
Currency or the date of any other calculation with
respect to such Foreign Currency, as applicable.
"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, (ii) any Guarantor, and (iii) 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.
"Revolving Note" means each of the promissory notes
executed by Borrower payable to the order of a Bank
evidencing loans under this Agreement, as provided in
Section 2.10 and in the form attached hereto as Exhibit
A, and includes any and all renewals, extensions,
amendments or modifications thereof.
"SEC" means the Securities and Exchange Commission, or
any successor organization.
"Spot Rate" means, with respect to any day, the rate
determined on such date on the basis of the offered
rates, as reflected on page 5 of the Telerate report at
or about 10:00 a.m. (Dallas, Texas time) (a) with
respect to the determination of the U.S. Dollar Amount,
to purchase U.S. Dollars with a particular Foreign
Currency and (b) with respect to the determination of
the Equivalent Amount, to purchase a particular Foreign
Currency with U.S. Dollars, provided that, if at least
two such offered rates appear on such display, the rate
shall be the arithmetic mean of such offered rates and,
if no such offered rates are so displayed, the Spot
Rate shall be determined by the Agent on the basis of
the arithmetic mean of such offered rates notified to
the Agent by NationsBank in accordance with its normal practice.
"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, LIBOR Rate
Loan and Foreign Currency Loan, as applicable, made by
a Bank as a part of a Syndicated Borrowing pursuant to
Section 2.01 and Section 2.04, as applicable.
"Termination Date" means September 30, 2002 or such
later date as extended pursuant to Section 2.18, or if
such day is not a Business Day, the next succeeding Business Day.
"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.
"Total Debt" means, as of any date of determination,
all Debt of the Borrower and its Consolidated
Subsidiaries (without duplication).
"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 Rate Loan or Foreign Currency Rate Loan.
"Unrestricted Subsidiary" means, at the time of any
determination, any Subsidiary of Borrower that is not a
Restricted Subsidiary.
"US Dollar Amount" means (a) in the case of any amount
denominated or redenominated in U.S. Dollars, such
amount, and (b) in the case of any amount denominated
or redenominated in a Foreign Currency, the amount of
U.S. Dollars which is equivalent to a given amount of
such Foreign Currency as of the Relevant Date,
determined by using the Spot Rate on the date two
Business Days prior to the Relevant Date (unless
another date is specified in this Agreement).
B. SECTION 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.
II. ARTICLE
THE CREDITS
A. SECTION Syndicated Borrowings.
1. The Commitments. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make
Base Rate Loans, LIBOR Rate Loans and Foreign Currency 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 (less the amount of such Bank's Pro Rata
Share of all Letter of Credit Liabilities). At any time when
one or more Money Market Loans is outstanding, each Bank's
Commitment shall be reduced and deemed used for all purposes
by its Pro Rata Share of the aggregate amount of all such
outstanding Money Market Loans. 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.
2. 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 and all
Letter of Credit Liabilities at any one time shall not
exceed the aggregate amount of the Commitments of all Banks
in effect at such time.
3. Borrowing Amounts. Each Borrowing with respect to Base
Rate Loans, LIBOR Rate Loans and Foreign Currency Loans
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.
4. 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.
5. 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.
6. Foreign Currency Election. The Borrower may, in
connection with any Notice of Borrowing delivered pursuant
to Section 2.02, direct that such Borrowing be denominated
and made in any Available Currency. If any such Notice of
Borrowing directs that a Foreign Currency denominated
tranche be part of the Borrowing and such notice is not
received by Agent by 10:00 a.m. (Dallas, Texas time) at
least three Business Days prior to the proposed Borrowing,
then such tranche shall be denominated in U.S. Dollars. Any
agreement or obligation of the Banks to provide any portion
of a Borrowing in a Foreign Currency pursuant to this
Agreement shall in all cases be subject to the condition
that no circumstance described in Section 2.08 shall have
occurred (as determined in good faith by Agent) in the
London interbank Euro-currency market or otherwise after
request therefor by the Borrower and before the relevant
date of Borrowing. If Agent has determined that such a
change has occurred, then Agent shall forthwith give notice
thereof to the Borrower and to each Bank, and the procedures
set forth in Section 2.08 shall be applicable.
7. Advances of Available Currency in Equivalent Amount.
If the Borrower requests (pursuant to this Section 2.01)
that any Borrowing of the Loan be denominated in a Foreign
Currency, the Banks shall, subject to compliance by the
Borrower with the terms and conditions of this Agreement,
make their advances of the Borrowing in such Foreign
Currency in an aggregate amount equal to the Equivalent
Amount of the Base U.S. Dollar Amount of the Borrowing to be
funded in such Foreign Currency.
8. Delivery of Advances in Available Currency. If any
Borrowing of the Loan is being redenominated in whole or in
part in an Available Currency (the "Applicable Available
Currency") for the next succeeding Interest Period ( such
Borrowing having been denominated in another Available
Currency during the Interest Period then ending), each Bank
will make an amount equal to its Pro Rata Share of the
Equivalent Amount in such Applicable Available Currency of
the Base U.S. Dollar Amount of the Borrowing (or the
relevant portion thereof) to be denominated in such
Applicable Available Currency during the next succeeding
Interest Period available to Agent on the first day of such
next succeeding Interest Period. Agent shall, subject to the
provisions of Section 2.01 (j), make each such amount of
such Applicable Available Currency available to the Borrower
on such date and in like currency and funds as received by
Agent from the Banks in the manner provided in Section 2.15,
and the Borrower on the last day of the Interest Period then
ending shall repay the amount of such Borrowing (or the
relevant portion thereof) outstanding in the other Available
Currency during the Interest Period then ending (with
accrued interest thereon in the other Available Currency).
9. Obligation of Agent to Deliver Advances and
Indemnification by Borrower. If Borrower is required to
repay any amounts on the last day of any Interest Period
pursuant to this Section 2.01, Agent shall only make any
amounts to be advanced by the Banks available to the
Borrower on the first day of the next succeeding Interest
Period against receipt by Agent, in accordance with this
Agreement, of the relevant amounts to be repaid by the
Borrower pursuant to this Section 2.01. The Borrower hereby
agrees that it shall indemnify Agent, Co-Agent, Managing
Agent and each Bank, and hold Agent, Co-Agent, Managing
Agent and each Bank harmless from and against, any and all
funding or foreign exchange costs, losses or expenses that
Agent, Co-Agent, Managing Agent and the Banks may suffer,
sustain or incur as a consequence of a failure by the
Borrower to promptly pay, when due, any amounts required to
be paid by the Borrower.
10. Currency of Payment. Any currency specified in
accordance with this Agreement shall be the currency of
account and of payment in all events. The payment obligation
of the Borrower hereunder shall not be discharged by an
amount paid in another currency, whether pursuant to a
judgment or otherwise, to the extent that the amount so paid
upon conversion by Agent or the Banks (as applicable) to the
specified currency under normal and reasonable banking
procedures does not yield at the place when payment is due
the amount of the specified currency due hereunder. In the
event that any payment by or on behalf of the Borrower,
whether pursuant to a judgment or otherwise, upon such
conversion and after the deduction of all fees, costs and
expenses relating thereto does not result in payment of such
amount of the specified currency at the place payment is
due, Agent and each Bank shall be entitled to receive from
the Borrower, and shall have a separate cause of action for,
the deficiency in respect of the payments due to each, respectively.
B. SECTION Notice of Syndicated Borrowings.
1. Notice to Agent. In order to effect a Syndicated
Borrowing, the Borrower shall give Agent a Borrower's Notice
of Syndicated Borrowing, in writing or by telephone, prior
to 10:00 a.m. (Dallas, Texas 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),
or (z) three Business Days before any Foreign Currency
Borrowing (e.g. notice on Monday, borrow on Thursday), specifying:
a) the date of such proposed Borrowing, which shall be a
Business Day,
b) the aggregate principal amount of such Borrowing.
c) the interest rate Option (Base Rate, LIBOR Rate and
Foreign Currency Rate, if applicable) selected for such Borrowing,
d) the duration of the Interest Period applicable to such Borrowing, and
e) if such Borrowing is to be made in Foreign Currency,
the designated Foreign Currency and the Base U.S. Dollar
Amount of such tranche.
2. Irrevocable; Confirmation. Once given to Agent, a
Borrower's 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 C attached hereto. In
the event of a discrepancy between Agent's record of such
telephone notice and the Borrower's confirmation thereof,
Agent's record shall be determinative, absent demonstrable error.
3. Notice to Banks. Promptly after receipt by Agent of
such Borrower's Notice of Syndicated Borrowing, Agent shall
deliver an Agent's Notice of Syndicated Borrowing to each
Bank in writing or by telephone. If Agent delivers such
Agent's Notice of Syndicated Borrowing to the Banks by
telephone, Agent shall promptly confirm such delivery by
telex or facsimile copy substantially in the form of Exhibit
D.
C. SECTION Money Market Borrowings.
1. 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.
2. 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 and all Letter of
Credit Liabilities at any one time shall not exceed the
aggregate amount of the Commitments of all Banks in effect at such time.
3. Money Market Quote Request. In order to request offers
to make Money Market Loans under this Section 2.03, Borrower
shall give Agent, in writing or by telephone, a Money Market
Quote Request substantially in the form of Exhibit E hereto
not later than 11:00 a.m. (Dallas, Texas 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 Money Market Auction (e.g., request on
Monday, borrow on Tuesday), specifying:
a) the date of such proposed Borrowing, which shall be a
Business Day,
b) the aggregate amount of such proposed Borrowing, which
shall be at least $1,000,000 and integral multiples of
$1,000,000 in excess thereof,
c) the duration of the Interest Period applicable thereto, and
d) 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 Agent's record of such telephone notice and the
Borrower's confirmation thereof, Agent'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.
1. Promptly after receipt by Agent of such Money Market
Quote Request, Agent shall deliver such request to each Bank
in writing or by telephone. If Agent delivers such Money
Market Quote Request to the Banks by telephone, Agent shall
promptly confirm such delivery by telex or facsimile copy.
2. Submission and Contents of Money Market Quotes.
a) 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 Agent by telex,
facsimile copy or hand delivery not later than (w) 10:00
a.m. (Dallas, Texas time) four Business Days before the
proposed Borrowing, in the case of a LIBOR Auction, or
(x) 10:00 a.m. (Dallas, Texas time) on the same Business Day
of the proposed Borrowing, in the case of an Money Market
Absolute Rate Auction; provided, however, if Agent in its
individual capacity as a Bank elects to submit a Money
Market Quote to the Borrower, it shall deliver a written
copy of such quote to each other Bank by telex or facsimile
copy not later than (y) 9:30 a.m. (Dallas, Texas time) four
Business Days before the proposed Borrowing, in the case of
a LIBOR Auction, or (z) 9:30 a.m. (Dallas, Texas time) on
the same Business Day of the proposed Borrowing, in the case
of an Money Market 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. By 11:30 a.m. on the day of its receipt of a Money
Market Quote from each Bank that submits such a quote, Agent
shall deliver to the Borrower by telex or facsimile
transmission a copy of each such Money Market Quote. 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.
b) Each Money Market Quote shall be in substantially the
form of Exhibit F hereto and shall in any case specify:
(1) the proposed date of Borrowing, which shall be as
specified in the Money Market Quote Request,
(2) the proposed Interest Period(s) for which each such
offer is being made, which shall be as specified in the
Money Market Quote Request,
(3) 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,
(4) 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,
(5) in the case of an Money Market 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
(6) the identity of the quoting Bank.
c) Any Money Market Quote shall be disregarded and be of
no force and effect if it:
(1) does not substantially comply with the provisions of
subsection (d)(ii) above,
(2) contains qualifying, conditional or similar language,
(3) proposes terms other than or in addition to those set
forth in the applicable Money Market Quote Request, or
(4) arrives after the time set forth in subsection (d)(i).
3. Acceptance and Notice by Borrower.
a) Not later than (x) 11:30 a.m. (Dallas, Texas time)
three Business Days before the proposed date of Borrowing,
in the case of a LIBOR Auction, or (y) 11:30 a.m. (Dallas,
Texas time) on the same Business Day of the proposed
Borrowing, in the case of an Money Market Absolute Rate
Auction, the Borrower shall notify, in writing or by
telephone, Agent regarding the Money Market Quotes for those
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.
b) 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 Agent, in substantially the form of
Exhibit G hereto, specifying:
(1) whether one or more of such Bank's offers have been
accepted or rejected,
(2) if accepted, the aggregate amount of each Money Market
Loan to be made by each such Bank as part of such Borrowing,
the applicable Interest Period, and the applicable Money
Market Absolute Rate or Money Market Margin,
(3) the aggregate principal amount of offers of all Banks
for each Interest Period that have been accepted, and
(4) the aggregate principal amount of all Loans outstanding
under the Agreement after taking into consideration the
Loans accepted in such Borrowing.
c) The Borrower may accept in whole or in part any Money
Market Quote meeting the requirements of subsection (d);
provided that:
(1) 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,
(2) 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,
(3) 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
(4) 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 Agent's record of such telephone
notice and the Borrower's confirmation thereof, Agent's
record shall be determinative, absent demonstrable error.
Promptly after receipt by Agent of a notice of
cancellation from the Borrower or receipt of a Notice
of Money Market Borrowing, as applicable, Agent shall
deliver such notice to each Bank (including those Banks
which did not participate in the bid process) in
writing or by telephone. If Agent delivers either such
notice to the Banks by telephone, Agent shall promptly
confirm such delivery by telex or facsimile copy.
1. 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
Agent among such Banks as nearly as possible (in such
multiples, not greater than $100,000, as Agent may deem
appropriate) in proportion to the principal amounts of such
offers. Determinations by Agent of such proportionate
amounts of Money Market Loans shall be conclusive in the
absence of demonstrable error.
2. 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 shall not affect the
requirement of any Bank to fund its Pro Rata Share under a Syndicated Loan.
3. Variances. The time periods set forth in this Section
2.03 related to the conduct of any auction may be varied as
the Borrower, Agent and the participating Banks may agree.
D. SECTION THIS SECTION IS RESERVED.
E. SECTION Interest Period for Borrowings.
1. Interest Payment Dates. Subject to the following
provisions of this Section 2.05, all interest payments shall
be due and payable on the last day of any applicable
Interest Period with respect to all Loans.
2. 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:
a) 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
b) all interest payments with respect to Base Rate Loans
shall be paid on each Quarter End falling after the
commencement of the Interest Period.
3. LIBOR Rate, Money Market LIBOR and Foreign Currency
Borrowings. The "Interest Period" with respect to each LIBOR
Rate Borrowing, Money Market LIBOR and Foreign Currency
Borrowing means the period commencing on the day the LIBOR
Rate Loans, Money Market LIBOR Loans or Foreign Currency
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:
a) 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; and
b) 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.
4. 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 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.
5. 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.
F. SECTION Maturity of Loans and Payment of Interest.
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.
G. SECTION 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, Foreign
Currency Rate and Money Market Absolute Rate, in each case
as described below in this Section 2.07.
1. 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
(i) the Reference Rate in effect for such day or
(ii) 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.
1. "Federal Funds Rate" means, on any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no
such rate is published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average
rate charged to Agent (in its individual capacity) on such
day on such transactions as determined by Agent.
2. LIBOR Rate. Each LIBOR Rate Loan shall bear interest at the LIBOR Rate.
The "LIBOR Rate" applicable to any LIBOR Rate 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 rate per annum,
(rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank
offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such
Interest Period for a term comparable to such
Interest Period. If for any reason such rate is
not available, the term "London Interbank Offered
Rate" shall mean, for any LIBOR Rate Loan or an
Money Market LIBOR Rate Loan, as the case may be,
the rate per annum, (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing
on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such
Interest Period for a term comparable to such
Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean
of all such rates (at approximately 11:00 a.m.
(London time) two Business Days prior to the first
day of such Interest Period for a term comparable
to such Interest Period).
1. "Euro-Dollar Reserve Percentage" means for any day the
maximum rate (expressed as a decimal) at which reserves
(including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System
against in the case of LIBOR Loans, "Eurocurrency
liabilities" (as such term is used in Regulation D
promulgated by the Board of Governors from time to time).
Without limiting the effect of the foregoing, the Euro-
Dollar Reserve Percentage shall reflect any other reserves
required to be maintained by such member banks with respect
to (i) any category of liabilities which includes deposits
by reference to which the Adjusted LIBOR Rate is to be
determined or (ii) any category or extensions of credit or
other assets which include LIBOR Loans. The Adjusted LIBOR
Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage. As of the date hereof, the Euro-Dollar Reserve
Percentage is equal to zero.
2. Foreign Currency Rate. Each Foreign Currency Loan shall
bear interest at the Foreign Currency Rate.
The "Foreign Currency Rate" applicable to any
Foreign Currency 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
Foreign Currency Rate.
The "Adjusted Foreign Currency 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 Foreign Currency Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
3. The "London Interbank Foreign Currency Offered Rate"
applicable to any Interest Period with respect to a Foreign
Currency Loan means the rate per annum, (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on the
appropriate Telerate Page as the London interbank offered
rate for deposits in such Foreign Currency at approximately
11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not
available, the term "London Interbank Foreign Currency
Offered Rate" shall mean, for any Foreign Currency Loan the
rate per annum, (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on the appropriate page of
the Reuters Screen as the London interbank offered rate for
deposits in such Foreign Currency at approximately 11:00
a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is
specified on the appropriate page of the Reuters Screen, the
applicable rate shall be the arithmetic mean of all such
rates (at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period).
4. Money Market LIBOR Rate. Each Money Market LIBOR 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 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).
5. 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).
6. Determination of Interest Rates. Agent shall determine
each interest rate with respect to which it has
responsibility to make such determination pursuant to and in
accordance with this Agreement. Agent shall give prompt
notice to the Borrower and 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.
H. SECTION Certain Loans or Interest Rates Unavailable.
1. LIBOR and Foreign Currency Loans Unavailable. If, on
any date on which an interest rate based on LIBOR or a
Foreign Currency Rate would otherwise be set, (i) Agent
shall determine in accordance with the terms of this
Agreement that adequate and reasonable means do not exist
for ascertaining the interest rate based on LIBOR or on
Foreign Currency Loans, with respect to any Interest Period,
including, without limitation, the inability or failure of
Agent to obtain sufficient information with respect to rates
from the applicable source as contemplated by this
Agreement, (ii) Agent shall determine that the Adjusted
LIBOR Rate or the Adjusted Foreign Currency Rate, as
determined by Agent, will not adequately and fairly reflect
the cost to the Banks of funding a proposed Loan for such
Interest Period, or (iii) Agent shall determine that the
requested Foreign Currency deposits (as to the portion of
any Borrowing proposed to be made in a Foreign Currency) in
the required amount for the required Interest Period are not
being offered to the Banks by prime banks in the London
interbank Euro-currency market, then Agent shall forthwith
give notice thereof to the Borrower and the Banks, whereupon
until the Agent shall determine that the circumstances
giving rise to such suspension no longer exist, the
obligations of the Banks to make LIBOR Rate Loans or Foreign
Currency Loans (as applicable), shall be suspended. Unless
the Borrower notifies Agent ( who shall promptly notify 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;
provided, however, with respect to such a proposed Borrowing
to be made as a Money Market LIBOR Loan, the interest rate
shall be an absolute rate agreed by the Borrower and the lending Banks.
2. Federal Funds Rate Unavailable. If, on any date on
which a Base Rate would otherwise be set, Agent shall
determine in accordance with the terms of this Agreement
that it is unable to ascertain the Federal Funds Rate for
any reason, including, without limitation, the inability or
failure of Agent to obtain sufficient bids or publications
contemplated by this Agreement, Agent shall forthwith give
notice thereof to the Borrower and the Banks, whereupon
until Agent shall notify the Borrower and the Banks that the
circumstances giving rise to such inability no longer exist,
the Base Rate shall be the Reference Rate.
I. SECTION 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 then applicable
interest rate or rates (if more than one type of Loan is
outstanding), reset daily.
J. SECTION Evidence of Loans/Borrowings.
1. Loan Account; Note. Agent shall maintain in accordance
with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to each Bank resulting from
each Loan owing to such Banks from time to time, including
the amounts of principal and interest payable and paid to
such Banks from time to time hereunder. The Borrower shall
execute and deliver to each Bank a Revolving Note
substantially in the form of Exhibit A attached hereto.
2. Register. Agent shall maintain at its address referred
to in Section 11.01 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 11.08) 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 the Borrower and any Bank at
any reasonable time and from time to time upon reasonable prior notice.
K. SECTION 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. If the maturing Syndicated Loans are not Foreign
Currency Loans, the Syndicated Loans comprising such new
Syndicated Borrowing shall be Base Rate Loans and the
Interest Period for such Borrowing shall be 30 days. If the
maturing Syndicated Loans are Foreign Currency Loans, the
Syndicated Loans comprising such new Syndicated Borrowing
shall also be Foreign Currency Loans of the same Foreign
Currency and the Interest Period for such Borrowing shall be 30 days.
L. SECTION Prepayments. Except as otherwise expressly
provided in Section 9.02 and Section 9.03, the Borrower may
not prepay any Bid Loan. Subject to Section 2.13, the
Borrower may prepay any Syndicated 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 accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied
to prepay ratably the Syndicated Loans of the several Banks
included in such Borrowing.
M. SECTION 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
actually incurred by it including (without limitation) any
loss actually 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.
N. SECTION General Rules as to Payments.
1. The Borrower shall make each payment of principal,
interest, fees and otherwise to be made under this Agreement
not later than 12:30 p.m. (Dallas, Texas time) on the date
when due to Agent at its office address appearing on the
signature page hereof for the account of the Banks (or their
applicable Lending Office). All payments of all Loans shall
be made in the appropriate Available Currency 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.
2. Except to the extent otherwise provided in this
Agreement: (i) each Loan shall be made by the Banks under
Section 2.01, each payment of Facility Fees shall be made
for the account of the Banks, and each termination or
reduction of the Commitments shall be applied to the
Commitments of the Banks, based upon their Pro Rata Shares;
and (ii) each payment and prepayment by Borrower of
principal of or interest on Loans of a particular Type shall
be made to Agent for the account of the Banks holding Loans
of such Type pro rata in accordance with the respective
unpaid principal amounts of such Loans held by such Banks.
O. SECTION Funding of Loans.
1. Disbursements. Not later than 2:00 p.m.(Dallas, Texas
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 in the appropriate Available
Currency (as applicable), to Agent who shall make available
such funds to the Borrower not later than 2:00 p.m. (Dallas,
Texas time) on such date at the Borrower's account
designated on the signature page hereto, or such other
account as may be designated by Borrower by notice to Agent.
2. 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.
P. SECTION Fees.
1. Facility Fee. Borrower shall pay to Agent for the
account of each Bank, based upon its Pro Rata Share, a
facility fee ("Facility 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
aggregate amount of the Commitments, regardless of
utilization thereof, for each day (from and including the
Effective Date to but excluding the later of the Termination
Date or the date that the Obligations are paid in full)
based upon the Rating (which shall be (i) the higher of the
two Ratings of Standard & Poor's Inc. and Moody's Investor
Corporation or (ii) the Rating immediately below the higher
of such two Ratings if the two Ratings are split by more
than one Rating) in effect on such day for Borrower's senior
unsecured nonconvertible long-term indebtedness as set forth
in the left hand column below:
Rating Rate Per Annum
A/A2 or better 7.5 basis points
A-/A3 8.0 basis points
BBB+/Baa 1 8.5 basis points
BBB/Baa2 11.0 basis points
BBB-/Baa3 or lower 15.0 basis points
1. Payment of Fees. Accrued 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 later of the
Termination Date or the date on which the Obligations are
paid in full. Payment of all such Facility Fees shall be
made by wire transfer or automated clearing house (ACH)
transfer not later than the fifth Business Day following the
aforesaid dates.
Q. SECTION 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 then accrued shall become immediately payable.
R. SECTION Extension of Termination Date.
1. Within 60 days prior to the first anniversary of the
Closing Date, the Borrower may notify Agent that it desires
that the Termination Date be extended for one year to the
sixth anniversary of the Closing Date. The Agent shall
provide written notice of such request to all the Banks
within two Business Days after its receipt thereof, and each
Bank shall notify Agent in writing within ten Business Days
after its receipt of the written notice from Agent of its
decision regarding such request. The failure of any Bank to
respond to such request within the ten Business Day period
shall be deemed a refusal to such request by such Bank. If
all of the Banks consent to such request in writing within
such ten Business Day period (such consenting Banks are
referred to herein as the "Consenting Banks"), the
Termination Date shall be extended to the sixth anniversary
of the Closing Date, and Agent shall notify the Borrower in
writing of such extension within two Business Days of its
receipt of the last written consent from the Banks. If
within such ten Business Day period, one or more Banks
informs the Agent in writing that it does not consent to
such extension request or fails to consent in writing (such
non-consenting Banks are referred to herein as the "Non-
Consenting Banks"), Agent shall promptly notify the Borrower
of each such Non-Consenting Bank, and the Borrower, at its
option, shall have a period of 30 days after receipt of such
notice (i) to replace each such Non-Consenting Bank pursuant
to the provisions of Section 11.07 with an Eligible Assignee
which does consent to such extension, or (ii) to continue
this Agreement with the Consenting Banks and to reduce the
amount of the Facility by the amount of the Loans and
Commitments of all Non-Consenting Banks. If the Borrower
elects to replace the Non-Consenting Banks and is able to
replace all such Non-Consenting Banks with Eligible
Assignees pursuant to Section 11.07, each such Eligible
Assignee shall notify the Agent in writing of its agreement
to replace a Non-Consenting Bank and the amount of Loans and
Commitments it is willing to acquire. The transfer and
assignment of each Non-Consenting Bank's Loans and
Commitments and the transfer of its obligations under this
Agreement to an Eligible Assignee shall be made pursuant to
an Assignment and Acceptance promptly following the Agent's
receipt of the last Eligible Assignee's written agreement to
replace a Non-Consenting Bank. Upon the execution and
delivery of such Assignment and Acceptances, the Loans and
Commitments shall continue without interruption hereunder.
If the Borrower elects to continue the Facility with only
the Consenting Banks, then upon the original Termination
Date, and assuming that no Default or Event of Default then
exists, (i) this Agreement shall be extended for one
additional year between the Borrower and the Consenting
Banks whose Loans and Commitments will continue unchanged,
and (ii) the Loans payable to the Non-Consenting Banks shall
be paid in full along with all other amounts, if any, which
may be owed to them under the Loan Documents, and their
Commitments shall terminate.
2. If the original Termination Date is extended for one
year pursuant to the terms of this Section 2.18, then within
60 days prior to the second anniversary of the Closing Date,
the Borrower may again request that the extended Termination
Date be extended for an additional one year to the seventh
anniversary of the Closing Date. Agent shall follow the same
procedures of notification and polling of the Banks to
determine if the request will be accepted and shall notify
Borrower of the results. In no event shall the Termination Date as
extended be extended beyond the seventh anniversary of the Closing Date.
S. SECTION Letters of Credit.
1. The Facility may be utilized by Borrower to support the
issuance of Letters of Credit for the account of Borrower,
subject to the unused Commitments (which Commitments shall
be deemed used to the extent of all Letter of Credit
Liabilities), up to the maximum aggregate unfunded face
amount at any time outstanding of $25,000,000. The maximum
term of any such Letter of Credit shall be one year, and no
Letter of Credit shall be issued with an expiration date
which is later than 90 days after expiration of the
Termination Date. Each such Letter of Credit shall be
supported by a duly executed application and reimbursement
agreement in form satisfactory to the Issuing Bank and shall
be subject to payment to Agent for the account of the Banks
(based upon their respective Pro Rata Shares) of an annual
fee (pro-rated for periods of less than one year), payable
quarterly in arrears, in an amount equal to the Applicable
Margin for LIBOR Rate Loans, as such rate may change from
time to time during the term of such Letter of Credit, times
the unfunded face amount thereof.
2. Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment or other drawing under such
Letter of Credit, the Issuing Bank shall promptly notify
Borrower and each Bank as to the amount to be paid as a
result of such demand or drawing and the respective payment
date. If at any time the Issuing Bank shall make a payment
to a beneficiary of a Letter of Credit pursuant to a drawing
under such Letter of Credit, each Bank will pay to the
Issuing Bank, immediately upon the Issuing Bank's demand at
any time commencing after such payment until reimbursement
therefor in full by Borrower, an amount equal to such Bank's
Pro Rata Share of payment, together with interest on such
amount for each day from the date of such payment to the
date of payment by such Bank of such amount at a rate of
interest per annum equal to the Federal Funds Rate.
3. Promptly after each drawing under any Letter of Credit,
Issuing Bank shall notify the Borrower of the time and
amount of such drawing. Unless the Borrower shall reimburse
Issuing Bank within one Business Day after receipt of such
notice for any amounts paid by Issuing Bank upon any such
drawing, without presentment, demand, protest or other
formalities of any kind, such drawing shall, if the Borrower
then satisfies the conditions of Section 3.02, automatically
and without further action by the Borrower be treated as a
Base Rate Loan (until such Loan is Converted to a Loan of
another Type as provided herein), in which case such drawn
amounts shall be subject to all terms and provisions hereof
relating to Loans. If the Borrower does not then satisfy the
conditions of Section 3.02, such outstanding Reimbursement
Obligation shall bear interest at the Default Rate, and such
Reimbursement Obligation and the interest thereon shall be
payable on demand. If the Borrower elects to reimburse
Issuing Bank as provided above, Issuing Bank will pay to
each Bank such Bank's Pro Rata Share of all amounts received
from or on behalf of the Borrower for application in
payment, in whole or in part, of the Reimbursement
Obligation in respect of any Letter of Credit, but only to
the extent such Bank has made payment to Issuing Bank in
respect of such Letter of Credit pursuant to subsection (b) above.
III. ARTICLE
CONDITIONS
A. SECTION Conditions to Effectiveness. This Agreement
will become effective on the date (the "Effective Date")
when all of the following have occurred:
1. Agreement 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.
2. Notes. A Revolving Note substantially in the form of
Exhibit A with appropriate insertions shall have been
executed by the Borrower and delivered to each of the Banks.
3. Guaranties. Each Guarantor shall have executed and
delivered a guaranty agreement substantially in the form of
Exhibit B to the Agent for the benefit of each of the Banks.
4. Legal Opinion. An opinion of counsel for the Borrower,
reasonably acceptable to the Majority Banks, dated the
Effective Date and substantially in the form of Exhibit H
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Majority 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 Majority Banks.
5. Compliance with Representations and No Default; Officer
Certificates. The representations of the Borrower contained
in Article 4 shall be true and correct and no Default or
Event of Default shall have occurred and be continuing. A
certificate dated the Effective Date, signed by an
Authorized Officer, to the effect set forth in this clause
(e) of this Section 3.01 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.
6. Other Documents. All documents which the Majority 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 in
form and substance reasonably satisfactory to the Majority
Banks shall have been delivered to the Banks.
7. No Material Adverse Change. Except as disclosed on
Schedule 3 hereto, since June 29, 1997, 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.
B. SECTION 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:
1. Notice of Borrowing. The Agent shall have received (or
be deemed to have received) the applicable Notice of
Borrowing as required by Article II.
2. Loan Limit. Immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans and the
Letter of Credit Liabilities shall not exceed the aggregate
amount of the Commitments.
3. No Default. Immediately after such Borrowing, no
Default or Event of Default shall have occurred and be continuing.
4. 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, 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.
IV. ARTICLE
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants severally to the Banks that:
A. SECTION 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.
B. SECTION 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 or any other third
party under any existing material contractual arrangements,
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.
C. SECTION 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).
D. SECTION Financial Information. The consolidated
financial statements of Borrower for the year ended
December 29, 1996, and the quarters ended March 30, 1997 and
June 29, 1997, 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.
E. SECTION Litigation. Except as disclosed on Schedule 4
hereto, there is no action, suit or proceeding pending, or
to the knowledge of the Borrower, overtly threatened against
or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or
official that purports to affect the Borrower or any of its
Restricted Subsidiaries or any transaction contemplated by
this Agreement, or 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 Restricted Subsidiaries,
considered as a whole, or which in any manner draws into question
the validity of this Agreement or the Borrower's obligations hereunder.
F. SECTION 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.
G. SECTION Compliance with Laws. Neither the Borrower
nor any of its Restricted 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 Restricted
Subsidiaries, considered as a whole.
H. SECTION Taxes. The Borrower and its Restricted
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 Restricted Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
I. SECTION 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 Restricted Subsidiaries,
considered as a whole.
J. SECTION Not an Investment Company. The Borrower is
not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
K. SECTION 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.
L. SECTION 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.
M. SECTION 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.
V. ARTICLE
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
Majority Banks waive compliance in writing:
A. SECTION Information.
1. SEC Reports. The Borrower will deliver to Agent 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 clause (b)
of this Section 5.01.
2. Financial Statements. If and when Borrower is no longer
subject to the reporting requirements under the Exchange
Act, Borrower will deliver to Agent (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.
3. 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 Agent 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.
4. Other Reports. Promptly upon their becoming available
to the Borrower, the Borrower will deliver to Agent (except
to the extent already covered by clause (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 Consolidated 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.
5. Notice of Default. No later than three Business Days
after becoming aware thereof, Borrower will deliver to Agent
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.
6. 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 Agent setting forth such determination, which certificate
shall constitute an amendment to Schedule 2 hereof.
7. Other Information. From time to time Borrower shall
provide Agent such additional information regarding the
financial position of the Borrower and its Consolidated
Subsidiaries or matters related to verifying Borrower's
compliance with this Agreement as any Bank may reasonably request.
Promptly after its receipt of any of the above
reports or information, Agent will distribute copies
thereof to each Bank.
B. SECTION Payment of Obligations. The Borrower will pay
and discharge, and will cause each Restricted 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.
C. SECTION Maintenance of Property. The Borrower shall,
and shall cause each of its Restricted 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 Restricted 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.
D. SECTION Insurance. The Borrower shall, and shall
cause each of its Restricted 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.
E. SECTION 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.
F. SECTION 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.
G. SECTION 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.
H. SECTION 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.
I. SECTION 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 Restricted
Subsidiaries, considered as a whole, the Borrower will
(a) employ, and cause each of its Restricted Subsidiaries to
employ, appropriate technology and compliance procedures to
maintain compliance with all applicable Environmental Laws,
(b) obtain and maintain, and cause each of its Restricted
Subsidiaries to obtain and maintain, all material permits
required by applicable Environmental Laws in connection with
its or its Restricted Subsidiaries' operations, and
(c) dispose of, and cause each of its Restricted
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.
J. SECTION Delivery of Additional Guaranties. Within 30
Business Days following the delivery of any of the
financial statements required by Section 5.01(a) or (b), the
Borrower shall cause the delivery to the Agent of Guaranties
from such additional Guarantors as may be necessary so that
the aggregate assets of the Borrower and all Guarantors
equal at least eighty percent (80%) of the total assets of
the Borrower and its Consolidated Subsidiaries.
VI. ARTICLE
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 Majority Banks waive compliance in writing:
A. SECTION Limitations on Liens.
1. 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:
a) 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,
b) 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,
c) 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,
d) 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,
e) 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 other legislation or regulations in effect from time to time,
f) Liens securing Debt owing to the Borrower or a
Restricted Subsidiary by a Restricted Subsidiary,
g) Liens existing as of the Effective Date,
h) extensions, renewals or replacements of pledges,
mortgages or liens referred to in clauses (i) to (vii),
inclusive, above, and any subsequent refinancings of the
Debt secured thereby, 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,
i) Liens as permitted by subsection (b) of this Section,
j) Liens as permitted by subsection (c) of this Section, or
k) 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.
2. 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, 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 or purchase,
to any Principal Plant owned by the Borrower or such
Restricted Subsidiary immediately prior to such merger,
consolidation 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 the Borrower
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
Obligations, 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.
3. 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
15 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.
B. SECTION Limitation on Debt of Restricted Subsidiaries.
1. 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:
a) Debt secured by a mortgage, pledge or lien which is
permitted to such Restricted Subsidiary under the provisions
of Section 6.01,
b) Debt owed to the Borrower or any other Restricted Subsidiary,
c) 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,
d) 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,
e) guarantees existing at the Effective Date of this Agreement,
f) guarantees and co-obligations of Debt with respect to
which the Borrower is directly liable, and
g) extensions, renewals or replacements of any Debt
referred to in clauses (i) to (vi), inclusive, above, and
any subsequent refinancings of such Debt, 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.
2. 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
15 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.
C. SECTION 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 Majority Banks,
each stating that such transaction complies with this
Section 6.03 and that all conditions precedent to such
transaction have been complied with:
a) 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,
b) Borrower may merge or consolidate with or into any
Person, including a Subsidiary, provided that Borrower is
the survivor, if immediately after giving effect to such
transaction, no Default or Event of Default shall occur and
be continuing, and
c) 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, if immediately after giving effect to such
transaction, no Default or Event of Default shall occur and be continuing.
D. SECTION 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 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 (b) 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 15 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.
VII. ARTICLE
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
Majority Banks waive compliance in writing:
A. SECTION Debt to Capitalization. Borrower will have
Total Debt equal to or less than 50 percent of
Capitalization, 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.
VIII. ARTICLE
DEFAULTS AND EVENTS OF TERMINATION
A. SECTION 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 11.06, the Majority Banks waive the same in writing:
1. Principal. Borrower shall fail to pay when due any
principal of any Loan under this Agreement.
2. 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.
3. 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 the earlier of (A)
written notice thereof has been given to the Borrower by any
Bank, or (B) any Authorized Officer of the Borrower shall
have actual knowledge of the Borrower's failure to observe
or perform any such other covenant or agreement contained in this Agreement.
4. 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).
5. Monetary Default. Borrower or any Restricted
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).
6. 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.
7. Change in Control. A Change in Control shall occur
with respect to the Borrower.
8. 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 Restricted 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.
9. 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.
10. 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.
11. Guarantor Default. Any Guarantor shall default in its
obligations under its guaranty agreement delivered pursuant
to this Agreement.
B. SECTION Consequence of Event of Default. If there
exists any Event of Default specified in subsections (a)
through (h) of Section 8.01, then the Majority 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) of Section 8.01, 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.
C. SECTION Notice of Default. Each Bank shall give
notice to the other Banks promptly upon giving notice to
Borrower under Section 8.01(c)(ii).
IX. ARTICLE
CHANGE IN CIRCUMSTANCES
A. SECTION [This section 9.01 is reserved].
B. SECTION 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
principal and interest shall be payable contemporaneously
with the related Loans constituting the applicable Borrowing
of the other Banks).
C. SECTION Increased Cost.
1. 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:
a) 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),
b) 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
c) 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,
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.
1. 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 and Agent 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.
2. Substitute Loans. If any Bank has demanded compensation
under this Section 9.03, at the option of the Borrower and
upon five Business Days notice to Agent and such Bank,
unless and until such Bank has notified Borrower and Agent
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.
D. SECTION Capital Adequacy.
1. 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 90 days prior to
such demand or relate to a retroactive reduction imposed on
the Bank or BHC no more than 90 days prior to such demand.
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.
X. ARTICLE
AGENT
A. SECTION Appointment, Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes Agent to act as
its agent hereunder and under the other Loan Documents with
such powers as are specifically delegated to Agent by the
terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental
thereto. Neither Agent nor any of its Affiliates, officers,
directors, employees, attorneys or agents shall be liable
for any action taken or omitted to be taken by any of them
hereunder or otherwise in connection with this Agreement or
any of the other Loan Documents except for its or their own
gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, Agent (a) may treat
the payee of any Revolving Note as the holder thereof until
Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to
Agent, (b) shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or
any other Loan Document be a trustee or fiduciary for any
Bank, (c) shall not be required to initiate any litigation
or collection proceedings hereunder or under any other Loan
Document except to the extent requested by the Majority
Banks, (d) shall not be responsible to the Banks for any
recitals, statements, representations or warranties
contained in this Agreement or any other Loan Document, or
any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement or
any other Loan Document, or for the value, validity,
effectiveness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any
failure by any Person to perform any of its obligations
hereunder or thereunder, (e) may consult with legal counsel,
independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts, and
(f) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or
other instrument or writing reasonably believed by it to be
genuine and signed or sent by the proper party or parties.
As to any matters not expressly provided for by this
Agreement, Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Majority Banks,
and such instructions of the Majority Banks, and any action
taken or failure to act pursuant thereto shall be binding on
all of the Banks; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability
or which is contrary to this Agreement or any other Loan
Document or applicable law.
B. SECTION Rights of Agent as a Bank. With respect to
its Commitment, the Loans made by it and the Revolving Note
issued to it, NationsBank (and any successor acting as
Agent) in its capacity as a Bank hereunder shall have the
same rights and powers hereunder as any other Bank and may
exercise the same as though it were not acting as Agent, and
the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may (without having to
account therefor to any Bank) accept deposits from, lend
money to, act as trustee under indentures of, provide
merchant banking services to, own securities of, and
generally engage in any kind of banking, trust or other
business with, the Loan Parties or any of their Affiliates
and any other Person who may do business with or own
securities of the Loan Parties or any of their Affiliates,
all as if it were not acting as Agent and without any duty
to account therefor to the Banks.
C. SECTION Defaults. Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other
than the non-payment of principal of or interest on the
Loans or of commitment fees) unless Agent has received
notice from a Bank or Borrower specifying such Default and
stating that such notice is a "notice of default". In the
event that Agent receives such a notice of the occurrence of
a Default, Agent shall give prompt notice thereof to the
Banks (and shall give each Bank prompt notice of each such
non-payment). Agent shall (subject to Section 10.1) take
such action with respect to such Default as shall be
directed by the Majority Banks, provided that unless and
until Agent shall have received such directions, Agent may
(but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default as it
shall seem advisable and in the best interest of the Banks.
D. SECTION INDEMNIFICATION. EACH BANK HEREBY AGREES TO
INDEMNIFY AGENT FROM AND HOLD AGENT HARMLESS AGAINST (TO THE
EXTENT NOT REIMBURSED UNDER SECTION 11.03, BUT WITHOUT
LIMITING THE OBLIGATIONS OF THE LOAN PARTIES UNDER SECTION
11.03), RATABLY IN ACCORDANCE WITH ITS PRO RATA SHARE, ANY
AND ALL LIABILITIES (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF
ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON,
INCURRED BY OR ASSERTED AGAINST AGENT IN ANY WAY RELATING TO
OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION
TAKEN OR OMITTED TO BE TAKEN BY AGENT UNDER OR IN RESPECT OF
ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO BANK
SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE
EXTENT CAUSED BY AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE BANKS THAT AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF
SUCH LIABILITIES (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF
ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH
PARTY (EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY SUCH
PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT
LIMITING ANY OTHER PROVISION OF THIS SECTION 10.04, EACH
BANK AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS
PRO RATA SHARE OF ANY AND ALL OUT-OF-POCKET EXPENSES
(INCLUDING ATTORNEYS' FEES) INCURRED BY AGENT IN CONNECTION
WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE
LOAN DOCUMENTS, TO THE EXTENT THAT AGENT OR ANY BANK IS NOT
PROMPTLY REIMBURSED FOR SUCH EXPENSES BY BORROWER.
E. SECTION Independent Credit Decisions. Each Bank
agrees that it has independently and without reliance on
Agent, Co-Agent, Managing Agent or any other Bank, and based
on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and
its Subsidiaries and the other Loan Parties and its own
decision to enter into this Agreement and that it will,
independently and without reliance upon Agent, Co-Agent,
Managing Agent or any other Bank, and based upon such
documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of
the other Loan Documents. None of Agent, Co-Agent or
Managing Agent shall be required to keep itself informed as
to the performance or observance by any Loan Party of this
Agreement or any other Loan Document or to inspect the
properties or books of any Loan Party. Except for notices,
reports and other documents and information expressly
required to be furnished to the Banks by Agent, Co-Agent or
Managing Agent hereunder or under the other Loan Documents,
none of Agent, Co-Agent or Managing Agent shall have any
duty or responsibility to provide any Bank with any credit
or other financial information concerning the affairs,
financial condition or business of any Loan Party (or any of
their Affiliates) which may come into the possession of
Agent, Co-Agent or Managing Agent or any of its Affiliates.
F. SECTION Several Commitments. The Commitments and
other obligations of the Banks under this Agreement are
several. The default by any Bank in making a Loan in
accordance with its Commitment shall not relieve the other
Banks of their obligations under this Agreement. In the
event of any default by any Bank in making any Loan, each
nondefaulting Bank shall be obligated to make its Loan but
shall not be obligated to advance the amount which the
defaulting Bank was required to advance hereunder. In no
event shall any Bank be required to advance an amount or
amounts with respect to any of the Loans which would in the
aggregate exceed such Bank's Commitment with respect to such
Loans. No Bank shall be responsible for any act or omission
of any other Bank.
G. SECTION Successor Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, (i)
Agent may resign at any time by giving notice thereof to the
Banks and Borrower, or (ii) Agent may be removed upon the
written direction of the Borrower and the Majority Banks.
Upon any such resignation or removal, the Majority Banks
will have the right to appoint another Bank as a successor
Agent; provided however, so long as no Default exists, any
such successor Agent must also be approved by Borrower,
which approval may not be unreasonably withheld. If no
successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of
resignation or its receipt of a written direction of its
removal, then the Managing Agent shall succeed to the
position of successor Agent hereunder. Upon the acceptance
of its appointment as successor Agent, such successor Agent
shall thereupon succeed to and become vested with all
rights, powers, privileges, immunities and duties of the
resigning or removed Agent, and the resigning or removed
Agent shall be discharged from its duties and obligations
under this Agreement and the other Loan Documents. After any
Agent's resignation as Agent, the provisions of this
Article X shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it
while it was Agent. Each Agent (including each successor
Agent) agrees that, so long as it is acting as Agent under
this Agreement, it shall be a Bank under this Agreement.
XI. ARTICLE
MISCELLANEOUS
A. SECTION 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 answer
back 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.
B. SECTION No Waivers. No failure or delay by Agent, Co-
Agent, Managing Agent or 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.
C. SECTION Expenses, etc. Borrower agrees to pay, and
agrees to save Agent, Co-Agent, Managing Agent and each Bank
harmless against any loss, liability, claim, damage or
expenses incurred by Agent, Co-Agent, Managing Agent or any
Bank related to, (i) all reasonable out-of-pocket expenses
and attorneys fees of such parties 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, (ii) all reasonable out-
of-pocket expenses and attorneys fees of such parties 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 such parties 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
such parties 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
such party shall have the right to be indemnified hereunder
for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
D. SECTION Set-Offs.
1. Set-Offs. Upon the occurrence of an Event of Default
and so long as such Event of Default is continuing, Agent,
Co-Agent, Managing Agent and 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 Obligations owed to such
party 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 party 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
any such party. Such right shall exist whether or not the
party exercising such right of set-off 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 such party. Each party exercising such
right of set-off shall promptly notify Borrower of any set-
off hereunder, but the failure to give notice shall not
affect the validity of such set-off.
2. 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 on a Pro Rata Share basis; 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.
E. SECTION Taxes.
1. 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.
2. Withholding Tax. If any Bank is a "foreign corporation"
within the meaning of the Code, such Bank shall deliver to the Borrower:
a) 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,
b) 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
c) 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 11.05 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 11.08 hereof, the assignee
shall comply and be bound by the terms of this Section 11.05
as though it were the assignor Bank.
F. SECTION 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, Agent and the Majority
Banks; provided that no such amendment, supplement, waiver
or modification shall, unless signed by Agent and 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, (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, (v) extend the Termination Date except as
provided in Section 2.18, or (vi) terminate or release any
guaranty signed by any Guarantor or modify or amend any such
guaranty in a manner that would have the effect of modifying
any provisions of such guaranty with respect to matters
described in items (i) through (v) of this Section 11.06.
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.
G. SECTION Replacement of Banks. If any Bank (a "Notice
Bank") makes demand for amounts owed under Section 9.03 or
Section 9.04 or 11.03(iv) or gives notice under Section 9.02
that it can no longer participate in Loans or if the
Borrower elects to replace a Non-Consenting Bank pursuant to
Section 2.18, 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 11.08, 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 or Non-
Consenting 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 I, and the Replacement Bank shall pay to the Notice
Bank all amounts then outstanding hereunder and payable to
the Notice Bank (whether or not such amounts are then
otherwise due). 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. Borrower shall pay or reimburse
such Notice Bank for its reasonable expenses, if any,
incurred in connection with such assignment.
H. SECTION Assignments and Participations.
1. 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 Agent and all the Banks.
2. Assignments. Each Bank may (and if requested by
Borrower pursuant to Section 11.07 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
a) 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)
b) 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
$10,000,000 (in aggregate outstandings and unused
Commitment) and shall be an integral multiple of $1,000,000
in excess thereof; provided however, a Bank which cannot
satisfy the above-described requirements may assign all of its Commitment,
c) 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,
d) each such assignment made as a result of a demand by
Borrower pursuant to Section 11.07 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,
e) no Bank shall be obligated to make any such assignment
as a result of a demand by the Borrower pursuant to Section
11.07 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
f) the parties to each such assignment shall execute and
deliver to Agent for its acceptance and recording in the
Register (as defined in Section 2.10(b)) an Assignment and
Acceptance, together with the Revolving Note subject to such
Assignment and Acceptance, and a processing and recordation fee of $3,500.
Upon its receipt of an Assignment and Acceptance executed by
an Assigning Lender and Assignee representing that it is an
Eligible Assignee, together with the Revolving Note subject
to such assignment, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the
form of Exhibit I hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in
the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five Business Days after its receipt
of such notice, the Borrower, at its expense, shall execute
and deliver to the Agent in exchange for each surrendered
Revolving Note evidencing the Loans, a new Revolving Note
evidencing such Loans payable to the order of such Eligible
Assignee in an amount equal to such Loans assigned to it
and, if the Assigning Lender has retained any Loans, a new
Revolving Note evidencing each such Loans payable to the
order of the Assigning Lender in the amount of such Loans
retained by it (each such promissory note shall constitute a
"Revolving Note" for purposes of the Loan Documents). Such
new Revolving Notes shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A 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.
1. 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 11.08; 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 11.03
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.
2. 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
a) such Bank's obligations under this Agreement (including
without limitation, its Commitment to Borrower hereunder)
shall remain unchanged,
b) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations,
c) such Bank shall remain the owner of any Loan for all
purposes of this Agreement, and
d) 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.
3. 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.
4. Subsequent Participations and Assignments. Persons who
have become assignees or participants pursuant to this
Section 11.08 may grant such further assignments and
participations only by complying with the same procedures
that a Bank would be required to follow hereunder.
I. SECTION 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.
J. SECTION Confidentiality. Each of Agent, Co-Agent,
Managing Agent and each Bank (each a "Confidentiality
Party") agrees that all documentation and other information
made available by the Borrower to such parties under the
terms of this Agreement shall (except to the extent required
by legal or governmental process or otherwise by law, or if
requested by any duly constituted state or federal bank
regulatory agency, or if such documentation and other
information is publicly available or hereafter becomes
publicly available other than by action of such
Confidentiality Party, or was theretofore known to such
party independent of any disclosure thereto by the Borrower)
be held in the strictest confidence by such Confidentiality
Party and used solely in connection with the administration
of Loans from time to time outstanding hereunder to the
Borrower; provided that (i) such Confidentiality Party may
disclose such documentation and other information to any
other bank to which such Confidentiality Party 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 Confidentiality Party 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 party's interest in any Loan,
and (iii) such Confidentiality Party may disclose such
documentation and other information to any officer,
director, agent, employee, attorney or other advisor of such
party, with a need to know such information for the purpose
of administering this agreement, so long as such individual
is obligated to comply with the provisions of this Section.
K. SECTION 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.
L. SECTION Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
M. SECTION WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT, C0-AGENT,
MANAGING AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION OR ENFORCEMENT THEREOF.
N. SECTION 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.
IN WITNESS WHEREOF, this Agreement is executed and
delivered as of the day first above written.
BORROWER:
Account to which Loans ADOLPH COORS COMPANY
are to be advanced:
By:
[describe account] Name:
Title:
Address for Notices:
12th & Ford Streets
Mail Number BC560
Golden, Colorado 80401
Attention: Michelle Woulfe
Telephone: 303-277-6778
Telecopy: 303-277-5636
AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
Name:
Title:
Address for Notices:
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Natalie Hebert
Telephone: 214-508-9060
Telecopy: 214-508-0980
CO-AGENT:
THE FIRST NATIONAL BANK OF
CHICAGO
By:
Name:
Title:
Address for Notices:
777 South Figueroa Street, 4th
Floor
Los Angeles, California 90017-
5800
Attention: Anthony Mathews
Telephone: 213-683-1957
Telecopy: 213-683-4999
MANAGING AGENT:
WACHOVIA BANK, N.A.
By:
Name:
Title:
Address for Notices:
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: William Hamlet
Telephone: 404-332-5570
Telecopy: 404-332-6898
LENDERS:
Commitment: $37,000,000 NATIONSBANK OF TEXAS,
N.A.
By:
Name:
Title:
Address for Notices:
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Natalie Hebert
Telephone: 214-508-9060
Telecopy: 214-508-
0980Commitment: $25,000,000 BANK OF AMERICA
NATIONAL TRUST AND SAVINGS
ASSOCIATION
By:
Name:
Title:
Address for Notices:
555 California Street, 41st
Floor
San Francisco, California
94104
Attention: Kevin Leader
Telephone: 415-622-4585
Telecopy: 415-622-8168
Commitment: $15,000,000 U.S. BANK NATIONAL
ASSOCIATION,
dba Colorado National Bank
By:
Name:
Title:
Address for Notices:
950 Seventeenth Street, Suite
300
Denver, Colorado 80202
Attention: Andrea Koeneke
Telephone: 303-585-4234
Telecopy: 303-585-6273
Commitment: $30,000,000 THE FIRST NATIONAL BANK
OF CHICAGO
By:
Name:
Title:
Address for Notices:
777 South Figueroa Street, 4th
Floor
Los Angeles, California 90017-
5800
Attention: Anthony Mathews
Telephone: 213-683-1957
Telecopy: 213-683-4999
Commitment: $15,000,000 NORWEST BANK COLORADO,
N.A.
By:
Name:
Title:
Address for Notices:
1740 Broadway
Denver, Colorado 80274-8673
Attention: Katy Jones
Telephone: 303-863-5070
Telecopy: 303-863-6670
Commitment: $15,000,000 SUMITOMO BANK, LIMITED
By:
Name:
Title:
Address for Notices:
777 South Figueroa, Suite 2600
Los Angeles, California 90017
Attention: Michael Jackson
Telephone: 213-955-3933
Telecopy: 213-623-6832
Commitment: $25,000,000 UNION BANK OF
SWITZERLAND,
New York Branch
By:
Name:
Title:
By:
Name:
Title:
Address for Notices:
200 Park Avenue
New York, New York 10171
Attention: Paula Mueller
Telephone: 212-821-3339
Telecopy: 212-821-3383
Commitment: $35,000,000 WACHOVIA BANK, N.A.
By:
Name:
Title:
Address for Notices:
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: William Hamlet
Telephone: 404-332-5570
Telecopy: 404-332-6898
Commitment: $3,000,000 SEAWAY NATIONAL BANK
By:
Name:
Title:
Address for Notices:
645 East 87th Street
Chicago, Illinois 60619
Attention: O. Victoria
Lakes-Battle
Telephone: 773-602-4153
